Purpose:
To assist in the determination of
appropriate compensation for U. T. System presidents
Date Approved:
August
7, 2003
Background:
Subsequent
to the August 2002 U. T. Board of Regents' Executive Session where
presidents' compensation was considered, the U. T. System Administration
staff was requested to review the various elements comprising the institutional
presidents' compensation for opportunities to simplify the compensation
structure and recommend appropriate and consistent System-wide policies.
The staff recommended a simplified compensation structure including a
methodology for the valuation of the presidents' salary supplements, known as
'housing allowances' prior to 2000. The
University of Texas System Presidential Cash Compensation Policy includes the
various staff recommendations indicated in the previously disseminated staff
report. The
Policy, to be implemented in stages, simplifies compensation structure and
valuation methodologies.
THE UNIVERSITY OF TEXAS SYSTEM
1. Purpose
This Policy sets forth the cash compensation
structure that is authorized for presidents of the component institutions of
The University of Texas System. It is
prospective in nature and application and is not intended to be applied
retroactively. It does not pertain to,
nor affect, benefit programs such as insurance, retirement, and deferred compensation,
which may also be a part of a president’s overall compensation package.
2. Policy
In order to attract and to retain effective, highly
skilled, and committed presidents of the component institutions of The University
of Texas System and to recognize their professional achievements, it is the
policy of The University of Texas System to offer competitive levels of cash
compensation within a compensation structure that is applied consistently. This Policy establishes and defines the various
elements for the cash compensation portion of the presidential compensation
package. Compensation packages for
the presidents are recommended by the appropriate Executive Vice Chancellor
to the Chancellor, and then by the Chancellor to the Board for approval.
3. Procedures
3.1 Base Salary
3.1.1 The base salary rate for each president shall
be set by The University of Texas System based on a review of state and
national compensation survey data for respective peer institutions. Comparable salaries are reported in surveys
by the College and University Personnel Association and other nationally recognized
organizations. These surveys typically
exclude allowances such as car, housing, and housekeeping, and retirement plans
and other fringe benefits.
3.1.2 In addition to the base salary rate, each
president shall receive as part of his or her base salary the market value of
one half-time housekeeper. The market
value shall be calculated by taking 65% of the average mid-point salary of the
housekeeper positions included in The University of Texas System Classified Pay
Plan; that calculation is intended to establish a market value that reflects
the salary and benefits of a half-time housekeeping position. Each president, at his or her option, may
privately employ a housekeeper, in which event the president shall be
responsible for the tax-related implications and expenses associated with the
employment of the housekeeper, or the president may elect to use the services
of the institution’s housekeeping staff, in which event the president shall
reimburse the institution for the salary and benefits associated with that
use. Each institution, at the
institution’s expense, shall provide appropriate housekeeping and other support
services for business-related functions held at the president’s residence.
3.2 Practice Plan Supplement
The bylaws of the physician practice plans provide
that the compensation for the presidents of the health component institutions
may be supplemented by up to 30% of the president’s salary from practice plan
funds. The supplement is contingent on
availability of funds in the practice plan. Practice plan supplements are included in national surveys of chief
executive compensation. The practice
plan salary supplement is not a part of the base salary and shall be reported
as a separate element of the health president's cash compensation because of
the special nature of the source of funding. Practice plan supplements are not eligible for Teacher Retirement System
and Optional Retirement Program retirement benefits or other retirement benefits
and no employer matching contributions may be made with respect to practice
plan supplements.
3.3 Salary Supplement
3.3.1 The salary supplement shall be paid in lieu of
a housing allowance to all presidents, including those who are provided a
residence owned by The University of Texas System. It is intended to cover the hypothetical cost of a model
residence, as described below. The
salary supplement shall be eligible for retirement benefits but is not a part
of the base salary.
