Capping executive compensation is unrealistic

UNIVERSITY ISSUES: A bill to prevent employees from being paid more than $500,000 will not pass

A bill that would cap UC employee compensation at half a million is a noble attempt to rein in what many see as lofty paychecks unbecoming of public employees.

As ideal as it would be to attend an institution where the highest-paid employees do not earn more than $500,000 per year, however, that reality is a wonderland which legislators and the University of California system would never realistically implement.

For instance, if the bill were passed, no top football coach would be willing to take such a heavy financial loss, given that he could be making 10 times as much at a comparable institution. Recruiting the best players without an excellent coach would be infeasible, demolishing the football program and leading to millions in lost revenue.

As much as UC campuses strive for the public principles of equity and affordability, they are forced to compete in a market that has no room for such ideals. Retaining and attracting the world’s best medical professionals, professors, coaches and even administrators unfortunately means shelling out the money.

Still, we must acknowledge that making half a million or more per year is ludicrous. Not one of the more than 300 UC employees earning so much needs that kind of money. No one needs that much money.

UC human-resource specialists and legislators then must consider whether these executive employees are actually worth the high payment. Does their talent or earning potential make them worthy of such a symbolically — and literally — huge salary? Without them, how much would the university suffer? Does high compensation create performance incentives that would otherwise be absent?

The university is no private institution with a centuries-old endowment, and it should not act as such. We are certainly OK with our top employees earning below-market wages. Sinking all salaries to $500,000, however, is impractical.

Furthermore, the bill should have included all California public employees on its docket of salaries to be slashed. Singling out those who work in education — although they tend to take home some of the highest salaries for state employees — is too easy. And if this bill ends up being nothing more than symbolic legislation, its author should have sent that signal to all state employees who make fat paychecks.

Executive compensation in the UC system is controversial for a reason, and we should continue to question whether top employees are worth what we are paying them. No one wants to assign employees a monetary value, but without doing so, we ignore the real market conditions for hiring talented individuals. To pretend otherwise could erode revenue-generating divisions of UC campuses.

Editorials represent the collective opinion of the Senior Editorial Board as written by the opinion editor.

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