Among a blizzard of documents, a new compensation disclosure shows that former CEO Barry Munitz enjoyed a stealth retirement package in addition to his disclosed salary of nearly $1.5 million. No wonder he waived the severance agreement.
The LA Times called our attention to new disclosures on the web site of the J Paul Getty Trust (EIN 95-1790021 Form 990).
Mostly of interest to the kind of people who read SEC disclosure documents, the new governance web pages provides everything from the by-laws to various policies, like one covering workplace complaints. The trust report is particularly annoying, in that it is a mere 95Mb PDF file broken up into 24 sections, with no option to download the document as a whole.
But of some interest is the compensation disclosure covering the last three years. It explains in more detail than ususally provided about the process used to determine the salary of former CEO Barry Munitz. The trustees used "broad based published surveys and information contained in the IRS form 990s of a custom peer group." The 47 listed peers included foundations, cultural organizations, and universities.
Another table details cash compensation and certain extras for the officers, key employees, and five highest paid employees. It indicates whether the individual drove a trust-owned vehicle (like Mr. Munitz' infamous Porsche Cayenne), or received an allowance. It lists housing provisions (interest-free loans or allowances, but not for Mr. Munitz). And it has a column labeled SERP with a "Yes" besides Mr. Munitz' name alone.
SERP stands for Supplemental Executive Retirement Plan. It is a way to provide an executive with retirement benefts over and above the tax-favored benefits provided by qualified pension plans. But it is also a way to hide additional compensation, because, as a defined benefit plan, the true cost of the plan shows up after the individual is no longer an employee, so it never appears on IRS Form 990. A background article on the use and abuse of SERPs is available here: "Stealth Compensation via Retirement Benefit".
Obviously, the only solution for true & honest disclosure by these large organizations is to start applying the SEC disclosure requirements for executive compensation, which includes disclosure of entire agreements, not just summary descriptions and cash payment amounts.
Here, here. Of course nonprofits should have to report in way similar to publicly traded companies. This reminds me of Regina Herzlinger's call for greater disclosure published in Leader to Leader. See it at:
http://l2li.org/leaderbooks/l2l/winter97/herzlinger.html
Posted by: robjohnston | August 01, 2006 at 05:35 PM