Executive Director Compensation

Let’s talk compensation. Specifically, the executive director.

Prior to fiscal year 2010, the theatre apparently didn’t consider the ED position as one of the “Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees,” Section VII of the Form 990. They list only the directors (board members), who of course are not compensated. Starting in 2010, they decided he had to be listed, so we have some numbers for 2010-2014.

Ah, but were it that simple! In Section VII, there are several columns, but the two of interest are “Reportable compensation from the organization (W-2/1099-MISC)” and “Estimated amount of other compensation from the organization and related organizations.” For 2010-2013, there is an entry in the latter column for the ED.

It’s probably nothing to worry about, but I can’t figure out what that would be. Someone guessed maybe his compensation for directing a show. No – that would be 1099-MISC at least. Since he’s an employee, it would probably be on the W-2. In other words, I don’t think he could be both an employee and contractor. At least at IBM, anything special or extra I did showed up on the W-2. So, I’m baffled. Was it a bonus? Again, I’d expect that the be W-2 income. (Some others have speculated about this when I posted it on Facebook. We still are only guessing, though.)

It gets more confusing because in Section IX where expenses are listed, there’s a line for “Compensation of current officers, directors, trustees, and key employees.” In some of the 990s, this line shows the sum of the two columns in VII, and in some it shows only the W-2/1099 column. I’m going to assume those that don’t show it have the other column added into “Other salaries and wages.” I don’t know that for a fact, though, and it bothers me I don’t know what this column represents. Maybe it’s 403b money? If so, why does it disappear for 2014?

So, that’s the background. Here are the numbers, the W-2/1099 value followed by the other compensation number, and then the sum of the two. The final number is the percentage this compensation represents of the total salaries the theatre paid.

2010       56,200   13,226                   69,426   24.9%

2011       58,634     9,448                   68,082   24.8%

2012       59,834     9,070                   68,904   22.8%

2013       58,480   10,770                   69,250   22.3%

2014       72,800             0                   72,800   20.5%

There is one more important thing to note from the 990s regarding the executive director compensation. Section IX splits the expenses into three columns: “Program service expenses,” “Management and general expenses,” and “Fundraising expenses.”

Where would you expect the chief executive’s compensation to fall? Some organizations actually use the title Managing Director rather than Executive Director. But this position by its nature and, certainly by how it was performed, is a management position. You’d be wrong.

Executive director compensation is accounted for as a program services expense. I doubt the IRS cares as long as the numbers are right. But it gives us a big clue about how the internal accounting works at the Civic. Anything and everything that can be charged against the productions and can make the productions APPEAR TO BE FISCALLY POOR is being done. I looked at 990 forms for a few other theatres, and there’s no real consistency. We also don’t know how those executive directors operate – some may also serve as artistic director or direct several shows. Some have the compensation in the program services column, some in the management column. One split the compensation between the two columns which could make a lot of sense – consider that the former ED did sometimes direct a show, so such a split would seem logical.

So when the board president tells you the shows can’t pay for themselves, ask to see the numbers. All the numbers. (For full transparency, yes – I’m speculating because Heather and Kay DO NOT share their accounting with us. I’m eager to learn their logical explanation for accounting for it this way on the 990s.)