Vice-chancellors’ millions questioned
An inquiry by the Council for Higher Education (CHE) into the remuneration of university vicechancellors (VCs) has laid bare weaknesses in how these institutions remunerate their executives, warning that pay is often not linked to performance.
According to a presentation tabled in parliament on Wednesday, the CHE said its investigation found several flaws in how vice-chancellors are paid and how their bonuses are determined.
The probe found that there were no “clear and definitive correlations between a vicechancellor’s basic salary and the financial management and health of their university”.
It also found a mismatch between what universities were paying their top brass and the knowledge output, particularly the number of research publications, and master’s and doctoral graduates. “Some but not all VCs and senior executives enjoy several fringe benefits — which were not always declared — such as university houses, vehicles, drivers, security and cleaning staff. In certain instances, universities pay housing fringe benefit taxes on behalf of their VCs,” the study says.
The inquiry, commissioned by higher education minister Blade Nzimande, also compared the pay of SA VCs with overseas counterparts and found that in US dollar purchasing power parity terms, the average total cost to company of SA’s VCs was higher than that of peers in the UK, Canada and New Zealand.
The CHE revealed that most universities did not keep their accounting books in order.
“Instances of poor institutional governance and management and lax financial practices were unearthed at a number of institutions, often involving large financial payments to executives, sometimes repeatedly and over a period of several years, without such payments following established financial and accounting processes and channels,” it said.
The CHE highlighted three instances where payments to vice-chancellors were not properly accounted for. The first relates to the University of Johannesburg allegedly failing to keep records of performance bonuses totalling more than R20m to a former vice-chancellor between 2016 and 2017.
“After a limited investigation, which did not cover the VC’s full term of office, some of this money was recovered from the VC and outstanding taxes were paid to Sars [SA Revenue Service], but the bulk was written off or not recovered,” the CHE noted.
The University of Limpopo was also found to have paid about R3.7m to its VC in 2017 to “rectify lost benefits”. The vicechancellor was also paid nearly R1.5m in “leave encashment” in 2018. “This VC was thereafter immediately reappointed on a five-year postretirement contract with little difference to his remuneration arrangements,” the CHE said.
The University of Pretoria was flagged for failing “to divulge fully (and partly misrepresented what it did divulge regarding) millions of rand paid to its executive managers in retention agreements”. These payments totalled nearly R12m.
The CHE recommended that private salary benchmarking companies should be encouraged to help with efforts to improve oversight on executive remuneration. It also recommended that the auditor-general oversee the external auditing companies employed by each university, as is the practice for other public entities in the sector.
“Large executive remuneration and the practices which abet them, where these exist, cannot be defended either morally or economically. While not all university executives are overpaid, and some institutions are managing executive remuneration well, the university sector’s efforts at self-regulation over the past 15 years have been limited and inconsequential,” the CHE said.
“The lack of regulation, both internal and external, regarding executive remuneration threatens to undermine institutional autonomy.
The substantial inconsistencies, extreme variations and increasing divergences in executive remuneration, at once within and between institutions and within and between Peromnes levels, suggest that internal and external guidelines and policies are inadequate and insufficiently monitored.”