It's deja vu at the top of the annual association salary survey
In new era of transparency, perquisites and deferred compensation continue to fall out of favor at not-for-profit organizations
Under the weight of public scrutiny and a turbulent period in the financial lives of tax-exempt associations, many top executives at healthcare-related associations took home less money in 2009 than they did the year before.
According to the 10th annual Modern Healthcare survey of publicly filed tax forms for nearly five dozen industry associations, average total compensation for CEOs fell 5.6% from the prior year, even though organizations’ revenue increased 12% in the 2009 tax year.
Transparency appeared to be an issue driving pay, as associations continued to curb many perks such as auto and housing allowances and country club memberships now that they are forced to disclose them on public filings in the second full year of the revamped Form 990 tax disclosure.
One organization on the Modern Healthcare list that did not disclose such information was the Health Industry Group Purchasing Association, or HIGPA, which has been pushing the transparency-challenged healthcare group-purchasing industry to open up even while it declines to disclose basic compensation information that the 56 other organizations on the list do.
Of the 50 executives for whom information from 2008 and 2009 was available, average total compensation fell to $916,559 during the 2009 tax year, down from $971,274 the year before.
The analysis, which is the first to be able to use two years’ worth of comparable data from the IRS’ recently revamped Form 990 tax disclosures, shows that the changes in compensation came primarily in two areas: perquisites and deferred compensation.
Average base compensation rose 5%, and average bonuses in 2008 rose by 13%. However, those gains were more than offset by the 35% average drop in perks listed under the category of “other compensation” and a 36% drop in deferred compensation payments. The cost of tax-exempt benefits that the associations provided to the executives rose 14% during the year.
For the second straight year, the top pay on the list went to Billy Tauzin, former president and CEO of the Pharmaceutical Research and Manufacturers Association. Tauzin earned total compensation of $4.6 million, up 3% from 2008. In all, nine executives on the list earned more than $1 million.
The magazine annually surveys pay at healthcare-industry membership associations and advocacy organizations, which had budgets ranging from the American Health Quality Association’s $1.4 million in revenue to the Blue Cross and Blue Shield Association’s $420 million. The average was $40 million.
On average, at the 53 associations for which 2009 tax year data was available, organizational revenue increased by 12%. However, the average fell to 6.4% when one statistical outlier was removed—America’s Health Insurance Plans, which had a 165% increase in revenue, to $184.7 million from $69.7 million the year before.
Karen Ignagni, president and CEO of AHIP,
received a 4.7% cut in total compensation in 2009, driven primarily by her 29% drop in perks as payment. Her $500,000 bonus in 2009 was the same as the year before.
However, such detailed information was not available for all of the not-for-profits.
Several of the organizations on the list used an apparent loophole in the disclosure rules to limit how much information is published, building on a trend in the growth of outsourcing of management of associations.
HIGPA is one of several associations on the list that use association management companies to handle the day-to-day aspects of management, including compensation of all employees. But unlike the other organizations, HIGPA does not disclose what the outside firm, Chicago’s SmithBucklin, pays President Curtis Rooney.
HIGPA reported only that $330,750 of the $1.1 million it paid to SmithBucklin went to pay for “management.” HIGPA had $2.1 million in total revenue in 2009.
The instructions that accompanied the Form 990 for 2009 say that any current officer’s salary “can be reportable” on a related form called Schedule L if the employee is paid by the outside firm. HIGPA did not include a Schedule L.
Mike Nikolich, senior vice president and chief marketing officer for SmithBucklin, says the association management company business model is fundamentally different from how most
For the second straight year, former PhRMA chief executive Billy Tauzin tops our annual survey of
compensation for association executives.