How to Navigate the Complex World of Head of School Compensation for Board Leaders, Heads of School and Aspiring Heads
The Challenge of Aligning Salary Systems to School Cultures
December 24, 2025How to Navigate the Complex World of Head of School Compensation for Board Leaders, Heads of School and Aspiring Heads
It is challenging to be a strong yet humble leader whose job is to care about all employees, children in the school, other stakeholder groups, and one’s own family. Most heads find it very awkward to negotiate with one’s own board or board chair about annual or periodic modest compensation increases, and even more uncomfortable to broach the topic of significant compensation or contractual changes.
It can be almost equally difficult for board chairs to play the role of negotiator. Most board chairs, even those with a background in human resources, have little or no expertise in this regard. Their professional experience does not translate necessarily to managing the contract and compensation of the board’s one employee, the CEO/executive director/head of school.
Why is the Topic of Head Compensation So Delicate for Both Parties?
Once heads are hired and on site, they are “captured”. The board might feel the whole topic is inappropriate and unnecessary. Did we not agree on terms for the next three years? Did we not negotiate fairly with you when you were first retained? Or did we not agree, for example, that there would be no deferred compensation in the first few years? Furthermore, some boards might find a self-advocating head to be the opposite of their vision of the self-effacing pastoral leader whom they thought they hired.
If the school is facing financial challenges the topic is even more difficult for the head to raise. If the School is doing moderately well, it is not much easier. If the school is doing extremely well and mainly due to the leadership of the head, then the head might find the pendulum swinging more favorably their way. The danger here for boards and heads is how generously to reward a beloved, successful head of school while not embarrassing the school in the public domain if the data leaks out (as it will eventually in the US), especially when the teachers are earning so much less.
When Attorneys Become Involved in Negotiation
The demand for enrollment may be high, test scores and college placements may be impressive, so the head may feel justified in hiring an attorney or compensation consultant as his or her own advocate to manage the compensation conversation. This is more common in the United States than in the international realm.
Sometimes that hired attorney/consultant can be helpful. But more often, it increases the awkwardness of the conversation as the board may want to do right by the head but feels pressured in a way that does not feel normal and appropriate for a head of school. The idea of a head involving an attorney flies in the face of their view of the “humble servant” heading a school.
It is Not Just About Salary
Besides a competitive salary and key benefits, there are compensation related matters that some boards may not know about or with which they have little experience. One of these is the role of school owned or leased housing. Another is tuition remission or assistance, which is not as straightforward as it may seem. Another is non-qualified deferred compensation plans which are becoming common in the US and even in the international marketplace.
If the school is in an expensive city or neighborhood, whether the school owns a head’s home, or is providing a leased home, or providing a taxable housing allowance, housing compensation can have a very significant impact on the board’s and the public’s perception of the value of the entire package. In all these cases, they may fail to internalize the fact that the head has no equity in any of these housing arrangements.
The board policy for the tuition of the head’s children, including the tax consequences to the head, must be very clear, especially if the school provides less or no tuition remission to all eligible staff children.
Because it can be very expensive for the school to gross up a taxable benefit, such as tuition remission or a housing allowance, most do not do this, and most heads do not ask for it.
In the international context, tuition remission is rarely an issue. Hiring an international head usually requires that the head’s children be tuition free or it can be almost impossible to recruit a high-quality candidate.
This conversation can be even more challenging to manage if one or more of the head’s children need to attend another school, i.e. a special needs school, a boarding school, a single sex or coed school, or just another school for a child who is having issues with a parent as head of school.
The Head’s Contract
Since most heads do not really leave their position voluntarily and given that many contracts do not clarify the definition of termination for “cause” or “not for cause”, heads would be wise to have an attorney review their contract language. Fairness to both sides is crucial. The recommended practice is to provide 18 months’ notice or a payout of 18 months’ salary and benefits to a head being asked to leave or who is not being renewed. The school and head normally need that 18 months for an unrushed search for both parties.
Termination for “cause” must be carefully written and should be narrowly defined to include egregious behavior or moral turpitude.
A 3, 4, or 5-year or longer contract (and all heads SHOULD have a written contract) is not a guarantee to pay out all the remaining years of contract if the relationship ends simply because one or both parties are no longer happy with one another. That is why clear termination language and a fair separation arrangement are key to maintaining the reputation of both the head and the school.
One School hired a valued highly visible nationally known Head and 5 years later fired that person for “cause”. That meant that the Board did not have to honor the substantial payout of the remaining 3 years of that person’s contract. Whether that definition of “cause” was fair, clear or manipulated by the Board to remove the Head without having to honor the terms of the payout has become a legal and political nightmare for both parties.
Patterns of Head Compensation
In general, male heads are still paid better than female heads even though women are closing the gap. Those hired from the inside are not testing the waters and tend to be paid less than those recruited from the outside. Those who have remained as head at the same school for more than 8 or 10 years lose ground unless their boards annually benchmark their compensation formally.
Those who are strong self-advocates do better in that hiring process than the less assertive heads. Also, heads can usually earn more if they leave a school and aggressively “negotiate up” to the next school.
It is still true that in most parts of the world compensation for heads is not based just on the head’s performance and the health of the school, but on the background, occupation, and financial wellbeing of the members of the head compensation committee. Professionals tend to see the head as a true service leader who is not primarily focused on his or her own financial advancement. This is not always the case, but it is human nature to find it awkward to pay a head who works for you more than you yourself may be earning.
CEO’s on board compensation committees are usually more likely to view the head as adding value to the bottom line and therefore believe that the head should be compensated accordingly. Such board members may think that some form of performance pay must be part of the total package if the board is to justify very competitive packages especially If it is benchmarked in the upper quartile of the local, regional and national competition.
Performance Pay
Some heads may feel uncomfortable with the concept of linking any form of their compensation, including deferred compensation, to financial outcomes such as enrollment growth, fund raising success, overall budget health, and other specific indicators of school performance.
However, performance related pay, if structured carefully and fairly, can be appealing to both the board and the head. It allows the head to earn more, and it allows the board to feel that the school is being financially astute in rewarding and keeping a valued leader. After all, head turnover is very expensive in both search and transition costs.
Summary
Head compensation benchmarking should not just measure what others are paying (and choosing the appropriate benchmarks can be challenging) but should engage the head in a conversation with a small subcommittee of the board. This process also includes and considers the needs of the head’s partner or spouse and family and allows the head to be his or her own advocate comfortably in a structured and fair setting.
Littleford & Associates has facilitated these conversations for thousands of schools worldwide since 1983. We are retained only by boards not heads and are not in this process to be the head’s representative. We believe in the fair and appropriate assessment of the relevant marketplace and competition and the consideration of the tax and family implications of the entire compensation package. Benchmarks by themselves are truly almost meaningless. They must be placed in context. What works for one head and family may not work for another.
Many boards tend to think that the highest paid heads are in major cities at schools with large enrollments and endowments, high tuition, expensive housing, and wealthy parents. Some of that is true. But as outlined above, there are other powerful patterns that can influence significantly the compensation outcomes for the head.
Keep in mind that US and other schools under the 501(c)(3) nonprofit status must be aware of and abide by the Intermediate Sanctions Act of 1996 and the “Rebuttable Presumption of Reasonableness Checklist” which the IRS requires the organization to update every year.
It is NOT just about salary.
It is also about a healthy and strong head/board relationship and partnership.
