Archive for December, 2010

A different kind of benefit

Tuesday, December 21st, 2010

Everyone who flies for business must keep returning to the value equation—how much does using general aviation aircraft save us time or money, increase our efficiency or reach, or generate new opportunities. But this time of year it’s also nice to remember that the general aviation community can, and does, do a lot of good in the world.

As Harrison Ford reminded us last week when he received the Wright Trophy, America’s general aviation community is filled with good and generous people who give of their time and freedom to fly in the service of others.

In just the past few weeks AOPA and our aircraft have been part of an airlift of toys to children on an isolated island off the coast of Maryland and welcomed Santa as he traveled across the country to bring Christmas cheer to wounded troops. Earlier in the year, we participated in the Citation Special Olympics Airlift to take athletes and their families to and from the games. And throughout the year we’ve heard heartwarming stories from AOPA members who use the same aircraft they fly for business or pleasure to perform humanitarian relief missions of all types—everything from medical flights to disaster relief.

General aviation flying, whether for business or pleasure, has unique capabilities that aren’t found in any other type of transportation. Those same capabilities that make GA such a worthwhile tool for our business transportation needs also make it especially valuable when it comes to serving others. And that’s part of the value equation, too.

Saint Nick One Visits AOPA

Saturday, December 18th, 2010

The Spirit of Liberty Foundation has airlifted Santa and his helpers across the country in a Cessna Citation Jet.  During his travels, Santa stopped along the way to visit our injured troops recovering in facilities here in the US.  Santa stopped by Frederick, Maryland and visited with our own Dave Hirschman.  From Washington, Santa flew to New York and then onto Iraq for an historic visit.  You will enjoy this heart warming general aviation story.  To view, CLICK HERE.

A Wonderful Christmas Story

Saturday, December 18th, 2010

Our friend, Mike Kucera, at the Southside Sentinel & Rappahannock Record sent us a wonderful video to go with our story about using the AOPA Caravan (with call sign Rudolph One) to transport Santa and his toys to Tangier Island.  The video really captures the day, so we share it here….just, CLICK HERE.

“….we misinterpreted some of the data on its IRS filings.”

Monday, December 13th, 2010

The statement above in today’s AVweb Insider by Paul Bertorelli at AVweb is appreciated.

Also, today’s “Inside Look at AOPA” follows a long and useful tradition of reporting after conducting an extensive interview covering important matters.  Seems a lot more useful than email exchanges.

Progress!

A Discussion About Compensation

Sunday, December 12th, 2010

 I appreciate the time many of you have taken to enter into the discussion about AOPA’s operations and our objections to AVweb’s inaccurate reporting about our finances.

Several of you who commented raised questions about AOPA’s finances, and it’s an issue that really deserves some discussion. To be meaningful, that discussion must be about more than just the numbers, although I will share numbers with you.

Until now, I thought most people who were interested in AOPA’s finances had no trouble finding the information they sought. AOPA has long provided a good bit of that information on our Web site, in our magazines, and in other forums as appropriate. If you have not seen it, you can view this information here.

However, as I said in my most recent post, a good case has been made for having a “governance section” on our Web site where such information can be easily accessed. We will set that up.

AOPA also reports compensation on the IRS Form 990s that have received a good bit of attention. While the numbers are accurate in and of themselves, they just aren’t a good basis for comparison. That’s because the IRS reporting requirements change from year to year. Personnel changes also have an effect as do some types of benefits. For example, if you are in a job that allows you to earn compensation in one year and defer receiving that money until some future time, you must report those earnings twice–once when they are actually earned and again when they are received. In effect, you are double counting the same money. So, when you compare forms from different years, you may actually be comparing significantly different numbers of people in different types of jobs with different degrees of responsibility. You may even be reporting numbers that were already reported some years ago. But, hey, it’s a federal form.

For a number of years, Washington-based publications have tracked association compensation and developed skills and programs that help them decipher these reports.  One such group is called the CEO Update.  A recent article presents a pretty clear picture of what has been happening to association compensation.  It is worth reviewing to get an understanding of the environment in which associations operate. 

