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$857,380
That's how much a local nonprofit agency's CEO made in 2004. Is it too much?
NESTOR RAMOS
nramos@argusleader.com
Article Published: 01/29/06
Communication Service for the Deaf began as no more than a dream and an office
in a closet. In a span of three decades, CSD grew into a leading advocate for
the deaf and a powerful nonprofit enterprise, with more than $80 million in
annual revenue.
Pay for the agency's founder, Benjamin Soukup of Sioux Falls, grew as well: The
chief executive officer's compensation in 2004 exceeded $850,000. That mark tops
the pay for the heads of Sioux Falls' two hospital systems, the leader of the
national Red Cross and the United Way.
Soukup's paycheck surprises experts in the nonprofit world.
"Even of the national charities that we evaluate, a salary of $700,000 would be
at the extreme," said Bennett Weiner, chief operating officer of the Better
Business Bureau's Wise Giving Alliance. "It would be unusual for us to see
that."
Soukup's salary grew during a time when CSD indirectly benefited from a scam
operated by overseas criminals and paid for primarily by taxpayers.
The CEO feels comfortable explaining his salary. And for those who work closely
with Soukup, the explanation is simple: He's worth it.
"We are a very unique organization with a very unique mission," Soukup, who is
deaf, said through an interpreter. "It requires very specific knowledge."
After a down year in 2005 that included some layoffs, Soukup said his salary
today is $370,000. But that figure does not include deferred compensation -
money paid to executives in the form of bonuses or contributions to retirement
funds.
Such deferred compensation can be substantial, amounting to hundreds of
thousands of dollars. The extent of Soukup's pay cut probably will not be known
until CSD files its 2005 IRS Form 990, the public accounting document required
of all nonprofits.
By comparison, Soukup's base salary in 2004 was about $500,000, with an
additional $350,000 in deferred compensation and benefits contributions.
CSD recently laid off employees at its headquarters on East 10th Street, part of
a process corporations now call "right-sizing." The layoffs affected fewer than
10 workers in Sioux Falls, according to Soukup, and all of the agency's other
executives took pay cuts of 10 to 30 percent before the decision was made to lay
off any workers.
Eight times regional average in CEO compensation
Paul Clolery, editor in chief of the Non-Profit Times, a twice-monthly magazine
covering the nonprofit sector, said Soukup's salary was "significantly higher"
than average for a nonprofit the size of CSD.
The magazine recently published its annual survey of nonprofit salaries, which
tracks compensation by position, region and size of organization. For CEOs of
the largest nonprofits, with revenue of more than $25 million annually, the
average compensation is $196,000, according to the study, and about $100,000
less for the North Central region.
That makes Soukup's 2005 compensation more than eight times the regional
average. By comparison, Clolery said, the president of the American Red Cross -
a $2 billion operation - makes about $450,000 annually.
Cynthia Massarsky founded Social Returns, a nonprofit devoted to helping other
nonprofits build entrepreneurial skills. Massarsky, herself a nonprofit
director, said examining the salaries of executives is a good thing because the
money can attract talented people who might not have otherwise considered a
career in philanthropy.
"It lets people know that these aren't just low-paying jobs," she said.
From a small office in 1975, CSD grew into large operation
Born in Wagner, Soukup is a massive man - well over 6 feet tall, with thick
hands and an infectious smile.
Soukup, 53, started CSD in 1975, out of a tiny office at the South Dakota School
for the Deaf, to provide interpretive services for sign language users.
"We're more like a business - we generate revenue from the service we provide,"
Soukup said in an interview interpreted by CSD spokesman Rick Norris. "But the
revenue we generate goes into the programs we provide. ... We don't depend
solely on charitable contributions."
Soukup said a good comparison in the nonprofit world would be a hospital. In
fact, Weiner said hospital executives account for some of the highest nonprofit
salaries, "in some cases a million dollars or more."
Today, payments for all of CSD's interstate relay services are collected from
telecommunications companies such as Sprint. Those companies pass the costs on
to consumers in the form of fees on bills. Relay service, mandated by the
Americans with Disabilities Act, allows deaf and hard-of-hearing Americans to
use the nation's telecommunications network on an equal basis with the hearing.
