Finance Council Top Ethical Concerns: #4: Compensation Committee

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.

Finance Council Charter says:

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.

BCI Concerns:

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.

  1. What other dioceses have a “Compensation Committee” as part of their Finance Council?  How do they address this problem without needing a separate committee?
  2. 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?
  3. 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?
  4. 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.
  5. 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?
  6. 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?
  7. 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?
  8. 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?

16 Responses to Finance Council Top Ethical Concerns: #4: Compensation Committee

  1. A. J. Constantino says:

    Great post!

    Let’s get to basics, each “lay executive employee “should be clearly defined by a Job Description; Objectives, Accountabilities and Measurements.

    Human Resources should be developing the Job Description with the hiring manager; while the objectives, accountabilities and measurements should be set by the manager and the employee and placed on file with HR.

    The question is does the RCAB have these “Standard Operating Procedures” in place?

    Next: there are countless FREE resources available to develop compensation packages =- it’s not a mystery!

    I have worked in several large companies, where the Presidents/CEOS have been anxious to use outside consultants, after paying large fees, we most often learned that no one knows our business better than we did and in the end “self-determination” was best.

    From the “outside looking in”, it appears that “lay executive employee” salaries are disporportionate to the overall RCAB budget.
    The biggest mystery is why men and women, with the background and experience of Chancellor McDonough, Mr. Connors and MS. Sen have not applied the “for profit” experience into the “non-profit” experience of the RCAB. All three have to know that the % of revenue to compensation would not be acceptable in a “for-profit” business.

    For those who may be bit put off my analysis, it’s a business world prospective, NOT a Church world perspective. In my opinion, a $100.0K-$150.0K salary for a “lay executive employee “ for the RCAB is just–with, once again, in my opinion, one exception, “in house” Legal Counsel.

    • Carolyn says:

      AJC,

      You are, literally, right on the money. If six people were paid between $100K and $150K, who were true leaders and put in long hours, I would be fine with it. The salary would be a good return on investment for the donors (us) and the “works” would work.

      What we have now is bloated compensation combined with questionable motivation in some cases, and questionable performance in others.

      The head of planning for RCAB came straight from Arthur D Little back in the early ’90s. (Like the day after he retired…) His salary was a staggering $1 per year after having been handsomely compensated for many years. He showed up every day, tie and coat, worked diligently in sometimes rustic office settings, and really brought his experience to the table.

      One or two of those in the mix would be a fabulous addition to a half dozen highly competent individuals paid a salary commensurate with the resources of the organization.

  2. A Priest says:

    I agree a salary of 100-150K is about right for a true executive with the right experience who wants to give back to the Church that gave him or her new life through Jesus Christ…of course over time that may rise slightly due to performance raises but the reality of the situation is; anything higher as a starting salary is bogus. I wouldn’t mind a return to priests in the Chancellor’s office, I think there are qualified guys out there who could do the job for a few years and then head back to parish life. Let’s maximize the resources we have.

  3. Disgusted Boston Priest says:

    About 20 years ago, a drumbeat began: “There soon won’t be enough priests – we need to empower the laity to run the Church!” It was, in my opinion, begun by dissatisfied and faithless priests who were afraid to promote vocations; it was repeated constantly in the seminary by many of the selfsame priests who no longer believed in the authentic priesthood of Jesus Christ, and it began to be picked up by the liberal press, who were delighted to have another instrument to create noise in the ever-growing cacophany of anti-Catholicism.

    The euphemisms of “increased lay participation” and “empowerment” have led to the current situation in the Archdiocese of Boston (and other places), where those ordained by Christ to shepherd His Flock now find themselves beholden to [read: hostage to] an increasingly emboldened laity. However, far from the ideal spouted by those disaffected priests some twenty years ago, the group of laity who have become “empowered” are those who already knew what power is and how to use it for their own ends.

    Jack Connors was loudly and roundly touted by The Boston Globe as the solution to the problems of the Archdiocese. After all, he’s financially successful, he’s influential, he’s connected and he wants to help. The fact that Jack’s faith is pitifully uninformed (my guess is he’s somewhere in the range of a seventies Jesuit) and that he might have his eyes on some low-hanging fruit in the assets of the Archdiocese that he might be able to convert to the use of friends didn’t seem to dissuade Cardinal Sean from doing the bidding of the Globe and hiring Jack on as his chief advisor.

    Jack Connors is now being quoted as wanting to rebuild the faith – and we are surprised? In his estimation, our faith is naive and unproductive, unhelpful to the bottom line. Like so many others, Jack thinks that to cure the ills of our “business” we need to “discover” a product that sells – and because we’ve been hemorrhaging money for the last several years, he figures it must be a problem with the product – the faith of the Apostles. If only our churches, our schools, our preaching were more friendly, goes his reasoning…

    Once firmly ensconced in power at the Archdiocese, Jack has – like any good oligarch – moved quickly to consolidate and expand his power base. He’s appointed friends (I’m sorry – he’s recommended them to Cardinal Sean) to positions of power that buttress his own. He’s paid them well (oops, recommended good salaries) so that they don’t forget which side their bread is buttered on. And he’s used his new found power to reward associates in the business community, from whom he ought to expect some form of recompense.

