by "davesaddiction @ opposite-lock.com" (davesaddiction)
Published 03/06/2017 at 14:34
by "davesaddiction @ opposite-lock.com" (davesaddiction)
Published 03/06/2017 at 14:34
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STARS: 0
Saw headline, linked article was behind pay wall, so did more digging. To begin, I really don’t have an issue with capitalism and people being able to make whatever money they can get someone to pay them. Someone wants to pay you millions of dollars to do what you do? Great - I hope you live & give generously, start your own company and hire a bunch of people. That said, it seems like corporate officer compensation has gotten ridiculously out-of-whack. What can one person actually bring to a company that is worth tens of millions of dollars every year? If their compensation is purely based on the performance of the corporation, and it made billions in profit one year, I can get it, but the base pay for many of these CEOs is millions of dollars, before bonuses & stock, etc. (Most CEOs’ base pay is around 10 percent of total compensation, fwiw.)
Anyway, that’s just a preface, as this is the environment in which these charities operate and must hire within. I’m not trying to pick on the United Way, but it was a company mentioned at the top of the article that first piqued my interest. The United Way brought in $3.9 billion last year, so we are talking about a massive enterprise. 86% of the money they raise does go out - maybe that’s a pretty good percentage, I’m not sure. Regardless, at the end of the day, the employees of this organization are working for a charity, whose primary purpose should be to take the money that comes in and do good with it. Is $1MM+ really an acceptable compensation for the person heading a charity? If he could only make half, or a third, or a quarter of that, would he really do more poorly at his job? If so, is he really the right person for the job in the first place? If he’s making that much, you know there are plenty of others making $350k and $250k a year as a base salary. Should working for a charity be a career choice you can make to make yourself wealthy? I get that you have to pay to get the best people for the job, but it still seems a bit grotesque in a world where 71% of the world’s population lives off $10 or less a day. Your thoughts?
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 14:39, STARS: 1
The Salvation Army’s highest compensation is $250k.
"rb1971 ARGQF+CayenneTurbo+E9+328GTS+R90S" (rb1971)
03/06/2017 at 14:46, STARS: 4
I’ll think you’ll find that most charity CEOs make a lot less than CEOs of similarly-sized non-charity organizations. For organizations of a certain size, you need someone with the skills to run that kind of organization, and there is a market for compensation of those individuals.
“What can one person actually bring to a company that is worth tens of millions of dollars every year?”
What if they have personal contacts that bring in $500M in donations, and if they worked someone else those donations would go somewhere else? Is that a consideration? Should it be? If I were on the board of the United Way I would say it should be.
My main metric for charities is how much of the money is spent on administrative costs. There are some nominal “charities” that have very high admin costs, which almost certainly means there are some shenanigans going on - including probably overpayment of executives. The United Way doesn’t seem out of line to me however.
Charity Navigator can be useful:
https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4629
(FYI, one of my close friends is the CEO of one of the US regional Girl Scout organizations.)
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/06/2017 at 14:51, STARS: 3
1 million, may seeeem out of line, but given he oversees an almost 4 billion dollar budget. It’s certainly a very small fraction of that. I bet if you looked up any other 4 billion dollar company (for-profit), the CEO would be making a whole lot more. So, I think if he’s doing a very good job of what they hired him to do, his salary is far from out of line. It’s also worth mentioning he has a 35 year career there, so he’s dedicated much of his professional life to the company and it likely took him much of those 35 years to work up to the salary he’s currently at.
"Trevor Slattery, ACTOR" (anacostiabikecompany)
03/06/2017 at 14:53, STARS: 1
Remember the key to a charity like a 501(c)3 has to do is NOT show a PROFIT.
Does not say they don’t pay people insane amounts of money. In fact, I know several FOR profit companies that give away all their profits in bonuses at the end of the year (after expenses) in an attempt to show ZERO profits for tax purposes.
I live and work in the DC/metro area. The Non-Profit Game is big money around here.
"Ash78, voting early and often" (ash78)
03/06/2017 at 14:54, STARS: 0
I can say pretty definitively that average Credit Union salaries (non-profit) are generally just as good as average Evil Bank salaries (for-profit), there are just far fewer of them. OTOH, Credit Union boards of directors have to work for free, which actually results in some lax oversight from what I’ve seen and heard. These mega-charities are outliers, though...I don’t think they represent the norm any more than Citibank or Exxon does. A charity of that size basically has to pay a decent salary to attract leadership because a sense of calling and purpose only goes so far...
