Friday, October 17, 2014

In defense of the DIA's executive compensation

Posted By on Fri, Oct 17, 2014 at 4:22 PM

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The Detroit Institute of Arts has found itself in hot water this week after it was revealed that its chief operating officer Annmarie Erickson and director Graham Beal quietly got raises while the museum faced tough financial times.

Beal got a 13 percent raise, it was reported, while Erickson got a 36 percent raise. Though our own Jack Lessenberry admitted both DIA executives are still not overpaid for the standards of the industry, he concluded simply that "it doesn't look good."

Today, the DIA released a statement to attempt to make their finances more transparent, noting that it has long been the policy of the DIA to pay its top executives "slightly below the national mean for comparable positions at major art museums." They also clarified the issue of Erickson's pay, stating that the widely reported 36 percent figure was incorrect in that it included retroactive pay from the time her contract was finalized back to the time she assumed her new duties, and included a performance bonus as well. With those considerations, the statement says, Erickson's pay increase from 2011 to 2012 would be four percent — not 36 percent.

Calculation errors aside, though, a good deal of the media backlash may come from the fact that it's easy to take for granted what a world-class institution the DIA is. The DIA has a huge, diverse collection that's right up there in caliber with just about any other museum.

(Full disclosure: I took a job helping facilitate the drop-in activity workshops and drawing in the galleries sessions that the DIA offers to all patrons free of charge shortly after college. Sitting on a wooden horse bench on a slow day, waiting for patrons to come by and try their hand at sketching from the DIA's paintings, sculptures, and other artifacts, it was easy to forget that I was in a room surrounded by treasures created by some of the most talented artists in the history of the world. Human nature, I guess!)

Plus, the DIA is dealing with challenges that no other museums in the world face — its leaders deserve to be compensated for sticking it out and navigating through some particularly murky and turbulent waters.

Check out the DIA's full statement below, and check out our Face Time interview with Graham beal from earlier this year here:

Executive compensation at the Detroit Institute of Arts (DIA) has been in the news for much of the past week, and unfortunately misunderstandings have occurred. It is critical to the DIA, given the position of trust that it occupies in our community, that our actions be transparent to all of our stakeholders, including our elected officials, the citizens of Wayne, Oakland and Macomb counties and the State of Michigan.

DIA executives work very hard to maintain a museum that is internationally respected, and they should be compensated in the same manner as their contemporaries in the art world. Nevertheless, in recognition of the very challenging economic times that have impacted our region and the financial hardships experienced by many of its citizens, the DIA has had a policy for many years of paying its top executives at a level slightly below the national mean for comparable positions at major art museums, notwithstanding their consistently high performance levels and the additional complications of managing a major cultural institution in Detroit’s challenging economic climate.

We sincerely regret that we did not anticipate the way in which our promotion and compensation decisions in late 2011 and early 2012 would be perceived in late 2014 in light of the conditions that developed for the city and the region as the DIA millage was approved in late 2012 and as the City of Detroit entered bankruptcy in 2013. We pledge to keep the elected officials in Macomb, Oakland and Wayne Counties informed on a current basis as we make executive compensation decisions in the future.

With regard to our compensation decisions in the last three years, here are the facts. Graham Beal and Annmarie Erickson have both served the DIA for more than 15 years and have taken the museum through many major milestones including the expansion and renovation of the museum building, the reinstallation of the art collection, the successful 2012 regional millage campaign and, most recently, the issues associated with the City of Detroit bankruptcy. They have provided strong and thoughtful leadership for the museum, and we feel fortunate to have them leading our team.

In September 2011, Ms. Erickson was named Chief Operating Officer of the DIA. While she assumed those duties immediately, her new contract was not finalized until the spring of 2012, during which interim period she was paid her pre-promotion salary. When the contract was finalized, Ms. Erickson received her salary increase at that time retroactive to the date of her assumption of her new duties, and in 2012 she received a 2011 performance bonus as well. The 36% pay increase which has been reported so prominently in the press resulted from this “bunching” of compensation related to 2011 into 2012. Had the compensation been paid in 2011 when it was earned, the increase in compensation from 2011 to 2012 would have been 4% not 36% (see table below).

It is also important to note that the 2011 promotion and 2012 retroactive compensation adjustment occurred before the tri-county millage was approved. In 2013, the first year of millage payments to the DIA, Mr. Beal’s compensation increased by 4% and Ms. Erickson’s compensation increased by 3%. The table below details the years reported in the media previously, adding 2013. These figures illustrate the attention paid to the DIA’s financial situation and executive compensation.

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NOTE: The millage was approved by the voters in the three counties in August, 2012. The first millage proceeds were not received by the DIA until January, 2013. Accordingly, only the amounts paid to Beal and Erickson in 2013 were paid after millage funds were received by the DIA. The amounts paid to Beal and Erickson in 2013 represent, in Beal's case, a 4% increase from 2012, In Erickson's case, the 2013 amount reflects a 3% increase from compensation actually earned in 2012 and a 9% decrease from her reported 2012 compensation.

The DIA is keenly aware of the public’s trust and confidence as evidenced by the 2012 regional millage vote. We will continue to provide our community with exceptional museum programs and will do so in a way that is responsible, transparent and reflects proudly on the history of this great institution. Representatives of the DIA Board of Directors will meet in the near future to consider the best means to work with elected officials in Macomb, Oakland and Wayne Counties to ensure that there is full transparency on compensation decisions. We will continue to steward our resources, which to a significant extent have been entrusted to us by citizens of the tri-county area, in a very careful, responsible manner that recognizes both the exceptional quality of the museum and the exceptional leadership of those who are directing its course, and we appreciate the continued support of all of the citizens of the tri-county area.

Eugene A. Gargaro, Jr.
Chairman, DIA Board of Directors



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