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Tuesday, April 12, 2016

It's Good to Be the King

It's also good to be President of University of Louisville.  Heck, to prove this, the University even commissioned a study by a consultant:
In a report that cost the university about $23,000, Verisight Inc. of Chicago found that [President James] Ramsey’s total annual of compensation of $1.1 million is 60 to 80 percent above the median pay for presidents at similar universities.
Those numbers don't include deferred compensation and other benefits.

In any case, despite this high level of compensation, I should say that it used to be good to be President of University of Louisville. However, recent events have muddied the waters tremendously. Lately, President James Ramsey has been under fire by some elements of the faculty -- and by a number of Board of Trustees members. My College, Arts & Sciences, overwhelmingly supported a "no confidence" vote in a survey of faculty.

Why all the recent troubles?

As noted, President Ramsey's salary is very high compared to other University presidents, while faculty and staff salaries are relatively low. The salary problem, by the way, is particularly acute in Arts and Sciences. Some members of the community are angry about the decision to withhold the men's basketball team from this year's NCAA tournament. A whistleblower has alleged serious executive misconduct. The medical school apparently had some recent trouble with accreditation. The array of concerns is large and diverse and I won't discuss them thoroughly here.

Let's focus on one rarely discussed issue.

Some members of the University community are especially unhappy about the business model UofL has adopted under Ramsey's leadership. There are a number of implications of this, but this post will focus on merely one: consider the University's relationship with Texas Roadhouse, a local company (despite the name):
Texas Roadhouse and U of L have enjoyed a close relationship in the past, most notably in 2010, when the university opened its Texas Roadhouse Student Center at the College of Business. This 1,840-square-foot lounge is designed to look just like a Texas Roadhouse restaurant, complete with signage and branding, though there’s no kitchen. It cost a reported $200,000 to build.
Why should this matter? Well, President Ramsey is a highly-compensated member of the Texas Roadhouse Board -- paid primarily in valuable shares of common stock:
On Jan. 7, the University of Louisville president received 8,500 shares of stock from Texas Roadhouse, where he serves on the board of directors. The acquisition brings his current reported total up to 97,418 shares. The next day, he received an additional 25,500 restricted stock units from the steak giant, which he can collect over the next three years but doesn’t own yet.
Texas Roadhouse stock shares closed Jan. 15 at $33.67, meaning Ramsey’s 97,418 shares were worth $3.28 million at that time.

The newest 25,500 shares are restricted, meaning they are incentives for him to stay on at the company as a director. The shares of the stock were broken into three separate tranches of 8,500 shares of restricted common stock. They were granted as part of the firm’s 2013 Long-term Incentive Plan.
The stock price is now $44 per share, meaning that merely the 34,000 shares of stock Ramsey received or was promised in January 2015 are currently worth almost $1.5 million. Then again, he must continue to serve on the Board through January 8, 2018, to receive the final 17,000 shares. Half (8500 shared) will be awarded January 2017 and the other half on that January day in 2018.

Ramsey's full SEC disclosures as a Board member can be found here -- and lots of other places on the web. These are required by federal law under "insider trading" regulations.

Interestingly, however, for many years President Ramsey apparently did not disclose these ties as part of the ordinary "conflict of interest" form that all UofL faculty must file.

This story summarizes President Ramsey's legitimacy crisis among many members of the faculty -- extravagant compensation, use of position and privilege for personal gain, double standards vis-a-vis the rest of the University community, and at least a whiff of unethical behavior.

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