"My bird IS the word" (mybirdistheword)
03/06/2017 at 14:55, STARS: 3
Are they worth $1 mil? no. however, that is one of those “cost of doing business” things because there are CEOs out there getting paid way more and they dick everything up on the regular (i.e. volkswagon). You want to pay enough to entice a good CEO that could get work elsewhere.
The CEO doesn’t guarantee success. However, a bad CEO can guarantee failure.
my question is, if you were making tens or hundreds of millions of dollars, why would you keep working? I would work ~5 years and retire.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 14:59, STARS: 1
Exactly. I’d probably work 2 at that level and call it a day.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:00, STARS: 0
A non-profit is different than a charity, but yeah.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:02, STARS: 1
And that last line is the saddest of all.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:04, STARS: 0
I get all that, but still feels it’s too much, and just unnecessary. I’d venture a guess that he might be the type to turn around and give a lot of it back, or set up his own foundation with his wealth.
"Ash78, voting early and often" (ash78)
03/06/2017 at 15:07, STARS: 1
True. To a degree, you can also see this in the private sector, usually among (ahem) do-gooder firms. IIRC, Ben & Jerry’s once pegged CEO salary to a multiple of their average line worker. Once they finally got a CEO, he did a pretty bad job. They eliminated the policy and it immediately got better. I’d love to believe there are people out there called to these roles (beyond money), but the reality of it is that those people are more likely already spreading their volunteerism around elsewhere, not dedicating 80 hours a week to a single firm.
"RutRut" (RDR)
03/06/2017 at 15:08, STARS: 1
This can’t be stressed enough. Assuming he started at $60k (I know, way too high for that time period) that is between 6.5-7% raise annually to hit $528k number.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:08, STARS: 0
I’ve seen that site before. What’s a good percentage - close to 90%? Higher the better, of course, but I guess in the end, the raw number that goes out is actually doing the good, not the percentage.
"haveacarortwoorthree2" (haveacarortwoorthree2)
03/06/2017 at 15:09, STARS: 1
I think it’s fairer to break it down a bit. It’s unclear how much of the $287k in health and retirement benefits is health insurance versus UW’s contributions to a retirement plan. In general, if these are similar to what a CEO would have available in private industry, I am generally ok with that. I mean, UW, per the description above, has $3.9 billion in revenues so it is a huge organization. Where I think a CEO of a non-profit should be willing to take a “hit” is in actual salary and bonus. I certainly can see the argument that Gallagher is taking a hit in that regard given that his salary and bonus was “only” $700k — that certainly is below what a CEO of a similarly sized for-profit company with similar revenues likely makes. Does it seem outrageous? As a standalone number combined with the non-profit designation, sure. But comparatively speaking, I don’t think it is horrible. And overall, I think United Way generally gets pretty good ratings from those organizations that cover nonprofits. But I certainly could see the benefit of the guy capping his actual salary + bonus at $500k.
Disclaimer: I actually am not a fan of United Way dating back to my days on the (volunteer) board of a nonprofit. I thought they were heavy-handed in how they dealt with smaller organizations, and I do think that it simply is too large for its own good.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:11, STARS: 0
Yup, in the end, it does just come down to compensation in the marketplace, and supply and demand.
"Chariotoflove" (chariotoflove)
03/06/2017 at 15:12, STARS: 2
14% overhead is really not that good for a charity. I’d put my money elsewhere.
That said, you do have to pay to talent. Ben and Jerry tried to get a CEO on the cheap and couldn’t find anyone worth having. These people need to work ridiculous hours and take the fall anything that goes wrong. Sure, the compensation packages are outlandish, but that’s often what it takes to get the person who is willing to deal with the ulcers.
"Trevor Slattery, ACTOR" (anacostiabikecompany)
03/06/2017 at 15:14, STARS: 0
Seriously, if you grow up around here you are so familiar with the 501(c)3 “business model” that it becomes a viable alternative when starting a small business.
I am planning a start up now and one of the discussions is do I go non-profit or not. Grant money=Loan money ‘round these parts.
