DIA pitches bonuses, pay hike for execs
The now-departed director of the Detroit Institute of Arts will get a $285,000 retirement severance — and forgiveness of his housing loan — under a compensation plan that also includes raises and bonuses for two other top executives.
A total compensation package of $625,185 is being prepared for former Director Graham Beal and executives Annemarie Erickson and Robert Bowen under a plan that covers fiscal years 2014 and 2015 as well as promises in Beal’s contract, according to details being presented to suburban leaders.
Taxpayers in Macomb, Oakland and Wayne counties would pay only for the raises — about $49,000 — because DIA officials intend to use private donor funds for the rest.
The raises will be paid for with general operating funds, which includes the DIA regional tax millage. The remaining compensation — the severance and forgiveness of a $155,832 housing loan for Beal, and $135,000 combined in bonuses for him and the two executives — is to be paid from a compensation fund established by the DIA, museum chairman Gene Gargaro told The Detroit News.
“With the (Detroit) bankruptcy, these three people had an inordinate amount of additional work to get us where we are today: testifying at the trial, working within the requirements of the court. It was a second job for all three of these people,” Gargaro said.
The DIA must inform the counties of compensation decisions before they are implemented, whether paid for through private or public funds, under a new agreement between the museum and three county art authorities. The DIA gets about $23 million a year through the regional tax.
This is the first time the art authorities will be informed of DIA compensation under the new agreement.
Gargaro, who spoke to Macomb art authority members about compensation on Aug. 17, said he wanted to follow the new rules, which are part of a legal contract between the DIA and county authorities, “to the letter.”
The agreement between the counties and the DIA was hammered out after an October 2014 firestorm over previous raises and bonuses awarded to DIA executives amid Detroit’s historic bankruptcy.
Raises, which along with salaries are paid from general operating funds, now must be “agreed to by the County Art authorities,” according to contract language, because they are being paid with public tax dollars. Under the agreement, the DIA can use public funds as long as the raises are consistent with national pay for museum executives.
‘There is no basis to object’
Gargaro said the amended contract does not require the art authorities to vote on or approve DIA compensation when private funds are used. He said he doesn’t anticipate any objections to the taxpayer-funded part of the compensation package because the raises are below national standards for museum executives.
He said the DIA’s presentation to county authorities is about “education and information.”
“If (the counties) object, my option is to use donor funds,” Gargaro said. “There is no basis to object. Having said all that, this is the first time we are having discussions on this, and we will try to all work together.”
The details of the latest compensation plan call for 3 percent raises each year for two years and bonuses of $65,000 and $40,000 over two years, respectively, for DIA executives Erickson, the chief operating officer; and Bowen, the chief financial officer.
Some of the bonus money for the pair is being awarded for “extraordinary efforts related to the City of Detroit bankruptcy,” according to documents.
Beal would get a $20,000 raise and a $30,000 performance bonus under the deal. He retired from the museum June 30.
Gargaro said the raises are consistent with median salaries of museum executives nationally.
According to the Association of Art Museum Directors, the median salary nationally for a museum director was $450,000 based on a 2013 survey and $461,250 for 2014.
Beal’s salary on June 30 was $430,000. The proposed $20,000 raise would bring that to $450,000.
Gargaro said Beal, Erickson and Bowen earned the bonuses and the raises, and the severance and housing loan forgiveness were in Beal’s employment contract. He declined to release the contract.
All compensation increases are for the consecutive fiscal years 2014 and 2015 ending June 30.
Elected officials in Oakland County said they were outraged at the museum’s decision to award $100,000 in bonuses to its top three executives in 2012, the same year Beal and Erickson appeared before county commissioners saying the museum was on the verge of financial collapse.
Months later, in August 2012, voters in Oakland, Wayne and Macomb counties approved the 0.10-millage regional tax, which accounts for 70 percent of the museum’s budget.
After a public firestorm and as Oakland County officials threatened to pull $11 million in funding, the museum board repaid $90,000 in bonus money awarded in 2013 — the first year public funds came into DIA coffers — with private donor funds.
Oakland County Executive L. Brooks Patterson, who has criticized the DIA over compensation in the past, said museum officials should proceed with caution.
“They got burned and took a public whipping for the raises that were so huge and right on the heels of the vote of the three counties,” Patterson said. “I have talked to them since then. I hope they proceed with caution. We are still suffering from the recession and from the Detroit bankruptcy ripples.”
Gargaro said the museum deferred implementing the pay increases during the public controversy over compensation and while a new agreement with the counties was being worked out.
No salary increases or performance bonuses to DIA executives will be paid, Gargaro said, until all three county art authorities have been informed at public meetings.
“Now I am seeking to get those payments made. They were deferred so no one can complain I was throwing kerosene on the fire,” he said.
Two months of Beal’s $23,750 a month severance — for July and August — have been paid, Gargaro said, because the museum was contractually obligated. Those payments and the remaining 10 months of the severance are being paid with donor funds, not taxpayer money, he said.
Beal received the housing loan in 2011 to buy a 6,000-square-foot English Cotswold-style manor home in Detroit’s Palmer Woods neighborhood in 1999. The six-bedroom, five-bath home has five fireplaces, a library and a pool, and was designed by famed architect Robert Derrick, who also designed the Henry Ford Museum.
Macomb Art Authority chair Stan Simek described the meeting with the DIA as preliminary and part of the move toward transparency.
“Nothing was agreed upon or voted on. They are trying to fulfill the agreement we had for more transparency for issues of compensation,” Simek said. “I think they would want approval from us before they went ahead with compensation.”
Elected officials in Oakland and Macomb counties were unaware of the proposal. Macomb Commissioner Robert Mijac said he didn’t have a problem with the raises, but he questioned the bonus amounts.
“How is that justified? What the taxpayer would say about that is, we are funding DIA operations. If you can find private donations to support large bonuses, why can’t you find private donations to support the DIA without taxpayer support?”
Gargaro declined to disclose the amount of the donor fund.
Graham Beal: $430,000 salary; proposed $20,000 raise; $30,000 bonus; $155,832 housing loan forgiven; $285,000 retirement severance = $490,832
Annemarie Erickson: $295,000 salary; proposed 3% raise ($8,850) for 2014; 3% raise ($9,115.5) for 2015; $25,000 bonus for 2014; $40,000 bonus for 2015 = $82,965
Robert Bowen: $187,000 salary; proposed 3% raise ($5,610) for 2014, and 3% raise ($5,778.30) for 2015; $15,000 bonus for 2014 and $25,000 bonus for 2015 = $51,388