Telecom firms pass along costs from fraud in system
One of the services that CSD and other companies provide is Internet relay. It
allows deaf computer users to communicate with the outside world by typing to an
operator who acts as a translator.
The popularity of the system made it a key source of income for CSD, because the
program is funded on a per-minute basis. By FCC mandate, funding for the service
comes from all telecom companies that provide services across state lines. That
cost is passed on to consumers in the form of fees on telephone bills.
But the system - including services run by CSD's for-profit competitors - became
a magnet for fraud.
Because the system is essentially untraceable and accessible by anyone with an
Internet connection, illegitimate users used relay operators to prey on
businesses around the country, posing as deaf people to perpetrate credit card
fraud.
Another new service - video relay - provided a sizeable amount of income for
CSD, more than $30 million in 2004. That service allows deaf users to connect
with certified interpreters via Web cam to place relay phone calls using sign
language.
CSD is a nonprofit not because of the size of its revenue stream but because of
its mission: providing greater opportunities for access, independence and
awareness for the deaf and hard of hearing. Every penny CSD makes after
operating expenses goes to charity programs to advance deaf causes, Soukup said.
Such programs vary from state to state, and range from offering American Sign
Language classes to providing specially equipped houses for deaf people. In
Minnesota, CSD offers citizenship training for refugees who are deaf or hard of
hearing, according to the agency's Web site. In Iowa and the Dakotas, CSD helps
clients find employment.
Because nonprofit organizations provide important services the free market often
neglects, they are not required to pay federal corporate income taxes. And
though relay service is often provided by for-profit companies, it is so
directly linked to CSD's core mission. That's how the organization meets IRS
criteria for a nonprofit.
Compensation committee determines executive pay
Public scrutiny of the salaries nonprofit organizations pay their executives has
grown in recent years, the result of widely publicized scandals at high-profile
operations like the United Way and the New York Stock Exchange.
"The issue of compensation is always somewhat of a sensitive one, given that
everyone has their own personal view of what is too much or what is enough,"
Weiner said. The Wise Giving Alliance rates charities on factors that include
CEO salary, but hasn't reviewed CSD.
Soukup said he took seriously the increased focus on how - and how much -
nonprofits pay their executives.
"We took that to heart," he said. "We wanted to be cautious about the process we
engaged in. We used a compensation committee. (We are) in compliance with all
the appropriate federal and local laws."
Because of its unique mission, Soukup says CSD has to pay top dollar for
talented people with knowledge of deaf culture - many of the agency's top
executives are deaf. Its five highest-paid employees each make more than
$150,000.
CSD's compensation committee, of which Soukup is not a member, commissioned a
salary study from Clark Consulting, a Minnesota firm that examines comparable
organizations, both for-profit and not. Representatives from Clark did not
return messages left at their office.
John Archer, a lawyer for CSD and a nonvoting member of the agency's board of
directors, sits in on the compensation committee meetings.
Archer said the salary studies conducted by Clark were exhaustive.
"They feel like they looked at all the right comparables," Archer said, both
for- and nonprofits. "CSD is a hybrid ... we are, in essence, a
telecommunications arm."
But Weiner said many people don't agree that comparing salaries from for-profits
and nonprofits is fair.
"I think there's a different public expectation," he said. "For-profit
ultimately has the objective of making money, and a nonprofit is meant to be
mission-focused. This doesn't mean that they shouldn't be adequately compensated
to conduct those tasks. But comparison to the for-profit compensation, many
would view as an apples-to-oranges comparison," he said.
Soukup said his job is extremely challenging, requiring him to run a complex
national organization that deals regularly with the FCC.
"This," he said, "is a very difficult job."
Norris agrees.
"Your job as a leader is to inspire the people who work for you," he said,
pointing out that Soukup turned his closet-sized charity into a national
powerhouse.
"We have such a long road we have traveled," Norris said. "It really does take
someone like Ben and his leadership style to infuse that passion."
To read full article and picture, please go to:
http://www.argusleader.com/apps/pbcs.dll/article?AID=/20060129/NEWS/601290313/1001
That's how much a local nonprofit agency's CEO made in 2004. Is it too much?