    Jack Connors is doing what good businessmen do.

    Unfortunately, while we do need good business sense to run our finances, we don’t need a profiteering businessman like Jack Connors to run the Corporation Sole – to discard unprofitable operations (like the seminary and Catholic hospitals) and to start up new ventures (like the Dorchester school debacle) which merely utilize the hard-earned money of the faithful to build a parallel public school system.

    The reason this blog is so hated in the executive offices at Brooks Drive is that you’re paying attention to the little man behind the curtain instead of the Great and Powerful Sean. Keep it up – with Jack Connors determining the content of our faith, much more than our money is at stake!

    • Fr. D says:

      I have to agree with most of the post and some of the phraseology betrays the poster’s age. There are a lot of factors contributing to the dearth of vocations and most of it is the reaping of poorly planted seeds from past times. I don’t think Father would disagree with that observation.

      I personally have never met this Jack Connors character. He sounds like a real pip to me.

      The bottom line is that the RCAB is really weak at this time and prime for the picking and it looks like Jack has a large bag in hand and is ready to gather in the fruit of his work!

  4. Clem Kadiddlehopper says:

    Ah, Disgusted Boston Priest stole my thunder. Corporation Sole is now a corporatocracy that serves the interests of the laity that direct its operations solely for the power and benefit of said laity. You can believe it or not. I have checked with Ripley, and he verified it.

  5. catholic Data Nerd says:

    In corporate life, the creation of a compensation committee (or the publicity of an existing one) is usually an acknowledgement that people realize they have a public relations problem, a compensation problem, or both. So the creation of this compensation committee MAY be an acknowledgement that many leaders are acknowledging a problem. That might be a sign of progress at 66 Brooks.

    A key question is whether the compensation committee idea was one of McDonough’s/Connor’s (to deflect accountability from them) or one forced on McDonough from O’Malley, Erikson and others (to bring the decisions back into a more normative salary band). Either way, it’s clear McDonough or someone with familiarity with corporate boards wrote the language you pasted above.

    The questions BCI poses above are all good ones. Identifying the appropriate benchmark or comparable organizations is key and other Northeast diocesan compensation is the BEST comparable.

    Having studied executive compensation as part of my day-to-day duties, and having followed the Church for a while, I’d make a few notes to the post and comments above:

    1. Comp salary bands should have distinctions depending on the type of candidate: (a) priest (comp is pre-determined); (b) religious (comp is pre-determined); (c) deacon (hybrid comp between clergy and layperson comp, assuming that they are still have many dependents); (d) layperson “after” prime of their career (who is “giving back” to the Church like the Chancellor or the general counsel); (e) layperson “in the prime” of their career who still has young dependents to put through Catholic schools, college, etc. (which seems true of about half of the highly comped staff members)

    2. Comp bands of $100-150K for key positions seem justified in this market. To get someone “extra” good or who needs more to take the role (see 1e above), the comp should only be increased IF a benefactor underwrites the comp above $150K. Those “heavy hitters” on the finance council that recommend key people for high comp should be willing to fund some part of these positions’ higher salaries. For example, if Connors and the Campaign for Catholic Schools was subsidizing Dr. O’Neill’s salary of $325K, it would be much more acceptable.

    3. While the Chancellor role probably should be the highest paid role (if occupied by a layperson), given McDonough’s previous business success, why didn’t anyone seem to ask him to work for a lower figure (let’s say $100K) or why didn’t he volunteer to do this PARTICULARLY when he was letting go many people who made <$50K/year in several rounds of cuts? Does he REALLY need that salary? What does it say to him that he continues to take it?

    4. In whose judgment did anyone think it made sense to pay a very successful lawyer at the end of his working career $300,000? Whoever made that determination should be willing to subsidize the position with outside funds. This is nothing against the individual in question, who is hard-working and productive, it's just shocking that a lawyer over 70 years old needs to make $300K to be interested in taking the role to help his Church and to give back.

    5. Generally speaking, the principle that a person working for the Church should always be making somewhat less than they could make in the private sector should be part of this new "compensation philosophy" that the committee recommends. Never should we have a situation where we need to pay someone MORE to dedicate themselves to the Church. That seems the case with the superintendent of schools and several of the people that report to the Chancellor.

    6. On the compensation committee, common-sense pastors who need to ask for Appeal contributions should be the majority of the compensation committee. They need to tell the Finance Council members that there are no real "executives" in the Church, just "servants" of the Word of God who work with pastors and other leaders to advance the Church's mission. Pastors are there to insist that the focus be maintained on who is actually paying for these salaries and what is justified to them, vs. these "professional board members" who are professionals at spending other people's money.

    Good work BCI.

    • Objective Observer says:

      CDN,

      Terrific analysis and summary. A pastor is the primary representative of the ordinary in the parish (canon law). In English, that means that he represents the cardinal to the people, and the people to the cardinal. These priests should be at the table, joined by men and women whose notion of fiduciary duty and unambiguous ethical direction are unimpeachable.

    • A Priest says:

      CDN…awesome post!

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