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January 30, 2020

Executive Compensation at Operation Smile (2018)

by Anne Paddock

Operation Smile is a non-profit tax-exempt 501 (c) (3) based in Virginia Beach, VA that provides corrective surgery to children and young adults in developing countries who are born with cleft lip, cleft palate or other facial deformities.

Established in 1982, Operation Smile was founded by Dr. William MaGee,Jr.  (a dentist and plastic and craniofacial surgeon) who serves as the organization’s Chief Executive Officer and his wife Kathleen McGee, who serves as the organization’s President. Their daughter, Kristie Porcaro also serves as the SVP of US and Global Philanthropy of Operation Smile.

Operation Smile raised about $70 million in 2017-2018, spent about $60 million (leaving $10 million to add to the general fund which some refer to as the endowment), and had $38 million in net assets (again, which is often referred to as the endowment) at year-end (June 30, 2018).

The organization spent heavily on two expenses:  public awareness, advertising and promotion ($24 million or 33% of revenue) and compensation ($13 million) for 191 employees, which is equal to an average compensation of $68,000. 15 employees received more than $100,000 in compensation with the 12 most highly compensated employees listed below:

  • $497,574:  William P MaGee, Jr. DDS, CEO and Director
  • $315,406:  Ernest Zinn, Former COO
  • $248,381:  Ruben Ayala, Chief Medical Officer
  • $228,570:  Richard Vanderburg, Chief Program Strategist
  • $196,933:  Kristie Porcaro, SVP US & Global Philanthropy
  • $168,125:  James Siti, Iteri CFO, COO as of 3/18
  • $166,148:  Geir Strangeland, Associate Chief Medical Officer
  • $165,809:  Kimberly Getz, VP of Finance
  • $157,712:  Christopher Bryant, SVP ENT APP & TECH
  • $155,560:  Adrian Slagle, VP Strategic Marketing
  • $148,352:  Lisa Jardanhazy, VP Global Media Strategy & PR
  • $142,414:  Yvonne Wray, AVP US Philanthropy

The above 12 employees were compensated $2.6 million.  7 of the 12 (58%) of the most highly compensated employees are male while 5 of the 12 (42%) are female.

The Form 990 also reports:

  • During 2017, Mr. Zinn (former COO) received $162,500 in severance payments which are reflected above.
  • William P MaGee, Jr, Director and CEO is the spouse of Kathleen S MaGee, Director and President. Mr. McGee also appears to work outside Operation Smile.
  • Kristie Porcaro, SVP US & Global Philanthropy is the daughter of William P MaGee, Jr., Director and CEO and Kathleen S MaGee, Director and President
  • Todd MaGee, a board member is the son of William P MaGee, Jr., Director and CEO and Kathleen S MaGee, Director and President.  Todd MaGee is the brother of Kristie Porcaro.
  • Alex Marshall, a board member is the nephew of William P MaGee, Jr., Director and CEO and Kathleen S MaGee, Director and President. Alex Marshall is the cousin of Kristie Porcaro.
  • Operation Smile pays for first class travel. Specifically, the organization allows for upgrades to business or first class air travel in limited circumstances for the CEO, President, COO, Chief Medical Officer, Chief Program Strategist, Senior Vice President of Logistics, Strategic Initiatives and Development Directors. Upgradeable fares may only be purchased if travel is more than 5 hours domestically, business class fares for more than 8 hours internationally for the positions previously listed.  When possible upgrades are paid for with airline points. In addition, employees are allowed to travel business class if business fares are lower than coach or there is a medical necessity.
  • Of the 9 directors, 4 are family and extended family members.

To read the IRS Form 990 (2017 for the year ending June 30, 2018), click here.

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