Wikipedia:Wikipedia Signpost/2016-05-28/Special report

{{Wikipedia:Wikipedia Signpost/Templates/RSS description|1=Compensation paid to Sue Gardner increased by almost 50 percent after she stepped down as executive director: Sue Gardner appears to be earning more money as the WMF's special advisor than she did as its executive director}}{{Wikipedia:Signpost/Template:Signpost-header|||}}

{{Wikipedia:Signpost/Template:Signpost-article-start|{{{1|Compensation paid to Sue Gardner increased by almost {{nobr|50 percent}} after she stepped down as executive director [Updated]}}}|By Andreas Kolbe| 28 May 2016}}

{{signpost filler image|image=File:WikiConference USA 2015 342.JPG|caption=Sue Gardner at WikiConference USA 2015. In the 2014–15 financial year, Sue Gardner received over $100,000 more in compensation as a "special advisor" than she received in the 2013–14 financial year as the Wikimedia Foundation's executive director. Her special advisor role has continued in 2015–16.}}

The Wikimedia Foundation last week released its [https://upload.wikimedia.org/wikipedia/foundation/2/27/Form_990_FY_2014-2015_-_Public.pdf 990 tax form] for 2014–15, which revealed a major surprise: after her [https://blog.wikimedia.org/2014/05/01/wmf_announces_new_ed_lila_tretikov/ departure] as executive director in mid-2014, Sue Gardner was still one of the foundation's two highest-paid employees, with total compensation for her role as a "special advisor" amounting to US$320,057. This is over $100,000 more than the $218,529 total indicated on page 48 of the tax form for the [https://upload.wikimedia.org/wikipedia/foundation/7/76/Form_990_-_FY_13-14_-_Public2.pdf previous year].

While the tax form reports that Ms Gardner's base compensation dropped from $200,000 in {{nobr|2013–14}} to $112,500 in {{nobr|2014–15}}, "other reportable compensation" increased from $1,685 in {{nobr|2013–14}} to $188,841 in {{nobr|2014–15}}, resulting in an overall increase in Ms Gardner's compensation of almost 50 percent.

The Signpost sent the following questions to the chair of the WMF board, Patricio Lorente, and chief financial officer Jaime Villagomez:

{{signpost inline quote|In the WMF's recently released public inspection copy of its return to the IRS for 2014–15, we note that on page 9 the former ED Sue Gardner is listed as "special advisor" at an average of 40 hours per week, with total compensation of US$301,341, with an additional $18,716, for a total of $320,057). On page 52, this compensation is broken down into $112,500 base, $188,841 other, $10,400 retirement etc, and $8,316 expenses.

We presume that this average was for the full financial year 1 July 2014 – 30 June 2015; that is, involving some 2000 hours of labor input.

According to the document, Ms Gardner's compensation and labor input as "special advisor" are considerable during that financial year. We wonder whether you might respond to these related questions:

(1) Given that in purely financial terms there were the equivalent of two full-time CEOs on the payroll, what were the inputs to and benefits for the Foundation in return for this charge to the budget?

(2) Is Ms Gardner still on the payroll (her [https://www.linkedin.com/in/suegardner LinkedIn page] states that she is), and does she currently play an advisory role to anyone in WMF management?

(3) In terms of transparency in management and governance, would it have been preferable to disclose the arrangements with Ms Gardner to the Wikimedia community at the time they were finalized rather than nearly two years later?}}

Mr Villagomez only replied to refer us to the chair, who responded as follows:

{{signpost inline quote|In May 2014, Jan-Bart announced that Sue would stay on as a special advisor,[https://lists.wikimedia.org/pipermail/wikimedia-l/2014-May/071458.html [1]] which he confirmed again in June that year.[https://lists.wikimedia.org/pipermail/wikimedia-l/2014-June/072372.html [2]]

The Board felt that her knowledge and experience in our movement was valuable to support the Foundation as it went through that ED transition. In general, it is good practice to make sure that there is the ability to draw on the expertise of an experienced former executive—in this case, someone who grew the organization from a few people to more than 200.

Here are a few things we wanted to ensure:

Sue’s counsel for the new ED. We did not know what kinds of counsel the new ED would need, but it seemed reasonable to us that the new ED would benefit from ongoing time with Sue to talk over issues as they arose.
Her engagement during the handover period, so that she would have time to engage deeply when and if that was necessary. If the new ED needed a briefing on the context for the creation of the FDC, or other initiatives Sue had pioneered in the organization, or similar, we wanted Sue to have the ability to carve out real time for that, possibly including on short , but notice sic.
Sue's counsel for the Board as we oriented and evaluated the new ED. It is the Board's job to manage the executive director, but Sue's experience gave her unique insight into the role and its requirements, and we wanted to be able to call on her when and if we thought it was necessary.
Sue's time so that she could dedicate some energy to generally staying aware of how the Foundation was doing, and was therefore equipped to help to support its continued success. For example, if the Board was struggling with an ongoing issue such as something related to paid editing or a media controversy, we wanted her reasonably up-to-speed so she could help us if necessary.
Lastly, Sue's time so she could help internally in small ways as needed. A senior staffer might need her to dig a document out of her files. Somebody might need her to help reconstruct how revenue targets had been developed in the past. There might be a piece of the annual planning process that wasn't well documented and needed to be explained. We wanted her to be available in the event we had quick questions or needed information that was known only by her, or was easiest to get from her.