By any measure, those of us running associations are well paid.  And, the compensation levels have been rising at a pretty good rate. Those increases have spread beyond the president’s office to key leaders within associations because it’s challenging to recruit really good talent with the skills and experience to lead an organization as large as AOPA. In fact, you should know that AOPA is one of the largest associations in the country.  With our membership and our roughly $60 million a year budget, we enjoy a capacity that not many organizations can match. And we put it to work every day at all levels of government, in our highly respected publications, in providing information and services to our members, and in dozens of other ways.

However, our real strength is our people.  Having experienced, respected, and talented people running our publications and advocacy programs is essential if we are going to compete in this biggest of big-league arenas called Washington, D.C.  And, the many fine people who support the organization through marketing, communication, finance and other areas are also essential.  If we are to fulfill the mission to protect and preserve the freedom to fly, we must employ the best people we can find to engage in the important and challenging work we do. In fact, as members, you should insist upon it.

As I explained at an all-staff meeting early in my tenure, perhaps my most important responsibility is a lot like coaching a professional team, meaning I must ensure we have the very best people we can find playing in the right positions in the organization.  For this reason, I do spend a good deal of time on getting the people and the structure of the organization right for the times.

Given the challenges to our economy and the large policy challenges we faced in Washington  when I entered AOPA, there was little margin for error. An important part of my job was to mold a very strong organization into something that was right for the changing times.

When I arrived, AOPA had an effective structure in place that consisted of six executive vice presidents who reported to the president.  It worked.  And that’s what mattered.

Over time, I felt that I could be most effective if I was spending time out with AOPA members, as well as federal, state, and local officials. To make that work, some changes seemed to make sense. Our structure now has two executive vice presidents reporting to me.  One is our chief operating officer and one is our chief financial officer.  In addition, the senior vice president of human resources reports to me as does the president of the AOPA Foundation as I am the chief executive officer of our Foundation.  This structure did not happen overnight.  It has evolved over the past two years.  I share this because I think it’s important to understand how AOPA has evolved to meet the times and why making year- to-year compensation comparisons is so challenging. (But we will get back to this). Today, as always, each member of the leadership team is identified every month in the masthead near the front of Pilot magazine.

To retain and recruit talented people we need competitive compensation policies. To make sure we stay competetive, AOPA’s Board of Trustees monitors compensation closely with the help of an outside, independent compensation consultant. Together, they compare policies and compensation levels from a broad range of associations. It’s worth noting, by the way, that our board members receive no payment for the hard work they do.

While I acknowledge we must be competetive, I will also tell you that many associations have senior executives who are paid two or three times what I and some of our key people are paid.  And some of these same associations are ones we run into, and sometimes compete with, as we advocate on behalf of general aviation.  The key is to be competitive–competitive in salaries so we can attract the right talent to compete for attention and support in Washington. And I firmly believe we are.

Another way to look at it is to imagine your $45 annual dues allowed you into a stadium to watch your big league baseball team.  You would want your team to hit, catch, pitch, score runs and, in other words, win games!  If your team had mediocre players, the chance of winning would be far less and you would demand changes so the team would be more competitive.

In managing the resources we are entrusted with, we look for a balance.  We cannot, frankly, offer the highest levels of compensation, but we can be competitive and that is what we strive to do.

Reporting the Numbers

So, let me talk in more detail about what we share publicly about AOPA compensation. 

We have more than 200 people who come to work at AOPA around the country every day. Like most people, they come with the expectation that what they earn is a private matter.  Also, from a business standpoint, our association does not benefit by sharing what we pay our very good people–honestly, I do not want them recruited away.

As I mentioned earlier, associations are required to report compensation for certain people on the IRS Form 990. Here’s a copy of one if you are interested. The requirements for who should be included on this form change regularly and we fully comply with those requirements. Right now, we are required to report the compensation and title of anyone making more than $150,000 a year. 

A few people and news organizations ask for these documents each year and we provide them.  Organizations like CEO Update report in detail on associations and provide listings of what associations pay their top people.  So from my perspective, this information has been out in the open for years.

What has complicated the interpretation of our reports from 2008 through 2010 are the changes I described.  I transitioned into AOPA in 2008.  Some transitioned out in 2009.  Some were promoted with added responsibilities and that meant a commensurate salary increase. IRS reporting requirements also changed.

When Belvoir Media’s chief operating officer tried to use these forms to calculate how compensation had changed since my arrival in 2009, he was destined to fail.  Without talking to us, the numbers cannot be sorted out because both AOPA’s organizational structure and the federal reporting requirements changed from one year to the next.

