Before leaving foundation, Ramsey gave lucrative employment deal - WDRB 41 Louisville News

Before leaving foundation, Ramsey gave lucrative employment deal to longtime aide

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Kathleen Smith Kathleen Smith

LOUISVILLE, Ky. (WDRB) --  Two months before he resigned as president of the University of Louisville Foundation, James Ramsey appointed his longtime aide Kathleen Smith as the nonprofit organization’s “acting chief administrative officer” with a $242,144 annual salary, according to a letter obtained by WDRB in a public records request.

The July 22 letter lists a number of “property development projects” Smith was to complete before the end of her employment term on July 31, 2017 and promises Smith an additional $100,000 a year in “deferred compensation” and a $12,000 annual car allowance from the foundation.

The letter also says that if the foundation dismisses Smith for a reason other than cause, she would be entitled to six months of salary ($121,072), plus the $100,000 of deferred compensation.

For decades, Smith had served both the university and foundation as an at-will employee of the university without an employment contract.

Smith, who retired as U of L’s presidential chief of staff on Sept. 16, has been on paid administrative leave from the foundation since Sept. 27. She has hired an attorney to help her negotiate her status with the foundation.

Smith’s appointment as chief administrative officer was never ratified by the foundation board, but in the July 22 letter, Ramsey said the board’s executive committee “discussed” the appointment “earlier this summer.”

Former foundation board chairman Robert Hughes said Smith’s employment agreement was discussed in closed sessions of the board, and board members supported it.

On Thursday, foundation chairwoman Brucie Moore declined to say whether the foundation considers the July 22 letter a binding contract entitling Smith to employment with the foundation.

Ann Oldfather, Smith’s attorney, has said Smith expects the foundation to honor the “written arrangements” governing her employment.

The foundation board met behind closed doors for more than an hour Thursday to discuss a personnel matter. The board took no action.

Ramsey’s letter describes the compensation promised to Smith – the $242,144 salary, $100,000 in deferred pay and $12,000 car allowance – as her “current compensation” which will “remain the same.”

But it’s unclear how long Smith had been paid those amounts. The foundation turned over no other records regarding her employment terms with the foundation after a request from WDRB.

Meanwhile, Smith had already received $100,000 in deferred compensation on July 1 – three weeks before Ramsey put her employment terms into writing – according to a foundation statement produced in an open records request.

And the foundation’s most recent annual tax return shows Smith received a $200,000 “retention grant” in 2014.

Despite multiple requests from WDRB, the foundation has not produced any records showing when those payments were agreed to, who approved them and how long the money was “deferred” before Smith became entitled to it.

However, in November 2015 Ramsey signed an amendment to Smith’s deferred compensation agreement which says the amounts of her deferred pay will be determined by him as he chooses, as WDRB reported last month.

The point of “deferred” compensation is to give “key employees” like Smith an incentive to remain on the job through a certain date.

But when the foundation only “defers” the money for a year or two, that is not enough time to provide a real retention incentive, according to an independent compensation consultant hired by U of L last year.

The statement showing Smith’s $100,000 award on July 1 refers to the money as “annual retention grant to 2020."

The foundation’s chief financial officer and attorney did respond to a request for comment on Tuesday. Neither did Smith’s attorney, nor Ramsey’s attorney.

Smith’s $100,000 in deferred pay will actually end up being more – perhaps twice as much – because the foundation typically provides “tax gross-up” payments on the deferred-pay awards.

The gross-up is an extra payment whereby the foundation effectively pays federal, state and Louisville Metro income taxes on behalf of the executive so that he or she receives the full value of the deferred pay without tax obligations.

Copyright 2016 WDRB News. All rights reserved.

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