We felt this was an important leadership change, perhaps one of the bigger ones in the Foundation’s history. This wasn't "two EDs"—Sue maintained operational distance and offered guidance as requested. This was a practical means of ensuring the handover went as smoothly as possible, and key institutional knowledge was preserved during an important period of transition.

Sue agreed to serve as Special Advisor to the Foundation for a term of one year after she stepped down. In June of 2015, the Foundation extended Sue's term as Special Advisor, through May 31, 2016, to continue her guidance and support of the Board and the Foundation. The Foundation regularly reports on executive compensation through the 990 disclosures, but we generally have not shared that information in other venues.

Jan-Bart and I reached out to her on a number of occasions, and she reached out to us. We, not Sue, are responsible for the decisions we've made and the actions we've taken. But we've been grateful for her considered input, even when we've disagreed with it or taken a path different from what she recommended.

I and the rest of the Board appreciate Sue’s long-time commitment to Wikimedia, and her continuing support to the Wikimedia Foundation.}}

As these were rationales for creating Ms Gardner's special advisor role rather than descriptions of actual work performed, we then asked for some concrete examples of what Ms Gardner had done in the financial year. Mr Lorente responded:

{{signpost inline quote|Among others, I can recall:

Sue designed and executed the handover process. She had prepared a handover book of orientation materials and had several multi-day offsite meetings briefing Lila on the organisation, its history, structure, operations, financials, guiding principles, etc.
In the first months following her departure, Sue carried out some remaining transition obligations for the organisation. For example, she attended Wikimania and participated in media, including the 60 Minutes documentary.
During Lila's tenure, Sue met with Lila regularly, and briefed her and advised her as requested.
Sue dug up files and created briefing documents for Lila and others as requested.
Sue has acted as a sounding board and advisor to senior staff on a number of issues over the past few years, both before and following Lila's departure. Some of this work has been quite sensitive as you can imagine: we've been grateful for her good judgment and constructive approach, in what has been a difficult time for the organisation.
Sue has acted as an ambassador and evangelist for Wikimedia. She has been a supportive external advocate on behalf of the Wikimedia Foundation and Wikipedia, since leaving the organisation.
Sue has acted as an advisor to the board. As I said before, Jan-Bart and I reached out to her on a number of occasions, and she had reached out to us. }}

{{signpost filler image|image=File:Patricio Lorente 2.jpg|caption=Patricio Lorente, chair of the WMF's board of trustees.}}

We leave it to the community to judge whether these responses are satisfactory, and whether this activity justifies an apparent $100,000 increase in Ms Gardner's compensation over what she received as a full-time executive director.

According to the 2014–15 tax form, the Foundation also paid two law firms in excess of $1.9 million for undisclosed "legal services" (p. 61). This is more than four times the total for the previous year (p. 57 in last year's report). On the Wikimedia-l mailing list, WMF communications strategist Gregory Varnum [https://lists.wikimedia.org/pipermail/wikimedia-l/2016-May/084276.html indicated] that a significant portion of these expenses went toward efforts to strengthen the Foundation's trademark portfolio:

{{signpost inline quote|As our global reach has grown over time, we felt it was important to strengthen the trademark portfolio and solidify the protection of Wikimedia’s marks globally. In December 2013, we began working with Jones Day on our global trademark filings, registrations, and oppositions. During the 2014–2015 fiscal year we filed 1,500+ new trademark applications for 35 different trademarks in 100+ countries. A significant portion of the legal services expenses in 2014–2015 went toward the mandatory government trademark application filing fees.

These new trademark applications contained expanded coverage and revised descriptions to ensure better protection of Wikimedia's marks and projects, including countries where readership was growing through targeted programs or distribution (such as Wikipedia Zero and mobile readership). Going forward, we anticipate (and are beginning to realize) a decrease in trademark expenses year over year, now that we have this initial foundation is in place. This investment immediately benefits Wikimedia and its communities by ensuring that our trademark portfolio reflects the maturity and breadth of the Wikimedia movement, and protects us against certain forms of infringement or misuse.}} {{u|Jayen466|AK}}

Tony1 assisted in the preparation of this story.

;Update (June 9, 2016)

In response to ongoing questions from Wikipedia volunteers, Wikimedia Foundation chair Patricio Lorente provided an additional explanation to the community on June 8, 2016, in an [https://lists.wikimedia.org/pipermail/wikimedia-l/2016-June/084403.html email] to the Wikimedia-l mailing list. This is quoted here in full:

{{signpost inline quote|Hi all,

We’ve heard your questions and want to address them broadly, as well as

provide more information about the breakdown of Sue’s compensation during

this time. We understand the confusion related to this recent 990, given

the period it covers, and the aggregate amounts it reports. Below you’ll

find additional information about the nature of our contract with Sue, the

timeframe, and her work and compensation. I expect this will help resolve

this conversation. As Chair, I am completely comfortable with all terms.