3.3.2 The amount of the salary supplement shall be
calculated by determining the fair market rental value of a standardized model
residence containing 4,100 square feet of improvements and located where
the president owns or leases his or her personal residence. In the case of a president who is provided a
residence owned by The University of Texas System, the 4,100 square foot
model residence shall be valued as if situated where
the institutionally-owned residence is located.
3.3.3 When a new president takes office, he or she
shall initially receive a salary supplement equal to the most recent fair
market rental value determined for the location of his or her predecessor’s
residence until such time as he or she obtains permanent housing. It is anticipated that the new president
will obtain permanent housing within one year of hire date. If, after one year, the president has not
obtained permanent housing, the value of the salary supplement shall be
calculated based on the fair market rental value of the 4,100 square foot model
residence located at the president’s current residence location.
3.3.4 In no event may the amount of the salary
supplement exceed the fair market rental value of the 4,100 square foot model
residence calculated at the location of the Bauer House (the official residence
of the U. T. System Chancellor).
3.3.5 No separate allowance for maintenance,
utilities, landscaping, or other expenses attributable to the president’s
residence may be paid. All personal
expenses associated with a president’s residence are intended to be covered by the
salary supplement.
3.3.6 Except as provided in the following sentence,
each president of a component institution for which a residence owned by The
University of Texas System is available shall have the option of leasing from
The University of Texas System the institutionally-owned residence or acquiring
a personal residence. If, however, the
Board makes arrangements with the president that require the president to
reside in the institutionally-owned residence or if covenants, conditions, or
restrictions applicable to the institutionally-owned residence require
occupancy by the president, then the president shall reside in the
institutionally-owned residence.
3.3.7 Those presidents who either elect to or are
required, as provided in Section 3.3.6, to reside in an
institutionally-owned residence shall enter into a lease of the residence with
The University of Texas System. The
rental rate to be paid by the president under the lease shall be based on the
current fair market rental value of that portion of the residence that is used
as the president’s private residence.
3.4 No Car Allowance
No separate car allowance may be provided to
presidents of the component institutions. A component institution may reimburse a president for business use of
the president’s personal vehicle in accordance with the latest published
Internal Revenue Service guidelines, the State Travel Regulations Act (Texas
Government Code Chapter 660), and applicable institutional policies.
3.5 Institutionally-Provided Property and Services
3.5.1 Institutionally-provided property and
services, such as club memberships, shall not be considered elements of
a president’s cash compensation. Such property and services shall be subject to appropriate authorization
and approval and monitoring of personal use and business use.
3.5.2 No tax equity adjustments may be paid
to a president. Tax equity adjustments
are cash compensation to the president for the federal income tax consequences
to the president arising out of the president’s personal use of
institutionally-provided property or services. Rather, each president shall reimburse the institution for his or her
personal use of institutionally-provided property and services at appropriate
rates as determined by the institution in accordance with Internal Revenue
Service guidelines and applicable institutional policies.
The statutory authority for this Policy is provided
by Texas Education Code Section 65.31, General Powers and Duties.
This Policy is applicable
to each component institution of The University of Texas System (each referred
to herein as an “institution” or “component institution”).
The Counsel and Secretary
to the Board of Regents officially interprets this Policy and is responsible
for proposing revisions to the Board of Regents as necessary to meet the
changing needs of The University of Texas System and statutory and regulatory
requirements.
The Policy reflects the
recommendations of a review team that was established following the August 7,
2002, Executive Session of the U. T. Board of Regents at which
presidential compensation was considered. The Board requested that U. T. System Administration staff review
each of the cash and noncash elements comprising the institutional presidents’
compensation for opportunities to simplify the compensation structure and
provide appropriate and consistent System-wide policies. The compensation structure, as it then
existed, had developed over the years and had been administered in the absence
of a formal policy, resulting in inconsistent applications and some confusion
as to the varying elements of compensation. The review team consisted of representatives from the Office of Business
Affairs, Office of the Board of Regents, Office of the Controller, Real Estate
Office, Office of General Counsel, Office of Health Affairs, and Office of
Academic Affairs.
Last reviewed September 2003