The DIA's tax filings indicate salaries and compensation for top executives such as Director Graham Beal have climbed 17 percent since 2010. (Ricardo Thomas/The Detroit News)
The Detroit Institute of Arts gave executives pay hikes, and granted a $155,000 loan to Director Graham Beal, while it campaigned for a regional property tax and faced a pension shortfall, according to its financial records.
The museum’s finances are coming into focus at a time when private foundations and the state have mounted an unprecedented $720 million plan to shield the museum’s artwork from bankruptcy creditors and bolster Detroit municipal pensions. The DIA, after initially rebuffing calls to contribute $100 million toward the plan, reversed course last week and agreed to raise the money.
The DIA’s tax filings indicate salaries and compensation for top executives have climbed 17 percent since 2010. That’s somewhat greater than increases at the Henry Ford Museum in Dearborn, and substantially greater than at the Detroit Symphony Orchestra. Neither of those institutions is getting rescue money.
Other salaries and wages at the DIA have increased 4.5 percent.
Critics say the museum’s spending illustrates that DIA leaders are out of touch with the financial problems facing the city.
“At a time when we are asking for so much from people in Detroit — pensioners, firefighters and police officers — it is outrageous that these individuals are being so grossly compensated,” said state Rep. Kurt Heise, R-Plymouth.
The DIA’s spending will get increased scrutiny as the state and federal mediators advance a plan to protect city-owned art from being sold in bankruptcy, said Michael Sweet, a San Francisco bankruptcy attorney who is following Detroit’s case.
“To the extent foundation and state money is made available, it would seem to me (the DIA) would get a pretty high level of scrutiny going forward in terms of what they’re doing with the money,” Sweet said. “Toget a (bankruptcy fundraising) gift of this magnitude, their business practices will certainly have to be ‘of the norm.’ ”
While bankruptcy lawyers and creditors fight over the fate of the nationally renowned DIA collection, The News has learned Beal last month listed, for $525,000, his 6,000-square-foot English Cotswold-style home in Palmer Woods.
“This is a private matter that does not warrant a response,” DIA spokeswoman Pam Marcil said when asked why Beal was selling his home and whether he is committed to remaining at the institute.
The 17 percent executive increase was tied to a new contract for Beal, promoting Chief Operating Officer Annmarie Erickson, one-time payments to a retiring executive, and hiring a replacement, Marcil said.
The 4.5 percent increase for other salaries and wages was due to changes in exhibition and operating schedules, which impacted employee hours, she added.
“Staff wages were frozen during this time period,” Marcil said.
DIA pension problems
Like the bankrupt city, the DIA is coping with its own pension shortfall.
The DIA’s pension plan has more than $25.5 million in assets but has a $7 million shortfall, according to the museum’s most recent audited financial statement. In 2012, the shortfall was more than $11 million.
Museum officials blame the shortfall primarily on low interest rates. The rates increased the DIA’s pension liability to $32.6 million last year, Marcil said in a statement.
“The DIA will make required contributions and allow growth in assets and rising interest rates to close the gap,” Marcil said.
The institute pays pensions to 79 retirees that average about $15,000 a year. An additional 233 employees are vested in the pension plan and eventually will collect pensions.
Its pension plan was frozen in 2009 and replaced with a 401(k) plan. In the last two years, the 401(k) plan has cost the museum almost $1 million, according to the audited financial statement.
Financial records also reveal museum executives have received more than $130,000 in bonuses in recent years. Most of the money — $103,000 — was awarded to Beal.
Erickson received a $30,000 bonus, according to the museum’s 2012 tax filing.
“Bonuses are covered in the contract of director and COO and approved by the board compensation committee,” Marcil said. “The total covers three years.”
Beal’s total compensation is $455,453. Erickson received $270,802, according to the DIA’s most recent tax filing. Four other museum executives are paid more than $100,000.
Orchestra, museum salaries
By comparison, Detroit Symphony Orchestra President and CEO Anne Parsons’ total compensation was $399,152, according to the orchestra’s most recent tax filing. Part of her compensation included housing and social club dues. Four DSO leaders are paid $164,000 or more and compensation for top executives has risen 2.7 percent in recent years, tax filings show.
At the Henry Ford Museum, executive compensation rose 14 percent in recent years, according to tax filings. President Patricia Mooradian was paid $348,763, according to the Henry Ford’s most recent filing, which lists seven executives with six-figure compensation packages.
At the Detroit art museum, Beal, 66, also received a $155,832 housing loan, according to the 2012 tax filing. He received the loan in December 2011, nine months before voters approved a 10-year, $230 million regional tax to pay for museum operations.
County executives in Wayne, Oakland and Macomb have warned that any sale of DIA artwork during the Detroit bankruptcy would invalidate the $230 million tricounty tax. Without the income, Beal has warned the museum would go into a controlled shutdown.
“(The loan) was part of his compensation package/contract,” Marcil wrote in an email without elaboration.
More than two years later, Beal still owes the full $155,832 loan. He is required to pay only interest while working for the museum, Marcil said.
It is unclear what Beal did with the money.
Beal and his wife bought the 6,000-square-foot English Cotswold-style manor home in Palmer Woods in 1999. The six-bedroom, five-bath home has five fireplaces, a library and oversized pool, and was created by famed architect Robert Derrick, who designed the Henry Ford Museum.
In January 2012, one month after Beal received the housing loan, the DIA executive and his wife took out a $264,000 mortgage on the Palmer Woods home, according to public records.
Beal listed the Palmer Woods home for $525,000 on Jan. 9, two years after the museum gave him the $155,000 loan.
Christine Anagnos, spokeswoman for the Association of Art Museum Directors in New York City, could think of only a few examples of museums offering free or subsidized housing for executives, namely the Indianapolis Museum of Art.
The museum’s director/CEO, Charles Venable, lives in historic Westerley Estate, in a 12,000-square-foot, 20-room home that was bequeathed to the museum in 2001, spokesman Christopher Parker said.
More benefits for director
The housing loan is just one piece of Beal’s compensation package. He also has a discretionary fund for business expenses paid for with contributions from museum patrons and honorariums.
Since 2011, about $7,500 was put into the fund — proceeds of Beal’s paid speeches, Marcil said.
His expenses are reviewed and approved by the museum’s chief financial officer and accounting department.
Marcil declined The News’ request to review Beal’s expenses.
Beal also receives paid memberships at three business clubs. Marcil would not identify which ones.
The museum also pays for his wife to travel with Beal. Beal traveled seven times last year.
“Mr. Beal’s wife accompanied him when necessary for business purposes/donor cultivation, which was approved by the board chairman in advance,” Marcil said.
In exchange for the state aid, Heise wants to overhaul the DIA board and give the state more control of the museum’s operations and finances.
He argues the tricounty millage should be eliminated and the governor and the three counties allowed to appoint members to oversee the DIA.
Under the city’s draft plan to restructure more than $18 billion in debt, the DIA’s art collection, building and assets would be held in a charitable trust forever.
However, in exchange for $720 million, the city and donors want oversight of a new DIA charitable trust.
“If the state is going to commit these kinds of resources, we need to make it truly a state operation,” Heise said.
Detroit News Staff Writer Michael Hodges contributed.