Regents Restructure Pay Scale for Senior Managers

By Ioana Patringenaru I January 23, 2006

The University of California Board of Regents approved a new salary structure for senior management positions and new rules for severance agreements during a meeting at UCSD last week. Regents also responded to some of the criticism UC has faced over its executive compensation packages.

"We take this very seriously," Regent Chairman Gerald Parsky said during the regents meeting on Jan. 18 at UCSD. "We're not paying lip service to this area."

Regents already had ordered a 10-year audit of executives' compensation and created an independent task force to look into compensation issues. The measures will have a significant impact, Regent Judith Hopkinson predicted.

"I suspect we'll see a fairly major overhaul of policies and procedures," she said.

The measures come at a time when UC faces increased scrutiny of its compensation practices. The San Francisco Chronicle ran a series of stories stating the university system paid out $871 million in extra compensation for its best-paid employees. The UC Office of the President recently released a breakdown showing that $600 million of that money went to health sciences faculty for treating patients and doing research and to campus faculty for teaching and research they conduct during the summer. The statement also said senior managers received $7 million in extra compensation, and only $1.2 million of that came from the state's general fund and student fees.

Meanwhile, at their meeting last week, regents approved a new interim policy that will allow them to scrutinize severance agreements more closely. Regents will now vote on all agreements for top executives including the UC President, Chancellors and Medical Center directors. They also will vote on any separation agreements that carry a price tag of $100,000 or more. The new policy will replace past practices that some regents described as murky. "Our policies are difficult, unclear, divergent and not organized," Regent Hopkinson said.

Regents also approved a new pay scale for senior management positions. The goal is to have a clear and equitable plan for salaries while offering competitive compensation packages, according to UC documents. For now, no one will receive raises as a result of this action, Hopkinson said. Regents voted to place 284 positions on the new salary grid, but they didn't take action to give pay raises to the individuals in these positions. Regents will review the new salary structure every year, with the first review due in six months, Hopkinson said. Regents will continue to vote on salaries for UC's top 32 positions. The UC President will determine salaries within the new structure for all other positions that make more than $168,000 a year. But regents will still approve pay raises that place an employee's salary above the maximum range for their position. Also, this academic year, regents will approve any salaries of $200,000 or more and any pay raises for senior managers of 7.5 percent or more.

Regents already asked consultant PricewaterhouseCoopers to examine the compensation for the 32 top positions in the UC system over the past 10 years. The audit will look at salaries, benefits, bonuses and expenses for these positions, Parsky said. The firm will hopefully complete the first three phases of the audit by the end of March, he said. The goal is to see whether the executive's compensation was reported fairly and in compliance with UC's policies, Parsky said. A task force also is looking into these issues. Members include Regents Monica Lozano and Joanne Kozberg and former California Senator Dede Alpert.

"The goal is to ensure that UC is a leader in terms of transparency," Kozberg said.

Also, California's legislators asked the state auditor to conduct its own audit into UC's compensation practices. At last week's meeting, UC leaders pledged to work with the legislature.