General Ramblings: Splash Of Cold Water

April 1, 2009       Paul Clolery      

A mere 2 cents doesn’t buy much these days. After all, there aren’t many soda fountains that offer the good old 2 cents plain glass of seltzer.

For 1.8 cents, you wouldn’t even get a full glass of seltzer. But like the movie Office Space, where geeks come up with a computer program to steal a small percentage of one cent on a transaction, small change adds up in a hurry.

In the case of Direct Marketing Association (DMA) CEO John Greco, Jr., his base salary works out to slightly less than 2 cents of every dollar brought in by the DMA. Add in other compensation and he’s paid $838,528. For easy math, let’s round it up to $840,000. Based on the $39 million in reported organizational revenue, roughly 2.15 cents of every DMA dollar went to Greco last year.

Surely some of the folks recently laid off at DMA would love a small percentage of that deal.

This isn’t an isolated case. Major League Baseball, a tax-exempt association, paid Allan ‘Bud’ Selig, Jr., Commissioner of Baseball, the king’s ransom of $18 million for the year ended Oct. 31, 2007. That’s $17.47 million in base salary, $461,540 in employee benefits and $422,590 in additional, non-detailed benefits. Granted, Manny Ramirez of the Los Angeles Dodgers makes more than that when he’s not manhandling a senior citizen like he did in Boston. The difference is that the baseball team is a for-profit entity and Major League Baseball is a tax-exempt group.

President Barack Obama makes $400,000. Other than free rent and travel, he has to pick up all of his own expenses, such as food and other incidental expenses. It’s a job that’s 24/7. You have to wonder when was the last time someone woke up Selig and told him the Yankees were attacking.

With the uproar regarding CEO salaries on Wall Street and other businesses that are tanking, how long will it be before the ire is trained on tax-exempt organizations? Sen. Charles Grassley (R-Iowa) has long had his eyes trained on the tax-exempt sector. The Republicans are the minority party these days, somewhat limiting Grassley’s impact. But with a budget deficit spiraling ever upward, it won’t be long before Congress starts looking to the sector to not only provide more services but for organizations to prove they warrant a free ride on the backs of taxpayers.

It’s going to be pretty hard for a tax-exempt group to defend an $18 million salary while standing under the tax-free umbrella of John Q. Public who can’t afford the new $2,500 seats in Yankee Stadium, built with tax-free bonds. Likewise, it would be difficult to defend a nearly $1 million comp package while revenue is declining and folks are losing their jobs. NPT

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