In the second meeting in as many weeks to discuss executive
compensation, the UC Board of Regents on Monday was rebuked yet
again for its accountability and compensation practices.
The regents called Monday’s meeting at UCLA
to receive an independent report and audit of the university’s
compensation practices, which depicted a payroll system in a state
of disarray, where perks are distributed without regental approval
or public knowledge.
With this audit coming on the heels of a similarly critical
report conducted from within the University of California, the
regents again lamented the long-term abuses and excesses that have
characterized UC compensation practices.
"It is clear there has been a total lack of compliance with the
(compensation) policies the regents have put in place," said Regent
Chairman Gerald Parsky.
Speaking on behalf of the board, Parsky said the audit’s
results, which were released to the regents and the public a few
hours before the meeting, would be analyzed in the coming weeks
and, in conjunction with two additional forthcoming audits, would
be used to decide potential consequences.
"The regents will also determine, on a case-by-case basis
beginning at our May meeting, how people should be held accountable
for policy violations and other acts deemed to be inappropriate,"
Parsky said.
Independent accounting firm PricewaterhouseCoopers helmed the
audit, which follows a similar report by the UC’s own Task Force on
Compensation, Accountability and Transparency, released April 13.
The independent audit focused on the university’s role in
establishing "compensation and other employment arrangements" for
64 of the university’s top employees – including UC President
Robert Dynes and UCLA Chancellor Albert Carnesale – for the years
1996-2005.
In presenting the audit’s findings, representatives from the
accounting firm said their report was meant not to assign blame,
but to present facts and determine what went wrong.
"Certain benefits promised or paid to selected employees were
not approved by the regents as required by regental policies," said
Kristin Rivera of PricewaterhouseCoopers. In addition to the
chronic failure to receive regental approval, many of the
university’s compensation practices were not properly disclosed to
the public, the audit found.
Several regents referred to a "systemic breakdown" in the
executive pay practices and said the compensation problems were due
to the process, not the people.
"It seems to me that what we’re talking about here is process,"
said Regent Norman Pattiz. "This isn’t about people committing
fraud."
Pattiz echoed Parsky’s suggestion that the regents wait until
their regular meeting next month to begin trying to determine who
is to blame for the university’s compensation problems.
Dynes said this audit will galvanize an effort already underway
to reform the UC’s compensation practices.
"The university has begun a complete overhaul of its
compensation practices," he said. "This audit report, and the two
audits to follow, will ratchet up that process."
Among the steps Dynes has implemented to address the problems is
ethics training for UC employees and a Web site and public
information practices coordinator to facilitate appropriate
disclosure of compensation activities to the public.
Monday’s meeting was attended in person by about 10 regents,
along with several others participating via conference call from
locations as far away as Frankfurt, Germany, and Barcelona,
Spain.
Executive compensation has been the center of focus for the UC’s
governing bodies since a series of articles ran in the San
Francisco Chronicle last November detailing bonuses, relocation
allowances and other payment to the university’s top officials.
The UC has publicly disputed some of the numbers cited in those
articles, but the university has nonetheless received considerable
criticism from lawmakers and public interest groups for its
compensation practices.