DIA board pays back $90K for execs' 2013 bonuses

Jennifer Chambers
The Detroit News

The DIA is trying quell a suburban uproar over executive bonuses.

Directors of the Detroit Institute of Arts on Tuesday repaid the museum $90,000 as reimbursement for bonuses awarded to three top executives in 2013, according to a memo sent to suburban authorities this week and obtained by The Detroit News.

Apologizing for making "mistakes which we regret," but emphasizing there was "no wrongdoing of any kind," board chairman Eugene Gargaro wrote that the DIA directors were contributing the money to end a very unfortunate situation.

The disclosure and repayment of the 2013 bonuses are the DIA's latest attempt to quell a suburban backlash against executive compensation.

Gargaro's memo made no mention of the $100,000 in bonuses paid to two executives in 2012 that Oakland County officials earlier this month demanded be returned. They threatened to withhold $11 million in funding from Oakland County.

Gargaro's overture got a positive reception from Oakland County Executive L. Brooks Patterson, a onetime critic who said he approves of the measures and would fight any efforts to end the county's support of the DIA.

Detroit Institute of Arts director Graham Beal, left, and DIA Chief Operating Officer Annmarie Erikson, celebrate the passing of the museum's millage in 2012.

"I'm satisfied they've learned a valuable public relations lesson and this mischief won't continue," Patterson said.

Gargaro disclosed the repayment and several safeguards in a letter dated Nov. 4 to elected officials in Oakland, Wayne and Macomb counties and their respective art authorities. The authorities collect and distribute a special tax voters approved in 2012 to support the DIA.

The bonuses revealed in the memo — $50,000 paid to DIA director Graham Beal, $30,000 paid to chief operating officer Annmarie Erickson and $10,000 to chief financial officer Robert Bowen — were awarded as the $23 million regional tax began flowing to the museum. The bonuses distributed in 2012 did not include money from the special tax, DIA officials say.

The changes Gargaro proposed are in line with a new policy implemented by the DIA last month after The News' Oct. 9 report detailing executive compensation in 2012.

According to IRS documents, Beal's total compensation increased 13 percent to $513,868. Erickson saw her compensation increase 36 percent to $369,366, a number that includes both the bonus and retroactive pay that was earned in 2011 but not delivered until the contract from her promotion was finalized. By attributing her 2012 compensation to the year in which it was earned, the DIA considers her 2012 increase to be 4 percent.

Gargaro spoke with board members via conference call on Wednesday to discuss the proposal, which is being presented in coming weeks to leadership at Oakland, Macomb and Wayne counties.

Reached Thursday evening, Gargaro declined to discuss the memo in any detail.

"I'm trying to resolve this," he said.

Reaction to the decision was mixed, with some elected leaders supporting the swap of funds and others calling for the bonuses to be stripped entirely.

Last month, a group of Oakland County commissioners met with Gargaro in separate caucus meetings and demanded the bonus money be returned to taxpayers.

Several commissioners said they were outraged at the museum's decision to award the bonuses in 2012, the same year in which DIA officials appeared before county commissioners saying the museum was on the verge of financial collapse.

Voters in Oakland, Wayne and Macomb counties in August 2012 approved the regional tax, which accounts for 70 percent of the museum's budget.

The bonuses came to light as the city of Detroit moves through its historic bankruptcy and after $816 million was pledged from foundations, the state and others to protect the DIA's art collection from creditors in the case. The DIA has pledged $100 million to the effort.

Mike Gingell, chairman of the Oakland County Board of Commissioners, said Thursday the plan is acceptable.

"It returns the money to the operating budget of the DIA, which was the purpose of the millage," Gingell said. "The fact they rectified it and are putting preventive measures in place to make sure it doesn't happen in the future is reasonable and acceptable."

The board "repaying it out of their own pocket is a good sign of the understanding of the situation and their willingness to rectify it," Gingell said.

Macomb County executive Mark Hackel said the decision is a move in the right direction.

"They are going to need to do a couple more things. They also need to get better at community outreach ... how do you connect with the community? They should have thought about that early on. It was a close vote and this has become very connected to the public," Hackel said.

There remained some skeptics.

Oakland County Commissioner John Scott, R-Waterford, said he does not care where the money is coming from to repay the bonuses, he wants both the bonus money and the raises stripped from Beal and Erickson.

"That doesn't fly with me. It's all out of the same pot whether it came from donations or tax dollars. If we didn't have the authority or the $11 million from Oakland County, would they still be taking the money from there (board funds) for the bonuses?" Scott said.

"I want the money returned and the salaries rolled back. These people just can't get enough money," Scott said.

DIA officials initially defended the compensation increases, saying they reflected what it takes to attract and retain top talent.

Eight days later, on Oct. 17, Gargaro issued a statement saying the DIA regretted that it did not anticipate how the increases would be perceived.

The statement also revealed what the DIA said was the total 2013 compensation for both Beal and Erickson. Beal received an increase of $19,851 in total compensation, or 4 percent, the release said. Erickson received an additional $10,837, or 3 percent.

The statement made no mention of the bonuses it now says also were paid in 2013.

The following week, Gargaro wrote a letter to Gingell outlining policy changes made at the DIA in response to the bonuses.

Those changes state that as long as the museum received county millage funds, any future bonuses and salary increases for the director or chief operating officer must be approved by the three art authorities and come from non-public funds and compensation decisions will be reviewed with the art authorities before they are implemented.

Gargaro amplified those points this week and also lauded how DIA executives guided the museum through turbulent financial times.

"We are blessed to have some of the best, most capable and most devoted museum leadership and staff in the country, and, as a result, we have a museum of which we all can be proud," Gargaro said.