From this news item:

The university system “faces its most severe budget shortfall in years, but that doesn’t appear to be a factor when it comes to setting the salaries of two new top administrators, critics say. The same critics predict that high salaries for the two administrators will cause a domino effect for incumbent administrators in similar or identical jobs.”

This article is out of San Francisco, dated April 22. It was prompted by UC-San Diego’s hiring of NC State chancellor Marye Anne Fox. Turns out that the new chancellor’s “salary was set at $350,000 a year, nearly $70,000 more than Dynes made as chancellor and well above what most of the other campus chancellors are paid” (emphasis added).

Furthermore, “UC spokesman Paul Schwartz said the salaries of UC’s senior administrators, including chancellors and the president, have significantly lagged behind pay at comparable institutions for several years.” So UCSD was paying its previous chancellor about $30,000 more a year than NC State was paying Fox, and therefore used the reason of lagging behind in pay to justify a significantly larger state expenditure during a budget crunch on executive pay in order to recruit Fox away.