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Despite Looming NIH Cash Crunch, Genomic Nonprofit CEOs Enjoy Soaring Salaries

NEW YORK (GenomeWeb News) — Leaders of private, nonprofit research institutes that perform genomic or genetic research or advocacy were paid 43 percent more in salary on average in recent years than the national average for US-based charities, according to an investigation by GenomeWeb Daily News.
 
However, genomic nonprofits paid their leaders only .003 percent more of their overall expenses in 2005, the most recent year for which federal tax records are available, than the national average for nonprofits that year.
 
The findings are particularly noteworthy because the National Institutes of Health’s massive budget is expected to contract in fiscal 2007 and 2008, forcing many of its beneficiaries — tool vendors, academic and private researchers, non-profit institutes, and pharmaceutical companies — to scrounge for scraps or scour other federal sources of funding.
 
They also come at a time when many chief executives of publicly traded companies, including some drug makers, are criticized by various advocacy groups and even Congress for what they consider to be excessive pay packages.
 
So-called 501(c)(3) public charities, most of which rely exclusively or predominantly on government funding, manage to avoid such scrutiny. However, a close examination shows that they are not much different from their for-profit counterparts.
 
‘Outrageous’?
 
CEOs or equivalent leaders of the 23 US-based private nonprofits that perform genomic or genetic research or advocacy whose 2005 federal tax returns were accessible earned on average 43 percent more than the 4,257 US-based charities paid their chief executives on average, according to Charity Navigator, an online service that monitors nonprofit spending (see accompanying tables and charts).
 


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In 2005, genomic nonprofits paid their heads on average $212,500 in salary, according to an analysis by GenomeWeb Daily News of Internal Revenue Service documents filed by the charities. By comparison, the national average for all nonprofits tracked by Charity Navigator was $148,477 that year. Data compiled for this article did not count as salary expense accounts, contributions to benefit plans, or deferred compensation.
 
According to Charity Navigator, the average nationwide salary for nonprofit CEOs “isn't outrageous when you consider that these are multi-million dollar operations, not mom and pop operations run out of someone's basement. Leading one of these charities requires an individual that possesses both an understanding of the issues that are unique to the charity's mission as well as business and management expertise similar to that required of for-profit CEOs.”
 
Attracting and retaining “that type of talent requires a certain level of compensation — roughly $150,000,” according to its analysis.
 
Twelve of the 23 genomic nonprofits whose 2005 Form 990 tax returns are accessible paid their CEOs more than that, some significantly. The five genomic nonprofit institutes with the highest-paid CEOs in 2005 were the Howard Hughes Medical Center, which paid President Thomas Cech $836,000; the Ludwig Institute for Cancer Research, which paid president Edward McDermott $593,300; the Research Triangle Institute, which spent $532,000 on VF Haynes, its president and CEO; the Translational Genomic Institute, which paid CEO Jeffrey Trent $530,000; and the J. Craig Venter Institute, which paid Venter, the chairman and president, $413,000.
 
According to the tax filings, salaries of genomic nonprofit CEOs surged 19 percent between 2003 and 2004 and increased 7.5 percent between 2004 and 2005.
 


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In addition, salaries for these 23 CEOs comprised 3.46 percent of their organization’s total expenses, on average, compared with 3.4 percent for the national average.
 
To be sure, just five of the CEOs, or 22 percent, were paid above the national average as a percentage of total expenses. They were: the Ocean Genome Legacy Foundation, whose chief executive salary represented 40 percent of its total expenses; the Fellowship for Interpretation of Genomes, with 12.5 percent; the Genetic Alliance, at 9.8 percent; the National Center for Genome Resources, which recently reorganized itself, with 5.4 percent; and the Molecular Sciences Institute, with 4.5 percent.
 
By comparison, salaries paid to the CEOs of the world’s 10 largest pharmaceutical and biotech companies in 2005 represented on average .007 percent of their company’s expenses. Expenses used to calculate these rates include costs of sales or revenue; selling, general, and administrative outlays, and research and development expenses. Salaries comprised base salaries only.
 
Salaries of CEOs running genomic nonprofits were higher among different by geographic regions and mission categories than Charity Navigator’s averages for those categories in all but one case.
 
According to Charity Navigator, all of the nonprofits that it follows in the Northeast paid their CEOs on average $174,919, or 15 percent more than the national average, while mid-Atlantic-based charities paid their leaders on average $155,803, or 4.7 percent more than the national average.
 