So, in response to further questions and in an effort to put to rest the false notion that AOPA executives had received pay raises of 14%, I took the position that we would fulfill a request for information about the 10 top-paid people at AOPA.  I felt the best way to provide meaningful information was to look at those positions by base salary at year end 2008, 2009 and 2010.  To be sure there are health benefits and other incentives, but the base salary provides the clearest and most direct number to compare year to year.

Still, I was determined for privacy and business reasons not to report on individuals not considered “reportable” to the IRS in that period. So, instead of providing information for those people on an individual basis, I provided a lump sum of their salaries. People who are “reportable” to the IRS are identified by title. Using that information, we created the chart below. It totals the combined base salaries for the 10 top-paid people in each year, both reportable and non-reportable. Noted below the total is the percentage increase from one year to the next.

This is what we provided to Belvoir Media Group’s COO a couple of weeks ago for his ongoing analysis.

Here are the numbers.

JOB TITLE Salary 2008 Salary 2009 Salary 2010
President 517,826 500,000 515,000
Chief Operating Officer 299,400 na 270,000
EVP, Government Affairs 215,498 229,505 na
EVP, Chief Financial Officer 218,325 270,000 278,100
President, AOPA Foundation 246,452 257,542 265,268
Chief Development Officer 190,000 205,200 211,356
Senior VP Government Affairs na 205,000 211,150
Senior VP, Human Resources 170,000 182,750 200,000
VP, Legislative Affairs na 200,000 204,000
VP, Chief Information Officer na 185,000 191,475
VP, Operations & International 150,000 na na
Non-reportable Total 429,490 260,000 185,000
Ten Highest Paid Total $ 2,436,991 $ 2,494,997 $ 2,531,349
Annual Increase 2.4% 1.5%

In addition to this information, I am committed to continuing to provide data to help you, our members, understand what is happening at AOPA. As we file Form 990 reports in the future and place them in the Governance section we are developing for our AOPA Web site, I will give you an update and an accounting to explain just where we are with regard to our financial situation.

Given all this information, you can see — I hope — why I really do expect AVweb to correct the pay raise story that they knew was wrong 32 days ago….

Anatomy of a Story

Saturday, December 11th, 2010

______________________________________________________________________________________

Issue One:  31 days ago Belvoir Media Group, LLC and AVweb knew their conclusion about AOPA pay raises was wrong and there has been no correction.

______________________________________________________________________________________

 Today, we have a new posting on the AVweb site that describes the making of a story….or, maybe not. 

 Here’s my perspective….

AVweb:  At issue is a story AVweb published on November 11th reporting salaries for AOPA’s top managers shown on the association’s public tax filings. The data for the story was taken directly from AOPA’s publically filed IRS forms.

 AVweb did ask for tax documents called Form 990s.  These are publicly available reports filed by associations.  And, as we were told, the chief operating officer of the Belvoir Media Group, LLC which owns AVweb, compared numbers between various years.  Unfortunately, he came to conclusions that are clearly incorrect.  We do not dispute that the source of the information came from tax forms, but we clearly demonstrated to Belvoir Media’s COO and the AVweb editor and publisher AFTER they posted their initial story on November 8th that because of reporting changes and misinterpretations, their calculations lead to faulty conclusions.  And, yes, we did state that the story was flat out wrong.

AVweb:  Although AVweb requested an interview prior to the original story appearing in early November, Fuller declined this request. In addition, AOPA answered only four of a list of a 12 detailed questions we submitted prior to publication.

 The request for financial information came in an email.  A team of people at AOPA reviewed the request and assembled information we thought was responsive to the request.  In fact, we provided links to extensive financial information that we make available thinking that it would be more helpful rather than relying on tax forms that are difficult to understand.  I know our team thought with all the information provided we had been responsive to the request. True, the email did indicate that a conversation with me was desired.  I thought such a discussion would be useful and would occur after they had digested their information.  And, as most of these stories develop with the normal amount of back and forth between reporters and our media people, I figured that if a discussion was needed, I would be contacted. It is also the case that all of this happened as we were preparing for our annual AOPA Aviation Summit, and I was headed to an aviation conference and then on to Long Beach.

