Edwin Naidu
A long-awaited report on Vice-Chancellors’ pay has recommended that their salaries be capped and subject to monitoring.
The report showed that VCs in South Africa receive, on average, 1.4 times more than senior executives, 2.2 times more than senior professors, 2.3 times more than professors, 4.1 times more than lecturers, 6.6 times more than junior lecturers; 2.3 times more than P4 senior directors; 6.2 times more than senior administrators; 8.5 times more than P11-P12 administrators; and 12.3 times more than P13-P16 general workers.
The inquiry into the Remuneration of University Vice-Chancellors and Senior Executive Managers in South Africa was presented in the National Assembly during a sitting of the Portfolio Committee on Higher Education, Science and Innovation on 21 February.
The probe began in January 2020, after the Minister of Higher Education, Science and Innovation, Dr Blade Nzimande, asked the Council on Higher Education (CHE) to undertake an enquiry into the salaries of Vice Chancellors (VCs) and other senior executive managers and look at possible measures for regulation.
The Terms of Reference for the enquiry included: the annual salaries and increases of VCs and senior executive managers since 2005; how these compared to those of academic and professional, administrative and support staff in universities; administrative and governance arrangements that determine the salaries of VCs and senior executive managers; whether remuneration committees utilize external benchmarks in determining salaries; performance evaluation mechanisms, and how they are used to determine VCs’ salaries and benefits.
In 2019, the university VCs’ average total cost to the company (TCTC) was R4 129 835 (median: R3 966 069). The university VC with the highest TCTC was at the University of Johannesburg (R7 166 995), and the VC with the lowest TCTC was at the University of Venda (R3 033 988).
In 2019, VCs’ average basic salary was R2 912 846 (median: R2 785 633). The university VC with the highest basic salary was Stellenbosch University (R4 198 875), and the VC with the lowest basic salary was Vaal Triangle University of Technology (R1 915 565).
From 2005 to 2019, VCs’ median TCTC grew from R1 296 987 to R3 966 069, which is a 206% increase and when compared with inflation, the real annual increase is 2.41% points on average. From 2005 to 2019, VCs’ median basic salary grew from R821 185 to R2 785 633, which is a 239% increase and, when compared with inflation, the real annual increase is 3% points on average.
According to the report, obtaining data and information on every component of the remuneration of hundreds of individual university executives over some 15 years faced several challenges: Some universities had not kept, lost, or could not retrieve or withheld vital records (including minutes of Council meetings and remuneration data).
A lack of institutional memory was proffered as a reason not to answer specific questions. Considerable delays were caused by some universities having to make extensive corrections to submitted data, which the enquiry found – and the institutions belatedly admitted – to be incorrect.
Poor institutional governance and management and lax financial practices were unearthed at several institutions, often involving large financial payments to executives, sometimes repeatedly and over several years, without such payments following established financial and accounting processes and channels. As a result, many of these payments could not be adequately explained or accounted for.
At most universities, VCs’ and senior executives’ remuneration packages are decided by a relatively small group of individuals, such as a Remuneration Committee, whose deliberations are not always disclosed to the full Council.
Three instances of significant concern in the report were raised as follows:
The University of Johannesburg kept no records of decisions regarding and failed to report annually or adequately account for large payments paid for performance bonuses (e.g. R4 055 035 in 2016), deferred compensation (e.g. R4 392 135 in 2016 and R12 800 000 in 2017) and other incentives and benefits paid to a former VC over several years.
After a limited investigation, which did not cover the VC’s entire term of office, some of this money was recovered from the VC and outstanding taxes were paid to SARS, but the bulk was written off or not recovered.
The University of Limpopo paid a large amount of R3 745 000 to its VC in 2017 to ‘rectify lost benefits’ because he had not utilised certain perquisites (including a university house and private staff) which, for years, had been available to him, as well as an amount of nearly R1.5m in ‘leave encashment’ in 2018. This VC was, after that, immediately re-appointed on a five-year post-retirement contract with little difference to his remuneration arrangements.
The University of Pretoria failed to divulge fully (and partly misrepresented what it did divulge regarding) millions of Rands paid to its executive managers in retention agreements. These agreements twice included large payments intended to retain the services of a VC (R3.5m in 2009 and R7.7m in 2014) who, despite receiving, in addition, a very generous remuneration package, left the institution anyway and was nevertheless permitted, somewhat dubiously, both to keep the retention payments and take up full-time employment elsewhere, as long as she returned (as a professor).
The enquiry also identified the poor corporate governance and lax financial practices of several other universities.
The report said VCs’ and senior executives’ generous remuneration packages and spiralling above-inflation increases had been facilitated by weak institutional governance and accounting practices, including decisions made by limited numbers of university councillors based on selective and sometimes problematic assumptions.
The report recommends greater external and institutional oversight, more regular scrutiny, improved institutional governance, accounting, and reporting practices, and strengthened and more developed policy frameworks concerning executive remuneration.
The reporting of executive remuneration in university Annual Reports must be made more detailed, comprehensive, comparable, and standardized; DHET monitoring of such reporting must be enhanced, and the Auditor-General should be requested to oversee the external auditing companies employed by each university, as is the practice for other public entities in the sector. Guidelines and policy frameworks should be developed and strengthened to cap executive remuneration.
INSIDE EDUCATION
