University of California Office of the President

FOR IMMEDIATE RELEASE
Monday, Dec. 19, 2005
Paul Schwartz (510) 987-9924
paul.schwartz@ucop.edu

UC REGENTS ANNOUNCE ACTIONS TO PROVIDE GREATER OVERSIGHT AND UNDERSTANDING ABOUT UC COMPENSATION POLICIES AND PRACTICES

The University of California today (Dec. 19) announced a series of actions designed to provide greater oversight and understanding about UC compensation policies and practices.

Among the actions ordered by UC Board of Regents chairman Gerald L. Parsky:

The creation of a Regents’ committee on compensation to provide ongoing oversight of university compensation;
The launching of an outside audit of senior manager compensation and departure agreements; and
The appointment of distinguished representatives from business, government, media, and education to a task force recommended last month by President Robert C. Dynes to review UC compensation policies and practices, including disclosures, and provide recommendations to the Board of Regents.

“The Regents recognize the University of California’s unique public trust,” said Parsky. “While UC must maintain its ability to compete with top universities across the nation for outstanding researchers, teachers and administrators, we must do so in ways that are transparent and understandable to the public. These actions set us on the road to achieving those objectives.”

Compensation committee created

As a first step, Parsky is creating a compensation committee of the Board of Regents.

“Committees on compensation issues are standard practice on most corporate and non-profit boards,” said Parsky. “It is our fiduciary responsibility to provide the same level of scrutiny and oversight over compensation matters at the University of California.”

Among other things, the committee will conduct regular studies to examine the competitiveness of UC compensation relative to the compensation at comparable institutions; review the annual report on senior management compensation and the annual report on outside professional activities and outside compensation by senior managers; review the salaries of individual senior managers, whose compensation requires regents' approval, prior to review and approval by the full board; and ensure compliance with regents’ compensation policies.

Parsky explained that the committee will hold many of its meetings at regular meetings of the Board of Regents so that other board members may attend. It will not have the authority to approve compensation, as this responsibility will remain the sole responsibility of the full board.

Outside audit ordered

Parsky, with the concurrence of President Dynes, also ordered an independent audit of current compensation arrangements and departure packages for all positions that now require compensation approval by the Regents under Regents’ Resolution 61.

Regents’ Resolution 61 was adopted in November to provide greater Board of Regents oversight and accountability in compensation matters, while at the same time helping the university reach and maintain market-competitive salaries for all employee groups systemwide. Among its objectives:

To establish goals to obtain, prioritize and direct funds to the extent they are available, to increase salaries to achieve market comparability for all groups of employees over the 10-year period from 2006-2007 through 2015-2016;
To adopt procedures for determining and setting compensation levels for senior leadership that are clear, comprehensive and accountable, the purpose of which is to strengthen regental oversight of senior leadership compensation and to help ensure that decisions regarding executive compensation are appropriate to the markets within which UC competes.

Compensation task force members named

Additionally, seven distinguished state and national figures were named to serve on the task force to review UC compensation policies and practices, including disclosures, and provide recommendations to the Board of Regents.

The task force will be chaired by former California state Assembly Speaker Robert Hertzberg and Regent Joanne C. Kozberg and will report to the Regents.

“Former Speaker Hertzberg and Regent Kozberg have recruited a number of distinguished individuals from outside the university to bring their perspectives to the task force,” said Parsky. “I am requesting them to give us a candid, forthright and uncensored set of recommendations, all of which will be made public.”

The members include:

Dede Alpert, a former California State Senate and Assembly member who chaired the Senate Appropriations Committee, the Joint Committee on the Master Plan for Education, and the Education Committees of both houses. She currently serves as special adviser for public policy and strategic planning for the Sacramento-based law firm Nielsen Merksamer.
Clifford Brunk, chair of UC’s Academic Council. He is a professor of cell and molecular biology at UCLA, where he has been on the faculty since 1967. He has served on numerous Academic Senate committees and has chaired the biology department at UCLA and was divisional chair of the UCLA Academic Senate.
James J. Duderstadt, president emeritus of the University of Michigan, university professor of science and engineering, and director of the Millennium Project. Duderstadt currently serves on or chairs several major national study commissions, including the Secretary of Education's Commission on the Future of Higher Education.
B. Kipling (Kip) Hagopian, managing partner of Apple Oaks Partners, LLC, a private investment company. Hagopian co-founded Brentwood Associates, a high-technology venture capital and private equities firm in 1972. He currently serves on a number of corporate and non-profit boards, and has been a witness at several government hearings on tax policy, venture capital and securities law.
Jay T. Harris, former publisher of the San Jose Mercury News who now holds the Wallis Annenberg Chair in Journalism and Communication at the Annenberg School for Communication at the University of Southern California. Harris, who joined the USC faculty in 2002, also serves as the founding director of The Center for the Study of Journalism and Democracy.
Monica C. Lozano, a member of the UC Board of Regents who is the president and chief operating officer of La Opinión, the largest Spanish-language daily newspaper in the U.S., which was founded by her family. She serves on numerous corporate and non-profit boards, and is a former member of the California State Board of Education from 1999 to 2001.
James E. Morley, Jr., president and CEO of the National Association of College and University Business Officers, a Washington, D.C.-based organization dedicated to higher education administrative and financial issues. Morley is a former senior vice president at Cornell University.

The task force’s charge will include the following:

Review the current regents' compensation policies and practices for faculty and senior managers, and recommend appropriate changes, if needed;
Review current disclosure policies and practices, and recommend appropriate changes to achieve the university's responsibilities as a public institution while also protecting the personal privacy rights of university employees as required by law.

In doing so, the group will review the compensation policies and practices, as well as the disclosure policies and practices, for faculty and senior managers at other universities.

The task force will report back by March 1, 2006, with its recommendations, and it will provide an interim report at the regents’ January 2006 meeting.

The new regental compensation committee, the call for an outside audit, and the task force, are part of a larger set of recent and ongoing university efforts designed to address questions about UC’s compensation and personnel practices, and to support the university’s ongoing commitment to transparency and public accountability.

Other efforts include:

-- The UC Board of Regents’ approval of a new structure and approval process for senior management compensation designed to strengthen regental oversight and market appropriateness of senior leadership compensation;
http://www.universityofcalifornia.edu/news/2005/nov16.html

-- Establishment of a Web site to address compensation issues raised by the San Francisco Chronicle;
http://www.universityofcalifornia.edu/news/compensation/

-- The regular online reporting of university budgets, financial statements, and salaries for senior personnel approved at regents’ meeting;
http://budget.ucop.edu/pubs.html
http://www.ucop.edu/ucophome/busfin/reports.html
http://www.universityofcalifornia.edu/regents/aar/aar.html

-- Communication mechanisms that have expanded opportunities for ongoing dialogue with UC leadership about university issues, including compensation and personnel matters;
http://www.universityofcalifornia.edu/president/desk.html
http://www.universityofcalifornia.edu/news/compensation/feedback.html

# # #