*
Transparency vs.
Confidentiality
Confidential: Intellectual Property of Littleford & Associates
* Head Compensation: Myths and Reality
* Competitive Compensation and Market Replacement Costs
* Evaluation Requirements
* Transparency
*
* Head compensation is most influenced by the
occupations of the Compensation Committee
members. Surprising?
* The highest paid heads tend to have board
chairs who are CEOs, COOs, venture capitalists
or investors. Why?
* The lowest paid heads have compensation
committee members who are “professionals”
*
* Far East, Middle East, Europe, Latin America
and Africa, generally in that order of pay
* Strong currency nations have more leverage,
i.e., yen, Euro, pound
*
* The highest paid heads are males who move about every 4-7
years. Why?
* Also highly paid are the senior respected leaders who have been
recruited by new for profit, privately owned or investor created
schools
*
* Women: paid up to one quarter less
* Heads who are hired from within
* Heads who stay at their first school
* Heads who have been at the same school more than 5 years
* Heads who are self-effacing
*
* Most are three year
* Most have an “evergreen” clause
* More than 90% of school heads have written
contracts and the remaining 10% SHOULD
*
*Termination not for cause should provide
the head 12 to 18 months notice or pay
*Termination for “cause” should include
only very serious matters such as “gross
misconduct” or “moral turpitude” NOT
“insubordination”
*Termination by the head is usually 6 to 8
months notice but in good schools, should
be 12
*
*Annual Base Salary
*Cash Bonus
*Deferred Compensation
funded by School
*
* The amount that the school ACTUALLY pays on
behalf of the head over and above what is
provide to other employees
* Disability Insurance: Often individual
* Life Insurance: Usually two times salary
* Medical Insurance: Usually Family
* Dental Insurance: Family
* Flexible Benefits
*
* Forgone Interest on Loans or Forgiven Loan Principle
* Education Assistance Plan
* Tuition Benefit (beyond standard remission and
including other kinds of tuition or other schoolrelated benefits) Include the “gross up” (if any) to
cover the head’s tax liability on this benefit.
* Tuition at another school
* Additional Insurance
* Spouse Travel Allowance or Payments
* On and Off Campus Housing
* Home leave: Business class flights?
*
* Auto Allowance or Driver
* Club Membership or Dues
* Sabbatical Opportunities, vacation and/or
personal days (cashed out instead of taken)
* Any other reportable income
* Calculated in gross or net terms?
*
* Many schools provide housing
* Most others provide a housing allowance (or it
is included in base pay calculation)
* Some provide an interest free down payment
forgiven over time to assist in the purchase of
a permanent retirement home (for long
termers mainly in Europe, US)
* It is difficult to recruit a head without housing
support no matter what the market
*
* Moving expenses
* Housing: Tax Issues
* Retirement/Gratuity insurance
* Life, health, disability insurance: Tax issues
* Tuition remission: Tax issues
* Deferred compensation: Tax Issues
* Club membership: Tax Issues
* Travel for family
* Bonus
*
*Evaluation must be annual and in writing
*Evaluation is a goal setting process of not
more than FIVE manageable goals
*Good evaluation does not involve parent or
faculty interviews
*Evaluation involves the entire Board
*The higher the pay, the more important
the need for an evaluation “paper trail”
*Avoid corporate “360” models: Why?
*
*Far better than no evaluation at all
*Be wary of “over kill”: too long, too
many questions
*Be wary of potential inadvertent
circulation
*
* Contract renewal is like a marriage renewal, a
reaffirmation of the parties
* Overlooking the head’s contract is
unprofessional and risky
* Setting the head’s compensation last is not
smart
* Do not take the head for granted as head
hunters will call.
*
*Should be 3-5 members
*Chair, Vice Chair and Finance Chair
or immediate past chair
*Meets annually
*Speaks for the board
*
*Everyone board member has a legal
right to know BUT
*Report no details to the full board
*If a board member demands
disclosure ask him or her to call the
board chair for a private
conversation
*
*Taking the time to talk and review the
compensation needs and package annually
is crucial
*The head often thinks about the contracts
of his staff but is reluctant to speak up
about his or her own
*Respect the head’s spouse and his or her
needs
*Respect the needs of the head’s children
and family
*
*To be fair, competitive and know
your market replacement costs
*To introduce discipline,
professionalism and some
measure of transparency into the
compensation setting process for
the head of school
*
* Benchmark the compensation package of the
head and senior administrators with one of the
most accurate data bases built over the past 22
years
* Can be retained by boards only, not heads
* Thorough and efficient process that affirms all
parties
* We have done this for over 4,000 schools in the
past 25 years and for many schools multiple
times for the same heads and for retiring and
new heads
*
Global Issues - Local Solutions
John C. Littleford
1-800-69-TEACH
John@JLittleford.com
www.JLittleford.com