UNC President-elect Peter Hans’ performance pay could set national example

By Emma Schambach
Carolina Journal News Service

RALEIGH — Incoming University of North Carolina System President Peter Hans has accepted a $400,000 base salary — significantly less than the earnings of some peers and predecessors. But the pay, outlined in a five-year contract, is accompanied by hefty, performance-based bonuses.

If executed correctly, the contract could be a great model for universities nationwide, says Richard Vedder, economist and professor emeritus at Ohio University. But the plan needs more work.

The UNC Board of Governors has discussed incentive pay since 2015, when UNC hired Buck Consulting — a New York human resources firm — to redesign the system’s executive compensation. Back then, the board decided to enact incentive pay only for UNC’s president. Last year, the board resolved to also create incentive bonuses for chancellors at its 17 campuses.

“What we’re trying to do is get this to a place where you’re not guaranteed pay just for breathing,” UNC interim President Bill Roper said at the time. “You have to perform.”

During his 18 months in office, Roper earned an annual base salary of $775,000, as did his forerunner, former UNC President Margaret Spellings. Spellings, who left UNC just three years into her five-year contract, collected performance bonuses of $90,000 in 2017 and $95,000 in 2018. The metrics for those payments were too broad, some board members said. Others thought the bonuses were justified, citing Spellings’ implementation of a strategic plan for UNC.

Hans, who starts his new job Aug. 1, has extensive experience in higher-education governance. Since 1997, he served six years on the community college board and three terms on the UNC board, acting as BOG chairman for two years. In 2016, Hans was a finalist for the UNC presidency. When Spellings got the job, he was hired as her adviser, earning $240,000 annually, Business North Carolina reported. Hans was elected president of the N.C. Community College System in 2018. While there, he earned an annual salary of $275,000, roughly $10,000 less than his two predecessors were paid.

Hans will initially earn $375,000 less than Spellings and Roper. His salary also falls below the base pay of peer executives at several other public university systems. For example, University of Michigan President Mark Schlissel earns a base salary of $900,000, University of Colorado President Mark Kennedy makes $850,000, and University of California System President Janet Napolitano earns $570,000.

Hans’ base salary is lower than that of some campus leaders he’ll oversee. N.C. State University Chancellor Randy Woodson makes an annual base salary of $664,387, and UNC Chapel Hill Chancellor Kevin Guskiewicz earns $620,000.

But Hans is eligible for up to $600,000 in bonuses at UNC next year if he meets three metrics:

  • Increase on-time graduation for first-time and transfer undergraduates
  • Reduce education and related expenses per degree completed
  • Reduce the average student loan debt of bachelor’s degree recipients as a percentage of per-capita income.

“I’m an advocate for performance funding and performance-based pay,” said Jenna Robinson, president of the James G. Martin Center for Academic Renewal. “However, the devil is in the details. Getting the specific metrics right is essential. If the metrics are either contradictory or easy to game, this plan won’t work.”

Hans’ contract says specific goals, metrics, and targets will be set by the BOG each year. The president-elect will consult with board members about those measurements, and annual incentives will be paid Oct. 1.

It’s unclear how soon the board will finalize those goals.

In principle, Hans’ salary plan is a very good thing, Vedder told CJ. But details are important.

“What particular criteria do you establish as goals?” Vedder said. “The ones mentioned … sound reasonable and good, but there are many, many others. What if in the course of events, Mr. Hans meets some of these standards and receives his … bonus payments, but on other criteria that are not [accounted for], UNC falls?”

Other measurements could include completion rates, retention rates, reduction of disparities between campuses, and competitive research funding, Vedder said.

If more specific goals are outlined, Hans’ pay structure could set a positive trend in the UNC system, Vedder said. It could even become a national model.

Robinson agreed.

“Other systems and universities should be watching carefully,” she said.