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March 29, 2020

Executive Compensation at Dairy Management Inc (DMI) 2017

by Anne Paddock

Dairy Management Inc (DMI) is the big organization that most people haven’t heard of because unless you’re a dairy farmer, work in the dairy industry, or work in the corporate offices of Pizza Hut, Taco Bell, or KFC, you would have no reason to know that this non-profit, tax-exempt 501 (c) (6) is the most powerful non-profit dairy organization in the country.

Considered a “check-off” program authorized by Congress but responsible to their members, DMI’s mission is to increase consumption of dairy products by finding more ways to get dairy products to the public including assisting fast food companies with menu items.

How does DMI do this? By requiring American’s 37,000 plus dairy farmers to pay 15 cents (and dairy importers to 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 (2017) shows that DMI raised $155 million in 2017 (which is $3 million less than in 2016). . Expenses totaled $155 million with the two largest expenses domestic marketing ($82 million) and compensation ($27 million) for the 280 employees.  The average compensation per employee was $96,400. 124 employees received more than $100,000 in compensation.  The 10 most highly compensated employees were:

  • $1,546,760:  Gregory D Miller, EVP
  • $1,191, 557:  Carolyn Gibbs, CFO (thru 7/17)
  • $  899,810:  Thomas Gallagher, CEO
  • $  857,405:  Jean H Ragalie-Carr, EVP
  • $  800,557:  Thomas J Vilsack, EVP
  • $  769,475:  Daniel J Chavka, Former Employee
  • $  649,419  :  Barbara O’Brien, President
  • $  638,041:  Mark A Leitner, EVP
  • $  478,809:  Elizabeth A Engelmann, EVP
  • $  246,542:  Quinton D Daily, CFL

As illustrated above, the 10 most highly compensated employees received $8.1 million in compensation, for an average compensation of $810,000.  6 of the 10 (60%) most highly compensated employees are male while 4 (or 40%) are female.

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.  See Schedule J for more detail on these expenses.

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 501 (c) (6)
  • National Dairy Council, a 501 (c) (3) controlled by United Dairy Industry Association
  • Innovation Center for US Dairy, a 501 (c) (6) controlled by DMI
  • Dairy Research Institute, a 501 (c) (3) controlled by DMI
  • Youth Improved, Inc., a 501 (c) (3)  controlled by DMI

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

  • $17.8 million:  Daniel J Edelman, Inc. of Chicago, Illinois for “agency services” (public relations/marketing company)
  • $ 8.0 million:  Fairlife LLC of Chicago, Illinois for promotion
  • $ 5.6 million:  NFL Properties LLC of New York, New York for promotion
  • $ 3,2 million:  MMS Education of Newtown, Pennsylvania for “agency services” (education marketing company)
  • $ 1.5 million:  Team Services of Rockville, Maryland for promotion

In summary, dairy farmers in the United States are required to pay 15 cents per 100 pounds of milk (or about 1.5 cents per gallon) to DMI who works to increase demand for milk products. DMI employees are very well compensated with the average compensation per employee nearly $100,000 and the 10 most highly compensated employees receiving $8.1 million in 2017 (compensation ranging from  $246,842 – $1,546,760). In addition, DMI paid for first class air travel, health or social club dues or initiation fees, and tax indemnification and gross up payments.

To read the IRS Form 990 (2017), click here.

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