Securities Law

SEC Chair's Salary Far Below Group Execs Representing Firms, Individuals Overseen

Securities and Exchange Commission chairman Mary Jo White's annual salary is $165,300, far below the base compensation of any of the top-paid, full-time officials of 21 self-regulatory, industry, government, and other municipal securities-related groups, most of which the SEC either oversees or have members the commission regulates or protects.

According to The Bond Buyer's annual salary survey, the base salaries for the officials of the 21 nonprofit groups in this year's survey ranged from $2.51 million for the fiscal year ending Oct. 31, 2012, for Tim Ryan, president and chief executive officer of the Securities Industry and Financial Markets Association, to $207,083 in 2012 for Bill Daly, director of governmental affairs for the National Association of Bond Lawyers.

The total compensation packages - which includes bonuses and other compensation, as well as deferred and other benefits - totaled $2.89 million for Ryan and $240,177 for Daly, based on the Form 990s the groups file annually with the Internal Revenue Service.

For total compensation, though, Ryan was bested by Richard Ketchum, chairman and CEO of the Financial Industry Regulatory Authority, who received $3.17 million in 2011 - the highest of any group official - with base compensation of $979,962. Daly's total compensation was $240,177, not as low as the $168,817 Macklin & Casey made in 2012 for serving as executive director of the Association of Financial Guaranty Insurers Inc.

Despite the loss of several muni insurers since the 2008 financial crisis, AFGI still has officers or directors from nine companies, according to its 990.

They include Assured Guaranty Corp.-Assured Guaranty Municipal Corp., Radian Asset Assurance Inc., National Public Finance Guarantee Corp., Ambac Assurance Corp., Syncora Guarantee Inc., CIFG Assurance North America Inc., Financial Guaranty Insurance Co., MBIA Insurance Corp. and American Overseas Reinsurance Co.

To be fair, the 21 groups' latest 990s vary in terms of timeliness. In addition, two groups this year - the National League of Cities and the National Association of Local Housing Finance Agencies - did not yet have new forms available from last year.

In this year's survey, the NLC's 990 is the oldest, for the year ending on Sept. 30, 2011. Five groups, including FINRA and NALHFA, have 990s for the 2011 calendar year. Another five groups, including NABL and AFGI, have 990s for the 2012 calendar year.

Nine of the groups, including SIFMA, have 990s for fiscal years ending some time during 2012. Bond Dealers of America's 990 is the most recent, for the fiscal year ending on Feb. 28, 2013.

Two organizations in this year's survey were in the red. The American Bankers Association had minus $18.83 million of net assets or fund balances, while the American Public Power Association had minus $9.01 million.

Of those in the black, FINRA had the highest net assets or fund balances, at $1.74 billion, followed by the Municipal Securities Rulemaking Board, at $46.39 million, SIFMA at $30.76 million and the National Association of Counties at $30.45 million.

Highly Paid
FINRA's Ketchum, SIFMA's Ryan, and Investment Company Institute president Paul Schott Stevens all had total compensation packages of more than $2 million. Stevens received $2.16 million for the fiscal year ending on Sept. 30, 2012, of which $905,902 was base compensation.

Including Ketchum, FINRA had three current and three former officials whose total compensation exceeded $1 million 2011. They were: former senior executive vice president James Donovan who left FINRA in late 2010, at $1.53 million, of which $132,566 was base compensation; former vice chair Steve Luparello, who left in October 2012 to join the WilmerHale law firm, at $1.38 million, with a base of $590,030; executive vice president and chief financial officer Todd Diganci at $1.22 million, with a base of $476,030; former EVP and general counsel Marc Menchel who left in June 2012 for private practice, at $1.16 million, with a base of $390,734; and EVP Steven Joachim, at $1.10 million, with a base of $345,708.

SIFMA had two officials besides Ryan whose total package was more than $1 million - executive vice presidents Ken Bentsen, who runs its Washington, D.C., office and is now SIFMA president, and Randy Snook. Bentsen received a total of $1.12 million, with a base of $790,764, Snook got $1.04 million, with a base of $653,524.

SIFMA's co-heads of municipal securities, both managing directors, made less and different amounts. Michael Decker received $529,165 total compensation, with a base of $314,438, while Leslie Norwood, who is also associate general counsel, got $465,005, with a base of $265,981.

The ABA, Financial Accounting Foundation and American Road and Transportation Builders Association also had officials in the above-$1 million category. ABA president and CEO Frank Keating 2nd, had a total compensation package of $1.97 million, with a base of $1.30 million, for the fiscal year ending Aug. 31, 2012. Edward Yingling, who preceded Keating but left in 2010, received $1.51 million for that year.

