'Reasonableness' of Ramsey-era compensation at issue as U of L F - WDRB 41 Louisville News

'Reasonableness' of Ramsey-era compensation at issue as U of L Foundation weighs lawsuits

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University of Louisville Foundation interim executive director Keith Sherman, center, briefs the board on Thursday, Sept. 28, 2017. University of Louisville Foundation interim executive director Keith Sherman, center, briefs the board on Thursday, Sept. 28, 2017.

LOUISVILLE, Ky. (WDRB) --  Lawyers working for the University of Louisville Foundation are examining whether the compensation the nonprofit organization paid to university and foundation employees in the era of former U of L President James Ramsey was “reasonable.”

Earl Reed, a member of the foundation board of directors, said the appropriateness of the compensation is a “critical” question as the foundation continues to explore whether it should sue anyone – or whether it will be sued – in the wake of a scathing forensic investigation of the organization’s finances under Ramsey.

The investigation released in June detailed up to $100 million in losses the organization sustained through excessive spending and mismanagement, a lawyer for the university has said.

Reed’s comments at a foundation board meeting Thursday provide the clearest window yet into countless private discussions conducted among the boards of the foundation and the university since the forensic report came out.

Reed, who chairs a special committee of the foundation board dedicated to the forensic investigation, said it’s possible that the university’s board of trustees could sue the foundation, and also that the foundation could sue unnamed “third parties.”

“This is a deliberative process and one we are taking very seriously,” Reed said.

He added that the foundation’s outside lawyers have “obtained expert assistance” to help determine the “reasonableness of the compensation” the organization paid in the Ramsey era.

The forensic investigation found that the foundation’s now defunct deferred compensation plan paid out $22 million to nine administrators between 2011 and 2016, including $8.8 million to Ramsey.

Earlier this month the university board of trustees passed a vague action authorizing its lawyers to talk to the foundation about a “resolution” to the potential legal issues stemming from the investigation.

Those discussions have not yet begun, foundation interim executive director Keith Sherman told reporters Thursday.

U of L board of trustees chairman David Grissom, who is also on the foundation board, declined to comment Thursday.

The foundation maintains about $25 million in insurance coverages for erroneous actions on the part of its officers and directors, according to records obtained by WDRB.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2017 WDRB News. All rights reserved.

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