Executive Compensation at Dairy Management, Inc. (2018)

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 America’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 (2018) shows that DMI raised $160 million in 2018 (compared to $155 million in 2017). Expenses totaled $160 million with the two largest expenses domestic marketing ($86 million) and compensation ($27 million) for the 298 employees.  The average compensation per employee was $91,000.

137 employees received more than $100,000 in compensation.  The 9 most highly compensated employees were reported to be:

• $999,421:  Thomas J Vilsack, EVP
• $875,897:  Thomas Gallagher, CEO
• $654,451:  Barbara O’Brien, President
• $639,651:  Gregory D Miller, EVP
• $551,726:  Mark A Leitner, EVP
• $532,869:  Elizabeth A Engelmann, EVP
• $494,641:  Jean H Ragalie-Carr, EVP
• $434,889:  Carolyn Gibbs, Former Officer (thru 7/17)
• $370,733:  Quinton D Baily, CFO

As illustrated above, the 9 most highly compensated employees received $5.6 million in compensation.  5 of the 9 (56%) most highly compensated employees are male while 4 (or 44%) 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

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

• $16.3 million:  Daniel J Edelman, Inc. of Chicago, IL for “agency services” (PR)
• $ 9.2 million:  Domino’s National Advertising Fund, of Ann Arbor, MI for promotion
• $ 8.0 million:  Fairlife LLC of Chicago, IL for promotion
• $ 5.8 million:  NFL Properties LLC of New York, New York for promotion
• $ 5.0 million:  MacDonald’s USA, LLC, of Chicago, IL 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 well compensated with the average compensation per employee nearly $100,000 and the 9 most highly compensated employees receiving $5.6 million in 2017. 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 (2018), click here.