Yet genomic nonprofits in the Northeast on average paid their CEOs $202,000 in 2005, or 15 percent above Charity Navigator’s average for the region. Genomic nonprofits in the Mid-Atlantic region, meantime, paid their chief executives on average $205,000, or 32 percent better than Charity Navigator’s average for the region.
 
On the other end of the spectrum, according to Charity Navigator, nonprofits that paid their leaders below the national average were located in the Mountain West, whose CEOs on average were paid $117,922 in 2005; followed by Southwest-based charities, which paid the chiefs on average $136,513; the Midwest, at $141,713; the South, at $135,424; and the Pacific West, which paid its CEOs on average $138,475.
 
By comparison, the sole genomic nonprofit in the Mountain West region beat Charity Navigator’s average by 89 percent; Southwest labs were 99-percent higher than Charity Navigator’s average; Midwest institutes were 59 percent below Charity Navigator’s average; the lone genomic nonprofit from the South did not pay its CEO a salary; and the only Pacific West nonprofit paid its CEO 53 percent more than Charity Navigator’s average.
 
Genomic nonprofit CEOs also outpaced the national average by charity sector. According to tax filings, the average 2005 salary of genomic nonprofit CEOs, $212,500, beat by 35 percent the national average for Charity Navigator’s Health sector, which paid its chief executives on average $157,487 that year.
 
Likewise, genomic heads were paid on average 74 percent more than CEOs representing Human Services charities in 2005, which paid their chief executives $122,146 on average.
 
Seven of the 23 nonprofits did not pay their CEOs a salary in 2005, according to their tax returns. These included the Critical Path Institute, the J. Craig Venter Science Foundation and the J. Craig Venter Science Foundation Joint Technology Center, the Human Genome Variation Society, the International Mammalian Genome Society, the Merck Genome Research Institute, and Target Autism.
 
Salaries of CEOs who run genomic nonprofits were also in stark contrast to budgetary trends at the NIH, whose grants help underwrite their salaries. Where the NIH budget increased 5.2 percent between 2003 and 2004, genomic nonprofit CEOs on average received a 19-percent pay raise. Likewise, as the NIH received a 2.2 percent spending increase between 2004 and 2005, genomic nonprofit CEOs were awarded with a 7.5-percent bump in salary.
 
The NIH’s budget was flat in 2006 at $28.5 billion, is estimated to decline to $28.4 billion in 2007, and is expected to be $28.7 billion in 2008, which will be below 2007 levels when inflation is factored in.
 
Asked to comment on the findings, Eric Bender, media relations manager at the Whitehead Institute for Biomedical Research, said his organization “doesn’t talk salary.”
 
Patrick Gibbons, communications director at the Research Triangle Institute, said: “We would not care to comment.” He said RTI is “a $500 million a year research institute,” and “one of the world’s leading research institutes,” likening it to the Rand Corporation, Brookings Institution, or SRI International.  “We work for almost every federal agency,” Gibbons added.
 
(The Rand Corporation, a global social, economic, and political policy think tank, paid its CEO, JA Thomas, $570,756 in 2005, or .26 percent of the organization’s total expenses. The Brookings Institute, also a political and economic policy think tank, paid its CEO, former Bill Clinton appointee Strobe Talbott, $309,060, or .8 percent of the group’s expenses. SRI International, a far-reaching R&D nonprofit, paid its CEO, Curtis Carlson, $936,000, or .36 percent of the group’s expenses.)

 

Sarah White, a spokesperson for the Ludwig Institute for Cancer Research, which has nine branches in seven countries, said the institute would not comment on any specific salary amount for any individual.
 
Dan Distel, who is executive director of the Ocean Genome Legacy Foundation, said he had no idea how non-profit institutions measure and fix executive salaries. “In fact, I’d like to know more about how it works,” Distel told GenomeWeb Daily News.
 
“The board just hired me,” said Distel, who runs the biobank of marine life staffed by himself and three other researchers.
 
None of the remaining genomic nonprofits returned multiple requests for comment.
 
‘Not So Unexpected’
 
According to a Charity Navigator official, the relatively high compensation rates for genomic nonprofit CEOs “is not so unexpected” considering the complexity of the science involved.
 
“The expertise and the training required of a CEO of that kind of organization is probably pretty extensive,” said Charity Navigator spokesperson Sandra Miniutti. “You’re probably looking at somebody with a PhD in order to understand the core work of the organization, [so] that attracting and retaining that type of individual takes a higher salary.”
 