"Master Cylinder" (mastercylinder28)
03/06/2017 at 15:14, STARS: 2
That would be my dream. I’d even settle for a gig with the same hourly rate, but only work 120 hours per year.
Ya hear that, billion-dollar multinationals? That’s one hell of a cost savings!
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:15, STARS: 1
To your disclaimer: I have to agree. Giving to the United Way is just paying their people to dole out your gift to worthy causes. Do your own legwork in finding good charities, cut out the middleman, and give directly.
"DipodomysDeserti" (dipodomysdeserti)
03/06/2017 at 15:15, STARS: 2
I do work for a lot of religious charities. The majority piss money away. What’s really interesting is when they use bottom of the barrel companies for marketing material which pay their employees wages that keep them in poverty.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:16, STARS: 1
I do.
Someone else brought up B&J.
"Chariotoflove" (chariotoflove)
03/06/2017 at 15:19, STARS: 0
What I get for being too lazy to read through.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:20, STARS: 0
Ugh. “The organization must not be organized or operated for the benefit of private interests...”
What’s your start-up?
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:22, STARS: 0
So where does the money go?
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:23, STARS: 1
Only beat you by 5 minutes - you were probably typing at the time. =)
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:24, STARS: 0
2 hours per week is where it’s at!
"Chariotoflove" (chariotoflove)
03/06/2017 at 15:24, STARS: 1
My thumb typing skills are even more abysmal than my regular typing.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:26, STARS: 1
Too high to start, and way too high an annual raise to expect at a charity. I assume his salary is that high because the CEO’s salary has to be some percentage higher than the COO/CFO/whoever’s the next down the chain.
"Trevor Slattery, ACTOR" (anacostiabikecompany)
03/06/2017 at 15:47, STARS: 2
I am starting a bicycle shop (see screen name) in Washington DC. Torn between doing a basic for profit shop or going with a 501(c)3 angle by doing youth job training (teaching “at risk” kids bike mechanics, retail management, etc.). I could probably come up with $300k/year in grants easy doing the 501(c) thing. But then I limit myself in terms of “benefiting private interests,” as your quote states.
"rb1971 ARGQF+CayenneTurbo+E9+328GTS+R90S" (rb1971)
03/06/2017 at 15:55, STARS: 0
I’d say the percentage is almost more important than the raw number. Right at 90% feels right to me (with no evidence). The Girl Scouts look like they are at roughly 85%, and I have always considered them well-managed but maybe my friend is totally corrupt. :)
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 15:59, STARS: 0
Ha - percentage is definitely very important, but I was thinking scale. If one charity raises $100,000 and gives out $95,000, that’s awesome, but they’re not doing as much net good as one bringing in $1,000,000,000 and doling out $800,000,000.
"WiscoProud" (wiscoproud)
03/06/2017 at 16:01, STARS: 2
I used to perform compensation studies for non-profits, typically hospital chains, but we would do all kinds. The logic behind the higher salaries is that charities like this are often very similar to for-profits, just substitute “donations” for “revenue”. So in that context, you’re paying someone $1.2 million to lead an almost $4 billion company. In that light, he’s likely very underpaid.
I won’t deny that many non-profits overpay their senior execs, and its a serious issue (Roger Goodell and the NFL comes to mind, not to mention every president of a college sports org), but this doesn’t seem egregious to me.
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/06/2017 at 16:05, STARS: 0
“too high to start”
based on what? How did he start? What was his previous experience?
"rb1971 ARGQF+CayenneTurbo+E9+328GTS+R90S" (rb1971)
03/06/2017 at 16:06, STARS: 2
That’s true, although maybe 10000 of the smaller charities with targeted missions would be more efficient? Possibly, although not necessarily. That answer is above my pay grade. :)
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/06/2017 at 16:08, STARS: 0
In some industries, if you play your cards right, you can double your salary every 5 years. If he started at 30k, he’d be at 1.96 million. Now if you factor in that later in people’s career salary growth typically tapers off, his salary of just over 1 million, again, isn’t extraordinary or out of line, in my opinion.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 16:09, STARS: 0
Cool - best of luck going forward!
How “bike-able” is DC?
