Tuesday, July 26, 2016

UK President Eli Capilouto's Golden Parachute

These days, Kentucky’s state universities tend to top the news headlines with dramatic changes among the top leadership. Kentucky State University President Raymond Burse also recently stepped down and Wayne Andrews of Morehead University and Gary Ransdell of Western Kentucky University both declared their plans to retire next year.

Then there are the stories of annual budget cuts. State funding for University of Kentucky had been decreased by $70 million since 2008. With Governor Matt Bevin’s most recent additional budget cuts, Eli Capilouto announced layoffs and a 5% tuition increase, the maximum annual tuition hike allowed by the Council for Post-Secondary Education.

Yet in late June, UK President Eli Capilouto received a 48 percent increase in his base salary, bringing it to $790,000, and a contract extension. In corporate America, President Capilouto’s contract revision is called a Golden Parachute, which are benefits given to a top executive (or top executives) in the event that the company is taken over by another firm and the executive is terminated as a result of the merger or takeover.

According to President Capilouto’s new contract, if his job is terminated prior to June 30 2018, he will receive rest of his base salary that he would have received until 2021 and a $1.74 million termination penalty. This means, if Matt Bevin terminates Capilouto’s contract tomorrow, the University will be obligated to pay its departing president more than $5 million.

President Capilouto is a Machiavellian genius and most likely already predicted the public uproar and backlash that his generous salary increase and contract extension would create amid budget cuts and layoffs. However, I strongly believe the move to increase his salary and to change his contract terms is driven by fear as much as driven by greed. President Capilouto is fearful of sharing University of Louisville President James Ramsey’s destiny.[R1] 

As untimely and unfair the salary hike for President Capilouto might seem to the uninitiated, there was a sense of urgency in this move. He is aware that his involvement with UK’s secretive foundation might be his downfall. Sooner than later, Kentucky Attorney General and Governor Matt Bevin will start to look into the financial dealing of UK’s $200 million Kentucky Medical Services Foundation (KMSF).

I strongly believe State Auditor Mike Harmon should also start auditing KMSF's books and financial dealings during the last decade. Since Previous Kentucky Attorney General Jack Conway already determined that KMSF is a public entity, we should question why UK's Board of Trustees are not overseeing UK's foundation, as they used to few years ago.

What is happening at UK today is not much different than what occurred at the University of Louisville. One only needs to follow the money trail, which always leads to the UK's secret foundation, Kentucky Medical Services Foundation. 

Dr.Lachin Hatemi, a graduate of the University of Kentucky-College of Medicine, is an Indianapolis physician who has filed open-records requests about the Kentucky Medical Services Foundation.