Supervisors failing to account for their own remuneration

Tekst Arno Kersten - Redactie Onderwijsblad - 8 april 2022 - 6 Minuten om te lezen

Image: Wim Stevenhagen

Supervisory boards are allowed to do something that no one else can: increase their own pay. In 2020 this happened at the Free University. The chairman of the council went from 22.500 to 30.150 euros in one fell swoop, the absolute maximum according to the Top Income Standards Act that year. The four members also reached the maximum compensation with an increase of more than five thousand euros, namely 20.100 euros.

What exactly happened here? If you search the annual report in search of the answer, you will come across a short passage stating that 'a policy line' has been introduced, that the reimbursement has been increased to the maximum reimbursement and the old expense allowance has been abolished. An explanation that actually raises more questions. In a response to the Education Magazine, Supervisory Board chairman Ron Teerlink explains the backgrounds by email, an explanation that would not have been out of place in the public annual report. Nevertheless, Teerlink maintains that the increase has been "adequately" explained in the annual report.

The supervisory board also increased its compensation at the Stichting Wonderwijs, an organization of fourteen primary schools in the Over-Betuwe region. In 2020, the chairman rose in one go by 45 percent from more than 10 to 15 mille. The members also improved by 45 percent, from seven to ten thousand euros. The supervisors do not explain why this happened in the annual report. This is limited to a single sentence: 'Adjustment of remuneration of Supervisory Board members (70% of the maximum; regulation VTOI-NVTK)'. That explanation will come after an email from the Education magazine, including an underlying note about the remuneration scheme. The supervisors acknowledge that the explanation in the annual report leaves something to be desired.

This article is from the April Education Magazine. Do you want to stay informed of everything that is going on in education? Join the AOb and receive the Education magazine every month.

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Implementing organization DUO publishes an annual remuneration overview of directors and supervisors in all education sectors, based on figures that the institutions themselves provide digitally. The list for 2020 lists just under 4900 supervisors, of which just under 4200 are in primary and secondary education. The vast majority are well below the maximum remuneration. In 2022, these maximums will increase from EUR 12.800 for Supervisory Board members at the smallest school boards to EUR 32.400 for Supervisory Board chairmen of the largest institutions. These amounts are linked to the statutory maximum remuneration for directors. In 2020, all supervisors together received more than 22 million euros, according to the DUO overview. Together they were allowed to earn 75 million. The year before, supervisory boards received about 20 million of the maximum 71 million.

The question is: how do supervisors deal with accounting for their own remuneration? The amount of the compensation is clearly stated in the annual report, which is mandatory. The Education magazine looked further and looked for the substantiation in annual reports. That should be there, also emphasizes director Geert van der Tang of the VTOI-NVTK, an association that represents about four thousand supervisors in primary, secondary and (secondary) vocational education and social childcare. “Because the supervisory board itself determines its remuneration, this accountability is extremely important. You tell us how you came to an increase and what considerations you made. And you also explain the process yourself: how did you communicate about it to the director and the participation council?”

Because the Supervisory Board determines its remuneration itself, this accountability is extremely important

As important as public accountability is, it is by no means self-evident in practice. At Helicon Opleidingen, an MBO institution that merged with two other schools last year to form Yuverta, this explanation will only be given afterwards, if the Education magazine asks for it. The regulators increased by two and a half to four thousand euros in 2020, an increase of a quarter. Explanation: fewer supervisors and more pressure because of the merger. That motivation should, of course, have been included in the annual report, acknowledges secretary Liesbeth de Wit on behalf of the council. “You make a valid point here. We could have done this better.”

Source: DUO, annual reports institutions

Increased time commitment is a common reason to increase the reward. Another is that fellow institutions pay their regulators better. At the end of 2019, they had a benchmark performed at Utrecht University. “The remuneration turned out to be substantially lower than the remuneration of supervisory boards of universities that are comparable in complexity to Utrecht University,” the supervisory board said in a statement.

The Supervisory Board of Utrecht University increased its own remuneration by almost 61 percent

The council thus increased the remuneration by almost 61 percent. The chairman now receives 24.120 euros instead of 15.000 euros, members 16.080 instead of 10.000. This puts them at eighty percent of the maximum compensation. And not one hundred, “because the Supervisory Board realizes that the fee is financed from public funds”. Here too, the substantial increase is not substantiated in the annual accounts. That should have been done, the supervisors admit afterwards. “We are (increasingly) aware of the importance of transparency, so it would have been better to include the argumentation in the 2020 annual report, as this topic has also been discussed with the University Council.”

More economical

The consideration of not claiming the full pound fits within the "restraint" that the VTOI-NVTK says it advocates. “There can be very legitimate reasons for a supervisory board to adjust the remuneration. Those maximums are a ceiling, but of course it does not mean that you should automatically sit on them. As far as we're concerned, you'd rather be a bit more economical than more generous with that," says Van der Tang.

A maximum standard - however indispensable such a legal limit is - does have the danger of being seen as a goal, warns AOb- director Douwe van der Zweep. “We saw that with drivers years ago. They looked sideways at the salaries of other directors and this created a leapfrog effect, with the rewards gradually being pushed up more and more.”

Ask yourself: can we explain it to the caretaker, the teaching assistant, the group teacher, the practical teacher or the university teacher?

Van der Zweep argues that instead of benchmarking how compensation compares to other supervisory boards, you should look much more closely at the interrelationships within the wage structure. “I find it strange that there is a group that is given the space to determine its own remuneration from public funds. In front of the AOb that the proportions within the wage structure must be in balance. What is fair in the context of your own school? Ask yourself: can we explain it to the janitor, the teaching assistant, the group teacher, the practical teacher or the university teacher? And then do that.”

Approximately how much time do supervisors spend on their job? This of course differs per institution, and probably also per year. At the VTOI-NVTK they take an average number of hours as a starting point: 126 hours per year for Supervisory Board members and 189 hours for the chairman. That equates to a few hours to half a day per week. “If you convert it into a full-time salary, how does that compare to what the other colleagues in the school earn?” he asks. AObdirector Van der Zweep. It is a "defensive number", says director Van der Tang of the VTOI-NVTK. “In our guidelines we assume an average over a longer period. I dare to say that our members are now spending more hours on internal supervision. The trend is that responsibilities and accountability are increasing and that supervisors are becoming more and more professional.”

You can find the reactions of institutions here.

This article appeared in the April issue of the Education magazine, which is published eleven times a year AObmembers falls on the bus. Read more about all benefits from the AOb-membership.