Rowling's Resignation

Bruce Zimmerman (l) and Robert Rowling: The moment the UTIMCO chair quit

"You can have my job. I resign."

It sounded like an empty threat when University of Texas Investment Management Company (UTIMCO) chair Robert B. Rowling told the Senate Finance Committee on Feb. 5 that he wasn't going to stick around to be questioned about the fact his board rubber-stamped $2.3 million in bonuses for staff after the economy took a nose dive. Or over UTIMCO's ethics policy that allows directors to invest in the same funds as the firm. Or, as Sen. John Whitmire, D-Houston, pointed out, that the UTIMCO board is a bunch of rich white guys that always vote the same way. He actually stuck around until the end of the meeting, but his name has now been bounced to the Previous Board Members page on their web site.

UTIMCO is the private investment firm created by the state in 1996 to run the permanent endowment funds for UT and A&M. That the body's savaging by senators never got around to the fact that UTIMCO actively rejects the idea of ethical investment is a sign of how bad the day went for Rowling.

The entire meeting is on-line, and it's worth catching some of the highlights.

The argument got heavy around the 2 hour mark when the issue turned to the bonuses paid to UTIMCO executives, and around 2 hours 20 minutes Sen. Robert Duncan, R-Lubbock, opened up the question of whether the UTIMCO board had any discretion in making the payments. Rowling claimed that, because all these bonuses dated back to before the recession kicked in, he was legally obligated to pay out.

That cut little mustard with the Finance Committee. Sen Royce West, D-Dallas, was unconvinced there was any legal obligation on the board to authorize these payments. Others were baffled by the idea that Rowling didn't see this was a bad idea. "Even though the fund has tanked," Chairman Steve Ogden asked Rowling about the $1 million bonus paid to UTIMCO CEO Bruce Zimmerman with obvious incredulity in his voice, "he deserves the maximum possible bonus?"

But skip to 2 hours 30, when Sen. Kevin Eltife, R-Tyler, balked at the idea of bonuses being paid after the fund dropped 27%. He rejected the old shibboleth that the public sector needs to pay like the private sector to attract talented employees. "Most of your peers don't have a job any more," he exploded, "and a lot of your peers turned down their bonuses."

That could be the most relevant moment of the entire discussion: With the Obama administration looking to limit executive pay-outs, there's finally some discussion of how much the financial industry throws cash at its staff – whether they've done anything to earn it or not.

Now if someone can explain why that whole "gotta compete with private sector pay" only seems to apply to upper management …