Strife Erupts at U of Louisville Endowment

Compensation and transparency issues pushed two trustees to call for the university to take over management of the $1.1 billion fund.

Trustees of the $1.1 billion University of Louisville Foundation have gone public with an internal conflict over executive staff compensation and governance practices.

Board member Steve Wilson, a Kentucky hotel and farm owner, submitted a letter on April 29 to the state Auditor of Public Accounts requesting an official audit of the university and foundation—an independently run nonprofit that manages the school’s endowment.

“I have for some time been troubled by the lack of information that the board of trustees receives from the administration and chairman of the board,” Wilson wrote, according to a copy obtained by CIO. “Various events—too numerous to list—have led me to be concerned about fulfilling my fiduciary and statutory responsibilities as a board member.”

Wilson stated that he and his fellow trustees had not been informed of compensation deals made by the independently operated foundation with members of the university administration.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

“We are having internal discussions and are looking at the matter, but we’ve launched no examination,” a spokesperson for the auditor told CIO.

Late last year, tax filings for 2012 revealed that the nonprofit had awarded University President James Ramsey $2.4 million in deferred compensation, along with $1.8 million for the school’s outgoing provost and $1.3 million to Ramsey’s chief of staff. These payments dwarfed the administrators’ reported salaries by up to 4,000%. Provost Shirley Willinhnganz, for example, earned $45,646 in base wages from the foundation in 2012—a package that climbed to $1,925,108 when the deferred compensation was accounted for.

Following these revelations, Wilson and fellow trustee Craig Greenberg have called for the foundation to be folded into the university, the Louisville Courier-Journalreported yesterday.

Board Chairman Robert Hughes decried Wilson and Greenberg’s actions to the newspaper, arguing that the two should have “made their case to the entire board instead of bypassing their fellow trustees, the chairman of the board, and the administration of the university.”

Wilson and the foundation’s lawyer did not respond to requests for comment. A university spokesperson declined to remark on the situation.

Related Content:2014 NACUBO-Commonfund Report on US Endowments

U of L Letter to Auditor

Home > News > Asset Allocation > Pension Funds Should Invest More in Oil & Gas… Says American Petroleum Institute Study

Asset Allocation April 29, 2015

Pension Funds Should Invest More in Oil & Gas… Says American Petroleum Institute Study

US public pension plans’ oil and natural gas investments averaged cumulative returns of 130% from 2005 to 2013, according to researchers.

Oil and natural gas holdings are sources of outperformance for US public pensions, according to a study released by the American Petroleum Institute (API).

Data analyzed by advisory firm Sonecon showed returns on oil and natural gas investments were consistently higher than other investments from 2005 to 2013 for the largest pension funds in 17 states.

Over the eight years—“spanning vigorous expansion, deep recession, and economic recovery”—oil and natural gas investments accounted for an average of 4% of total pension plan assets and yielded 8% of total returns, the report said.

“During good economic times—or challenging ones—oil and natural gas investments far outperformed other public pension holdings,” said Kyle Isakower, API’s vice president of regulatory and economic policy. The oil and natural gas industry “provides stability to the nest eggs that millions of Americans are counting on for a secure retirement.”

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

These investments also averaged returns of 130% over the eight years, compared to just 68% for non-petroleum holdings, the report said.

In addition, every $1 invested in US oil and gas stocks in 2005 was worth $2.30 in 2013, API and Sonecon said, while $1 invested in other assets over the same period was worth $1.68.

Based on data collected from annual financial reports, API noted that net capital gains from oil and gas investments for the 17 state’s pension plans reached $92.5 billion from 2005 to 2012. These gains were 9.2% of the funds’ total cumulative net capital gains of more than $1 trillion.

“The lesson, frankly, from this analysis is that pension plans would be in better shape if they increased the share they invest in oil and gas,” said Robert Shapiro, Sonecon’s chairman, during a conference call. “Regardless of how much you invest, the returns are consistently above those of other assets.”

The report studied data from California, Florida, Illinois, Indiana, Iowa, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Ohio, Pennsylvania, South Carolina, and West Virginia.

« Default by Design, Not by Neglect