She added that the relatively higher salaries are “probably” what the market will bear in that sector. “It’s probably pretty competitive to find someone who can take on that role. There’s so many nonprofits vying for a specific pool of candidates that we are seeing that the salaries are jumping up each year.”
 
Miniutti also stressed that nonprofit CEO salaries in general tend to follow the health of the overall economy rather than, say, government budgets.
 
“The economy as a whole is doing fairly well, and so several organizations at this point in time are able to pay a little bit better,” she said.
 
Miniutti said that the IRS, which is wholly responsible for regulating nonprofits at the federal level, requires that nonprofits should “benchmark” their CEO’s salary, and that compensation should be what the IRS calls “reasonable.”
 
“If the IRS were to go in and do an audit [on a nonprofit] they’d want to see [whether] the board has looked at other similar types of institutes working in similar-sized cities with similar-sized budgets, and have they used that data to set the salary,” she said. “Or are they [setting salaries] in a vacuum because they like the CEO and they want to keep him around?”
 

Matt Jones contributed to this article.
 
 


2005 Genomic Nonprofit CEO Salaries, Expenses, and Salaries as Percentages of Expenses*
Year Salary Expenses % of expenses
Cold Spring Harbor Laboratory
Cold Spring Harbor, NY
Bruce Stillman, president
2004
$364,000
$96 million
.38%
2003
$359,000
$90 million
.49%
2002
$350,000
$83M
.42%
Critical Path Institute
Tucson, Ariz.
Raymond Woosley, president and CEO
2005
$0
$124,000
0
Fellowship for Interpretation of Genomes
Burr Ridge, Ill.
Veronika Vonstein, president
2005
$115,000
$923,000
12.5%
2004
$89,000
$508,000
17.5%
2003
$8,000
$24,000
33.3%
Foundation for the National Institutes of Health
Bethesda, Md.
Daniel Carucci, director in 2005
Tiziano Dipaolo, administrator in
2004 Colleen Clancy, director of financial administration in 2003
2005
$191,000
$49 million
.39%
2004
$96,500
$7.5 million
1.3%
2003
$87,000
$8 million
1.1%
Foundation for Genetic Medicine
Reston, Va.
Leslie Platt, president, trustee, and director
2003
$0
$82,000
0
2002
$0
$96,000
0
2001
$0
$41,000
0
Genetic Alliance
Washington, DC
Sharon Terry, president
2005
$97,500
$1 million
9.8%
2004
$80,000
$909,000
8.8%
2003
$16,500
$680,000
2.4%
Howard Hughes Medical Institute
Chevy Chase, Md.
Thomas Cech, president
2005
$836,000
$634 million
.13%
2004
$792,000
$641 million
.12%
2003
$785,000
$603 million
.13%
Human Genome Variation Society
Minneapolis
2005
$0
$9,600
0
2004
$0
$25,700
0
2003
$0
$22,600
0
The Institute for Genomic Research
Rockville, Md.
Claire Fraser-Liggett, president†
2004
$487,000
$71 million
.71%
2003
$429,000
$68 million
.63%
2002
$473,000
$41 million
1.2%
†Fraser-Liggett resigned from TIGR in April.
Institute for Systems Biology
Seattle
Lee Hood, president
2005
$212,000
$25 million
.85%
2004
$86,000
$25 million
.34%
2003
$86,000
$24 million
.36%
International Mammalian Genome Society
Oak Ridge, Tenn.
Christine DiSteche was the highest official in the filings, though no title reported.
2005
$0
$515,000
0
2004
$0
$468,000
0
Jackson Laboratory
Bar Harbor, Maine
James Osterholt, administrator in 2005
Peter Plante in 2004 Warren Cook in 2003
2005
$314,000
$121 million
.26%
2004
$187,000
$123 million
.16%
2003
$303,000
$118 million
.26%
J. Craig Venter Institute
Rockville, Md.
Craig Venter, chairman and president
2005
$413,000
$47 million
.99%
2004
$219,000
$19 million
1.1%
2002
‡ $339,000
$2.3 million
14.7%
‡Includes salaries from the JCVSF, TCAG, IBEA, and TIGR
J. Craig Venter Science Foundation
Rockville, Md.
Craig Venter, chairman and president
2005
$0
$7.8 million
0
2004
$22,700
$11 million
.2%
2002
$14,300
$607,000
2.4%
J. Craig Venter Science Foundation Joint Technology Center
Rockville, Md.
Craig Venter, chairman and president
2005
$0
$23 million
0
2004
$0
$23 million
0
Ludwig Institute for Cancer Research
New York
Edward McDermott, president
2005
$593,300
$103 million
.52%
2004
$544,000
$98 million
.56%
2003
$460,000
$89 million
.52%
Marine Biological Laboratory
Woods Hole, Mass.
Jerry Melillo, co-director
2005
$180,000
$37 million
.49%
2004
$164,000
$36 million
.46%
2003
$157,000
$35 million
.45%
Merck Genome Research Institute
White House Station, NJ
Anthony Ford-Hutchinson, president
2005
$0
$600,000
0
2004
$0
$625,000
0
2003
$0
$600,000
0
Molecular Sciences Institute
Berkeley, Calif.
Roger Brent, CEO
2005
$222,600
$5 million
4.5%
2004
$219,000
$6.2 million
3.5%
2003
$196,000
$4.6 million
4.3%
Mount Desert Island Biological Laboratory
Salsbury Cove, Maine
Patricia Hand, administrative director
2005
$112,000
$7.4 million
1.5%
2004
$99,000
$6 million
1.7%
2003
$90,000
$4.8 million
1.9%
National Center for Genome Resources
Santa Fe, NM
Stephen Kingsmore CEO in 2005 and 2004
Miguel Rios was chairman and president in 2003
2005
$284,000
$5.3 million
5.4%
2004
$221,000
$5.2 million
4.3%
2003
$156,000
$5 million
3.1%
National Consortium for Genomic Resources Management and Services
Montross, Va.
Thomas Frazier, president
2003
$0
$23,500
0
2002
$0
$6,300
0
2001
$0
$3,000
0
Ocean Genome Legacy Foundation
Ipswich, Mass.
Daniel Distel, CEO in 2005
Wolfgang Hess in 2004 and 2003
2005
$80,000
$199,000
40%
2004
$31,500
$172,000
18.3%
2003
$81,500
$134,000
61%
Research Triangle Institute Research
Triangle Park, NC
VF Haynes, president and CEO
2005
$532,000
$452 million
.12%
2004
$437,000
$492 million
.09%
2003
$368,000
$323 million
.11%
Target Autism Genome
Fairfield, Conn.
2005
None above $50,000
$20,000
N/A
2004

