It’s taken more than seven months, but the S.C. Research Authority has finally complied with an S.C. Freedom of Information Act request seeking information on bonuses paid to executives of the state agency and its affiliates between 2008 and 2010.
The data provided show a government body that doles out bonuses like candy, certainly when compared to what the average South Carolina state employee makes in post-salary supplements.
According to information provided to The Nerve, the Research Authority paid out more than $1.44 million in bonuses to 50 individuals for the 12-month period ending Oct. 23, 2010, the most current data available.
That’s an average of nearly $29,000 apiece for the top echelon of the agency’s employees. The $1.44 million bonus figure is equal, on average, to about 20 percent of the base salary of the SCRA’s top employees.
Staff at few other state agencies enjoyed anything close to that kind of largesse over the past few years as the Great Recession ravaged the state’s economy.
In early January, for example, then-Gov. Mark Sanford released a non-binding 2011-12 budget plan that called for cutting the pay of state workers earning more than $35,000 a year by 5 percent. Those state workers also would have had to take two unpaid furlough days.
That cutback was avoided in the end, but it pointed to South Carolina’s dire fiscal condition.
Bonuses for top SCRA executives were particularly hefty in 2010. For example, Chief Executive Bill Mahoney took home an extra $125,189 in addition to his base salary of $253,436, for total compensation of $378,625, according to information provided by the Research Authority.
Over the past three years, Mahoney has earned bonuses of more than $320,000 to go with a total salary of more than $727,000, making his compensation more than $1 million during the time period.
Also for 2010, Chief Operating Officer Gregory Frank got a bonus of $86,400 to go with his $281,081 salary; Chief Financial Officer Julia Martin received a bonus of $84,447 along with her $205,919 salary; Chief Executive Vice President Richard Self netted a $85,504 bonus on top of his salary of $201,578; and Senior Executive Vice President John Gregg received a bonus of $78,678 in addition to a salary of $190,100.
But even if you move well down SCRA’s pay chart, there are numerous examples of lucrative bonuses being paid out. Senior Systems Engineer Daniel Baltrus, for example, is listed at No. 41 among SCRA employees on the 2010 information provided by the Research Authority, yet he received a $17,438 bonus to go with a $117,760 salary.
The generosity doesn’t appear to be a one-time deal, either.
For 2009, SCRA paid out $1.35 million in bonuses, equivalent to about 17.6 percent of the salaries of the nearly 60 individuals included in the information sent by the agency.
In addition, the Research Authority paid out a little more than $1 million in bonuses for 2008, or about 15.7 percent of the salaries of the 53 individuals included in the data sent by SCRA for that year.
The entire list of bonuses sent over by SCRA, along with a letter from Mahoney can be found here.
The Nerve filed its Freedom of Information Act request seeking the bonus information in November 2010. SCRA replied within 15 business days – as required by law – stating that the data was under review and would be addressed “in the normal course of SCRA business.”
However, The Nerve wasn’t able to elicit another response from the agency until June 21.
That came only after The Nerve had sent a note to SCRA stating that if it did not receive a response from Mahoney or someone else at the Research Authority by the end of the following day, The Nerve would be forced to assume that the SCRA intended to be in willful noncompliance, a potential criminal violation, with the state’s FOIA law and would contact its attorney to discuss further action.
By midday June 21 Mahoney had responded: “SCRA intends to provide the additional requested compensation information by the end of next week.” It arrived by email on July 1. Included was a June 30 letter from Mahoney which detailed SCRA’s reluctance to disclose the bonus information.
Among the reasons: “As a technology services corporation, our professional workforce is our means of production, and our total labor costs are a critical factor in pricing vs. competition,” according to Mahoney. “Publishing the information you have requested could enable our competitors to accurately compute SCRA’s total labor costs, and hinder or harm SCRA’s required ability to compete in the free marketplace.
“Furthermore,” he continued, “publishing the information you requested incrementally exposes our workforce to recruiting raids from our competitors, harming our means and ability to perform our public mission on behalf of South Carolina.”
Why is the question of bonuses significant? Beyond the fact that SCRA is a state agency and the extra payouts are well above anything seen at any other state agency, last year SCRA said it needed to boost the pay of its employees substantially in order to remain competitive.
