Handbook of Operating Procedures 3-3150

Establishing Compensation for Highly Compensated Employees

Effective October 25, 2025
Executive Sponsor: Vice President and Chief Operating Officer
Policy Owner: Associate Vice President of Human Resources

 

1. Policy Statement

In compliance with The University of Texas System (UT System) Policy UTS 144, Establishing Compensation for Highly Compensated Personnel, UT System Institutions will establish and maintain a record of how the recommendation for total annual compensation of Highly Compensated Personnel was derived.

2. Reason for Policy

To accomplish its mission, The University of Texas at Austin (University) must attract, retain, recognize, and reward the performance of high-quality, dedicated employees of competence and distinction. The market competition for such employees among employers is often intense. The compensation of highly compensated employees will be set in such a way that will demonstrate the level of compensation is reasonable when provided with full information about the decision. Moreover, this policy is intended to ensure adequate documentation is maintained to support the reasonableness of the compensation paid, and to follow the UT System Policy and Regents’ Rules and Regulations.
 

3. Scope & Audience

This policy applies to all University employees, including faculty and administrative and professional staff, who meet the definition of Highly Compensated Employee.
 

4. Definitions (specific to this policy)

Highly Compensated Employee:

Employees whose total annual compensation exceeds, or may exceed, $1 million, and who are not covered in Regents’ Rules and Regulations, Rule 20203, Compensation for Key Executives.

Total Annual Compensation:

Salary or wages, practice plan salary supplements, incentive plan payments, and unpaid deferred compensation, excluding employer-provided insurance, expense allowances, employer contributions to the Teacher Retirement System of Texas and the Optional Retirement Program and other fringe benefits.
 

5. Website (for policy)

https://secure4.compliancebridge.com/utexas/public/getdoc.php?file=3-3150
 

6. Contacts

7. Responsibilities & Procedures

1. Policy

1. The University is charged with setting compensation levels for highly compensated employees in such a way that compensation is reasonable, and adequate documentation is maintained for supporting the reasonableness of compensation paid. The University adopts this policy to comply with UTS 144, Establishing Compensation for Highly Compensated Employees. The process for setting the initial compensation of highly compensated employees will include, as a minimum, the factors listed below:

1. the nature of the duties of the position, including level of responsibility as outlined in the job description;

2. the need of the organization for the services of the person whose compensation is being determined;

3. the person’s background, experience, knowledge in the field, accomplishments, salary history, and time devoted to the organization;

4. the employee’s contributions to the organization’s goals, objectives, and success;

5. the levels of compensation paid to similarly qualified people performing comparable duties in organizations in the market from which normally recruited, e.g., local, regional, national;

6. the nature of the organization, e.g., purpose, size, and complexity;

7. the relationship to the compensation of other employees;

8. budgetary constraints;