Get Money, Get Paid

Two articles worth looking into came out last week that touched on what will almost certainly become an increasing flashpoint of attention in coming months: executive compensation. First up is Peter Dobrin’s article in the 6/9/2011 edition of the Philadelphia Inquirer that takes a long look at recently released compensation figures for Philadelphia Orchestra Association (POA) CEO Allison B. Vulgamore…

What’s worth noting is that following the release of Vulgamore’s compensation figures, which confirm a 33.27 percent increase over her immediate predecessor, is although Vulgamore declined to talk to Dobrin about the matter, POA board chair Richard B. Worley did. According to Dobrin’s report, Worley went on the defense by playing down those increases; and in fact, attempted to make Vulgamore’s compensation package appear on par with the cuts the POA is presenting to musicians at the bargaining table.

Worley said Vulgamore’s estimated 20 percent lower-than-potential compensation was meant to mirror the percentage of the cuts musicians were being asked to accept.

“When she informed us that she wouldn’t accept the $25,000 salary increase guaranteed in her contract, I was impressed. Additionally, she told us that she would decline the variable compensation that her contract entitled her to. All told, this is approximately 20 percent less than her contract calls for. Her commitment to the orchestra is clear and I am delighted to have her as our leader.”

Worley’s magnanimous portrayal might ring hollow with some in an age where simply foregoing a series of planned raises and perks over and above a previous double-digit pay increase while the institution is amidst bankruptcy may not have the Iacocca style impact the chairman was looking for.

The other article you should take a moment to read is a commentary piece from David Zoltan at Arts Appeal who wrote about the Detroit Symphony Orchestra’s decision to extend President Anne Parson’s contract for an additional three years. In case you missed that news, the highlights include that the decision was made by the DSO board in late march, before the strike concluded. Moreover, little information was released about Parson’s expected compensation and the organization did not provide details about a bevy of extensive perks that go above and beyond what executives in larger budget orchestras receive.

Zoltan speculates on how the board’s decision, and Parson’s acceptance of those terms, will impact the institution from the perspective of loyalty.

This move shows a complete lack of leadership on Parsons’ part, and in the aftermath of the strike, she needs to be rebuilding loyalty if the rest of her programming has a real chance to help rebuild the audience base and expand into new audiences. She needs willing and enthusiastic collaboration with the musicians that decide to stick it out.

Let’s assume for a moment that her salary is deserved for those “deep connections within the national funding community” among other things. Fundraising is going to be a critical part of rebuilding the orchestra’s position in Detroit and the world stage. There’s still a chance for her to lead here, to make a very substantial commitment to the orchestra and its musicians.

So I call on Parsons to donate 23% of her salary back to the orchestra as long as the musicians also must sacrifice for the health of the organization. Parsons is already a donor, as I’d hope all arts managers would be to the organizations they love and support, but at a more modest 3-7% level according to the article.

Given the Detroit backdrop, the Iacocca analogy comes to mind again and as that bit of history demonstrated, legitimacy is achieved by recognizing the difference between effort and achievement. Iacocca’s story went on to the history we know today while his counterparts at the time, particularly Roger Smith at General motors, attempted to mirror his tactics by taking token pay cuts while pressuring everyone else in the organization to take massive cuts. It’s worth noting that Roger Smith is the idee fixe (not to mention butt of the joke) in Michael Moore’s documentary Roger and Me.

Zoltan’s piece made me recall a passage I read years ago, long before the 9/11 recession, that might apply to the situation in Detroit and Philly (I apologize in advance for failing to recount the source): To acquire legitimacy, you must stand for something. And that something has to be more than just your own self-interest. You must stand for principles, ideas, and the needs of others.

Ultimately, an accomplished executive capable of managing debt during troublesome times, maintaining respectful labor relations, and reinforcing institutional vision is worth every cent. On that note, I want to remind everyone that the 2011 Orchestra Compensation Reports come out all next week.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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0 thoughts on “Get Money, Get Paid

  1. Drew, this is one of the best blogs on orchestra executive compensation packages that I’ve read. It begs the question of whether it is legitimate to draw comparisons between the orchestra “industry” and other industries, such as the automotive industry. But in terms of executive compensation packages when the organization is in crisis, I think those comparisons are fair, and should be used as a tool to guide symphony boards. It’s time to end this idealized notion that orchestra managers are “special” and in a league of their own. True, they may have specialized expertise, but so do auto industry execs.

  2. Thanks John, it’s there (second paragraph) but it doesn’t hurt to have another reference. The links can sometimes be hard to see on certain monitors and iPhones. I’d change it but there is actually a big theme update planned for this week.

