New UTIMCO compensation plan doesn’t seem to be rushing along

AUSTIN, Texas — A new compensation plan for investment managers at the University of Texas Investment Management Co., Austin, could still be months away from approval.

UTIMCO Chairman Woody Hunt had hoped for a discussion of the compensation plan, which has been approved by the UTIMCO board, at the regents' March 11 meeting. But Charles Miller, chairman of the board of regents, said that would not be the case.

"There's not anything on UTIMCO" scheduled for that meeting, Mr. Miller said.

Mr. Hunt conceded as much and said he would instead focus on getting the plan on the agenda at either the board's April 29 or May 12-13 meetings.

"Even though I don't like the additional time, I think it's a more appropriate way to go" and could increase the chance that the compensation plan will be approved, he said. "I think working through the process will answer any unanswered questions about the incentive compensation plan."

Mr. Miller said, the working group that is reviewing UTIMCO's structure is expected to complete its report in time for the board's April 29 meeting. That meeting is expected to be taken up mostly by UTIMCO issues.

The board of regents might be in a position to make some decisions at the April meeting, Mr. Miller said, but those would most likely be about the structure and oversight of UTIMCO and not necessarily the compensation issue. He has contended that the structure and oversight issues need to be settled before the board considers UTIMCO compensation.

"It's not just a compensation issue," he said. "There's going to be a much broader analysis of what we want the investment management operation to do and to be. We know there are places we can improve, and many of those are related to oversight."

Mr. Hunt said he supports the working group's review but added that he had hoped to have the compensation issue settled by now. The plan has been in the works since the middle of last year.

"The overall review of the structure — I'm supportive of that process," he said. "I'd like to keep the investment professionals focused on investing and be incentivized to do so while we deal with these separate issues of the relationship (with the board of regents) and oversight."

If the regents do not address the compensation plan at either the April or May meetings, the plan could be tabled until summer.

"If we don't finish by May, then July-August is the normal budgeting period," Mr. Miller said.

One regent, who asked not to be named, said he doubted the plan would be put in place until the next fiscal year, which begins Sept. 1.

While UTIMCO is a private organization, its sole client is the university and three UTIMCO board members sit on the board of regents. The board of regents does not technically need to approve the package, but Mr. Hunt has acknowledged the regents' "support and their understanding is really critical."

The UTIMCO board approved the compensation plan in January. Under the new plan, the performance of each asset class is used to measure outperformance, and thus bonuses. Also, the new plan would use peer group performance.