The board of the University of Texas Investment Management Company, which manages endowment funds and other assets for the University of Texas System and to a lesser extent the Texas A&M University System, approved on Thursday salary increases for the company's staff as well as Bruce Zimmerman, its chief executive officer and chief investment officer.
Staff base salaries were raised approximately 4 percent, for a total of nearly $4.8 million. Zimmerman's base salary was increased approximately 4.3 percent, from $575,000 to $600,000. It is his first salary increase in the last three years.
Zimmerman acknowledged that the raises may generate criticism. Performance bonuses handed out to UTIMCO staff before the 2009 Legislative session resulted in complaints from the governor and a stern dressing down by state lawmakers during a public hearing. "Because we do manage public funds, there's always scrutiny," Zimmerman said.
UTIMCO is a non-profit company separate from both university systems. Zimmerman said that compensation levels are determined based on what other endowment staff are paid, and the rates are very competitive. Not only have UTIMCO salaries been lagging lately, he said, but the gap has been widening. "Attracting and retaining qualified investment professionals is important," he said.
Lately, the company's investments have paid off, officials say, to the extent that they are comfortable recommending a larger-than-normal payout from the chief endowment, known as the Permanent University Fund. While they usually distribute 4.75 percent from the fund, two-thirds of which go to the UT System with the remaining third going to the A&M System, on Thursday the UT System Board of Regents approved a payout of 5.5 percent.
Reasons cited for such an increase — which should yield more than $575 million for the systems in the next fiscal year — include strong returns and revenue from land holdings in West Texas that is projected to be more than double what it was last year.
This comes at a time of significant budget cuts in higher education and is expected to provide some relief for universities, if only temporarily. While officials indicate a similar recommendation could be made next year, it is not guaranteed.
UT Regent Steve Hicks indicated that he was initially hesitant about the proposal, but said he saw the "chance to make transformational change" through the use of these one-time funds. The plan also appears to have the support of the Legislature. UT Regents Chairman Gene Powell indicated that they had worked "very closely" with Senate Finance Chairman Steve Ogden, R-Bryan, on the proposal.
"This is an issue that has been vetted very significantly," said UT regent and current UTIMCO board chairman Paul Foster.
The morning's meeting also featured a discussion about the investment company's approach to and preparedness for the risk of major disruptions in the global economic. It was noted that no such conversation happened prior to the economic collapse in 2008, which may have been an oversight. Regents encouraged UTIMCO staff to take an approach that took such risk into account.