Today we continue our “Top 10 Ways the Finance Council is Conflicted, Self-Contradicted, or Perhaps Even Corrupted” series with the third part on compensation. To catch-up on what we covered previously in the flow, start by reading #1: Consultation on Performance or Removal of the Chancellor, and #2 Term of Service, and #3 Conflicts of Interest. Then you may want to recap on #4: Compensation–Six Figure Salaries, and Compensation: Mary Grassa O’Neill. Today we discuss in more detail:
#4: Compensation Committee
As we documented previously, the objective reality is that we know of 15 people–mostly publicly disclosed–whose combined salaries total about $2.9M. (We cited 14 people last time for a total of about $2.7M, but we missed the consultant’s annual compensation in our last post). As several people commenting observed, that is nearly 1/5 of the Catholic Appeal target. Sources say there are around 20 people collecting 6-figure salaries today.
Before 2006, if you looked at the 4 highest-paid employees, the cutoff point to get those 4 employees was $137K and the combined compensation was $689K. Today, there are 8 Cabinet-level employees whose compensation of $150K or more is publicly disclosed, and we know of another 4 (not in the Cabinet and not publicly disclosed) who are also at $150K+. So, the number of employees earning above $137K has at least tripled in the past several years, during the worst economic climate seen in decades.
The whole idea of a new compensation committee–to ostensibly solve the problems of a lot of 6-figure salaries amongst the cabinet leadership team and/or people being overpaid relative to norms for their background and role–has the appearance of turning the Finance Council into a corporate “Board of Directors”. It also gives even more power to the Finance Council, beyond what seems to have been intended by Canon Law. And it raises some additional concerns.
Article X. Committees, Section H: Compensation Committee (excerpts)
The Compensation Committee shall develop and submit to the Finance Council for its review, and for approval by the Archbishop, a statement of the compensation philosophy of the Archdiocese for senior lay executive employees. The Committee shall review and recommend to the Archbishop all changes in senior lay executive compensation, including offers of employment for senior lay executive employees…The Committee will perform an annual review of all compensation for senior lay executive employees to ensure that compensation falls within ranges that are consistent with the approved compensation philosophy. Where deviations are observed, the Committee shall either determine that there is an acceptable reason therefore, or recommend a plan to correct the deviation…The Committee shall from time to time appoint a qualified independent compensation consultant to advise the Committee in the performance of its duties, and shall direct the consultant to conduct an analysis of competitive compensation practices and report to the committee thereon, at least once every three years. The Committee shall also advise on other compensation matters as requested. The Committee shall consist of at least one member of the Finance Council, and shall have members with proven credentials in executive compensation or other relevant general business experience.
It sounds like the description came straight out of a corporate board of directors committee overview. We will pose our concerns today in the form of questions we feel reasonable people should be asking about this new committee and the overall approach the Archdiocese seems to be taking to compensation. The end goal is fair and just compensation so funds are used prudently to build the Kingdom of God.
- What other dioceses have a “Compensation Committee” as part of their Finance Council? How do they address this problem without needing a separate committee?
- Why does this need a new committee? Why is it that the HR department cannot just obtain and share comparable salaries from other Catholic dioceses for similar roles, so the hiring manager and those who approve compensation make their own educated decisions consistent with norms? What is stopping the HR director and her staff from picking up the phone and calling a few other HR directors at other dioceses to ask for comparables?
- Is this just a facade for Jack Connors and Chancellor Jim McDonough to make these decisions and merely get them rubber-stamped by the archdiocese?
- Who are the objective, unbiased members of the committee going to be? Jack Connors and Jim McDonough have already been integral to these sorts of decisions, so they have the appearance, if not the reality, of being biased. Jack McCarthy is already head of the Steering Committee and, coincidentally, just so happens to be the next-door neighbor in Hingham to the newly-hired Development Chief, so he has a perceived conflict of interest if her compensation is to be reviewed. (He was also a member of the “sham search” committee that was never allowed to interview candidates). Laura Sen, CEO of BJs, who recently joined the Council, is connected to McDonough from having served with him on the Abington Bank Board, so she cannot be seen as neutral and independent. Sen also received compensation from BJs of $4.9 million in 2009, and it seems to this blogger that an effort to review compensation would be better led by someone whose own annual compensation is closer to the level that people who work full-time for the Catholic Church are paid.
- What will the background of the committee members be? The charter says the committee “shall have members with proven credentials in executive compensation or other relevant general business experience.” Why just background in “executive compensation” or “general business experience” but no background in Catholic Church management or compensation?
- The charter says the committee can engage a “qualified independent compensation consultant.” Is this person going to be familiar with Catholic diocesan compensation? Will he/she conduct an “analysis of competitive compensation” looking at other Catholic dioceses?
- Why should donor contributions–or parish funds taxed by the diocese which come from donors in the pews–have to pay for some new, expensive “compensation consultant” whose purpose is ostensibly to correct problems created by certain cabinet decision-makers who are themselves earning six-figure salaries?
- Who is assessing the qualification level of some of the cabinet-level executives and their competency in executing their jobs to not only earn the salary level they are earning, but also to remain in their jobs? Are Catholic donors in the Archdiocese getting value commensurate with the compensation paid? Who that is knowledgeable enough about certain functional areas can make those assessments on an individual basis? Do people hired several years ago necessarily have the right backgrounds and/or skill-sets for the job today? This is a post in and of itself.
The above are just are a few questions for the committee or those involved to take up when they convene. No personal attacks or judgment calls. They are simply objective questions about the process we feel should be used in order to prove or disprove that the funds donated by people in the pews are being used effectively.
Seems to this blog that the Finance Council has already shirked their fiduciary responsibility by allowing the current situation to get to the point where it now needs yet another new “committee” to try and address it. Now those that helped create the problem are proposing they will help fix it.
Why is there apparently not a mention of this concern at vicariate meetings or at the Presbyteral Council? Why does the Archdiocesan Pastoral Council apparently also seem uninterested in discussing how donations from the pews and parish contributions to the archdiocese are spent?
Does anyone care how their donations are spent by Corporation Sole and who provides oversight that those funds are spent responsibly?
Please, no personal attacks in comments today. Let us keep it about the process and not name specific individuals for a change, OK?