General Ramblings: Right Message, Wrong Messenger

November 1, 2009       Paul Clolery      

General Ramblings

There’s nothing like a good airing of dirty laundry to get a community’s bowels in an uproar. That’s exactly what happened as Gerry Pike, a Direct Marketing Association (DMA) board member who was denied re-nomination, battled for the proxy votes of members in advance of the organization’s annual meeting and negotiated his way back on the board.

Pike made numerous accusations regarding a lack of transparency between the organization’s senior management, the board and members. He also took issue with the compensation of CEO John Greco, Jr., about which he claims a majority of board members were kept in the dark.

Amazingly, as soon as he was back on the board he clammed up.

For its part, DMA played right into his hands. Greco was never made available for public questions prior to the recent annual meeting in San Diego. Senior staff and board members hid behind press releases that didn’t address the core of issues.

The tactics used in the battle between Pike and DMA violated many of the DMA’s very tenets. DMA, in a cease-and-desist letter, accused Pike of improperly using a member list to blast emails regarding the proxy fight. Pike denied using The DMA’s list but it’s clear from the breadth of the email blast if he wasn’t using DMA’s member list, then he has one incredible house file. If he was using the member file as alleged, how did he get it and where was DMA’s data security?

Pike was interviewed by The NonProfit Times and while demanding transparency by The DMA, declined to answer questions regarding his business, DMSA, Inc., in Newfoundland, Pa. He can’t possibly have a previous business relationship with most of the people who received his proxy emails. So basically, a DMA board member possibly was spamming the direct response community as a member of The DMA board while demanding accountability of others.

The DMA denied through its public relations department that board members were kept in the dark regarding Greco’s compensation package, listed as $838,528 on the organization’s most recent federal Form 990. There is a board compensation committee and there is little doubt that a presentation of some sort was made to the board. So why during an informal poll of several DMA board members, who would only speak for background, did all of them say the level of Greco’s compensation surprised them?

A source at The DMA told The NonProfit Times that the compensation on the Form 990 probably was overstated and that a new accounting firm is examining the past several Form 990s and might be filing revisions. The source said Greco didn’t receive bonuses this year and his salary was closer to $500,000.

When The NonProfit Times first wrote about Greco’s compensation during coverage of layoffs at the organization back in March, The DMA was reporting total annual revenue of $39 million. According to the ASAE & The Center for Association Leadership, the average salary for an association executive in New York City, where The DMA is based, was $222,927, bringing it to $266,304 with benefits. According to ASAE, nationally for an organization with revenue of more than $15 million during that time period, the chief executive was paid $359,047, bringing that to $468,852 with benefits.

Why would board members, who have a fiduciary responsibility to the organization, think that such information is confidential? Almost all of the board members, some of them officers, thought that the chief executive’s compensation package was not for public viewing. If they were provided a copy of the organization’s federal Form 990 — or even simply asked to see one — they surely would have found the information.

Back in March it took repeated telephone calls from The NonProfit Times to The DMA to get a copy of the Form 990, which by law must be available for public inspection. For some reason DMA made it a challenge to obtain the public document.

Sources within The DMA said that The NonProfit Times’ layoff and compensation story caused much consternation, not because of the situation but because the compensation package was reported.

Pike demanded in his proxy fight that the organization’s bylaws be amended so nominations to the board be allowed to be made from the floor and any such nominees to be added to the list of nominees and the entire slate to be voted on at the annual meeting. He claimed the selection process is cloaked in darkness and that he wasn’t really given a reason for not being re-nominated, other than staff allegedly didn’t like the tone of his questions regarding operations.

It’s the board’s duty to ask questions. Technically, the staff works for the board. There are many issues at The DMA that the board and staff must address. Put aside for the moment the organization’s overall mission and member services. Forget for now the continuing fight regarding how a direct mail-driven organization not just uses but embraces online marketing and those who do business with it.

It’s clear that there needs to be a considerable amount of board training at The DMA. The organization should reach out to consultants in the nonprofit industry for an education on how a tax-exempt, membership organization must be run. Board members must be schooled in the legal and ethical obligations that come with those positions.

It’s nice to parade around a conference with a special badge that identifies you and your leadership position. There are responsibilities that come with these volunteer board positions that involve more than rubber-stamping what is put in front of you by management. NPT