Newsday (New York), May 21, 2007, Monday
Copyright 2007 Newsday, Inc.
Newsday (New York)
May 21, 2007 Monday
NASSAU AND SUFFOLK EDITION
SECTION: NEWS; Pg. A04
Big paycheck at nonprofit;
Long Island Development Corp. head's $686,805 pay package angers some observers, but board members say she's worth the money
BYLINE: BY ELIZABETH MOORE. elizabeth.moore@newsday.com
BODY:
Roslyn Goldmacher, president and CEO of the nonprofit Long Island Development Corp., which makes loans to small businesses Islandwide, made $686,805 in total compensation last year.
Her loyal current board of directors believe Goldmacher has earned every penny. After all, they say, she's an award-winning pioneer in small business finance and a tireless advocate for the little guy.
But others in the region's economic development community have been unhappy about Goldmacher's pay, which in recent years has been more than the heads of the Long Island Association, United Way of Long Island and Vision Long Island put together, according to charitable tax returns. She also earns more than all but one of her peers at 30 of the busiest community development companies around the country for which Newsday examined records.
Goldmacher emerged victorious from a bitter internal battle over her pay seven years ago, one that split LIDC from its government patrons. But ever since Suffolk County Executive Steve Levy heard about the pay package this spring, he has been scathing in his criticism.
"It's off-the-charts outrageous," said Levy, who takes pride in his own decision to give up more than $32,000 of the pay he could have received over the past four years to set an example of frugality with the public's money. "This isn't Wall Street, where you reward your best brokers with a bonus for making the firm more profitable. It's a not-for-profit entity. That kind of a salary gives a black eye to the whole process."
Nassau County Executive Thomas Suozzi declined to comment.
Goldmacher also declined to comment for this story. But Phyllis Hill Slater, chairwoman of the LIDC's compensation committee, passionately defends her pay.
"I don't think she makes enough for what she has to do," Slater said. "This is her brainchild. There's no other group that has done as much as she has done for economic development here on Long Island."
First certified by the federal Small Business Administration in 1980 to provide low-cost second mortgages, the Long Island Development Corporation has been Long Island's leading small business lender, offering financing and technical assistance to qualified businesses and nonprofits under a variety of government-backed programs, overseeing what board members called a portfolio of about 1,000 loans. It derives most of its income from fees charged to borrowers for brokering those loans and services and from fees from government and others for work it performs. In addition, in its 2005 fiscal year, about 4 percent of its revenue was from government grants and another 4 percent from direct public support.
LIDC recently expanded its range to the entire tri-state area.
Helped start LIDC in 1980
Goldmacher, 54, who co-founded the LIDC with two now-deceased partners in 1980 and has run it ever since, got a bachelor's degree in labor relations at Cornell University, expecting she would be a "famous union organizer," as she told the Long Island Business News four years ago. Instead, she earned a law degree from Hofstra University and threw herself into promoting small businesses, which she came to see as the engine for the region's economic development.
Since then, she has perennially topped lists of the region's most prominent women, garnering a slew of awards for initiatives like the Long Island Small Business Assistance Corp., which makes micro loans to women-owned businesses.
For much of its history LIDC had the gloss of a quasi-governmental agency, pooling local, county and federal grants to power its programs and stocking its board with officials, including the Nassau and Suffolk county executives. That changed in 2000, several sources said, after officials learned Goldmacher, then the executive director, was receiving bonuses that doubled her compensation.
LIDC board president John Garvey, a Roslyn Savings Bank vice president, stumbled on that fact after a bank foundation rebuffed his request for a donation, asking him to explain why the LIDC's IRS return showed Goldmacher had been paid more than $350,000 a year.
That pay, revealed on charitable tax returns that had not been shown to him, came as a surprise to other top board members as well, according to LIDC's then-vice chairman George Gatta, a former Suffolk deputy county executive. He could find no one on the board who had known of or approved any bonus beyond her base salary of about $175,000, he said.
Nassau officials forwarded the matter to the district attorney's office, but it found no wrongdoing because her full pay was disclosed on the tax returns, sources said.
Goldmacher loyalists then called a board meeting in November 2000, two months earlier than usual, voting to reorganize the LIDC board to reduce the number of government board seats and shorten board terms from two years to one. And though Garvey, the banker, had more than a year left in his term as president, Goldmacher's allies elected her to take his place. Garvey, now with North Fork Bank, declined to comment.
Goldmacher's defenders insist her full pay package was never a secret. They say the board reorganization was simply driven by changes in federal policy. But board member Tom Junor added, county officials should have let the LIDC handle the compensation matter internally. "They went public ... I was really ticked off at that - why didn't they bring it to us first?"
The upheaval led to a mass exodus. Islip economic development commissioner William Mannix said he quit the board in protest over the reduced voice of government in the body, though Islip Industrial Development Agency still contributes $6,250 he called a required local match for a longtime federal grant. Gatta also resigned in protest. The county seals were dropped from the LIDC letterhead and county support was ended.
"I felt very strongly that it was flouting its responsibility to maintain the public's trust," said Gatta, now Suffolk County Community College vice president for workforce and economic development. "I have always believed that not-for-profits like the LIDC exist to benefit the community, not to enrich their senior executives with inflated salaries and bonuses."
But Goldmacher's new board followed up by hiring a compensation specialist to study her pay package, concluded she was actually underpaid, and gave her a raise.
Pay at other nonprofits
Douglas Asofsky, a Citibank vice president and 15-year board member who became chairman in the reorganization, said the study looked at executives at nonprofit community development companies as well as for-profit small banks with similar portfolios. Slater said it took into account Goldmacher's long years of service to the LIDC. But Asofsky, Junor, Goldmacher and Slater declined to provide a copy of the study or any more details from it. They also declined to specify her base salary or the formula for determining her bonus.
Pay and benefit packages for salaried executives of Long Island's leading nonprofits vary widely, from $53,600 taken home last year by Vision Long Island's Eric Alexander to the $1.4 million collected by Michael Dowling to run the North Shore-Long Island Jewish Health System. Last year, Long Island Association President Matthew Crosson received $353,050; Patrick Foye was paid $199,556 to head the United Way.
Though 44 nonprofit lenders in the U.S. have processed more this year of the type of government-backed second mortgage the LIDC specializes in, Goldmacher's pay is extraordinarily high among those executives. Of 30 such companies for which tax records were available, the average pay was less than $250,000. Only one pay package could be found that was bigger than Goldmacher's: the $734,250 collected by Jacklyn Jordan, president of Capital Access Group of San Francisco, which processed $39.4 million in loans so far this year, more than twice the LIDC's $17.2 million.
Asofsky said the scope of Goldmacher's duties and the LIDC's wider range of programs merits her premium.
"She's our corporate counsel, she's our CEO and president, and she's really the best in the industry if you check with the trade association," he said. "She works seven days a week, she's absolutely incredible, she's on every board you can think of and we're thrilled to have her."
But even some of her loyalists are still not quite clear about how much she is paid. Martin Cantor, a longtime director who backed Goldmacher in the 2000 reorganization, estimated that she made "somewhere in the neighborhood of $450,000." Told his guess was $236,805 too low, he said he was still "comfortable" with it.
"If they knew the depth and breadth of her responsibility ... they'd realize she's fairly compensated," said Cantor, who published a book last year with LIDC help and left the board this year to take a paid position as LIDC's chief economist.
The Suffolk County executive begs to differ. "We can hire some major talent for one-third of that price," Levy said. "The board has to address this."
GRAPHIC: Cover Photo - Roslyn Goldmacher of the nonprofit Long Island Development Corp., which makes loans to small businesses
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