That was, executives asserted, the recommendation of a management consulting firm, the Philadelphia-based Hay Group, which claimed the Research Authority ranks in the 25th percentile among peers in terms of pay. To remain competitive, SCRA needed to raise its compensation so that it was much closer to the 50th percentile, the Hay Group reported.
SCRA’s compensation ranking did not include the hefty bonuses, former SCRA Chairman Bill Masters said.
However, Mahoney’s June 30 letter included the contention that even when total compensation, including bonuses, is taken into account, the agency is still “well below the national industry average.”
SCRA officials have declined to release copies of the Hay study, saying the details could hurt the agency’s ability to compete.
In fact, Masters has said he was not allowed to keep a copy of the Hay Group study, either. He reviewed it during a SCRA Compensation Committee meeting last year, but management would not let him take it with him to review it afterward, he told The Nerve.
At a Sept. 30 Research Authority board meeting, a proposal to enact a largely across-the-board 6.5 percent pay increase for its 240 employees was approved, an event reported by The Nerve and other media outlets.
Days later, though, Mahoney backtracked, claiming the media erred in its reporting.
According to a letter Mahoney sent to SCRA employees, salary adjustments were calculated for 97 employees – rather than for all SCRA employees – and those increases ranged as high as 9 percent.
However, The Nerve videotaped the meeting in question, which showed Masters asking Mahoney directly, “What percent raise are we talking about giving out? Is it across the board or weighted toward one group?”
Mahoney tells Masters the increase will be approximately 6.5 percent across the board for all employees for the first year, and, if approved, nearly 20 percent total over three years.
But of the 54 employees for which SCRA included data for the year ended Oct. 23, 2011, all but 11 got bonuses equal to at least 10 percent of their salary, and many got far more.
Mahoney’s bonus of $125,189 was equal to more than 49 percent of his salary; Self’s bonus of $85,504 was equal to more than 42 percent of his salary; and Gregg’s bonus of $78,678 was equal to more than 41 percent of his salary.
There were just five SCRA employees of the 54 listed who didn’t get any bonus at all; however, they earned salaries of $169,000, $140,000, $140,000, $95,854 and $90,000, respectively.
In 2009, there were just two listed employees who didn’t get bonuses, while in 2008 there were eight. Clearly, with an agency that distributes bonuses on such a regular basis – and often of robust amounts – it would seem disingenuous not to include those amounts when computing SCRA’s compensation ranking compared to its peers.
SCRA is a state-created and controlled technology and real estate company with annual revenues of $180 million. Acting much like a general contractor, the Research Authority specializes in forming partnerships to commercialize scientific and technological research. The SCRA also is a key player in efforts by the state and some local governments in South Carolina to develop a “knowledge-based economy.”
Begun in 1983 with a gift of $500,000 and 1,400 acres of state land from the General Assembly, the Research Authority is a largely below-the-radar operation.
While the Research Authority doesn’t get any direct appropriations from the state, SCRA-affiliate SC Launch receives $6 million annually under the Industry Partners Fund, which provides the working capital seed grants to new technology companies. Donations to the Industry Partners Fund are good for a 100 percent, dollar-for-dollar credit against state taxes.
In addition, the Research Authority is exempt from income, sales and property taxes under its enabling legislation.
While information on its employees who earn more than $50,000 annually can be found in the state salary database, those figures don’t include such items as bonuses and other forms of compensation.
Masters was brought on to the SCRA board by Sanford to make the agency more transparent and accountable. He resigned earlier this year, frustrated by what he perceived as roadblocks by board members and executives.
In Masters’ resignation letter to Gov. Nikki Haley he cited a number of troubling allegations, including:
- That the Research Authority is run mostly for the benefit of top management;
- It manipulates government contracts and data to pass audits; and
- Board trustees are allowed to have input into issues and decisions from which they benefit without having to disclose their affiliations.
Masters has also questioned the veracity of data provided by SCRA top management to board trustees, high management salaries and whether the agency funds jobs that go to other states.
However, Mahoney’s June 30 letter to The Nerve states that “…transparency and accountability have been, and are today, embedded principles and practices within SCRA. They are ingrained in SCRA’s corporate DNA, based upon state and federal requirements.”
Reach Dietrich at (803) 779-5502 ext. 110, or email@example.com.