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Thursday, Jun. 11, 2009

League board didn't approve individual salaries

Three Kentucky League of Cities executive board members voted last June to give Executive Director Sylvia Lovely a $31,000 raise based on a compensation report commissioned by the League, according to two of the board members.

The rest of the League's executive board never heard about the raise because the three compensation committee members didn't bring it up at the full board meeting a few days later. Staff members presented the compensation study, but all individual salaries were simply included in a $5.2 million line item in the annual budget, the board members said.

No one on the executive board ever asked how much Lovely and other top executives at the League were being paid. So, board members were surprised when the Herald-Leader, relying on documents obtained through the state's Open Records Act, reported on Sunday that Lovely made $307,044 in 2008.

Her total compensation package for 2008, which included the use of a BMW SUV and a service award, was $315,677. That's an increase of $64,169 in the last three years, or 25.5 percent. (Deputy Executive Director Neil Hackworth's total package last year was $246,994 and Director of Insurance Services William Hamilton's was $225,520.)

State Auditor Crit Luallen has recommended that public boards review executive compensation to assure that it's reasonable.

Lexington Mayor Jim Newberry, who is on the KLC's executive board and who said he did not know Lovely's salary until she told him recently, has called for a re-evaluation of League salaries to put them more in line with other municipal salaries. Several other mayors who serve on the board have agreed that action needs to be taken at the League's next board meeting on June 19.

Luallen has said she will wait to see what the board does before she decides whether to take further action.

Lockton Companies of St. Louis was paid $7,500 by the League for the report on executive compensation, which found the executives needed more money to put them in line with other insurance companies and non-profits.

A $26,000 study on the other KLC salaries found they were mostly in line with those at comparable organizations. Fifteen other employees of KLC make more than $100,000 annually.

The League's compensation committee is made up of four officers on the board: Connie Lawson, the League's chairwoman and mayor of Richmond, Jackson Mayor Mike Miller, Elizabethtown Mayor David Willmoth and Williamstown Mayor Glenn Caldwell. Lawson, who was not at the compensation committee meeting last year, did not return phone calls requesting comment Wednesday.

Miller says he doesn't know why the full board didn't discuss Lovely's salary.

"I really can't answer that question," he said. "I do remember them talking about the compensation study, but no individual salaries were discussed.

"Based on their (Lockton's) comparisons, I didn't have any problems with the salaries," Miller said.

Caldwell also said the salary seemed fair to him. Willmoth, who is no longer on the KLC board, did not return phone calls Wednesday.

Board usually sets salaries

In most organizations, non-profit or for-profit, a compensation committee will discuss the CEO's salary, but the full board will actually set it, said Tim Delaney, director of the National Council for Non-Profits.

"It is the responsibility of board members to set the compensation for the CEO," Delaney said.

Newberry has called for other policy changes at the League, which provides lobbying and legal advice and sells insurance and financial services to cities. The proposed changes include an end to spousal travel, more economical vehicles and an end to business with relatives of League employees. In addition, he wants the board to consider the recommendations Luallen made in the wake of a spending scandal at Blue Grass Airport, where top officials spent $500,000 over three years, much of it on questionable expenses.

The Herald-Leader found that in the past three years, the League had spent more than $20,000 at Azur, a restaurant co-owned by Lovely's husband, Bernard Lovely. An additional $19,000 has been spent on travel for spouses of the top three KLC executives. Overall, those executives spent more than $304,000 on travel, meals, sports tickets and other entertainment in three years. In addition, Hamilton, the director of KLC Insurance Services, rents office space to one of the League's major claims adjustors, Collins & Company in Georgetown.