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March 2, 2022

Executive Compensation at the American Council on Education

by Anne Paddock

The American Council on Education (ACE) is “the major coordinating body for the nation’s colleges and universities” to shape policy which would lead one to think the ACE is a trade association.  Although ACE is a membership organization (with a reported 1,700 colleges and universities as members that paid about $4,700 each annually), membership dues only make up about 20% of revenue.  ACE is actually a tax-exempt, non-profit 501 (c) 3 reliant on several sources of revenue:  membership dues, royalties, government contracts, rent income, contributions, gifts, and grants, and registration fees.

In 2020, ACE reported total revenue of $34 million (compared to $43 million in 2019) with the decline primarily attributable to contributions, gifts, and grants, and investment income.

Expenses totaled $35 million (compared to $36 million in 2019) so there wasn’t much change in how the organization spent revenue even though revenue declined about 25% in 2020.  The largest expense was compensation – 174 employees received $22 million in compensation, which equates to an average of $126,000.  However, only 58 employees received more than $100,000 in compensation. The ten (10) most highly compensated were reported to be:

  • $817,792:  Theodore Mitchell, President, Ex-Officio
  • $459,564:  Terry Hartle, SVP, DPGA
  • $367,083:  Kara Freeman, SVP, COO
  • $365,555:  Philip Rogers, SVP
  • $360,761:  Peter McDonough, VP, General Counsel
  • $348,276:  Louis Soares, Chief Learning and Innovation Officer
  • $326,923:  Cathy Jones, VP, CFO (until 6/20)
  • $326,535:  Sonya Williams, VP, Chief HR Officer (until 3/20)
  • $258,945:  Andrea Burnett, AVP, ITS (until 2/20)
  • $256,619:  Daniel Madzelan, AVP, Gov’t Relations

The 10 most highly compensated employees received nearly $4 million in compensation.  6 of the 10 most highly compensated employees are male while 4 are female (note:  the Form 990 does not report gender; determinations were made based on name and google searches).

ACE paid for a personal residence or provided a housing allowance.  Specifically, ACE provided a housing allowance of $82,334 (about $7,000 per month) to Theodore Mitchell which was included in taxable compensation. In addition, ACE contributed $50,000 to the 457 (F) plan for Theodore Mitchell.

ACE paid $1.9 million in insurance premiums to American Mutual Health Insurance Company (AMHIC), where Kara Freeman (the SVP and COO of ACE) is a board member.

ACE has a 30% interest in GED Testing Service LLC (domiciled in Delaware but operating out of Bloomingtonk, Minnesota) which provided $1.1 million in income to ACE in 2020.

In 2020, ACE spent $6 million on fees for outside services.  7 independent contractors received more than $100,000 in compensation with the five (5) most highly compensated reported to be:

  • $282,000 to Connectadrem, LLC, of Herndon, VA for consultling
  • $216,709:  Addison Group, of Chicago, IL for consulting
  • $176,123:  Compendium Software Systems, of Apopka, FL for consulting
  • $136,567:  Arent Fox Kintner Plotkin and Kohn LLP, of Pittsburgh, PA for consulting
  • $135,000:  Entangled Solutions, LLC, of San Francisco, CA for consultling

The 5 most highly compensated consultants received ed less than $1 million collectively,  If only 7 independent contractors received more than $100,000 than there is an inconsistency.  Form 990, Part IX reports total fess for services (non-employees) was $6 million. On the Form 990, Schedule O, more than $5 million in other fees are detailed with $2.1 million reported for consultants for programs and $2 million for sub-awards and sub-contracts program expenses, which indicates there must be other outside payments made to vendors not listed.

To read the IRS Form 990 (2019 for the year ending September 30, 2020), click here.

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