In the face of growing disenchantment among academics, Glasgow University has agreed to give Professor Anton Muscatelli an extra five years in the £250,000-a-year post.
Since Mr Muscatelli joined the institution as principal in 2009, the percentage of staff who enjoy working there has fallen from 89% to 78%, while those feeling loyalty fell from 82% to 72%.
Issues raised by staff include a major restructuring exercise that saw nine academic faculties replaced with four colleges in a move even the university accepted was "over-ambitious".
Unions have repeatedly raised concerns over the way the institution is run, arguing that a small management group dominates decision-making and is increasingly focused on a business agenda.
Last year, Glasgow University caused widespread public anger after raising the prospect of large-scale cuts to courses including modern languages and adult education.
The university was also criticised for its handling of the end of an occupation of a research club by students, which saw the campus swamped by police.
Last month, officials apologised to students for the second year running after a multi-million-pound enrolment website failed to work as planned.
Last week, there was further bad news, with Glasgow slipping down an international league table of universities, although other recent tables have shown Glasgow improving its position.
Supporters of Mr Muscatelli said it was vital to modernise the university to ensure its courses were relevant and its research world-leading in a changing global economic climate. They said the changes had made the university financially sound.
Glasgow University has also been praised for its groundbreaking attempts to widen access to students from some of the most deprived areas in the west of Scotland at a time when other universities have made little or no progress.
David Ross, the university's convener of court, said the decision to re-appoint Mr Muscatelli came after a recommendation from a review group that included staff and student representatives.
"The university court unanimously endorsed that recommendation, believing strongly that Professor Muscatelli has led the university very effectively through difficult times since his appointment in 2009 and that he has a clear vision and programme of action to implement the university's strategy and to lead the university to further success in the years ahead," he said.
Mr Muscatelli said he was "extremely grateful to the university court for its strong message of support".