February 8th, 2012

A New UVM President Within The Week, Crucial Questions About the Brand New UVM Foundation Within The Year

by Philip Baruth

Those of you following the executive compensation issue at UVM may remember that when the Fogel debacle went down last summer, the Board charged a subcommittee with investigating what had gone wrong and suggesting changes — if, of course, any were needed. And there was the rub: any skeptic worth his salt had to immediately suspect that no changes would be forthcoming.

And when the Education Committee finally received the report last week, it turned out to be what one might diplomatically refer to as substance-free: it noted the outrage from students, faculty, alumni, and taxpayers, but made clear that the Board would continue to use all of the same controversial methods of both “base” (salary) and “non-base” (perks) compensation going forward.

So we drafted a letter in response, asking for clarity, particularly with regard to one intriguing point. In their report, the Trustees made it clear that they were now concerned with “Foundation monies,” and how a President might be compensated with these. When asked directly, the Board suggested that the word “Foundation” referred to corporate foundations — in other words, the new guideline would define the ability of a President to accept compensation for sitting on outside corporate boards.

But it seemed to me that, having just established a Foundation of its own — and one that has taken over the University’s fundraising operation almost in its entirety — the Board might also be laying some general groundwork for using the new UVM Foundation to compensate executives in the future.

Which would lead to transparency issues, arguably, in that the new Foundation has different reporting rules than the University proper (that, of course, being a key reason it was created).

So we drafted a letter to the Board, asking for some direct answers on whether the UVM Foundation could, now or in the future, be used to compensate the President or others. The response that came yesterday was interesting, in a neutral word:

“The policy revisions you asked about require the Board as a whole to approve, in advance, and in open session, any proposed external compensation to the President. Previously the President needed only to inform the Board. This is intended to include Foundation salary support but not be limited to it. There are no plans at this time to provide salary or other support to the President or UVM other employees from the Foundation. Should that change in the future, such income would need to be approved by the Board as specified above.”

A couple of points. It seems clear that the Board has discussed whether the Foundation might pay the President in whole or in part, as they’ve developed a new bit of bureaucratese to refer to it: “Foundation salary support.” And while it’s true that there are purportedly “no plans to provide salary or other support,” the qualifier is there: “at this time.”

To me that declares fairly openly that the Board is reserving the right to do so going forward, and want to say so now, to establish the right without yet invoking it. The last sentence makes clear that if (or maybe better to say when) that happens, there will be a vote — but that vote, as with others, may well be pro forma.

The principle is established, with this very small change in guideline, that the Foundation can shoulder any or all of the President’s (or other executives’) compensation, with the single formality of a vote, and that’s newsworthy in and of itself — especially since one of the points of creating the Foundation was to shield donors, to establish different rules of transparency.

Expect the announcement on the new Presidential hire this coming week. Expect the Foundation’s role in compensating that President to become an issue next year.