U of L top execs make millions in deferred pay

When University of Louisville Provost Shirley Willihnganz announced last week that she is stepping down, the university said her current salary is $342,694. But that represents only a small fraction of what she's been paid at U of L.

Tax records for the U of L foundation show that Willihnganz, who is also the university's executive vice president, was paid about $1.8 million in deferred compensation in 2012-13.

The same records show the foundation paid deferred compensation of $2.4 million to President James Ramsey that year and $1.3 million to Chief of Staff Kathleen Smith.

In an interview, Burt Deutsch, who was the foundation's vice chairman at the time, said the payments accrued over many years and that the compensation for Ramsey was designed to keep other universities from recruiting him.

Deutsch said the foundation rewarded Willihnganz and Smith because it wanted to "build and retain" Ramsey's executive team and because both occupy key positions. And university spokesman Mark Hebert noted the contributions did not come from tax dollars.

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But Tracy K'Meyer, chair of the university's history department, said: "Without commenting on the individuals involved and their relative quality or contributions, I think I can say with fairly high certainty that most faculty would argue that million dollar plus bonuses are inappropriate in a public university setting, especially one that has been hit by budget cut after budget cut and one that attracts a relatively low-income student body.

"If the foundation has so much money, it should give it to students in the form of greatly enhanced scholarships to help them pay the steadily rising tuition," she added.

Law Professor Russell Weaver also suggested that the payments could have been used to "avoid or mitigate" tuition increases of 45 percent since 2008.

The foundation's tax reports are public, but the deferred compensation for U of L's top administrators has never been reported before by news organizations.

It also wasn't mentioned in public meetings when the Board of Trustees discussed salary increases and bonuses for Ramsey in 2011 or 2013, according to news accounts in The Courier-Journal.

Deferred compensation is common for university presidents but rare for executive vice presidents — 88 percent of the latter said they did not get any in a 2013-14 survey conducted by the College and University Professional Association for Human Resources.

The Chronicle for Higher Education has written that, of all the perks college presidents routinely receive, few are as lucrative as deferred compensation. Sometimes called a "golden handcuff," deferred-compensation plans encourage presidents to stay the full length of their contracts because if they leave before an agreed-upon payout date, they forfeit the money.

The University of Kentucky has deferred compensation plans for its president, Eli Capilouto, and for Dr. Michael Karpf, executive vice president for health affairs, spokesman Jay Blanton said.

Capilouto, who was appointed in 2011, is to receive $950,000 in deferred compensation if he stays through 2018. Karpf, an internist, has received $1.55 million in deferred compensation for 10 years of service, Blanton said.

The U of L foundation payments for Ramsey began accumulating when he started as president in 2002 and were increased in 2007-08, when other universities tried to recruit him, Deutsch said.

Joyce Hagen, the foundation's current vice chairwoman, said deferred compensation for all three executives was based on "best practices in the industry."

The payments came from the foundation, which has about $1 billion in assets and collects private gifts to the university.

Unrestricted gifts to the foundation can be used to pay for scholarships, hire additional faculty, endow faculty chairs or for anything else that enhances the education of students, said Malcolm Chancey, a former foundation chairman.

K'Meyer said tuition assistance would have allowed her students to be able to focus on their classes and not have to work long hours outside school.

"After that," she said, "I would argue that extra funds could be used to offset the below national median salaries of many of our young professors" as well as mid-career professors.

The payments to Ramsey, Willihnganz and Smith included interest earned on the deferred compensation during the years it was invested, said David Saffer, an outside lawyer for the foundation. The three also were paid additional amounts to cover taxes on the compensation.

The tax report shows that another $520,833 in deferred compensation was set aside for Ramsey in 2012-13 in connection with a revision of his employment contract in 2011. The total compensation reported for him by the foundation for the fiscal year was $3,264,405, according to the report.

Ramsey, 66, is also paid a salary of $647,723 by the university and the foundation. He also will collect $2 million in retention bonuses if he stays through 2020.

Ramsey turned down annual pay raises and bonuses from 2008 to 2010.

Since he became U of L's 17th president in 2002, the university's graduation rate has increased more than 60 percent and the average ACT score of incoming freshmen has climbed from 23.2 to 25.2. U of L's research funding has more than doubled over the past decade, and more than 5,000 students live on campus or in university-affiliated housing, compared with 2,300 when Ramsey arrived.





Willihnganz, 62, was appointed provost in 2004 after serving in an interim capacity for three years. The university has said that under her watch, it has produced more Fulbright scholars than any other college or university in Kentucky.

She is scheduled to step down at the end of this academic year and return a year later, after a sabbatical, to teach at a lesser salary that hasn't been determined.

Her total salary this year, including $51,838 from the foundation, is $394,531, Hebert said.

Smith has worked for more than 43 years at U of L and served three presidents. The university said she has been instrumental in raising more than $43 million in private donations for its academic programs, including a $10 million gift for the business school.

Reporter Andrew Wolfson can be reached at (502) 582-7189