Executive Compensation at the American Beverage Association (2018)

The American  Beverage Association is a Washington, DC-based non-profit 501 (c) (6) trade association representing America’s non-alcoholic beverage industry. Originally established in 1919 as the American Bottlers of Carbonated Beverages, the organization was renamed the National Soft Drink Association in 1966, when the soft drink market began growing rapidly in the USA.

In 2004, the organization’s name was changed to the American Beverage Association (ABA), which coincidently was about the time negative press was on the upswing calling out the soft drink industry for the copious amount of sugar and high fructose corn syrup in soft drinks. In subsequent years, as the government imposed taxes on these beverages siting the lack of nutritional benefits and the great cost to the consumer and the health care industry, the ABA has fought attempts by stepping up their lobbying efforts.

Basically, the ABA is a lobbying group representing the special interests of those in the non-alcoholic beverage industry, including the companies making or bottling regular and diet sodas. It is interesting to note the chair of the ABA is the Chairman and CEO of the Atlantic Coca-Cola Bottling Company and the majority of directors are affiliated with Coca Cola, Pepsi, Dr. Pepper and Red Bull.

So, what exactly does the ABA do?  The ABA collects about $100 million in revenue annually which primarily comes from two sources:  “special project assessment” and membership dues. The “special project assessment is the largest source of revenue ($71 million in 2018) but it is unclear where these funds come from although a guess would include the big players in the non-alcoholic beverage industry including Coca Cola, Pepsi, Dr. Pepper, and Red Bull.

According to the IRS Form 990 (2018) The ABA uses revenue to do 5 primary tasks:  pay for staff, organization, and office-related costs (about $11 million), cover legal costs ($6 million), pay for other fees which appears to be lobbyists and other professional fees described as “consultants”  ($12 million), pay for “special projects” ($52 million) which may also be related to lobbyists, and allocate revenue to the general fund assets which, as of the end of 2018, had $57 million. So, the ABA is basically a trade association that spends the majority of revenue lobbying on behalf of its members.

The Form 990 (2018) reports the ABA compensated 49 employees $11 million in 2018, which equates to an average compensation of $225,000.  However, only 23 employees received more than $100,000 in compensation which means there are some very highly compensated employees at the ABA, including the 8 most highly compensated employees who received $7.6 million:

• $3,375,648:  Susan K Neely, President and Chief Executive
• $1,265,462:  Mark Hammond, EVP and CFO
• $  796,437:  Kevin Keane, EVP Government and Public Affairs
• $  573,929:  Amy E Hancock, EVP, Secretary and General Counsel
• $  531,945:  Katherine Lugar, President and Chief Executive
• $  358,955:  Fredericka McGee, VP, CA
• $  318,385:  Sean Krispinsky, SVP
• $  296,462:  Karen Biley Chapman, SVP

If the 8 employees listed above were excluded and the $7.6 million of their compensation is deducted from the total compensation of $11.4 million, then the remaining 41 employees received $3.8 million, which equates to an average compensation of $93,000.  Although the overall average compensation appears high, the 7 employees at the top received very generous compensation packages compared to the 41 other employees.

It is unclear why there are two (2) employees acting as President and Chief Executive.

Of the 8 employees listed above, 4 (57%) are female including the most highly compensated employee, while 3 (43% are male).

The IRS Form 990 also reports the ABA paid for health club or social club dues or initiation fees. Specifically, the president had access to a health club (his compensation of $3.4 million wasn’t enough).

It is important to note 26 independent organizations received more than $100,000 in compensation with the five highest reported to be:

• $3.0 million:  Bluefront Strategies, of Washington, DC for professional fees
• $1.1 million:  Nielson Merksamer Parrinello Gross and Leo for professional fees
• $0.9 million: Latham & Watkins, of Philadelphia, PA for professional fees
• $0.6 million:  Morgan Lewis & Bockius, of Philadelphia, PA for professional fees
• $0.1 million:  Keybridge Research, of Washington, DC for professional fees

To read the IRS Form 990 (201), click here.