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Anger Grows Over Executive Compensation

Audio

Aired 12/17/10

The UT's Watchdog team reports that the former head of the San Diego YMCA had a pay package worth nearly $1 million -- twice as much as YMCA leaders in Los Angeles and Chicago. The newspaper also investigated rich medical benefits for board members at local water agencies. We discuss the growing anger over executive compensation.

The UT's Watchdog team reports that the former head of the San Diego YMCA had a pay package worth nearly $1 million -- twice as much as YMCA leaders in Los Angeles and Chicago. The newspaper also investigated rich medical benefits for board members at local water agencies. We discuss the growing anger over executive compensation.

Guests

Ricky Young, watchdog editor for the San Diego Union-Tribune

Alisa Joyce Barba, independent editor with NPR member stations

Scott Lewis, chief executive officer of voiceofsandiego.org.

Read Transcript

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

GLORIA PENNER: Last week, the UT's watch dog reported that former San Diego YMCA president, Richard Collato, was paid more than $954,000 in the year that ended June, 2009. He also was paid more than $380,000 for serving on the boards of Sempra and WD40. And that's a cool $1,000,334. I added them all up together. So Ricky, other than giving us all this money that's coming in, that came into Mr. Collato, what was the purpose of the report?

YOUNG: Well, at the watch dog, we've been doing a lot of stuff with public compensation. And we've sort of recently decided to branch out and look at nonprofits as well. A big part of nonprofits is they're tax exempt. And they take money from the public. And so for those two reasons, we started looking at nonprofits in addition to public compensation and salaries. And so Mr. Collato was pointed out to us actually by some other people in the nonprofit community who said, wow, that's a lot of money if you look at that. Of and you upon, it was to some extent an anomaly. The YMCA pointed out to us that that included a $360,000 bonus that he was paid as part of a three-year retention deal, and it was all paid out in the last year. But even in the previous years issue he was paid 4, 500000, and we compared his pay to the heads of the YMCA in Chicago and Los Angeles, and even the national YMCA outfit, and he was paid more than all of those, even in the year when he didn't have the outsized bonus. Now, the people at the Y say he's well worth it, and that he turned them around from, you know, some pretty low times when he started 30 years ago to now being one of the more robust and successful Ys in the country. And we had a lot of feed back from readers who said they're very happy with the Y and they think it's very well run. But we talked to some members of the Y who were also kind of shocked by the salary. And some experts in approximate nonprofits who said this kind of salary structure calls into question the very purpose of a nonprofit, which is to be nonprofit.

GLORIA PENNER: Nonprofit. But nonprofit means that you don't have any share holders who get a portion of profit that's made. If your revenue is more than your expenses, Alicia, then you certainly can put that extra money back into your operating expenses, back into your compensation packages, what's wrong with that?

BARBA: Well, you know, I think that part of it is a mission -- the reason why a lot of these things are nonprofits is they have a mission to serve the community. And so that to plow it back into high, up, almost private sector compensation publics, it doesn't really make a whole lot of sense. It seems like more of that money should be [CHECK] and into the community. On the other hand, I can see a just compensation for a higher compensation package. If you're trying to interest and trying to retain really high level executives that will make a -- that will run a good business and run it well.

GLORIA PENNER: There's been a point made by several people that there should be federal limits on nonprofit executive compensation when there are contributors who get tax deductions for giving to these organizations 678 let me ask our callers about this. Are you concerned about the amount of salary that some nonprofits are giving out in San Diego? We have had an issue with the American red cross, I think it happened about seven years ago where there was criticism of the money that the CEO was making then. So I ask you, do you think that we really should limit the amount of money that the chief executive officer of a nonprofit should get? Let's talk a little bit about that situation. Scott Lewis, does San Diego have a history of paying large amounts to heads of nonprofits such as that instance with the American red cross seven years ago.

