CPB and PBS salary cap responses questioned

Television Digest with Consumer Electronics, Feb 23, 1998

CPB Pres. Robert Coonrod said in Feb. 13 letter to Bliley and Paxon: "In no instance has CPB supplemented the annual rate of pay of CPB executives, officers or employees such as through bonuses or other supplemental pay that would violate the 396(e)(1) salary cap." However, recent Form 990s show that Pres.-CEO Donald Ledwig, who resigned May 31, 1992, drew $256,641 that year, more than $110,000 beyond cap. Senior Vp-Programming Eugene Katt, who left July 31, 1995, received $171,191 that year, with what CPB called "salary, severance and annual leave pay." House Commerce Committee source said of CPB compensation that "if true, this raises a serious question regarding the completeness of CPB's response."

CPB "strongly believe[s] that accrued annual leave and severance are not a part of the statute governing salary caps or a part of the congressional inquiry," CPB spokeswoman told us. Katt's compensation involved annual leave and severance, she said. She was less clear on what comprised Ledwig's pay package: "We're looking into that." Pres.-CEO Richard Carlson received salary cap limit for fiscal years 1993-1996. He left CPB near end of FY 1997, but CPB last week received another extension from IRS for that Form 990 and is not obligated to release it yet. Spokeswoman said Carlson "received no severance" in FY 1997, but she wouldn't say whether he exceeded cap that year.

Even if CPB isn't found to have violated cap, we're told, it's undergoing special scrutiny because it "requires PBS and NPR to provide an annual statement certifying that each organization, as of the date of the certification, is in compliance" with salary cap, as Coonrod's letter said.

PBS bonuses "certainly raised some eyebrows," Paxon spokesman John Szwartacki told us. PBS had 4 officers over salary cap in FY 1997 and 6 in FY 1996, after only 6 instances of exceeding cap in previous 16 years, PBS said in letter. "The public broadcasters' responses to date have not satisfied our curiosity" as to why they felt exceeding cap was appropriate, Szwartacki said. We're told NPR, PBS and CPB attorneys coordinated their responses to Bliley and Paxon, and common theme was that bonuses are legal if "unusual, unexpected or extraordinary payment," as Coonrod wrote.

Paxon "is especially concerned with PBS's response," Szwartacki said, because "it suggests a pattern" recently of aggressively exceeding salary cap. "Ten instances in 2 years is extraordinary," he said, and Paxon noted that start of bonuses "coincided nicely" with arrival of Erwin Duggan as pres. in 1994 from FCC, where he had been commissioner. Responses by PBS, CPB and NPR were felt by Paxon to be "too legalistic," Szwartacki said: "At best, they found a way to live within the law, but Congressman Paxon is also interested in the spirit of the law." Responses "didn't disabuse us of the notion that these bonuses were improper," he said. Among 6 PBS bonuses in FY 1996, Duggan is listed on Form 990 as receiving $20,000, as reported (TVD Dec 29 p2), but in letter he said he had $45,000 bonus for that year. In FY 1997, according to Duggan letter, he received cap salary of $148,400 and $37,000 bonus; Exec. Vp-COO Robert Ottenhoff $147,300 salary with $24,500 bonus ($23,400 over cap); Exec. Vp-Learning Venture John Hollar $141,977 salary with $24,000 bonus ($17,577 over); Exec. Vp-Programming Kathy Quattrone $135,417 salary with $24,000 bonus ($11,017 over).

PBS Chmn. Colin Campbell and Compensation Committee Chmn. Milton Wilkins wrote in Feb. 13 letter that bonuses were acceptable as they "constitute genuine bonuses - that is, so long as they represent nonregular, extraordinary and unexpected payments..." Despite CPB's role in certifying PBS compliance with salary cap, Coonrod wrote that agency had just learned of PBS excess in FY 1997: "CPB has also recently been informed that for FY 1997" PBS had 4 employees whose compensation "will exceed the Section 396 salary cap."

NPR had employees exceeding salary cap in FY 1995 and 1996, according to Form 990s. In FY 1996, Pres. Delano Lewis received $149,716, just over $148,400 cap, while Exec Vp-COO Peter Jablow had $132,126 salary and $29,048 "prevesting retirement benefit." Lewis was only officer to exceed cap in FY 1995, with $170,660 total compensation. Morning Edition host Robert Edwards topped cap both years, with $159,375 in FY 1996, $148,506 ($106 over cap) in FY 1995, although Lewis said in letter to Hill that "he must begin work at 1:00 a.m. each day" and is subject to benefits of union contract. He also wrote that "I cannot speak with certainty for the period before approximately 1991," as NPR doesn't retain records that long.

Immediate impact of issue may have been to kill, at least for now, effort by PBS to have salary cap law removed. PBS board led intensive lobbying effort last fall, with assistance of Washington law firm Covington & Burling. "They've been coming at us hard" to change law, one Hill staffer told us, but others said that in current climate PBS was expected to back off. With House in recess last week Paxon hadn't had chance to discuss responses with Bliley, Szwartacki said, but several sources thought they would develop action plan this week. Bliley and Paxon have 4 avenues to pursue with investigation, we're told: (1) Schedule private meeting. (2) Send another letter, broadening inquiry. That would come, we're told, if Bliley and Paxon feel responses from public broadcasters "raise more questions than answers." (3) Hold public hearing. (4) Introduce legislation. While aides insist course of action hasn't been chosen, Paxon seemed to be seeking more aggressive course than Bliley. Szwartacki told us: "This is not the end of the story, but the beginning."