The top two officials at the University of Louisville received a combined $4.2 million in deferred compensation from the U of L Foundation last year, according to tax documents filed by the university. That is separate from their reported income from the university, which is considerably less.
President James Ramsey was paid $2,437,312 and Provost Shirley Willihnganz, who recently announced she is leaving the post, received $1,879,462 from the foundation, which manages more than $1 billion in assets for the university.
In addition, Ramsey’s chief of staff, Kathleen Smith, received $1,334,402 in deferred compensation.
The payouts are the result of incentives packages that became vested in 2013, according to U of L Foundation attorney David Saffer. He said the compensation is an aggregate that has accrued over several years and includes incentives provided by the foundation, earnings on those incentives, interest gained, tax gross-ups, and additional taxable benefits such as auto allowances.
“While the aggregate number is a large number, it’s comprised of components that have accumulated over a number of years and the compounding effect of those accumulations,” Saffer told IL in an interview Thursday.
While U of L is a public institution, the money paid out by the foundation is privately raised. The U of L Foundation is governed by a 16-member board, which includes Ramsey and four members of the Board of Trustees, which is responsible for university policies.
Generous incentives packages from the foundation through deferred compensation began when Ramsey became president in 2002, after the departure of former president John Shumaker and a period in which Ramsey and another official served as interim presidents. They were designed to help ensure stability atop the university, said Bert Deutsch, vice chair of the foundation board when the payouts were made.
Deutsch said during the 2007-08 school year, as Ramsey was being recruited by other universities, the foundation board decided to increase his incentives. At the time, he said, they also wanted to keep his leadership team intact, so they created deferred compensation incentives for Willihnganz and Smith.
“One of the strong executive management values President Ramsey has is he wants to keep a strong leadership team around him,” Deutsch said. “Most of us (on the board), businesspeople, did applaud that, and so we wanted to make sure that continued.”
Next to Ramsey, Willihnganz’s deferred compensation is the highest among the exclusive club of recipients, which also includes James Graham Brown Cancer Center Director Dr. Donald James Miller. Last year, Willihnganz’s university salary was $342,694.
Smith is a longtime U of L employee who is paid $128,613 per year by the university.
The U of L Foundation’s board of directors approves the incentives packages, while the Board of Trustees sets university pay for administrators. Deutsch said the foundation takes guidance on amounts of deferred compensation from the trustees, although they do not officially consult. Some trustees have expressed concerns lately about a lack of oversight over university functions, including top administrators.
“We don’t make those decisions in a vacuum,” Deutsch said. “They set the tone for what should happen. We work hand-in-glove.” However, trustees have no official role in — or oversight of — foundation decisions, which could have a tremendous impact on university functions.
Not everyone believes the incentives are worth it. A member of the Faculty Senate who declined to be identified by name said there is a sense among some teachers in undergrad and elsewhere that the top-shelf foundation incentives should be spread around to those in the trenches, who haven’t seen a significant pay increase in a decade.
Deutsch told IL that the incentives are part reward, part retention effort for administrators who have met certain goals. During Ramsey and Willihnganz’s tenure, for example, graduation rates at U of L have gone up 60 percent. Since 2008, however, tuition also has gone up nearly 50 percent.
Ramsey’s base university salary is $342,930. In addition, the foundation paid him a base salary of about $270,000 in 2013.