LEWIS: I'm not familiar with too many more cases. I think there are three things to keep in mind when you look at a situation like this. . You have to evaluate, if you look at an employee's or a CEO's compensation on something like that. You have to look at three things. One, did the right people decide to give him or her that compensation or not? And in the case of a nonprofit, it's the board of directors. The second thing is, was it disclosed? Was it properly disclosed? Were all parts of it disclosed and that sort of thing. And the third thing then is how does it compare and how does it work out? Now, the first two in this instance look like they were okay. I mean, the disclosures were all there, right are Ricky?

YOUNG: Yeah.

LEWIS: The board of directors were the ones that gave it to Mr. Collato. So those two look okay. I think what the UT pointed out that was interesting was that the third element of how it compares to counterparts across the country seemed a little bit out of whack. And a nonprofit is tricky, and I run one, and [CHECK] our cost efficiency and what not. And so by being open, you make that, be and it's not like a tax system where people are forced to give money to it. They choose to. And they're therefore guaranteed access to information about how it's going so they can make that decision. [CHECK].

GLORIA PENNER: I would like to get to our callers as quickly as possible. All of our lines have lit up on this one. We'll start with Ted in downtown. Ted, you're on with the editors.

NEW SPEAKER: Hi, I guess my comment was, I think it goes a little deeper than just looking at compensation. . And that you'd want to look at how this individual had raised money or brought in resources to the institution. Because I've been a member of the Y for 20 years, and I think that the past years there's been a real improvement in the facilities and it looks like a lot of corporate donors and that sort of thing. So if his compensation is high, I think you also want to look at over all what the results of his tenure has been.

GLORIA PENNER: Okay. Let's hang onto his question. And hear from Grace in San Diego. Ricky, maybe can answer both of them. Grace, you're on with the editors.

NEW SPEAKER: Hi, good morning, I was just calling because my sister actually works for the YMCA here in San Diego. And she's -- [[CHECK]] they are deprived of so many things that a regular office needs to operate effectively. And I cannot believe this comment recently about how much money this person makes. And I think quite unfair when that money could go back to help people work properly in this community. Especially when you see that in comparison to others, he's getting paid a lot more.

GLORIA PENNER: So, now you have two points of view, Ricky, to go with. Go ahead.

YOUNG: Right. . The first caller wondered how many money the guy's brought in. And Gloria, you mentioned at the top of this segment, that he's on the board of Sempra and WD40 and collected $380,000 for that service on those boards. You know, which certainly adds to his compensation, but at the same time, it's rubbing shoulders with people who he can hit up for money, to put it crassly. But we haven't necessarily looked at this, and they don't necessarily disclose their donors, but I assume that part of his value to the Y is fundraising.

GLORIA PENNER: All right, but what about what Grace says? That they're cutting way back on what they're able to give to their staff to get their job done?

YOUNG: Well, one person's cut back is another person's efficiency. And maybe he's brought efficiencies to the Y that have happened as well.

GLORIA PENNER: Okay, well, we're starting the conversation with that. Two different points of view on how you feel about having the head of your nonprofit collecting a really big salary. We'll be back in just a moment to continue the discussion. This is the Editors Roundtable, I'm Gloria Penner.

This is the Editors Roundtable, I'm Gloria Penner. At the round table today, Alisa Joyce Barba, Scott Lewis, Ricky young. Right now we're talking about the compensation packages for people who are the heads of nonprofits in San Diego. We heard that there's almost a million dollar package that the CEO of the YMCA got last year, and we're trying to figure out whether there's a good thing or a bad thing. If they deserve it, if they earn it, shouldn't they have it? Or should there be a limit on how much CEOs of nonprofits should really be able to earn? Our number is 1-888-895-5727. And Jim in La Jolla is with us now. Jim, you're on with the editors.

NEW SPEAKER: Yeah, I was wondering how is the salary set for the CEO? Is it done by a board? And does that -- do the members of the board eventually, do they make it to CEO? When they select a CEO, what are the chances it comes from that board? In a sense, does the board know that the salary is way too high when they think they've got a shot at being in that position in the future?

