UTIMCO gets new chief

Robert Rowling, chairman of the University of Texas Investment Management Co. (UTIMCO), resigned late last month in the midst of a Texas state senate hearing about the system’s falling capitalization.

His decision does not appear to have been planned, but instead a reaction to intense grilling over UTIMCO’s decision to pay performance bonuses to members of its investment staff.

Both Republican and Democratic members of the senate finance committee accused the UTIMCO board of directors of “shattering” the public trust for a $1.05 million bonus given to UTIMCO President Bruce Zimmerman, plus another $1.3 million doled out to the rest of the staff.

In November, UTIMCO paid bonuses based on performance for the year ending June 30, 2008, a period in which the system had made money and outperformed most of its peers. However, those details did not seem to assuage the legislators, who argued that the bonuses should have been renegotiated by the system, or declined by the recipients.

After lengthy questioning by State Sen. Steve Ogden (R-Bryan), Rowling said:

“I’ve spent half my life at the University of Texas and UTIMCO. I volunteer. I travel. They never reimburse me for this stuff. It costs me a lot of time and money. The sacrifice of my family. I sacrificed my friends and, you know what? You can have my job, I resign… I’m outta here. You come here and abuse him [Zimmerman]. We did what we thought was right. We thought we had an obligation. Some people say you can walk away from your contracts, but we had an obligation.”

Following Rowling’s resignation, UTIMCO’s board of directors elected Erle Nye as his replcement. Nye was appointed to the UTIMCO board in March 2005 and had served as the chairman of the UTIMCO Audit and Ethics Committee, according to the Associated Press.

UTIMCO was created in 1996 to make investments on behalf of the University of Texas and Texas A&M university. It is a limited partner in more than 70 venture capital funds, according to a report it released on Nov. 30, 2008. Among the firms that have raised money from from UTIMCO are Austin Ventures, Foundation Capital, Foundry Group, Integral Capital, Morgenthaler Venture Partners, Technology Crossover Ventures and Union Square Ventures.

The one-year return for UTIMCO’s private investments (which include VC, buyout and other private assets) was -8.57%, compared to -38.09% for the S&P 500 Index, as of Nov. 30, according to the report.

Private investments returned 12.23% (vs. -8.67 by the S&P) over a three-year period, 16.3% (vs. -1.39% for the S&P) over a five-year period, and 9.78% (vs. -0.93%) over a 10-year period, according to the report.

UTIMCO’s total assets under management hit a high of $23.5 billion on Aug. 31, 2007, but they fell by about 24% from that peak to $18.9 billion as of Oct. 31, 2008, in the wake of the Wall Street financial crisis, according to Fitch Ratings. —Dan Primack with additional reporting by Lawrence Aragon