What never occurred was a call prior to publication of the posting about pay increases.  A phone call or email to any of us at AOPA describing the remarkable conclusion the Belvoir Media Group COO had reached would have allowed us to identify the errors in about 30 seconds.  In thirty years of dealing with difficult stories in Washington, D.C. I do not remember a time when an organization that thought they had discovered startling information did not call and ask for a comment prior to publication. 

AVweb:  In an extensive and at times contentious phone conference on Wednesday, Fuller illuminated details about budget, the association’s direction and how its related businesses compete with other businesses in the aviation sector.

 Well, we did have an extensive discussion, but I’m not sure it was contentious….maybe I did suggest it was not always very productive.

Honestly, we have taken a good deal of time with Belvoir Media and AVweb.  We thought we’d been responsive to their original request.  I spoke several times with the publisher after they posted a story on pay raises at AOPA that was wrong.  We agreed to meet face to face to sort through the facts.  We were then told getting everyone together would not work (we did agree to fly or drive to a location of their choice….call me old fashion, but these email exchanges are just are not the same).

We were then given over 30 additional questions to review and a conference call was requested.

As AVweb has reported, we provided a written response to every question that runs over 20 pages.  Then, we got on the phone with Belvoir Media Group’s COO who did the calculations, the editor who wrote the first story and AVweb’s publisher.

After repeatedly describing how the numbers used in calculation had lead to the wrong pay raise conclusion, we never once heard a comment about the possibility someone had made an error.

We did hear questions about why we are in the insurance business…curious.  We were asked why we spend as much as we do for advocacy….more curious. 

And, with regard to the budget, I shared with them that we are now projecting that we will end this year spending a little less than was spent in either 2008 or 2009.  I did ask them to remember that we exist to protect and preserve the freedom to fly.  We work to fight regulations, legislation and the imposition of fees and taxes that would threaten general aviation.  We operate in a different kind of “cycle” than the business cycle the Belvoir Media Group COO suggested we had failed to pay attention to when he suggested he’d hope to hear more about cut backs.

Our job, I reminded them, in 2009 with a $9.5 billion user fee suggested by a new Administration was to do everything possible, working with our aviation colleagues, to prevent that billion dollar cost to hit general aviation.  So, yes, in a very tough economic year, we geared up.  It was a good fight.  It was an expensive fight.  And, for now, it remains a successful fight.  OK….so maybe the discussion was contentious here and there during the call.

And, as for this final item mentioned about competing with other businesses in the aviation sector.  Let’s see, we do publish two magazines and electronic newsletters that are supported by wonderful partners in the aviation community through advertising.  And, our partners do this as a way to reach the aviation community.  We do have an insurance agency that does sell insurance to our members who rent aircraft as well as to those who own aircraft.  We have a legal services program and a medical services program. And, now, we are working on partnerships with online companies that allow our members to make different kinds of purchases and AOPA receives a small financial benefit, but it all adds up to support the work we do.

It’s kind of curious that this is being treated like a discovery, since AOPA has broadened its financial base over decades.  It really is not possible to do all that we do with just dues.  We are a $60 million a year organization when everything is added up.  While we enjoy a membership that tops 400,000, even with dues at $45 a person we need additional forms of revenue.  And, when we can find offerings that provide value to the members we serve, I think it is right to explore such opportunities.  By the way, these opportunities do not cost AOPA money they provide additional revenue.  And, in some cases, AOPA members themselves have developed opportunities from which all of our members benefit when revenue flows to AOPA.

I do know that this has been a tough economic time and we remain very sensitive to doing all we can do to support the aviation community.  When we enter the marketplace with an offering, we do so thoughtfully and carefully.  And, increasingly, we are looking for ways to partner with others along the way.  But always, we are looking to provide something of value to our members.

AVweb:  “AVweb’s interest from the outset has been to provide accurate information to our readers and that’s why we agreed to delay publication of stories on AOPA finances until we could confirm additional details,” Cole [the publisher] said.

 I certainly am 100% behind this practice.  Had it been followed prior to the posting of the pay raise story on November 8th we would not be having this discussion.  And, I do commend AVweb’s publisher who throughout this has focused on getting the facts on the table.

AVweb:   we are hopeful the spirit of cooperation that began this process will be sustained.

I am not quite as admiring of how this began….but; you can count on a sustained, spirited exchange.

AVweb:  We’re AOPA members, too, and we think members have a right to know how their money is being spent.

