After being denied tenure at Columbia Business School, Assistant Finance Professor Ravina Enrichetta figured that she would ultimately end up at a business school ranked in the 30 to 40 range, a fate that would ultimately cost her $3.4 million over the remainder of her academic career.
The recently concluded trial in New York City that led Enrichetta to that conclusion put a spotlight on how much business school professors are paid. Though Enricheeta was an untenured assistant professor at Columbia with a light teaching load, she was making $275,000 a year, not including a hefty housing allowance of $57,000 annual. Do the back-of-the-envelope math: That’s a $332K package for a junior prof without tenure who was hardly seen in a classroom.
Her one-time mentor, tenured full professor Geert Bekaert revealed that he is making total compensation of $428,000 a year, with $350,000 in base salary and the remainder in “summer support.” That sum does not include the value of his subsided housing from Columbia, worth at least a much as Enricheeta received. But Bekaert also disclosed that he is earning $50,000 a year as an editor of an academic journal and got a $5,000 advance on a textbook in the past year.
His total comp in the past year? A hefty $540,000 for a professor who is expected to teach three MBA classes a year. And by the way, a single stock sale he made earlier this year as a result of his consulting work with a company called Financial Engines came to $1.8 million.
$2,564,416. That’s what these four finance professors cost UCLA in 2016 in total compensation. Francis Longstaff (left) made $687,012; Stuart Gabriel and Mark Grinblatt (top right) both made $627,694. And Ivo Welch got $622,016
THE 19 LADDER FACULTY IN FINANCE AT UCLA ANDERSON MADE $8.1 MILLION IN 2016
Nice work if you can get it, right? While certainly not a record, no one is going to be weeping for Bekaert anytime soon. Yet, on the West Coast at a public university, UCLA’s Anderson School of Management, the full professors in the school’s finance department do even better. The 19 ladder faculty in finance made a total of $8.1 million a year in pay and benefits in 2016, with eight professors pulling down more than half a million dollars a year.
Anderson’s highest paid finance prof, Frances Longstaff, made $687,012 in pay and benefits in 2016. He was followed by Mark Grinblatt at $627,694, Stuart Gabriel at $625,562, Ivo Welch at $622,016, Avanidhar Subrahmanyan at $547,433, Mark Garmaise at $545,849, Antonio Bernardo at $512,586, Bhagwan Chowdhry at $510,167. The only woman among Anderson’s finance profs, Andrea Eisfeldt, made $494,961.
Even several of the adjunct professors in the finance department are paid well. William Cockrun earned $242,927, Lori Santikian made $229,576, and Ehud Peley’s total paycheck with bennies came to $222,260–all as adjunct professors. Of course, these numbers represent total compensation and not merely base salary. To get to his $512,586 package, for example, corporate finance expert Bernardo made a base salary of $318,700, along with $134,694 in “other pay,” and $59,192 in benefits.
A FEW YEARS AGO, A LITTLE-KNOWN THUNDERBIRD PROF WAS MAKING MORE THAN $700,000 A YEAR
The $3.2 million-a-year Dean Takahashi teaches at Yale SOM
At least, these profs are all at a highly prominent business school consistently ranked among the top 15 in the U.S. A few years ago, Poets&Quants revealed that a little-known global strategy professor at the Thunderbird School of Global Management was being paid total compensation, with benefits, of $700,096 (see The $4.3 Million Bunch At Thunderbird). That was more than the total compensation made by Harvard Business School Dean Nitin Nohria, then-Thunderbird President Angel Cabrera or President Obama, for that matter. But the Thunderbird prof, Kannan Ramaswarmy, was clearly an outlier.
There’s also some other even more unusual examples. Consider Dean J. Takahashi, who teaches investment strategies at Yale’s School of Management. He made $3.2 million in 2016, making him the highest paid business school teacher in the world. But he didn’t make all that money because he teaches at SOM. He is the senior director of investments for the university’s $27.2 billion endowment. Along with Yale Chief Investment Officer David Swenson, he has been able to consistently deliver results that put the university’s returns in the top tier of institutional investors. Yale’s endowment returned 12.1% annually over the 20 years ending June 30, 2017, exceeding broad market results for domestic stocks, which returned 7.5% a year. Given those outsized returns, Takahashi’s $3.2 million is a pittance compared to what he could make on Wall Street.
