With Stellar Investments, Texas Endowment Hands Out Robust Bonuses to Managers

(November 10, 2011) — Texas’s public university endowment has awarded $7.2 million in bonuses to 29 managers, with the biggest award of $1.88 million going to University of Texas Investment Management Co.’s (UTIMCO) chief executive, Bloomberg has reported.  

The bonuses come as managers at the second-largest US college fund beat benchmarks for three straight years, the fund’s top executive told Bloomberg. President Cathy Iberg received approximately $1.08 million, according to the news service, while the smallest payout was $25,000. In comparison, the fund paid $5.1 million in 2010 bonuses.

In July, the University of Texas revealed that its five endowment funds were up 20% in the year ended June 30, and up approximately 17% for the fiscal year to date.

“I’m not surprised the Texas fund would pay $7 million total, and around $2 million to the head,” Jeff Visithpanich, principal at Johnson Associates, told aiCIO. “It’s a highly objective industry, where performance is significantly linked to pay…Given 20% returns, $2 million incentives does not appear off the charts,” he said.

The news follows a May 2010 report by compensation consulting boutique Johnson Associates, which noted that money management compensation should increase by up to 20% during the year. The pace of economic recovery, industry activity, business mix, and evolving legislation are key bonus drivers for 2010, the report said.

“There’s been so much scrutiny with compensation and the big question is what execs are going to do at the end of 2010,” Visithpanich told aiCIO last year. “Last year, top management at financial firms took big cuts in incentive pay, but since then, companies including Goldman Sachs have implied ‘business as usual,’ likely meaning a return to massive bonuses and other incentives.”