None above $50,000

$26,000
N/A
2003
None above $50,000
$30,000
N/A
Translational Genomics Research Institute
Phoenix
Jeffrey Trent, CEO
2005
$530,000
$30 million
1.8%
2004
$568,000
$25 million
2.3%
2003
$333,000
$13 million
4.1%
Whitehead Institute for Biomedical Research
Cambridge, Mass.
Gerald Fink, CEO
2005
$235,000
$65 million
.4%
2004
$235,000
$95 million
.25%
2003
$244,000
$134 million
.22%
SOURCE: Nonprofits' tax returns.
*Data represents all available Form 990 income tax returns between 2001 and 2005, the most recent year for which data are available. Filings for some years were unavailable and were therefore not included in every calculation in accompanying tables and graphs.

 

 

2005 Top 5 Genomic Nonprofit CEO* Salaries Above National Average†
Company Name Name, Title
Salary
Howard Hughes Medical Institute Thomas Cech, president
$836,000
Ludwig Institute for Cancer Research Edward McDermott, president
$593,300
Research Triangle Institute VF Haynes, president and CEO
$532,000
Translational Genomic Research Institute Jeffrey Trent, CEO
$530,000
J. Craig Venter Institute Craig Venter, chairman and president
$413,000
SOURCES: IRS filings, Charity Navigator
*Refers to CEOs or equivalent leaders.

 

 

2005 Top 5 Genomic Nonprofit CEO Salaries as Percentage of Annual Expenses
Company Name Name, Title Salary Expenses
% of expenses
Ocean Genome Legacy Foundation Daniel Distel, CEO
$80,000
$199,000
40%
Fellowship for Interpretation of Genomes Veronika Vonstein, president
$115,000
$923,000
12.5%
Genetic Alliance Sharon Terry, president
$97,500
$1 million
9.8%
National Center for Genome Resources Stephen Kingsmore, CEO
$284,000
$5.3 million
5.4%
Molecular Sciences Institute Roger Brent, CEO
$222,600
$5 million
4.5%
SOURCES: Nonprofits' tax returns, Charity Navigator
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