Executive Compensation at the Rotary Foundation

The Rotary Foundation (RF) is a 501 (c) (3) based in Evanston, Illinois (at the same address as Rotary International (RI)). Although the organizations are separate (RI is a 501 (c) (4)), they are related. In the most simplistic terms, RI overseas the 32,000 Rotary Clubs across the world while RF awards grants and manages a very large endowment (nearly $1.1 billion). The executive employees appear to work with both organizations.

Staffed with 281 employees who were compensated $27.8 million (an average compensation of $99,000), RF provided more than $100,000 in compensation to 45 employees.  The most highly compensated individuals were:

• $507,638:  John Hewko, General Secretary ($324,888 from RI and $182,750 from RF)
• $280,627:  Michelle Berg, Deputy Gen Secty ($179,602 from RI and $101,025 from RF)
• $275,167:  Peter Markos, Chief Info Officer thru 3/17 ($156,845 from RI and $118,322 from RF)
• $253,233:  James Barnes, Chief Program/Mem Officer ($194,989 from RI and $58,244 from RF)
• $251,252:  Lori Carlson, CFO ($130,652 from RI and $120,602 from RF)
• $227,526:  David Alexander, CCO ($195,672 from RI and $31,854 from RF)
• $226,880:  Steven Routberg, Gen Counsel ($186,042 from RI and $40,838 from RF)
• $186,498:  Bernadette Knight, Sr Dir Finance ($96,979 from RI and $89,519 from RF)
• $177,457:  David Stumpf, Dir of Aud Svcs ($86,511 from RI and $90,946 from RF)
• $176,346:  Andrew McDonald, Deputy Gen Counsel ($118,152 from RI and $58,194 from RF)
• $174,847:  Matthew Switzer, Global Dir of HR ($99,663 from RI and $75,184 from RF)
• $159,662:  Celso Fontanelli, Office Mgr Brazil ($75,041 from RI and $84,621 from RF)
• $125,826:  Joe Brownlee, former key employee ($65,429 from RI and $60,397 from RF)
• $109,377:  John Osterlund, former key employee ($4,376 from RI and $105,001 from RF)

It is important to point out that all of the highly compensated individuals listed above receive compensation from more than one Rotary organization. Although the RF 990 does not specify which other Rotary organization, it appears to be RI because the same executives are listed on RI’s most highly compensated individuals and the numbers match.  To look at just the compensation from RF would be missing the big picture because the total compensation each individual is receiving from both RI and RF (since they operate out of the same address) presents a more accurate reporting of compensation.

Of the 14 most highly compensated individuals, 11 were male (79%) while 3 were women (21%).

The IRS Form 990 (2016 for the year ending June 30, 2017) also reports the following:

• RF paid for first class or charter travel:  RF paid for “business-class airfare for the trustees and the general secretary. Business-class is available in most markets, but if it is not, first class or economy airfares are substituted. The Rotary Foundation trustee chair is permitted to use first-class travel…”
• RF paid for travel for companions:  RF paid for “spouse travel if spouse participation assists the organization in achieving its mission…”

It is also important to note the five most highly compensated independent contractors were:

• $835,495:  Pacific Investment Management Company of Newport Beach, CA for investment manager
• $638,594:  Artisan Partners Limited Partnership of San Francisco, CA for investment manager
• $630,062:  Tiff Multi Asset Fund of Radnor, PA for investment manager
• $607,656:  Grantham May Otterloo of Boston, MA for investment manager
• $599,843:  UBS Realty Investors of Hartford, CT for investment manager

In total, 19 independent contractors were compensated more than $100,000 in 2017, five of which are investment managers. It is important to note investment management fees totaled $4 million for the year, according to the income statement. Other for service fees of $1.8 million were also expensed but there is no detail on who these fees were paid to.

In summary, Rotary International and Rotary Foundation operate out of the same address, with each organization paying a portion of the most highly compensated individuals.  Collectively, these two organizations employed 611 individuals in 2017 and compensated 105 more than $100,000 with the most highly compensated individual being John Hewko. Both organizations also paid for first class travel and travel for companions.  With most of the funding of these organizations coming from rotarians, it appears the members support a large staff with well compensated employees, many of whom are provided first or business class travel as well as travel for their companions (for business purposes).