NESTOR RAMOS
nramos@argusleader.com
Article Published: 01/29/06
Communication Service for the Deaf began as no more than a dream and an office
in a closet. In a span of three decades, CSD grew into a leading advocate for
the deaf and a powerful nonprofit enterprise, with more than $80 million in
annual revenue.
Pay for the agency's founder, Benjamin Soukup of Sioux Falls, grew as well: The
chief executive officer's compensation in 2004 exceeded $850,000. That mark tops
the pay for the heads of Sioux Falls' two hospital systems, the leader of the
national Red Cross and the United Way.
Soukup's paycheck surprises experts in the nonprofit world.
"Even of the national charities that we evaluate, a salary of $700,000 would be
at the extreme," said Bennett Weiner, chief operating officer of the Better
Business Bureau's Wise Giving Alliance. "It would be unusual for us to see
that."
Soukup's salary grew during a time when CSD indirectly benefited from a scam
operated by overseas criminals and paid for primarily by taxpayers.
The CEO feels comfortable explaining his salary. And for those who work closely
with Soukup, the explanation is simple: He's worth it.
"We are a very unique organization with a very unique mission," Soukup, who is
deaf, said through an interpreter. "It requires very specific knowledge."
After a down year in 2005 that included some layoffs, Soukup said his salary
today is $370,000. But that figure does not include deferred compensation -
money paid to executives in the form of bonuses or contributions to retirement
funds.
Such deferred compensation can be substantial, amounting to hundreds of
thousands of dollars. The extent of Soukup's pay cut probably will not be known
until CSD files its 2005 IRS Form 990, the public accounting document required
of all nonprofits.
By comparison, Soukup's base salary in 2004 was about $500,000, with an
additional $350,000 in deferred compensation and benefits contributions.
CSD recently laid off employees at its headquarters on East 10th Street, part of
a process corporations now call "right-sizing." The layoffs affected fewer than
10 workers in Sioux Falls, according to Soukup, and all of the agency's other
executives took pay cuts of 10 to 30 percent before the decision was made to lay
off any workers.
Eight times regional average in CEO compensation
Paul Clolery, editor in chief of the Non-Profit Times, a twice-monthly magazine
covering the nonprofit sector, said Soukup's salary was "significantly higher"
than average for a nonprofit the size of CSD.
The magazine recently published its annual survey of nonprofit salaries, which
tracks compensation by position, region and size of organization. For CEOs of
the largest nonprofits, with revenue of more than $25 million annually, the
average compensation is $196,000, according to the study, and about $100,000
less for the North Central region.
That makes Soukup's 2005 compensation more than eight times the regional
average. By comparison, Clolery said, the president of the American Red Cross -
a $2 billion operation - makes about $450,000 annually.
Cynthia Massarsky founded Social Returns, a nonprofit devoted to helping other
nonprofits build entrepreneurial skills. Massarsky, herself a nonprofit
director, said examining the salaries of executives is a good thing because the
money can attract talented people who might not have otherwise considered a
career in philanthropy.
"It lets people know that these aren't just low-paying jobs," she said.
From a small office in 1975, CSD grew into large operation
Born in Wagner, Soukup is a massive man - well over 6 feet tall, with thick
hands and an infectious smile.
Soukup, 53, started CSD in 1975, out of a tiny office at the South Dakota School
for the Deaf, to provide interpretive services for sign language users.
"We're more like a business - we generate revenue from the service we provide,"
Soukup said in an interview interpreted by CSD spokesman Rick Norris. "But the
revenue we generate goes into the programs we provide. ... We don't depend
solely on charitable contributions."
Soukup said a good comparison in the nonprofit world would be a hospital. In
fact, Weiner said hospital executives account for some of the highest nonprofit
salaries, "in some cases a million dollars or more."
Today, payments for all of CSD's interstate relay services are collected from
telecommunications companies such as Sprint. Those companies pass the costs on
to consumers in the form of fees on bills. Relay service, mandated by the
Americans with Disabilities Act, allows deaf and hard-of-hearing Americans to
use the nation's telecommunications network on an equal basis with the hearing.