GLORIA PENNER: Wow, that's a different point of view. I hadn't even thought of that. Let me go to Scott on that one. You have a board, do members of the board think that maybe they can take your job.

LEWIS: No. That would be a pretty highly unethical environment if that were true. Ricky can confirm whether -- but I'm sure that the board decided on his salary based on whatever calculation they did about whether this was a marketable salary or not. My understanding is he's bounced around YMCAs for decades and has built a reputation that they felt made it worth it.

GLORIA PENNER: Alisa?

BARBA: They've just hired a few CEO, and her salary coming in is $400,000. So again, where do these numbers come from?

YOUNG: With the chance for a hundred and $20,000 a year bonus.

BARBA: But that hangs it a comparable salary with other CEOs across the country?

A. But it also fits in, because women tend to earn a percentage of what men earn on all levels. So you don't get a hundred percent salary with men's salaries and women's salaries. Ricky.

YOUNG: Yeah, the board does set the salary. [CHECK] I think more the factor is boards are recruited by CEOs, they're there for their connections in community, often for fundraising and other matters. And they sort of follow his leadership, and this far he's able to shape policy on a number of things, including his own salary, is I think is probably more the problem than him positioning to take his job. I did want to follow up on [CHECK] we did ask the Y to disclose his salary for the year ending June of this year, the fiscal year.

GLORIA PENNER: That's before he retired?

YOUNG: Right. And they declined to do that. So they didn't disclose that, A, and B, we had some criticism for people saying that our reporting would hurt contributions and public perception of the Y. And I just wanted to say, you know, the disclosure is -- should be a good thing. And if they think that the public knowing this is gonna be bad for them, then I think they should reconsider their policy, not criticize us for letting people know.

GLORIA PENNER: Well, I would think you would hear, but when the local rate crosses president salary was under [CHECK] contributions to that dropped considerable. So when something's found to be at fault or lacking in some way, it does affect contributions I'm sure. Okay, you, the watch dog, also brought up something else which I'm just gonna have you touch on. It pointed to local water agency board members who don't get paid, it's a volunteer kind of thing, and it's part time. They attend a few meetings a week or a month. But some of them get full medical insurance. Some get life insurance, dental, vision insurance. Who pays for this?

YOUNG: Well, the rate pay ares of those water agencies pay for that. And it's a tiny part of their budgets which largely go to buy water. But there are people sort of now noticing this. Of these are fairly obscure agencies. It crops up, we've shined a little light on it. And their benefits are quite good. They have basically the same plan as the legislature. But the state lawmakers at least contribute to the premiums. These guys don't even do that. They get a hundred percent across the board health coverage. I should say that's not all the water agencies in town. There's three of them, including, I think Valley Center, who don't take this at all. And there's a new slate of candidates that won in Borrego this past November who are gonna put an end to this benefit that their predecessors had just buzz I think people are starting to think that a water agency that doesn't even give this benefit to its part time employees, shouldn't be giving this benefit to its board members.

GLORIA PENNER: Before we leave the subject, we had a caller calling in saying the new CEO of the YMCA is not a woman, a man. And I think it's Baron Herdelin-Doherty is his name so --

YOUNG: I wondered if Alisa knew something I didn't. Because the name barren I had assumed was a man. But you never know. I knew a woman named Knight once.

GLORIA PENNER: Let's move on to another man.

Comments

Avatar for user 'philosopher3000'

philosopher3000 | January 9, 2011 at 6:53 a.m. ― 3 years, 6 months ago

Welcome to the new scam, non-profit public service for million$.
Sempra Energy is the YMCA's biggest "Detonator.
Ever wonder why they don't use Solar Hot Water or Renewable Energy at the YMCA?

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Avatar for user 'philosopher3000'

philosopher3000 | January 9, 2011 at 6:56 a.m. ― 3 years, 6 months ago

$1-million/year salary, divided by $600/year membership fee = $1,666 YMCA members to pay or one man's salary.

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