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 16:13, STARS: 0
It probably takes both, honestly. Just glad generosity is one thing that our fellow citizens get very right: http://www.marketwatch.com/story/america-is-the-second-most-generous-country-in-the-world-2015-11-10
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/06/2017 at 16:14, STARS: 0
Again, if you look at it as a percentage of the company’s 3.9 billion they brought in:
3,900,000,000 / 1,236,000 = ~3155
He brings 3,155 x less than what the non-profit as a whole brings in.
To put that into perspective, every dollar you donate, only $0.000317 goes to him.
86% of the money receive goes out, so out of every dollar, they keep $0.14 cents, the amount of that, that goes to the CEO is minuscule.
It may be thanks to his leadership that they only keep 14%. Maybe under the leadership of someone else they’d only be able to put out 78%? I don’t have much experience with the non-profit industry, so I have no idea how good 86% is.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 16:17, STARS: 0
A $60k salary in 1982 is the equivalent of $155k today.
“he graduated from Ball State University with a degree in social work and started with the United Way as a management trainee”
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/06/2017 at 16:21, STARS: 0
Well I’m sure he started lower than 60k then.
Another way of looking at it (from my responses to RutRut):
In some industries, if you play your cards right, you can double your salary every 5 years. If he started at 30k, he’d be at 1.96 million. Now if you factor in that later in people’s career salary growth typically tapers off, his salary of just over 1 million, again, isn’t extraordinary or out of line, in my opinion.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 16:31, STARS: 0
I get it. It’s minuscule percentage, but it’s still a LOT of money for one person to make in compensation. I’d argue that half that would be plenty, and would free up another half million dollars to go to a lot of good with.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 16:40, STARS: 1
Thanks for chiming in. I think I’m just taking issue with the idea that a not-insignificant number of people are getting very wealthy working for charities. Seems contrary to what should be the point of these organizations. By all means, compensate people well, reward them for performance, and give them a more than comfortable life and retirement for a job well done. Giving them massive wealth is something else. This guy (not trying to pick on him...) has been CEO for 15 years. He is surely a multi-multi-millionare by this point. Is that really necessary?
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/06/2017 at 16:42, STARS: 1
People are greedy though. But in this case I intend that in a good way. I perform much better at my job when I receive raises, when I receive a nice bonus and when I get the option for overtime pay. Now all of that adds up to nowhere near what the CEO of UW makes, but, one could argue he wouldn’t do nearly as good of a job with a 50% paycut. But that’s just me playing devils advocate.
I’ll leave this at the fact that I do not think he is overly compensated he isn’t anywhere near a golden type parachute salary and bonus level. He makes a lot of money, sure, but given what he’d be making in the private sector it’s just fine. So I think the key here is: in relative terms, he isn’t overcompensated.
At the end of the day I believe CEO’s could all take a 20 to 75% paycut, depending on who you are talking about. I don’t think this guy would be anywhere near the top 100 on that list. They would probably get to him when it’s time for the 20% paycuts.
"rb1971 ARGQF+CayenneTurbo+E9+328GTS+R90S" (rb1971)
03/06/2017 at 16:42, STARS: 2
Myanmar?!?
By the way it sounds trite to say it, but my involvement with helping people has been the most rewarding thing I have ever done. I’m just sorry I didn’t do more of it before I was 40.
"WiscoProud" (wiscoproud)
03/06/2017 at 16:52, STARS: 1
Your line of thought seems to be that he should be donating his time to the Company. I would say that compared to what he could be making in a public $4 billion company, he’s likely taking a 90% reduction in pay at least. $20 mil in pay is not unreasonable for a company that size.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 16:57, STARS: 0
So giving... So loving... Myanmar...
Same here, my friend. Not many things feel as good as helping out a “neighbor” who could use a hand (physical or otherwise). I try to be even more intentional about it when I’m around my kids, to model that type of behavior for them.
This past year has been a life-changing one for me and my wife, due to my employment with and equity in a small start-up. We will soon be debt-free and, among other things, are looking into starting a donor-advised fund. Something we’ve done for some time now is have a “giving fund”, a savings account where we put money we’re planning to be charitable with. It’s been a really good thing. Since we’ve already made the decision to give, and the money’s already there, when an opportunity comes up to help, the only decision is whether or not it’s a worthy cause.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 17:00, STARS: 1
Thanks for the perspective! My point does still remain about charities making some of their employees wealthy, though. But I know that to get the best people, you usually have to compensate them very well.