Sue was a great ED and brought real value in exchange for her compensation.

Background

In re-reading Jan-Bart’s original email [1] where he stated that Sue was

staying on as an advisor, it isn’t explicit that this was a paid position.

We should have been more clear on this point. It is understandable that

people wonder why Sue was not listed on the page of staff and contractors.

However, everyone listed on the staff and contractors page report up to the

ED. Sue did not report to the ED; she was accountable to the board chair.

That's why she was not on that page.

On the issue of compensation: We handled Sue's compensation the same way we

do with other individuals: it is disclosed in the 990 as appropriate, and

not elsewhere. That's our normal practice. This is true for a variety of

reasons, including the fact that the results are certified through our

external auditors. Other reasons include that it is a transparent

mechanism, consistent with other large charitable organizations, and a

matter of permanent, public record. The Foundation also wouldn’t normally

announce the salary or contract compensation at the time of bringing

someone on; that includes special advisors.

We also don’t usually share the specific details of people’s compensation

beyond what is published in the 990. However, the 990 can be confusing,

especially when compensation levels change mid-year, and so in this case we

(including Sue) are happy to clarify the specifics.

Timeframe

One point of confusion is for the period this compensation covers. This is

reasonable, this confused even some of us involved in preparing this

response. Although the majority of activities reported on the Form 990

cover the Foundation’s fiscal year (specifically, the six months between

July 1, 2014 - June 30, 2015), the IRS requires that details about

compensation for certain highly-paid individuals are for the full calendar

year in which the fiscal year begins or ends. So all the executive

compensation reported is for twelve months, from January - December 2014,

even though some of it it falls outside the fiscal year reporting (July 1,

2014 - June 30, 2015).

Since Sue was on payroll during the 2014 calendar year, this means that the

990 contains her total compensation for the whole year, includes Executive

Director salary, bonus, and special advisor work, at differing levels

throughout that period.

Total compensation

The total compensation ($301,341) reported in the 2014 990 form is broken

into three areas:

(1) Compensation for her role as Executive Director during the 2014

calendar year (January 1 - May 31 2014): $107,174

This number is Sue’s regular compensation as full-time Executive Director,

before the appointment of the new ED. This is for the 2014 calendar year

period of January 1 - May 31, 2014. It does not include compensation for

any of her efforts following May 31, 2014.

(2) Retention bonus to compensate Sue for lost opportunities during the

transition period: $165,000.

Sue informed us of her intent to step down in March of 2013, but agreed to

stay on until a new ED was identified. In August 2013, the Board of

Trustees approved a one-time retention bonus to compensate Sue for lost

opportunities and for her willingness to remain with the Foundation during

an important transitional period. Sue continued to serve as Executive

Director for more than a year after announcing her resignation, even though

she could have sought opportunities elsewhere. In addition to her other ED

responsibilities during this time, she led the creation of a transition

plan for the new Executive Director and supported the search process.

The Board discussed this agreement with Sue over a few months before

reaching the agreement in August. This is a standard practice used to

compensate individuals for lost opportunities and ensure organizational

stability during transitional periods. The Board and Sue agreed she would

receive this retention bonus after the new ED had started.

(3) Compensation as Special Advisor between June 1, 2014 - December 31,

2014: $29,167.

Sue agreed to serve as Special Advisor to the Foundation for a term of one

year after the new ED started, from June 1, 2014 - May 31, 2015. The Board

felt that it was important to have Sue’s knowledge and experience at hand

to support the Foundation as it went through an executive transition. In

general, it is good practice to make sure that there is the ability to draw

on the expertise of an experienced former executive: in this case, someone

who grew the organization from a few people to more than 200.

Sue’s total compensation for her role as Special Advisor was $50,000 per

annum, $29,167 of which was reported during the 990 period. This is a small

proportion of the total amount reported, as compared to compensation as ED

and the retention bonus.

In June of 2015, the Board of Trustees extended Sue's term as Special

Advisor for another year, amounting to an additional $50,000. Her term

ended May 31, 2016. The compensation for this period is unlikely to be

reported in the next 990, as it is much lower than the threshold for

reporting. However, Sue has agreed to disclose this total, given the

interest in her role as Special Advisor.

We realize this is complex, so to summarize: From January 1 2014 to May 31

2014 Sue was the ED and received her normal salary. When Sue left her

position as ED we gave her a one-time bonus of $165,000, to compensate her

for staying on during a long transition period. From June 1 2014 until

December 31 2014 she received $29,167 intended to compensate her for

advising the Board after the new ED started. These are the numbers reported

in the 990. Since then, she received a total of $70,833 for work as a

special advisor over a period of 17 months (January 1 2015 - May 31 2016).