July 31, 2007

There's one for you, nineteen for me

Don't miss Geoff Edgers' fine muckraking smackdown of the Citi Performing Arts Center in this morning's Globe. It seems the awfully lawyer-heavy board of trustees voted to give the CEO a $1.2 million bonus at the same time* they were running a deficit, cutting their summer outdoor Shakespeare productions from three weeks to one, etc., etc.
In a phone interview on July 18, board chairman [John William] Poduska [Sr.] said the bonus was created to keep [CEO Josiah] Spaulding [Jr.] at the center. "Was it justified or not? Boy, I'll tell you it was," he said. "Joe was being courted by everyone under the sun. . . . He stayed and did a heck of a job."
The millennium's most ringing endorsement! At the rate they're going, the place'll be a Citibank branch office before "Riverdance" swings through town again.

*Update (8/21): Citi Center board chairman John Poduska, Sr. has sent a letter to supporters and donors in which he states that the decision to give Spaulding the bonus was made in 2001, just before a run of deficit years, although the expense was spread over the five years of his contract ($200K per year, plus accrued interest), which means that they were, in fact, setting aside money for the bonus at the same time they were cutting their support of other programs.

3 comments:

Sound Investments said...

First, let me say that I agree with you that the bonus in particular is offensive in its size and his salary is on the high side as well. That said, you incorrectly state that he was given the bonus "at the same time they were running a deficit." The article actually says the downward financial spiral began after the bonus decision was made. Here is the how the article put it:

"Spaulding's bonus was actually set in motion in 2001, when the then-Wang Center's trustees created what they called a "retention program . . . to maintain continuity of key positions within the organization," according to documents filed with the IRS. At the time, the center was coming off several years of surpluses."

I don't think you need to make it sound worse than it actually is - it's pretty bad already. It is definitely an example of a board dropping the fiduciary ball.

Matthew said...

I'll gladly make a correction if needed when the board comes clean on exactly when they offered a bonus to Spaulding specifically, but I think this is something that the board is being purposefully coy about. The retention program was started in 2001, but the announcement of the bonus to Spaulding was made in 2005 (after deficits had begun) saying he was eligible for the money in 2006. I checked back through news reports via Lexis, and the first mention of Spaulding's bonus indeed isn't until 2005—if they were planning to give that money to Spaulding from 2001 on (i.e., if it was part of his five-year contract) they weren't saying it publicly. My read was that Spaulding's bonus was approved after the deficits had started. I'd love to see some clarification on this, but the board has clammed up for the time being.

And you're right, irregardless, the timing just makes these people look flat-out irresponsible. Contracts can be re-negotiated, people.

Sound Investments said...

Thanks for filling in the gaps. I work regularly with several nonprofit boards and such practices are unheard of in my neck of the woods.