U of L: 2006 approval of "one-time bonuses” authorized deferred - WDRB 41 Louisville News

U of L: 2006 approval of "one-time bonuses” authorized deferred pay for Ramsey aides

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Margaret Handmaker and Junior Bridgeman at University of Louisville Foundation meeting July 10, 2015. (image from foundation video) Margaret Handmaker and Junior Bridgeman at University of Louisville Foundation meeting July 10, 2015. (image from foundation video)

LOUISVILLE, Ky. (WDRB) -- Over the last several months, University of Louisville President James Ramsey has insisted that multi-million-dollar deferred compensation packages he and his top aides have received from the school’s $1.1 billion foundation were implemented with the full knowledge and consent of U of L’s Board of Trustees.

But board records reviewed by WDRB News raise questions about the extent to which the trustees explicitly authorized Ramsey to give deferred pay plans to several of his subordinates over nearly a decade.

The key board action documenting the approval makes no mention of “deferred compensation” or even of pay continually awarded over several years.

Instead, on May 23, 2006, the trustees’ compensation committee authorized Ramsey to use foundation money in giving “appropriate one-time bonuses” to members of his “leadership team,” according to minutes of the meeting.

It’s that authorization – later ratified by the full board without discussion – under which Ramsey and the foundation created, augmented and renewed deferred pay plans – some very lucrative -- for nine U of L officials other than the president over the years.

In 2012, for example, former U of L Provost Shirley Willihnganz and Ramsey Chief of Staff Kathleen Smith received $1.7 million and $1.3 million, respectively, in deferred pay from the foundation.

In a statement, the university said there is only a semantic difference between “appropriate one-time bonuses” and many years of “deferred compensation.”

“Terms such as ‘bonus,’ ‘discretionary bonus,’ ‘one-time bonus,’ ‘supplemental compensation,’ and ‘discretionary compensation,’ are used interchangeably from one meeting to the next,” according to the statement issued by Tim Mulloy, a public relations executive working for the foundation.

UPDATE, July 13: Mark Reilly of Verisight Inc., the Chicago firm hired by the university in March to examine executive pay, told trustees on Monday that "one-time bonus" and "deferred compensation" are not synonymous terms. Trustee Craig Greenberg posed the question during a meeting, an apparent reference to this story by WDRB. 

The university's statement noted that the “one-time bonuses” were described as “discretionary compensation” during a trustees meeting only a few months later on Sept. 27, 2006, when the foundation updated the trustees on recent activities.

The compensation committee’s one-paragraph authorization does not say which officials would receive the “bonuses,” how many would be awarded or the amounts of the payments.

The full Board of Trustees signed off on “discretionary bonus for the Office of the President Leadership Tem (sic)” on June 6, 2006. It was one of 16 non-controversial items approved together without individual discussion.

Former trustees say Ramsey was given broad authority

Three of the nine trustees present at the 2006 compensation committee meeting said in interviews that, though they cannot remember what exactly was discussed, the intention was to give Ramsey broad authority to reward his key employees.

“I think we all assumed it was an annual bonus plan,” said former trustee Margaret Handmaker, now a foundation director. Asked if that means bonuses over many years and not just one, Handmaker said, “Sure."

“I can’t tell you years and dates, but ‘annual bonus plan’ was what I knew about,” she said.

“To tell you exactly what the conversation was in 2006 -- I have no idea,” said Sandra Metts Snowden, a trustee from the mid-1990s to 2008. “All I do know is, over the years, we gave Jim the authority to give bonuses or deferred comp as he saw fit. We weren’t trying to micromanage. We set his compensation and his authority to set his leadership team’s compensation.”

Former trustee Bill Stone, who was not a member of the compensation committee but was in the room during the 2006 meeting, said the trustees’ role is to hold Ramsey accountable for results and not to scrutinize the pay of his subordinates.

“The state was starting to tighten up (with funding), and one of the foundation’s original purposes has always been to reward outstanding talent outside the salary structure of the university,” Stone said.

Junior Bridgeman, a former trustee chairman and member of the compensation committee at the time, did not attend the meeting in which the “one-time bonuses” were approved. But Bridgeman said the trustees wanted to give Ramsey leeway to retain his key staff at the time.

“However it was worded, the intent was – and maybe that’s what happened along the lines afterwards – was to come up with a structure to maintain the people that he thought were important to what he was trying to do and the progress of the university,” Bridgeman said.

Experienced board members: new trustees don’t have perspective

A handful of current university trustees like Steve Wilson, Craig Greenberg and Stephen Campbell have expressed concerns in recent months about the board’s oversight of the foundation and the degree to which university employees are paid from foundation money.

State Auditor Adam Edelen said last month he would examine the relationship between the governor-appointed Board of Trustees and the foundation's self-perpetuating Board of Directors, with an eye toward strengthening the trustees’ role as the main body in charge of the university.

But several foundation board members – all current or former trustees – said during a foundation meeting Friday that the two boards have worked in lockstep for years.

“There has been a consistent policy of collaboration,” said Handmaker, who reviewed about 15 years of records for a presentation charting the foundation's approval of deferred pay plans going back to 1998.

She noted that since 1970, the foundation's board has included four current trustees.

“It’s interesting that, over time, we forget how some things work,” said Bridgeman, who gave the presentation with Handmaker.

Several foundation board members said the real problem is not oversight, but that recent appointees to the Board of Trustees don’t have the perspective to understand all the board has approved in the past.

“It behooves the board members to educate themselves as to what the former trustees have done… There is no lack of transparency,” said Robert Hughes, chairman of the foundation and trustee boards.

“The problem occurring now is because there are some people on the board now who don’t know what the board or the foundation did back then,” said Bill Selvidge, a foundation director and former trustee.

Trustee Bruce Henderson said it’s important not to lose sight of the university’s “remarkable” progress under Ramsey, and that, “collectively, the process has been working very well.”

“Some of the criticism has been very shocking to a lot of us,” Henderson said.

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