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April 3, 2019

Executive Salaries at Dairy Management, Inc.

by Anne Paddock

Unless you’re a dairy farmer or work in the dairy industry, you may never have heard of Dairy Management, Inc. –  a 501 (c) (6)  – whose tax-exempt status as a “business league” is one of the most powerful dairy organizations in the country.

Funded by America’s 41,000-plus farmers and dairy importers, Dairy Management’s purpose is to increase demand and sales for dairy products.  To do this, dairy farmers pay 15 cents (and dairy importers pay 7.5 cents) for every 100 pounds of milk (a gallon of milk weighs 8.6-11.6 pounds so 100 pounds of milk is roughly 10 gallons, meaning US dairy farmers pay Dairy Management about 1.5 cents per gallon for their services).  These funds are used to “fund programs and aimed at promoting dairy consumption and protecting the good image of dairy farmer, dairy products, and the dairy industry.”

The most recent IRS Form 990 available (2016) shows that Dairy Management raised $158 million in 2016. Expenses totaled $158 million with the largest expenditures (87% of revenue) in four categories:

  • $73 million (46% of revenue):  Domestic Marketing
  • $37 million (23% of revenue):  Compensation
  • $20 million (13% of revenue):  Export
  • $ 8 million:  (5% of revenue):  Research

As illustrated above, Dairy Management spends $46 out of every $100 in revenue on domestic marketing. $23 out of every $100 in revenue is spent on compensation for the 281 employees.  The average compensation per employee was $132,000 although only 118 of the employees received more than $100,000 in compensation.  The 8 most highly compensated employees were:

  • $1,011,379:  Thomas Gallagher, CEO
  • $  754,878:  Daniel Chavka, EVP
  • $  753,620:  Thomas Suber, EVP
  • $  591,494:  Barbara O’Brien, President
  • $  579,665:  Gregory Miller, EVP
  • $  557,569:  Mollie Waller, EVP
  • $  474,265:  Carolyn Gibbs, CFO
  • $  455,813:  Mark Beck, EVP

As illustrated above, the 8 most highly compensated employees received nearly $5.2 million.  5 of the 8 (62%) most highly compensated employees are male while 3 (or 38%) are female. The top 3 most highly compensated employees are male.

The IRS Form 990 also reports Dairy Management paid for first class travel, health or social club dues or initiation fees, and tax indemnification and gross up payments.

It is also important to note Dairy Management operates out of an office in Rosemont, Illinois in which the following organizations also operate out of:

  • United Dairy Industry Association, a 51 (c) (6) whose control and management delegated to Dairy Management
  • National Dairy Council, a 501 (c) (3) controlled by United Dairy Industry Association
  • Innovation Center for US Dairy, a 501 (c) (6) controlled by Dairy Management
  • Dairy Research Institute, a 501 (c) (3) controlled by Dairy Management
  • Youth Improved, Inc., a 501 (c) (3)  controlled by Dairy Management

37 independent contractors received more than $100,000 with the 5 highest listed below:

  • $15.1 million:  Daniel J Edelman, Inc. of Chicago, Illinois for “agency services” (public relations/marketing company)
  • $ 5.4 million:  NFL Properties LLC of New York, New York for promotion
  • $ 4.0 million:  MMS Education of Newtown, Pennsylvania for “agency services” (education marketing company)
  • $ 3.2 million:  NTT Data, Inc. of Boston, MA for IT services
  • $ 1.6 million:  Information Resource Inc of Chicago, Illinois for “agency services” (market research company)

To read the IRS Form 990 (2016), click here.

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