In our practice of working with several thousand schools worldwide since 1983 on the topic of head of school compensation, we have seen many patterns: some expected, some novel and some very surprising.

One of the newest patterns is the widening gap between the high paying, complex packages that heads receive at a growing number of independent schools in the US and international schools around the world and those packages that other heads are earning. The highest packages include: contributions to deferred compensation plans, and more money for housing, education for children to attend another independent school, contribution to college tuition, a club for health and wellness, gross ups for the taxable components of the package, and professional development opportunities. In addition to standard life, LTD and medical insurance, these highly compensated heads may receive supplemental LTD and life insurance, long-term care insurance, a one-time signing bonus or resigning bonus, a retention bonus for completion or extension of a contract, performance-based bonuses, and financial counseling.  It is important to note that this level of detail about the components of a compensation package is rarely available on the 900’s and on regional and national salary surveys.

Performance-related bonuses have become increasingly popular in the past 10 years. These are often related to specific metrics that are tied to a school’s financial success in enrollment, fund raising, balancing the budget and/or generating surpluses. While some heads remain opposed to this type of compensation structure, boards feel they can be more generous in compensation decisions if the head can help ensure the financial health of the school. In the US, especially, these large performance related bonuses may also be tied to contributions to a 457(f) non-qualified deferred compensation plan, thereby serving as “golden handcuffs” since the contributions are subject to substantial risk of forfeiture.

As a result, many heads worldwide now earn more than one million dollars annually, and many are approaching that level. However, there is also a huge gap between what these usually better-known schools offer and what other heads earn which can be as low as $250,000 USD in total package value. These heads, if very talented, may be picked off by the better paying schools.

We have observed from experience that generally enrollment size, endowment, location, and tuition are not the most important determinants of what a head of school earns. They play a role but not the dominant one.

Generally, the highest paid heads outside the US are in East Asia, the Middle East, Europe, South Asia, Latin America, and Africa, in that order. Australia and New Zealand pay competitive packages for the most prominent independent schools there. In Canada, heads in Toronto and Vancouver and to a lesser extent in Montreal and Calgary are also well paid. A few longer-term heads there are very well compensated.

The very talented heads whose boards are supportive do very well financially. But these schools can be K to 8 day schools of 400 students as well as multi campus schools of over 2000. In other words, size is not the driving factor of head pay. The highest endowed schools may often pay less than some much lesser endowed schools probably due to the need for smaller schools to find and keep the “rain maker” heads who can bring in students and are masterful at fund raising.

Increased pressure on heads from boards, parents and faculty is driving up the compensation for heads of school recently.  Each group has specific demands of the head of school, and heads are attempting to balance all these competing forces while also trying to avoid burnout and find time to care for their families. In our experience working with thousands of schools, the vast majority of heads are still “fired” across the world generally within 5 years of employment. The tenure for independent and international schools continues to be in the  3.5 years internationally and 5 to 6 years in North America.

Those promoted from within still start off lower in their compensation packages. However, newly hired, younger external heads often come in at higher pay than long serving, valued heads whose boards have not done much if any formal benchmarking over time, especially if those heads have not advocated for themselves.

The composition of boards and the makeup of the compensation committee have a powerful impact on how the head of school is paid. Professionals in general, who serve on most of our boards, tend to pay less because they tend to think of their own pay and sometimes ask: “If I knew heads were paid this much, I would have chosen that profession!”  Well, not if they think about the job carefully!

The highest paid heads generally have at least one board member on the compensation committee who is a CEO of a large company or of their own company, an investment banker or another businessperson who regard the head not as a civil servant but as a person who adds value to the school not only educationally but financially.

Littleford & Associates has been retained only by boards worldwide since 1983. However, we often come to the attention of boards largely through heads of schools. Our work with boards on this topic includes a process that is a marriage renewal, in effect, and not just marketplace benchmarking. Our proprietary database is derived from published sources and confidential information from school heads that are updated annually. Many of our clients ask us to benchmark their packages annually to ensure safe harbors compliance.