Vice-chancellors’ salaries in South Africa were likened to a ‘runaway train’, according to the long-awaited findings of a Council on Higher Education (CHE) investigation into the exorbitant remuneration of university heads and senior executives.
In 2019 university vice-chancellors’ average annual total cost to company (TCC), which is the total package, was about ZAR4.130 million (about US$214,461 today).
The university with the highest TCC was the University of Johannesburg (ZAR7.167 million), and the vice-chancellor (VC) with the lowest TCC was the University of Venda (ZAR3.034 million), the portfolio committee on higher education, science and innovation, a parliamentary oversight committee, heard in February.
The CHE inquiry found that some but not all VCs and senior executives enjoy fringe benefits – not always declared – such as university houses, vehicles, drivers, security and cleaning staff.
In certain instances, universities paid housing fringe benefit taxes on behalf of their VCs.
In 2019 the VCs’ average basic salary was ZAR2.913 million. The university VC with the highest basic salary was Stellenbosch University (about ZAR4.2 million), and the VC with the lowest basic salary was Vaal University of Technology (about ZAR1.9 million).
From 2005 to 2019, VCs’ median TCC grew from ZAR1.297 million to ZAR3.966 million, which is a 206% increase and, when compared with inflation, the actual annual increase is 2.41 percentage points on average.
From 2005 to 2019, VCs’ median basic salary grew from ZAR821,185 to ZAR2.785 million, which is a 239% increase and, when compared with inflation, the real annual increase is three percentage points on average.
Investigation ordered
In January 2020, the Minister of Higher Education, Science and Innovation, Dr Blade Nzimande, requested the council to probe the salaries of university heads and other senior executive managers and look at possible regulation measures.
According to the report, there is growing public concern that executive compensation may be ‘excessive’, and there was little, if any, connection between executive remuneration and individual or institutional performance or evidence that high pay promotes high performance.
‘Asymmetric benchmarking behaviour’ increased VC salaries, with lower-paying institutions trying to keep up with higher-paying institutions. Regulations requiring greater transparency and disclosure of remuneration also, ironically, fuel increases.
The probe found that VC salaries are increasingly benchmarked against the wider corporate sector, adding that remuneration committees only sometimes have requisite training or expertise. Reporting on remuneration is only occasionally clear and consistent and is more often than not merely an exercise in compliance rather than real accountability.
At most universities, the investigation found that a relatively small group of individuals decided on VCs’ and senior executives’ remuneration packages as a remuneration committee whose deliberations are not always disclosed to the full council.
Most universities believe that their VCs and executives are paid less than their counterparts at other universities.
Common reasons for paying some senior executives more than others are these executives’ experience, scarcity and previous earnings.
Most but not all VCs sign annual performance agreements and are formally performance-evaluated.
At more than a third of universities, the chairperson of the council singlehandedly conducts the performance evaluation of the vice-chancellor.
While remuneration and performance management policies often contain strictures against inferior performance, such poor performance appears seldom, if ever, to result in financial penalties.
Universities believe that ex gratia payments to senior executives, which are relatively common, should be better controlled but not dispensed with. Most chairpersons believe that the regular award of above-inflation increases to VCs and senior executives was justified by the need to compete with other institutions and attract, retain and reward skilled staff.
Universities attributed substantial divergences between VC TCC figures submitted in response to the CHE’s enquiry and corresponding figures published in their annual reports since 2005 to differing reporting requirements, limitations in their accounting practices and the timing of decisions. Not all discrepancies could be explained.
Almost all universities think that executive remuneration should reflect institutional performance and that VCs and executives should be rewarded for exceptional performance and disciplined for substandard performance.
The role of council chairs
Few university chairpersons considered that there was, or should be, any direct connection between VCs’ TCC and higher education transformation. One-third of chairpersons thought that VC and senior executive salaries should be benchmarked against those of the CEOs and executives of private companies.
Many universities felt that ‘guidelines’ would be sufficient to promote better institutional governance of executive remuneration.
Most universities were concerned that executive remuneration could become like ‘a runaway train’; around a third felt this scenario may already be a reality.
Regarding basic salary and TCC, university VCs are generally paid better than the CEOs of most science councils.
Considering the average TCC, in 2019, VCs were paid nearly ZAR700,000 more than their counterparts at the science councils.
When considered in US dollar purchasing power parity terms, the average TCC of South African VCs compares favourably with VCs in some developed countries, being second-highest when compared with Australia (highest) and higher than their counterparts in the United Kingdom, Canada and New Zealand.
University World News
