Some Detroit Institute of Art Execs Get Big Rewards

August 25, 2015; Detroit Free Press (Associated Press)

Taking note of the controversy over the proposed bonuses and other emoluments for some executives of the Detroit Institute of Art won’t make some people happy, for sure. There are those in the nonprofit sector who believe that nonprofit executives should be paid handsomely, a sentiment for which one can make good arguments. There are those in the arts and culture world who might suggest that bonuses and benefits for the DIA executives are necessary to keep pace with compensation packages at other top museums. And there are some who probably think that the turmoil over saving the DIA from being auctioned off as part of the Detroit bankruptcy deal might have been one of the toughest challenges to confront any museum executives anyplace, and boy do the DIA brass merit extra consideration for that.

Others might think a little differently about the two sets of compensation proposals that the DIA is considering—or may have already approved, at least in part. The DIA has proposed pay raises of $49,000 for former DIA executive director Graham Beal and high-level staffers Annmarie Erickson, the DIA’s chief operating officer, and Robert Bowen, the chief financial officer. The raises cover fiscal years 2014 and 2015, meaning that they are somewhat retroactive, especially considering Beal’s resignation. That small sum would be paid for by tax revenues from Macomb, Wayne, and Oakland counties.

The other part of the compensation proposal, more controversial than the raises, are the bonuses and other compensation. In the deal, Beal gets a $30,000 bonus—again, retroactive, since he has resigned—plus a retirement severance payment of $285,000 and the DIA will forgive a $155,832 housing loan he used to buy a 6,000 sq. ft. historic home in the Palmer Woods neighborhood. Erickson would get a $25,000 bonus for 2014 and a $40,000 bonus for 2015; Bowen would get a $15,000 bonus for 2014 and a $25,000 bonus for 2015. Unlike the pay raises, these increases would be paid from a privately funded compensation fund at the museum. Under an agreement reached with Michigan’s counties for the use of tax revenues for the DIA, the counties get to vote on and approve pay raises made from tax revenues, but the counties, according to DIA chairman Gene Gargaro, do not have authority to approve or disapprove payments from the private donor funds. According to the Detroit News, “Gargaro declines to disclose the amount of the donor fund.”

The agreement giving the counties the right to know about and review pay increases emerged after widespread outcry in 2012 when the counties learned that the DIA had paid the three executives a combined bonus of $100,000—at the same time that Beal and Erickson were apparently making the case for the museum’s need of a fiscal infusion.

Given that the DIA is in the midst of recruiting a replacement for Beal, one might guess the importance of putting a positive face on how the board and its public sector funders treat the museum’s executive staff. There’s no doubt that the three worked hard during the Grand Bargain negotiations, engaging in interactions that museum staff probably never could have anticipated.

Nonetheless, there has been some blowback to this announcement. Gargaro explained that he was discussing the bonus, severance, and housing payments for the purpose of “education and information.” The only approval that the DIA needs from the counties is for the raises, which are within the bounds of compensation paid at major museums around the country. It may have been the reporting, but the statement made Gargaro appear more than a little dismissive of the public sector entities whose $23 million annual infusion of tax revenues into the museum is nothing to sniff at.

Moreover, money is fungible. The counties, if they were so motivated, could ask about what they are paying for that the private dollars in Gargaro’s donor fund might cover. The fact that Gargaro declined to reveal the size of the fund doesn’t help in a situation where, in the wake of the Detroit bankruptcy deal, disclosure is important.

And finally, there is the public relations impact. Many Detroiters, not living in 6,000-foot mansions designed by the architect who designed the Henry Ford Museum, might have an adverse reaction to bonuses, a concept beyond the experience of most of them and probably something they thought nonprofits didn’t do, and the forgiving of the housing loan. Even if these compensation proposals are legitimate and appropriate, the DIA ought to know from the experience of many other major nonprofits that being tone-deaf to the public can undermine even the best of plans.

The DIA has had its share of communications and public relations miscues over the years, sometimes not quite endearing itself to many Detroiters. This past spring, word leaked out that the DIA was quietly considering the voluntary sale of some of its artwork, including a Van Gogh still life (of dubious provenance). It caught many by surprise, since one of the elements of the Grand Bargain was to prevent the DIA’s collection from being sold. Beal himself added to the public’s consternation with the statement, “We couldn’t sell any works (until now) because it would have caused such confusion.” He later walked that back a bit, announcing that the museum wouldn’t sell the Van Gogh, and then adding that he would leave the issue of selling parts of the collection (“deaccessioning”) to his successor.

NPQ would be interested in hearing from people in the museum world about their reactions to Gargaro’s proposed compensation changes for the DIA’s past (Beal) and current executives—and from Detroiters who have been witnesses to and are intended to be beneficiaries of the bankruptcy deal.—Rick Cohen