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.
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. That’s the vast majority of the roughly $10 million annual cost of Anderson’s finance department.
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. Not bad for professors in the UC system which has seen major cuts in funding in the past ten years.
Several of the assistant professors at the school are paid handsomely, too. Assistant Prof Barney Hartman-Glaser, who specializes in real estate finance and is director of research at the Ziman Center for Real Estate, racked up total comp in 2016 of $351,169. And you can add adjunct professors in the finance department to the mix.. 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. Other pay comes largely as a result of “summer support” for academic research and teaching in executive education programs, extras that tend to go to the better profs.
A FEW YEARS AGO, A LITTLE-KNOWN THUNDERBIRD PROF WAS MAKING MORE THAN $700,000 A YEAR
By contrast, the top of the market finance professors at UC-Berkeley’s Haas School of Business are paid $100K or more less. Highest paid are Ulrike Malmendier, who made $530,728 in 2016, and Nicolae Gârleanu, who was paid $511,788 in pay and benefits. Other than former Haas Dean Rich Lyons, who is also attached to the school’s finance faculty, there were no other professors in this discipline at the school who made $500 or above. In fact, the total annual cost of the finance group at Haas was about $8 million, a couple of million less than UCLA’s finance department.
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 UCLA 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.
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.
One of the highest paid professors outside of finance at Haas, Toby E. Stuart, made $481,317 in 2016, 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.