Spurred by a reader's question, I reached Little Rock laywer, Peter Kumpe, vice chairman of the Board of the University of Arkansas Foundation, about the recent decision of the UA Board of Trustees to give Fayetteville Chancellor David Gearhart a significant pay boost in the form of an annual $225,000 payment in deferred compensation until he retires from the post. Such payments typically accumulate tax free. The money is to be provided by the private UA Foundation.
How can the Board of Trustees make an annual commitment to an employee with money from a private organization it doesn't control?
Kumpe said that the Board of Trustees can only offer and that, of course, it would be up to the Board of the Foundation to fund the commitment. He said, to date, the Board of the Foundation had not discussed or approved an expenditure to provide deferred compensation to Gearhart. He said there'd been discussions "at the staff level" of the general issue of using Foundation money for deferred compensation to key employees. But he said it would be proper and he added his comments to those of others complimentary of the work Gearhart has been doing.
"If the Board of Trustees thinks some type of commitment to the chancellor is a good idea -- and if it's consistent with spending policies of the foundation and we're within terms of gift agreements -- there’d be no reason to question doing that," Kumpe said.
Kumpe said that the Foundation is independent and operates that way, though its aims may parallel those of the Board of Trustees, which appoints some of the Foundation Board's members.