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Nastiness Starts: DIA Plan Opponents Attack Director

Politics, not to mention bankruptcies, are a nasty business, so perhaps we should have been prepared. Today The Detroit News published an article headlined DIA executives’ pay up 17% since ’10. It puts the museum and its executives under the microscope, probably to undermine the deal reached last week.

bealThe headline doesn’t cover most of the reporting, which may have influence. The article goes on to elaborate on the raise for top museum executives; a loan to Graham Beal, the DIA director; a “discretionary fund” for his business expenses; compensation for his wife’s travel, and a few other things. It also said the Beal has put his house up for sale — signaling, perhaps, his intended departure. (And who would blame him?)

A few choice excerpts:

The Detroit Institute of Arts gave executives pay hikes, and granted a $155,000 loan to Director Graham Beal, while it campaigned for a regional property tax and faced a pension shortfall, according to its financial records….

…“At a time when we are asking for so much from people in Detroit — pensioners, firefighters and police officers — it is outrageous that these individuals are being so grossly compensated,” said state Rep. Kurt Heise, R-Plymouth….

…The DIA’s pension plan has more than $25.5 million in assets but has a $7 million shortfall, according to the museum’s most recent audited financial statement. In 2012, the shortfall was more than $11 million.

…Beal’s total compensation is $455,453. [AnnMarie] Erickson received $270,802, according to the DIA’s most recent tax filing. Four other museum executives are paid more than $100,000….Beal, 66, also received a $155,832 housing loan, according to the 2012 tax filing. He received the loan in December 2011, nine months before voters approved a 10-year, $230 million regional tax to pay for museum operations….Beal still owes the full $155,832 loan.

Although the News compares Beal’s salary to those of other local arts groups, like the Symphony chief’s, which is lower, those salaries don’t seem out of line to me. Nor are the article’s comparisons all apt — running a museum is somewhat more complicated than a symphony, for example. The Detroit Symphony has a smaller budget than the DIA (or did…the DIA’s has shrunk a bit).

And although the AAMD is quoted as saying that there are “only a few examples of museums offering free or subsidized housing for executives, namely the Indianapolis Museum of Art,” I think this requires more investigation. Off the top of my head, I recall that the Metropolitan Museum used to subsidize the director’s housing, though that may have been discontinued with Tom Campbell. So did the Los Angeles County Museum of Art and the Morgan Library (that ended recently for practical reasons, not on principle). I believe there are others.

What’s clear here is that some politicians (maybe just a few) opposed to the deal to save both pensions and the DIA are going to fight it, perhaps with dirty tactics — just as banks and bondholders are going to fight. The latter don’t have much choice — Kevyn Orr, and his boss Gov. Rick Snyder, along with the court, have the final say. But politics is unpredictable. Let’s hope these issues go away.



  1. Beal’s salary is within the usual norms for such a position. (Whether those norms should be accepted is another matter.)

    Below are some examples of other high salaries for arts exectuives in 2009, as reported in the New York Times. See:

    * Peter Gelb at the Met makes 1.3 million.

    * Reynold Levy’s annual compensation to run Lincoln Center tops $1 million.

    * Carnegie Hall pays Clive Gillinson more than $800,000.

    * Glenn D. Lowry, director of the Museum of Modern Art, earned $2.7 million in the year that ended in June 2008, including several one-time bonuses and the cost of his apartment in the tower beside the museum.

    * Occasionally institutions will also pay bonuses tied to performance or longevity, like the $3.25 million given in 2006 to Philippe de Montebello to recognize his 30-year service to the Metropolitan Museum of Art.

    * On top of his $940,000 salary, Michael Kaiser of the Kennedy Center earned a $150,000 bonus, as well as other benefits, for 2009.

    * Zarin Mehta’s most recent compensation, for fiscal year 2010, is $807,500. In the fiscal year ending in August 2008 he earned 2.67 million. This reflected his salary in addition to eight years of accumulated deferred compensation.