"WiscoProud" (wiscoproud)
03/06/2017 at 17:04, STARS: 1
There are certainly a lot of them abusing the system, I won’t argue with you on that, but this is not one of those cases. Typically, they’re either smaller, religious, or are sports affiliated. Big successful charities like this are typically run much more like a business.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 17:14, STARS: 0
If he made $250k and more of his compensation was based on performance, and he ended up making the same overall for a particularly amazing year, I think I’d have much less of a problem with it, honestly.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/06/2017 at 17:18, STARS: 0
Not at all saying this is abuse (it’s not really his choice to pay himself this much), just saying it’s a lot of money.
"WiscoProud" (wiscoproud)
03/06/2017 at 17:37, STARS: 1
Yeah, but so is $4 billion. I’ve seen charities where half of all the money that came in went to the top people. There are a limited amount of people capable of successfully running companies that big, and seeing as he’s done it for 15 years, he must be pretty good at it.
"DipodomysDeserti" (dipodomysdeserti)
03/06/2017 at 21:00, STARS: 2
On my end it gets wasted on redoing jobs when they’re set up wrong or someone changes their mind, and paying way more for work than they have to. I met with some televangelist once who wanted us to do all his marketing stuff. He drove his brand new S600 to our meeting and his wife showed up in a matching one. I think all the money was going to them in that case. I won’t name names, but my wife had a nonprofit aimed at helping disabled vets buy a few hundred dolllats worth of tickets for a seminar she was doing. No one from the nonprofit showed up. They just pissed away about $600 (not a lot, but wtf?).
I used to build houses in Mexico for free. I think volunteering and helpin people out is great. However, I think making a living off volunteer work is kinda bullshit.
"StudyStudyStudy" (jesterjin)
03/06/2017 at 21:16, STARS: 2
86% is pretty good if the 14% is just the overhead cost to get to the destination. Spending the money on good management can be crucial. You also have to keep in mind as generous as some people are, you won’t attract successful experienced CEO’s without a decent pay.
If you want to be really frustrated look up the Red Cross. The Red Cross was actually about to be bankrupt from poor management etc until Haiti hit which gave them a huge financial boost, you should look at their bottom line it was something like 75%. Of that 75% a lot of it was spent on other charities which also have their own administration fees someone did the math once and it was distasteful how wasteful they were for aboslutely stupid things.
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/07/2017 at 07:48, STARS: 1
Deborah Borda, LA Philharmonic: $1.6MM, 1.5% of expenses
John Ruskay, United Jewish Appeal: $3.15MM, 1.5% of expenses
John Miller, Goodwill SE Wisconsin: $3.2MM, THREE POINT FOUR PERCENT of expenses.
Now let’s go back to Brian with is $1.2MM and his insanely low % that takes up of the total expenses for United Way. He is far more justified than the 3 above CEO’s or the 6 others I found here: https://www.thestreet.com/story/12877842/8/you-wont-believe-how-much-these-10-nonprofit-ceos-get-paid.html
Brian isn’t even near being on the Radar of this article.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/07/2017 at 08:43, STARS: 0
Yeah, I wish I’d found John Miller to highlight for this instead... Over $3MM to lead a state’s regional charity?!
"Yowen - not necessarily not spaghetti and meatballs" (yowen)
03/07/2017 at 09:06, STARS: 2
Not even an entire state! The SE portion of it, haha.
"RutRut" (RDR)
03/07/2017 at 09:16, STARS: 1
Oh I absolutely agree that the start is too high and the annual is too high. It’s just a basic illustration, I’m sure his compensation increase over time was non-linear. My wife is in non-profit and annual/merit raises are pretty much non-existent, the only way to make more money is to move up.
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/07/2017 at 09:51, STARS: 1
Obscene.
"Brian McKay" (brianmckay)
03/08/2017 at 03:35, STARS: 1
Yesssss!
"davesaddiction @ opposite-lock.com" (davesaddiction)
03/08/2017 at 09:21, STARS: 0
I gather from all these stars that you agree with my thoughts on all this - ha!