University of Louisville Foundation to pay nearly $170,000 for study on Ramsey-era compensation
The University of Louisville Foundation will spend nearly $170,000 to find out whether the millions of dollars it paid former U of L President James Ramsey and other top former officials was excessive.
LOUISVILLE, Ky. (WDRB) -- The University of Louisville Foundation will spend nearly $170,000 to find out whether the millions of dollars it paid former U of L President James Ramsey and other top former officials was excessive.
And the foundation is routing the work through its law firm so it can keep the results secret by invoking attorney-client privilege.
The foundation’s law firm, Wyatt Tarrant & Combs, hired a consultant in September to examine the organization’s payouts under Ramsey’s administration, between 2010 and 2016, according to a “letter of engagement” obtained under the Kentucky Open Records Act.
The study by Los Angeles-based Korn Ferry Hay Group Inc. is expected to be a key factor as the foundation’s board of directors continues to explore legal action stemming from a scathing forensic investigation of the organization’s finances under Ramsey.
“This is an important piece of our investigation,” Keith Sherman, the foundation’s interim executive director, said in an email.
The study is only coming to light now because the foundation's board of directors did not vote to approve the contract, and they have made only a passing mention of it in the public portions of recent board meetings.
The board has a held countless closed-door discussions about potential litigation since the forensic report was released June 8.
The report detailed up to $100 million in losses the foundation sustained through excessive spending and mismanagement, a lawyer for the university has said.
That includes a “deferred compensation” program through which Ramsey and eight other administrators earned $22 million.
The university paid Chicago-based Alvarez & Marsal more than $2 million for the forensic examination. Nonetheless, that report “did not provide a market study related to the Foundation’s executive compensation practices,” Sherman said.
However, in 2015 the university spent $23,000 on a study that said Ramsey and the university’s then-vice presidents were compensated “at or above the market” when considering their combined pay from the university and foundation. The study recommended doing away with the foundation’s lucrative “gross up” payments that were meant to cover administrators’ income taxes.
The 2015 study did not include all executives paid by the foundation and left out Kathleen Smith, Ramsey’s former chief staff, who was paid an average of about $491,000 by the foundation from 2010 to 2016, according to the forensic report.
It’s unclear which former officials or administrators will fall under the Korn Ferry review, which is not finished. The foundation released a heavily redacted version of the firm’s contract in response to a public records request from WDRB.
The study will cost $145,000, plus $6,000 for access to the firm’s data and a 12 percent charge for administrative expenses, according to the contract.
Sherman said it’s too early to say whether the Korn Ferry report will be made public. “We will make that determination with legal counsel at the appropriate time,” he said.
Amye Bensenhaver, an attorney with the Bluegrass Institute’s Center for Open Government, said the foundation’s use of its law firm as a middleman does not guarantee that the study can be legally withheld under the Kentucky Open Records Act.
But the courts do recognize a privilege for communications between attorneys and their clients related to litigation, she said.