    * Timothy Rub, the director of the Philadelphia Museum of Art earns $450,00.

    * George Steel, the general manager and artistic director of New York City Opera receives $360,000 – and from an opera house that just shut down its next season due to a lack of funds.

    *Deborah Borda, Executive Director of the LA Phil makes $799,970 per year plus bonuses that raise her income to 1.5 million dollars.

  2. The article was shoddily written, and, yes, it is very apparent it is meant to undercut the DIA and Mr. Beal. It tried awfully hard, but wound up being quite incoherent with inappropriate comparisons that were inaccurate. Ms. Parsons, the President of the Symphony, for instance, has a huge home the orchestra was given in Grosse Pointe with all expenses paid.
    She receives a car and a very generous expense account. I believe, her salary is, also, considerably, higher than quoted. The bonus for her ‘work’ during the enforced strike was $50k, despite the claims of not having enough money for the musicians, etc. Plus there are , now, no less than 70 on staff in the DSO Administration , with many hired after the enforced strike. It is, frankly, ridiculous.
    The DIA is a healthy organization, and should be left alone. Mr. Orr never should have,
    in effect, made it the linchpin for the Pension funds and the city’s debts. What was revealed
    from what the State Representative said is the degree of involvement in every decision the DIA will make , that he is considering, since the State has pledged to contribute. This would be disastrous. The politicians are not qualified , or experienced , in running a museum, especially, the costs.
    If the voters from adjacent counties are paying a tax that equates the bulk of the DIA’s budget, how does that diminish the city’s actual status, particularly, with the default, if at all?
    The increase in the salaries was done a few years ago. Whether, or not, Mr. Beal is selling his house is no one’s business. A comment reported there had been murders very near his house, recently. He lives in a lovely home, but it is in Detroit, proper, and is not safe. Period.
    The State Rep, and Mr. Orr seem to forget, it is not the DIA’s responsibility to cover the monetary consequences of the banks’ failed risk it took, or the shortfall debts of the Pensions and Healthcare provisions of the Police and Firefighters. Their contracts should have been conditioned on realities, not wishful thinking. He can’t transfer responsibility from the city to the DIA. The corruption in Detroit is so deeply embedded, it is simply wrong to do anything to the DIA, when it is needed to serve as a base for rebuilding for the future.
    Furthermore, the city is in default with its payments to the DIA since 2012. That could account for the $11M shortfall. This default was not mentioned in the article. The fact, that Mr. Beal turned over his speaking fees to the DIA demonstrates his intent to payback the loan.
    To have the State come in, and move the DIA under its auspices but with severe restrictions, while detaching it from the city, should be carefully thought out as well. The detachment has to be accomplished, but the transition must enhance stability and into a secure reorganization. The holdings have to be protected from the State’s debts and those of any bank, and any possible Federal government takeover of the banks in the future due to mismanagement in the markets, again, or due to an attack, or for any reason. (See ArtDaily’s report, today, on Christies, I believe, cancelling an auction of Joan Miro because of a precarious legal situation in Portugal. They are, now, selling 85 of his works to pay a debt to a bank . Christies’ will not auction anything that is not completely clear of possible legal entanglement.
    I wonder, from where Portugal and the bank got the idea. )The Plan by Orr was poorly conceived in the first place.

  3. There is a difference between subsidizing housing and a loan. Subsidized housing, unless the house is used for entertaining or as part of the position the Director is required to live in a specific house, is generally taxable and therefore part of compensation.

    A loan is different and while it may not be illegal, it is certainly outside the boundaries of the activities of a museum or any nonprofit. Museums are in the business of, well you know what they are in the business of, and banks are in the business of making loans. Bottom line, it is not best practices and frankly, when it is about executive compensation for nonprofits, perception is as important as reality. Particularly during such a public financial situation, making a loan to a director is a mistake.

    PS. If Beal sells the house and makes a profit, does he split it with the museum?

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