HIGHEST PAID AT UC-BERKELEY’S HAAS SCHOOL: ENTREPRENEURSHIP & INNOVATION PROF TOBY STUART
The highest paid business schools professors often work at private universities, such as Columbia, where compensation data is hard or even impossible to obtain. The salaries of business school faculty at public universities is made available and what that data shows is that profs at the best public business schools, from UC-Berkeley’s Haas School of Business to the University of Michigan’s Ross School of Business, are paid quite handsomely. In fact, you can make a fairly strong argument that the last best gig in America is to be a tenured professor of business at a highly ranked school, given all the time off, the perks, the opportunity to do consulting, and one’s protected status as a tenured faculty member.
Haas superstar professor Toby Stuart made $445,778 in 2015
The highest paid professor at Haas, Toby E. Stuart, made $445,778 in 2015, the latest year for which figures are available. Stuart holds a chair in entrepreneurship and innovation and is the faculty director of the school’s Lester Center for Entrepreneurship. Not far behind him is banking and finance professor Ross Levine who made $454,354. Not bad for professors in the UC system which has seen major cuts in funding in the past ten years.
The highest paid professor at Michigan’s Ross School is a woman, Toni Whited, who made $435,000 in 2017-2018. But Whited, who has a Ph.D. in economics from Princeton and teaches finance, macroeconomics and econometrics, is an unqualified superstar (see photo below). She has won a Jensen Prize for one of the top articles in corporate finance in the Journal of Financial Economics and twice won the Brattle Prize for one of the top articles in the Journal of Finance in corporate finance. She also serves as co-editor for the Journal of Financial Economics.
BUSINESS SCHOOL PROFS WHO MAKE THE MOST ARE NOT YOUR RUN-OF-THE-MILL TEACHERS
All of this brings up a critical point. The profs at the top of the business school food chain can command large buckets of money because they are not your average classroom professor. Many of them have are research superstars, published in the top scholarly journals. Their individual prestige carries over to their employers who are then able to more easily recruit junior faculty in their disciplines. Their productivity in publications also reflects on a school’s ranking. In short, they tend to be academic rock stars. If Columbia refused to pay up, another peer school gladly would.
Toni Whited a superstar professor at Michigan Ross made $435,000 in 2017-2018
That’s certainly the case with Ross’ Wallace J. Hopp who pulled down $431,500 last year, the second highest pay for a Ross faculty member, excluding the dean of the school. Besides serving as the associate dean for Ross’ part-time MBA program, Hopp teaches manufacturing, supply chain systems and innovation processes. He served as president of the Production and Operations Management Society and editor-in-chief of the journal Management Science. He’s also an active industry consultant, whose clients have included Abbott Laboratories, Black & Decker, Boeing, Case, Dell, Ford, Eli Lilly, Eaton, Emerson Electric, General Electric, General Motors, John Deere, IBM, Intel, Motorola, Owens Corning, Schlumberger, S&C Electric, Texas Instruments, and Whirlpool.
At the University of Virginia’s Darden School of Business the two highest paid professors are former Dean Robert Bruner ($393,100) and Sankaran Venkataraman ($391,800). An internationally recognized expert on entrepreneurship, Venkat is also senior associate dean for faculty and research.
So what are business school professors paid generally? Profs at the top of the food chain–the top 25 business schools–easily make more than twice the overall professional averages. The AACSB, the major accrediting agency for business schools, annually publishes a detailed look at B-school faculty salaries. The latest survey, fielded in June of 2017, is based on data from 33,141 full-time faculty.
The large number of business schools in the survey tends to disguise the much higher pay at elite schools such as Harvard, Stanford, Wharton and Columbia, among others. And the averages reflect nine-month salaries for full-time faculty so they do not include “summer support” or extra payment for teaching in executive education courses or playing an administrative role at the school. In other words, they are low-ball averages.
FINANCE PROFESSORS ARE AT THE TOP OF THE PAY SCALE AT MOST BUSINESS SCHOOLS
A full professor at a business school makes $163,400 for nine months of work. An associate professor pulls down an average of $128,700, while an assistant prof makes $122,600. Of course, pay not only is impacted by school “brand.” It’s also a reflection of the discipline a professor is in and the demand by the schools for faculty members with specific expertise (see table below). Finance tends to pay the most: a $189,600 average for a full professor. But it is still important to keep in mind that several adjuncts at UCLA in finance make more than the average over the vast array of business schools.
General business, meantime, pays the least: $108,600 for nine months. B-school profs in strategy and the behavioral sciences also do well. Strategy management and behavioral science and organizational behavior faculty both make an average of $184,100 at the full professor level.
Even those levels of pay for nine months of work for the merely average faculty member are nothing to sneeze at. No wonder an MBA costs as much as it does.
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