Critics Question High Salary of Philadelphia’s WHYY Public Broadcasting Station’s CEO

The Philadelphia Inquirer reports that WHYY, the Delaware Valley’s major public broadcaster, received nearly $4 million in tax dollars in 2007 and spent $2.63 out of every $100 in expenditures on its CEO – more than any other public station in the largest markets.

President and CEO William J. Marrazzo’s potential pay, benefits and expenses totaled $740,090 in the year ending June 30, 2007, according to its most recent tax filing. The package consists of $415,993 in salary, $317,240 in benefits and $6,857 in expenses. Marrazzo’s total outstripped that of chief executives at WNET and WGBH, with five and six times WHYY’s revenues. It also exceeded the compensation of the heads of the Public Broadcasting System and National Public Radio, networks that serve stations countrywide.

WHYY board members, including chairman Jerry Sweeney, said Marrazzo is worth the money because he put the station on a sound financial footing, has strong ties in the business, civic and cultural worlds, and has expanded WHYY’s services to the community. Explaining its CEO’s compensation, WHYY noted on tax forms that Marrazzo received extra money in 2005 and 2006 for “retroactive tax liability incurred on retirement benefits.” The added taxes arose from IRS regulatory changes that were part of a broader crackdown on high CEO compensation. Marrazzo said responsibility for his compensation fell to WHYY’s board and noted that pay should match performance. Among public stations in the top-10 markets, WHYY it is in the middle of the pack for budget and staff.

Interviews with experts in executive pay, nonprofits and public broadcasting raise questions about Marrazzo’s compensation and suggest it is inconsistent with the station’s size and the quality of its original TV programming.

ActionAIDS, a Philadelphia nonprofit that had volunteered to answer phones for a WHYY pledge drive last year, “respectfully declined” after learning of Marrazzo’s pay. “An organization that would have that kind of disparity in salaries and would be paying someone at that level would be at odds with what we value as an organization,” said Kevin Burns, its executive director. According to Charity Navigator, WHYY spent 61.5% of expenses on programs – in the bottom 10% of all nonprofits examined by the group – and 25.3% on fund-raising in the fiscal year ending June 30, 2006. Charity Navigator claim the most efficient public broadcasters spend 15% or less on fund-raising. Sweeney and Marrazzo said it is unfair to compare Marrazzo’s pay only with public broadcasters. A more appropriate comparison, they said, is with regional nonprofits and for-profit media, but others disagree because the private sector is not concerned with taxpayers’ money.

IRS regulations say a nonprofit’s board must show that its CEO compensation is in line with similar organizations or there is a special reason for high compensation. Board members can be held responsible if the IRS deems the compensation excessive.

A 2008 Philadelphia metro-market study by Charity Navigator showed the median compensation of nonprofit CEOs is $116,634. And in the private sector, the average salary and bonus for a commercial station manager in a Top 10 TV market – Philadelphia is fourth – was under $500,000, according to the National Association of Broadcasters. (That 2005-06 figure is the latest available.) However, no comparison is perfect, especially when it comes to public broadcasting, which relies so heavily upon individuals’ support. In 2007, WHYY got 12% of its funding through taxes, 28% from program support, 50% from contributions, and 10% from other sources. The station had 104,987 contributors last year (down from 111,743 in 2005) who gave a total of $15.7 million.

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