University of Texas System regents unanimously approved a pay-for-performance plan Thursday despite misgivings on the part of some campus presidents covered by the plan.
Those misgivings did not emerge publicly during a two-day Board of Regents’ meeting in Austin. Rather, concerns surfaced during private meetings earlier with system officials.
“There were some questions and anxiety expressed by some academic presidents,” said Scott Kelley, the system’s executive vice chancellor for business affairs.
All 15 presidents of the system’s nine academic and six health campuses are covered by the plan.
Health presidents were more comfortable with the concept of bonus pay for meeting performance goals because a form of that is already part of their culture, Kelley said. Physicians at health campuses who work longer hours and see more patients than their counterparts receive more revenue from the campuses’ practice plans.
UT System Chancellor Francisco Cigarroa, a transplant surgeon and former president of the UT Health Science Center at San Antonio, signaled his support for incentive-based compensation a year ago when he listed it among numerous priorities in his “Framework for Advancing Excellence.” In addition to presidents, as many as 11 system executives, including Cigarroa, are potentially eligible to participate.
“We’re kind of putting our toe in the water” by starting with a target of 10 percent of base pay, Cigarroa said.
However, participants could actually qualify for a 15 percent bonus if they exceed targets for fundraising, graduation rates, cost-cutting through shared services and sponsored research.
The goals for each president and system executive will be fine-tuned to match their responsibilities.
Kelley said base pay would probably be held flat for the budget year beginning Sept. 1, with any increases coming through the performance component.
Regent Robert Stillwell urged caution.
“The devil’s in the details,” Stillwell said. “There’s a lot of subjectivity that’s being reserved to us as the board. If it’s applied evenly and effectively, it’ll be a great motivational tool.”
Some presidents said privately that they are not so much concerned about their compensation as they are about potentially negative perceptions from adopting a corporate-flavored approach to pay.
Richard D. Cotton, a lawyer in Washington who has represented many boards and presidents in contract negotiations, applauded the regents for taking a case-by-case approach to each president’s goals but questioned other aspects of the plan.
In the nonprofit world, rewarding people for the amount of money they raise is considered unethical, Cotton said.
“Bringing over business techniques that might work very well in a for-profit company may have serious unintended consequences in a nonprofit university,” he said.
Cotton also expressed concern about bonuses for the system’s top lawyers, as the plan contemplates, arguing that lawyers are supposed to be motivated solely by a client’s best interests.
UT-San Antonio President Ricardo Romo said the presidents have a lot of confidence in Cigarroa and therefore a higher comfort level with the plan than they might have otherwise.
Performance goals will be worked out with Cigarroa, but subject to the regents’ approval.
“My sense is, he’s going to do the right thing,” Romo said.
UT-Austin President Bill Powers said it’s OK to align goals and funding.
“As Regent Stillwell said, the devil’s in the details,” Powers said. “It takes a lot of work to get the details right.”
UT-Dallas President David Daniel said he has no quarrel with being held accountable for the university’s performance and is motivated by the thrill of seeing students succeed in their studies.
“I don’t think much about compensation,” Daniel said. “I get a cash allowance every Friday from my wife.”
Contact Ralph K.M. Haurwitz at 445-3604