Leslie Seidman, former chair of the Financial Accounting Standards Board who retired on June 30, received $1.10 in total compensation, with a base of $820,740, while Robert Attmore, who stepped down as chair of the Governmental Accounting Standards Board the same day, got a total of $532,163, with a base of $389,232 in 2012. Peter Ruane, president and CEO of ARTBA, pulled in a total of $1.13 million, with a base of $1.03 million in 2011.

MSRB executive director Lynnette Kelly received just under $1 million of total compensation, at $975,963, with a base salary of $618,883, for the fiscal year ending Sept. 30, 2012. The board was still paying $523,176 of total compensation to Hal Johnson, the former deputy executive director who left in 2011.

The MSRB paid 26 board members a total of $967,910, with Michael Bartolotta, receiving the highest amount - $80,000 for working 10 hours per week. Alan Polsky, chairman of the board at that time, received $51,100 for seven hours per week. Vice chairman John Young received $56,100 for four hours per week.

Mike Nicholas, CEO of Bond Dealers of America, received total compensation of $502,638, with a base of $468,333.

Besides substantial pay and benefits, FINRA's highest paid executives have some major perks, which are described in run-on, microscopic print in a supplemental section of the self-regulator's 990. They are permitted first class or charter travel to and from Canada, Mexico and other countries for flights more than four hours long. Board members can fly first class to board and corporate committee meetings. FINRA will reimburse weekend travel for companions to join employees on extended stays in the United States.

Ketchum also receives up to $20,000 each year for admission fees, dues and house charges of one club in each of the New York City or Washington, regional areas. He also gets cars and drivers in New York City or Washington for business purposes, which may be used by other FINRA employees for business. In addition, he gets up $20,000 per year for personal financial and tax accounting as well as for spousal travel for business-related events.

The MSRB reimburses Kelly and board members for business class travel for air travel for trips that last more than three hours one-way, as well as for business class rail fares.

State and Local Groups
Jeffrey Esser, executive director and CEO of the Government Finance Officers Association, appeared to be the highest paid official of any state and local group, based on the 990s. He received total compensation of $434,757, with a base of $358,340 for the fiscal year ending March 31, 2012. Stephen Gauthier, director of GFOA's technical services center, got $346,030 of total compensation with a base of $287,242. And Susan Gaffney, who was then the director of the group's federal liaison center, received $200,766 in total compensation, with a base of $169,011.

The next highest paid official of a governmental group was Larry Naake, then-executive director with NACo, who received a total of $401,927, with a base of $325,983 in 2012.

Nonprofits' 990s are required to include the five highest compensated independent contractors that received more than $100,000.

The MSRB reported contracts with four companies, the largest of which was $1.78 million with C C Pace Systems Inc., for software development.

SIFMA's highest paid contract was $6.10 million for legal work from Davis, Polk & Wardwell. The group also had consulting contracts of $2.03 million with Oliver Wyman in Boston, $1.12 million with Promontory Financial Group in Washington, D.C., $1.10 million with Cleary, Gottlieb & Stern, and $658,966 with the trustees of University of Pennsylvania.

BDA paid $259,535 to Nixon Peabody for legal work and $180,000 to Roberts, Raheb & Gradler LLC for lobbying. One of the principals of that firm is Rick Roberts, a former Securities and Exchange Commission member and top aide to Sen. Richard Shelby, R-Ala., who is currently the ranking minority member of the Senate Banking Committee.

The five highest paid contracts reported by ABA were to lobbying and law firms, including $1.47 million to the Glover Park Group for consulting. The ICI's largest contract was $381,711 to Covington & Burling for legal services.

The National Association of State Treasurers paid $741,112 to the Council of State Governments for management and staff support and $192,000 to Williams & Jensen for lobbying. One of the four contracts reported by NACo was $170,000 to State Local Legal Center for advocacy services.

NABL paid Hawkins, Delafield & Wood $127,647 for rent, parking, printing and other expenses.

The American Association of State Highway and Transportation Officials' most expensive contract was $21.70 million to Info Tech Inc. in Gainesville, Fla., for software services.

Three of FAF's largest contracts were to accounting firms, the largest of which was $1.01 million to Ernst & Young for payments for fellows. The foundation also gave $508,469 to the law firm, K&L Gates, for "consultant external relations."

Monica Akhtar contributed to this story.




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