Telecom firms pass along costs from fraud in system
One of the services that CSD and other companies provide is Internet relay. It
allows deaf computer users to communicate with the outside world by typing to an
operator who acts as a translator.
The popularity of the system made it a key source of income for CSD, because the
program is funded on a per-minute basis. By FCC mandate, funding for the service
comes from all telecom companies that provide services across state lines. That
cost is passed on to consumers in the form of fees on telephone bills.
But the system - including services run by CSD's for-profit competitors - became
a magnet for fraud.
Because the system is essentially untraceable and accessible by anyone with an
Internet connection, illegitimate users used relay operators to prey on
businesses around the country, posing as deaf people to perpetrate credit card
fraud.
Another new service - video relay - provided a sizeable amount of income for
CSD, more than $30 million in 2004. That service allows deaf users to connect
with certified interpreters via Web cam to place relay phone calls using sign
language.
CSD is a nonprofit not because of the size of its revenue stream but because of
its mission: providing greater opportunities for access, independence and
awareness for the deaf and hard of hearing. Every penny CSD makes after
operating expenses goes to charity programs to advance deaf causes, Soukup said.
Such programs vary from state to state, and range from offering American Sign
Language classes to providing specially equipped houses for deaf people. In
Minnesota, CSD offers citizenship training for refugees who are deaf or hard of
hearing, according to the agency's Web site. In Iowa and the Dakotas, CSD helps
clients find employment.
Because nonprofit organizations provide important services the free market often
neglects, they are not required to pay federal corporate income taxes. And
though relay service is often provided by for-profit companies, it is so
directly linked to CSD's core mission. That's how the organization meets IRS
criteria for a nonprofit.
Compensation committee determines executive pay
Public scrutiny of the salaries nonprofit organizations pay their executives has
grown in recent years, the result of widely publicized scandals at high-profile
operations like the United Way and the New York Stock Exchange.
"The issue of compensation is always somewhat of a sensitive one, given that
everyone has their own personal view of what is too much or what is enough,"
Weiner said. The Wise Giving Alliance rates charities on factors that include
CEO salary, but hasn't reviewed CSD.
Soukup said he took seriously the increased focus on how - and how much -
nonprofits pay their executives.
"We took that to heart," he said. "We wanted to be cautious about the process we
engaged in. We used a compensation committee. (We are) in compliance with all
the appropriate federal and local laws."
Because of its unique mission, Soukup says CSD has to pay top dollar for
talented people with knowledge of deaf culture - many of the agency's top
executives are deaf. Its five highest-paid employees each make more than
$150,000.
CSD's compensation committee, of which Soukup is not a member, commissioned a
salary study from Clark Consulting, a Minnesota firm that examines comparable
organizations, both for-profit and not. Representatives from Clark did not
return messages left at their office.
John Archer, a lawyer for CSD and a nonvoting member of the agency's board of
directors, sits in on the compensation committee meetings.
Archer said the salary studies conducted by Clark were exhaustive.
"They feel like they looked at all the right comparables," Archer said, both
for- and nonprofits. "CSD is a hybrid ... we are, in essence, a
telecommunications arm."
But Weiner said many people don't agree that comparing salaries from for-profits
and nonprofits is fair.
"I think there's a different public expectation," he said. "For-profit
ultimately has the objective of making money, and a nonprofit is meant to be
mission-focused. This doesn't mean that they shouldn't be adequately compensated
to conduct those tasks. But comparison to the for-profit compensation, many
would view as an apples-to-oranges comparison," he said.
Soukup said his job is extremely challenging, requiring him to run a complex
national organization that deals regularly with the FCC.
"This," he said, "is a very difficult job."
Norris agrees.
"Your job as a leader is to inspire the people who work for you," he said,
pointing out that Soukup turned his closet-sized charity into a national
powerhouse.
"We have such a long road we have traveled," Norris said. "It really does take
someone like Ben and his leadership style to infuse that passion."
To read full article and picture, please go to:
http://www.argusleader.com/apps/pbcs.dll/article?AID=/20060129/NEWS/601290313/1001
