University of Texas Endowment Names Pension Fund Veteran CEO

(Bloomberg) -- The University of Texas Investment Management Co. named Thomas Britton “Britt” Harris, who runs one of the largest U.S. pension plans, as chief executive officer to help boost performance at the $40 billion fund.

Harris, 59, chief investment officer at the Teacher Retirement System of Texas, succeeds Bruce Zimmerman, who stepped down last year from Utimco, as the university endowment money manager is known. The Utimco board approved the appointment Friday at a board meeting in Austin.

Harris will also hold the CIO position and manage money for both the University of Texas and Texas A&M University. He starts Aug. 1, according to Utimco. Mark Warner, one of Utimco’s senior directors, will continue to serve as interim chief executive officer until then.

New Leadership

Turnover among university investing chiefs has been on the rise as investment performance has waned, with many institutions producing returns that trail endowment spending. Harvard University and more than a half-dozen other schools have sought new leadership in the past year.

“Britt is a highly successful endowment manager with an outstanding track record,” Jeffery Hildebrand, Utimco’s chairman and vice chairman of The University of Texas System Board of Regents, said in a statement. “He has provided both steady leadership and strong returns everywhere he has served.”

Utimco had a five-year annual average return of 5.6 percent through June 30, 2016, trailing the average gain of peer endowments, which was 7 percent, according to a report from a board meeting last year.

The board has been frustrated by the results in recent years. Utimco had shifted out of multistrategy and event-driven hedge funds as it sought to lower its exposure after returns disappointed. It also reduced exposure to hedge funds more broadly. Utimco also attempted to amp up returns by expanding the buyout, venture capital and real estate portfolios.

Interim Chief

Austin-based Texas Teachers is the state’s largest pension plan, and one of the largest in the U.S., with $140 billion, according to the statement. Jerry Albright, deputy chief investment officer of the Texas plan, will serve as interim chief investment officer, and the board will consider plans at its July meeting for filling the position, according to a statement by the pension plan.

While Harris managed more money at the Texas fund, his compensation will almost certainly be higher at Utimco, according to Charles Skorina, an executive recruiter based in San Francisco who specializes in chief investment officers. Because Utimco is a nonprofit, it has the flexibility to pay more for its top executives versus a public pension fund, he said.

Harris’s salary was $551,250 as of Sept. 1, according to a document from the Texas pension plan. He also received $2.2 million in bonuses during the fiscal years 2009 to 2015, according to the Austin-American Statesman newspaper. Zimmerman had a compensation package of $4.1 million in 2014, according to a Utimco tax filing. That included a base salary of $659,862, a $1.8 million bonus and deferred compensation of $1.6 million, according to the filing.

Longtime Manager

Harris, who had been CIO of the Texas plan since 2006, previously managed the pension fund at Verizon Communications Inc. and spent six months as CEO at Bridgewater Associates, the world’s biggest hedge fund.

Utimco has about 75 employees, including support staff, according to its website. The investment management division at the Teacher Retirement System has 150 employees, according to spokesman Howard Goldman.

“He’s a beautifully safe choice,” Skorina said of Harris. “He knows the politics. He knows the culture down there. He’s an insider.”

The University of Texas is one of the largest public university systems in the U.S., with 14 institutions. The school said Utimco, created in 1996, is the first nonprofit investment corporation formed by a public university and is under the authority of the system’s board of regents.

“I appreciate the strong tradition and profound responsibility that comes with stewarding and significantly increasing the value of endowment funds that fuel the missions of the University of Texas and Texas A&M systems,” Harris said in the statement.

--With assistance from Ivan Levingston

To contact the reporters on this story: Michael McDonald in Boston at mmcdonald10@bloomberg.net, Lauren Etter in Austin at letter1@bloomberg.net.

To contact the editor responsible for this story: Mary Romano at mromano6@bloomberg.net.