Executive Compensation at the March of Dimes
The March of Dimes has experienced tough times for the past few years. At the beginning of 2014, the March of Dimes had $75 million in net fund assets which was reduced to $24.6 million at year-end after spending $8 million more than they raised, recognizing an unrealized loss ($1.6 million) on investments, and a $41 million pension/post-retirement liability.
In 2015, the deterioration continued when the March of Dimes spent $26.8 million more than they raised and recognized a $3.4 million unrealized loss on investments. A $19 million pension post-retirement credit resulted in the March of Dimes ending 2015 in a positive position with $13.4 million in net fund assets.
But, in 2016, the March of Dimes went into a negative net asset position. Starting with $13.4 million in net fund assets at the beginning of the year, the organization then spent $8.7 million more than they raised. Although the March of Dimes was able to post a $2.8 million unrealized gain on investments, a $20.4 million million change in pension and post retirement benefits resulted in the organization showing a negative asset balance of -$12.9 million at year-end. In other words, for 3 years the March of Dimes spent more than they raised and faced increasing pension and post retirement benefit liabilities for its employees contributing to the organization going into a financial position where their liabilities exceed their assets in 2016.
The notes on the IRS Forms 990 (2014, 2015, and 2016) report the company has taken cost cutting measures including cutting the workforce:
Year 2014 2015 2016
Number of Employees 1,638 1,583 1,513
Received More Than $100,000 129 138 120
Compensation to Key Employees $1.9 million $1.8 million $2.5 million
Total Compensation Costs $96.2 million $103.5 million $91.9 million
As illustrated above, the March of Dimes reduced the number of employees (by 55 or by 3%) in 2015 but the organization spent more on total compensation and increased the number of employees who received more than $100,000 in compensation.
In 2016, the number of employees decreased by 70 (or by 4%) and the March of Dimes reduced the total amount spent on compensation and the number of employees who received more than $100,000 in compensation. However, compensation to officers, directors, and key employees increased over the years.
In 2016, the 12 most highly compensated employees were:
- $553,249: Jennifer Howse, President (retired Dec, 2016)
- $424,899: Edward McCabe, MD, Chief Medical Officer
- $379,644: Joseph L Simpson, MD, Senior VP
- $362,454: Paul E Jarris, Senior VP
- $346,110: Nora S Gooch, Senior VP (terminated Aug, 2016)
- $338,096: Paula A Ransom, Senior VP
- $320,284: Alan D Kauffman, Senior VP (terminated Nov, 2016)
- $300,663: Karen Andrews Esq, Assistant Secretary and EVP
- $275,561: Frederick A Brogdon, Senior VP
- $269,332: David C Horne, Assistant Treasurer
- $258,333: Janice E Thompson, Senior VP
- $241,360: Vincent J Sampugnaro, Senior VP
As listed above, 12 employees were given total compensation of $4 million which equates to an average of $333,333 each.
The IRS Form 990 also indicates that in 2014, 2015, and 2016, the March of Dimes paid for First Class or Charter Travel – although the notes on the 990 states:
Due to the high demands and changes in travel itineraries, Foundation policy permits the President of the Foundation to use unrestricted flights or fly business class on all flights to minimize flight change fees. However, in some instances domestic business class flights are not available. In these cases, a domestic first class fare may be purchased. None of this benefit was treated as taxable compensation. This policy was suspended as of December, 2016.
The IRS Form 990 for 2016 indicates a 2017 settlement of SERP (Supplemental Executive Retirement Plan) benefits is expected for Jennifer Howse in the amount of $1,333746, due to her retirement. This amount was accumulated over the prior 26 years. Of this amount $598,426 will be considered compensation in 2017 and will be reported in the 990 next year.
Supplemental non-qualified retirement including tax gross up payments for the following employees are reported:
- $15,592: Paula Ransom
- $4,181: Joseph L Simpson
- $14,845: Edward McCabe
So, the questions that beg to be asked include:
- Why did the March of Dimes take so long to react to the changes in their financial position?
- Why did executive compensation continue to rise during these years?
- Why did the President continue to be compensated more than $500,000 annually when revenues were declining, the organization was spending more than they received, and pension post retirement accounts were underfunded?
- Why was the President flying Business, First, or Charter travel during these years? And how could change fees possibly be more than the difference between an economy and business class ticket?
- Why are there so many Senior VP’s being paid hundreds of thousands of dollars?
And finally, the most recent balance sheet (12/3/2016) indicates the largest liability ($68.5 million in accrued pension liabilities and medical benefits) is to the employees of the organization, which is troubling.
To read the IRS Form 990 (2014) click here.
To read the IRS Form 990 (2015) click here.
To read the IRS Form 990 (2016) click here.
To read an update, click on Executive Compensation at the March of Dimes (2018).
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02 August 2018
Scientists stunned as medical non-profit group abruptly ends research grants
The US-based March of Dimes says it revoked awards to 37 researchers as part of a shift in its funding priorities.
A major US non-profit group focused on improving child health has abruptly terminated US$3 million in research grants — leaving nearly 40 scientists confused, angry and scrambling to secure new funding.
On 24 July, 37 grant recipients received an e-mail from the March of Dimes Foundation in New York City informing them that their 3-year grants had been cut off, retroactively, starting on 30 June. Many of the researchers were only a year into their projects, and had had just enough time to hire and train staff, purchase supplies and generate preliminary results. Now, several say that they might need to lay off employees, euthanize lab animals and shelve their research projects if they cannot find other funding — fast.