 AOPA members do have the right to know how their money is spent.  And, to be honest, comments in the AOPA Forum and to my last blog posting suggest to me that we should make sure access to all the information we provide is more readily available.  We will create a Governance Section on our AOPA web site that lets people find answers to the kind of questions our members have posed. 

We do publish our annual financial reports and discuss them at the organization’s annual meeting.  Click here to see our most recent information.  But, given the interest and the confusion from reporting off of IRS Forms, we can and should provide clear information and more explanation.

The tyranny of miscalculation

Thursday, December 9th, 2010

About 30 days ago, an online group called AVweb posted a gross miscalculation, saying that executives at AOPA had received pay increases of 14 percent. That report was flat out wrong, and we said so. But the post stayed up for about three days before the publisher agreed to take it down, and it caused no small amount of angst.

The truth is that the top 10 people at AOPA saw salary increases of less than 3 percent from 2008 to 2009 and less than 2 percent from 2009 to 2010.

Since that initial post, we’ve responded in detail and in writing to numerous questions and spent two hours on the phone with the group’s publisher, editor, and chief operating officer.

Now, 30 days later, they have made no correction and no public acknowledgement of their error. In fact, the very individual who miscalculated the compensation figures now wonders aloud why AOPA spends so much on advocacy.

We anticipate more postings, and we will answer them with the facts.

In the meantime, let me share just a few highlights from the exhaustive information we provided:

• Total expenditures for AOPA in 2010 are projected to be lower than they were in 2008 and 2009.

• Total salaries paid to all AOPA employees will be about 2 percent less in 2010 than they were in 2009, due to a small reduction in the number of employees.

• From 2008 to 2010, AOPA reduced the number of employees by six.

• When asked why AOPA spent so much money on advocacy during an economic downturn, we explained that our “cycle of activity” is different from many other “business cycles.” With a new Administration coming to Washington in 2009 and the threat of a $9.5 billion user fee on the table, we would not have served our members by pulling back and cutting spending.

• When asked why AOPA uses turbine aircraft, we explained that the Association has made use of turbine airplanes for 30 years because it is an efficient way to move people and equipment around the country. We are, after all, a general aviation association.

I am very proud of what AOPA has accomplished in the past and the work we are continuing to do today. We are a large and strong organization dedicated to protecting our freedom to fly. And we continue to try new approaches and experiment with new offerings to our members.

We always recognize our members’ right to know what we do and why. We can only hope that those who want to post information about AOPA come to care as much about being accurate as they do about being provocative.

Bringing Christmas to one small island

Saturday, December 4th, 2010
Santa arrives in the Caravan

Santa received a warm welcome when he arrived in the AOPA Caravan.

Today I got to enjoy one of my favorite holiday traditions–bringing Christmas to a group of children who live on a small, isolated island in the Chesapeake Bay.

I flew the AOPA Caravan to Tangier Island as part of the annual Holly Run where I was greeted at the small airport by an enthusiastic crowd of kids and their parents. But it wasn’t me the island’s youngest residents were excited to see. They were really waiting for Santa Claus, who decided to forgo the sleigh and reindeer for a ride in the right seat on this chilly afternoon. Even though we didn’t bring the sleigh, the Caravan did get a special ATC designation for the trip–Rudolph One.

Santa had his sack of toys, and the kids lined up to see what he would pull out for each of them. You just can’t beat the excitement of a child at the holidays, or the wonder on their faces when they discover that Santa has brought a special gift for them.

Santa hands out toys to excited children on Tangier Island.

Santa hands out toys to a crowd of kids on Tangier Island. He joined me in Rudolph One, better known as AOPA's Caravan, for the flight to the island.

Tiny Tangier Island is accessible only by boat or aircraft, and the majority of the residents make their living fishing and crabbing in the bay. It has a rich history (it was visited and named by Captain John Smith in 1608) but a relatively poor and small population, just about 600 people according to the 2000 census. And while the scenery is postcard perfect, the island’s isolation means many of the modern conveniences we take for granted are more or less inaccessible. So bringing Santa, and his sack full of toys, really means a lot.

It’s something we at AOPA are honored to be part of. And it was a great turnout by the GA community, with nearly 50 aircraft taking part. Our Caravan may not be able to circle the globe in a single night, but it can and does bring some welcome holiday cheer to at least one small community.