  3. Thank you Christa. I always like to be clear on this issue, however, and point out that I fully endorse a policy that compensates executives via merit based program that includes a rigorous assessment policy (that utilizes an independent review at least once every three years).

    I don’t endorse tethered formulas, caps, or any other rigid parameters. Instead, merit based incentives that incorporate factors beyond fiscal performance are crucial in helping shape an environment that rewards sincere leadership success.

  4. Ok, I see it now, yes it is a bit difficult to see the links on my monitor especially if the linked text encompasses fewer words rather than more.

    I noticed a comment by Arleigh in the Zoltan piece that brought up an interesting point:

    To clarify the pay cut controversy, it is important not be be comparing dissimilar numbers. My understanding is that Ms. Parsons’ present pay, which will not increase through 2014, is 10% less than her full-year 2008 pay. The musicians, however, had pay increases in the summer of 2008 and 2009 to reach the level from which they took their 23% cut. And their new contract apparently includes pay increases in 2012 and 2013. So, unless all the musician pay changes result in their 2014 compensation being more than 10% below their 2008 pay, it appears that Ms. Parsons has sacrificed as much a percentage-wise as they have. Any comment on this analysis from the musicians?

    While I don’t necessarily want to be an apologist for Ann Parsons for what would otherwise seem like poor performance especially during the strike, but if the above is true maybe can at least not assign blame regarding the point of her own pay and compensation. Whether or not this would fit in with a merit based program that you mention in your reply to Christa is another matter altogether, of course.

  5. I saw Arleigh’s comment as well and didn’t even want to reply since anyone who followed that mess knows that the meager increases built into subsequent year’s of the musician CBA don’t come close to restoring compensation to levels before the cut.

    I’m curious to know where Areigh came up with the assumption that Paron’s pay won’t increase through 2014 when the details of her contract have not been made public. As such, that’s a dangerous premise to base that sort of question.

    Consequently, there are far more outstanding questions that not regarding Parson’s compensation along with the process the board used to arrive a their decisions on those matters.

  6. Ok, thanks. Yeah, I was under the impression that the increases in the CBA didn’t come close to what he was claiming but I thought I might have been mistaken. And yes–I was wondering how he was able to get details of Parson’s contract before it was made public and how he’s privy to that information. Thanks for clarifying.

  7. In fact, the issue of returning to previous compensation levels after the cut (also known as “parity”) was one of the issues that led to the strike and the musicians caved on in the final agreement.

  8. I tried to post something in response to Arleigh on the blogspot, but It didn’t stick. Any comparison between Anne Parsons’ compensation package is handicapped by the simple fact that Anne’s Contract includes all sorts of ancillary pay, details of which are secret. What even the highest paid member of the orchestra gets is all he or she gets.

  9. Correct Thomas, those are some examples of the unknown components related to Parsons compensation.

    On the issue of musician individual contracts (which for those who might be unfamiliar are terms that individual musicians can negotiate above and beyond what is guaranteed in the collective bargaining agreement), they rarely include perks like the sort and never to the same degree Parsons receives, there are instances where they happen.

    As someone who has negotiated and/or provided negotiation counsel for dozens and dozens of musicians and executives in everything from the biggest budget Big 5 groups down through lower budget orgs, I can say individual compensation parameters are at times both predictable and diverse. In fact, it might make for a good topic sometime soon; but no, I’m not going to name names nor will I reveal any specifics regarding client agreements. I work under strict confidentiality agreements. So anyone looking for a tell-all post will need to go elsewhere.

  10. Drew, I’m willing to give the benefit of the doubt and stipulate that the contract won’t rise at all during the length of the contract as is implied by the article, but as you point out, it still comes nowhere close to achieving parity even in the end to the cut being made by the musicians even if you ignore the three years in between and even if you ignore the fact that the subsequent years’ numbers since the quoted year of Parsons’ salary haven’t been released to show us a more reasonable basis for comparison after the announced 10% cut and even if you ignore the other large benefits that aren’t included in the cash portion of her salary (the use of the house owned by the orchestra for use by the music director or president, the company car, etc.) that aren’t given to the musicians as part of their compensation. I was being extremely generous to Parsons, even in my rounding. The numbers used for the musicians come from reports during the strike itself and were current, quoted between $105,000 and $116,000. The approximate 3-to-1 ratio stands.

    Thomas, I apologize about the slowness of the comments at times. I’ve checked the spam filter, and there is nothing there. Sometimes, Blogger just takes its sweet time to post them. I’ll keep my eyes on the spam filter though just in case it shows up later.

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