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Council Debates CEO Retirement Package |
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Division News and Notes |
Tommy T. Stigall, Ph.D. |
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Why was the Council of Representatives informed about the details of Dr. Raymond Fowler's 2002 compensation only after news accounts appeared in the local press? This was the lingering question following an executive session called to deal with this issue during the February Council meeting in Washington, DC. In executive session, the Board of Directors and officers of the Association provided background and details of negotiations with the former APA chief executive officer prior to his retirement at the end of 2002. Questions were raised concerning the composition and amount of the retirement package, as well as the process by which the agreement was reached. At the conclusion of these deliberations, the Council endorsed the decisions and actions taken by the Board of Directors on behalf of the Association. All parties agreed that, with the benefit of hindsight, better procedures were needed to coordinate the Board's actions with the Council and to keep Council members informed about delicate personnel negotiations on a timely basis. The following statement, intended to answer questions for the general membership, was prepared by APA's Director of Public and Member Communications Rhea Farberman, following consultation with legal counsel: Raymond D. Fowler, Ph.D., was APA’s chief executive officer from 1989 until his retirement in December of 2002. Dr. Fowler assumed the CEO position at a time of extreme financial distress for the Association due to the purchase and later sale of Psychology Today. He also led the Association at a time when tensions between the practice and science communities were keen. Throughout these difficulties, Dr. Fowler provided strong leadership for the Association. His 13-year tenure, by far the longest tenure of any CEO in APA history, was marked by a return to financial stability and unparalleled growth for the Association. Recently, as part of reporting on top salaries at Washington trade and interest groups, the National Journal and the Washington Post reported that APA’s former CEO, Raymond Fowler, Ph.D., was paid slightly more than $2.2 million in 2002. This information was taken from APA’s tax return that, by law, is publicly available to anyone. The reported figure was actually made up of four components of taxable income reported on APA’s 2002 tax return and was not just salary and benefits for one year. The following Q&A is designed to correct the misperceptions caused by the Post report and provide more information about Dr. Fowler’s retirement package. Q1. What was Dr. Fowler’s regular annual compensation for 2002? Dr. Fowler’s compensation for 2002 was $364,172. In arriving at CEO compensation, the Board generally reviews salary surveys of similar non-profit organizations conducted by independent compensation experts. For 2002, the survey showed that Dr. Fowler’s salary was below the 50th percentile for CEOs of similarly sized non-profit organizations in the Washington area with long-serving CEOs. Such surveys were also used in setting current CEO compensation, which is also below the 50th percentile for CEOs with 1-2 years experience in their positions. Q2. What were the other payments to Dr. Fowler reflected on the APA 2002 tax return? There were several other components of taxable income to Dr. Fowler in 2002 as part of his retirement package. First, under the terms of Dr. Fowler’s employment contract, he had earned a month of salary for each year of service with APA. This provision was included in his employment contract to compensate for the fact that it is not possible for the CEO to use most of his annual earned leave due to the demands of the job. Dr. Fowler had worked at APA for 13_ years at the time he retired in December 2002. This length of service contractually required a leave payout of $436,797 made to Dr. Fowler upon his separation from the Association. Second, Dr. Fowler had earned a portion of his compensation from 1989-1996 on a deferred basis that allowed him to defer payment of taxes on this income until the end of his APA employment. When Dr. Fowler left APA in December 2002, all of this compensation earned in earlier years on a deferred basis became taxable and therefore was reported to the Internal Revenue Service on Dr. Fowler’s 2002 W-2 and APA’s 2002 tax return. This amount totaled $476,374, but did not involve any actual cash payout in 2002 by APA. Finally, Dr. Fowler was paid $910,454 as a retirement package (see Q. #3) and APA also transferred to him, at the time of his retirement, $31,117 in personal property that he had used during his tenure as APA CEO (office equipment and furnishings, and a company car). Q3. How did the Board arrive at the $910,454 cash retirement amount? A number of factors went into the valuation of a retirement package for Dr. Fowler. There were 20 months remaining on Dr. Fowler’s contract after December 31, 2002, the date Dr. Fowler and the Board agreed would be a reasonable date to complete the transition to a new CEO. The contract also provided payment for a six months notice period. In addition, the Board felt that Dr. Fowler had enjoyed a long and productive tenure at APA, taking the reins at a time of great financial difficulty for the Association and transforming APA into a large and successful association. The Board also considered salary comparability data and the fact that Dr. Fowler was retiring and would not be holding another job. Taking into account all of these factors, and the goal of assuring a smooth and conflict free transition to a new CEO, there was a tentative agreement to provide 30 months of salary and benefits to Dr. Fowler as a retirement package. The Board of Directors then sought outside expert advice from an independent consulting firm, Hewitt Associates, to determine the reasonableness of the retirement package. Hewitt was asked to compare the proposed retirement package to that of other long-serving CEO’s of organizations similar in business and size to APA. Hewitt recommended a minor decrease in payments for benefits, and then concluded that the total package was reasonable. As part of his employment agreement, Dr. Fowler had use of an APA owned vehicle. Upon his retirement the market value of the car as well as the market value of computer equipment in his use were included in the total value of the retirement package increasing the package value to $941,571. Q4. Why wasn’t Council more involved in the process? The discussions with Dr. Fowler were complex, extended and sensitive from a personal perspective and would have been made that much more complex by the inclusion of a large group of people. The Board felt that in the interest of recruiting a top candidate for the CEO position it was important to deal with the retirement package confidentially and to avoid contention. In hindsight, however, the Council should have been informed about the specifics of the package once the negotiations were completed. Q5. Why didn’t Dr. Fowler continue to work as a consultant to APA to earn the retirement payout? The Board concluded that it was in the best interest of the organization that, after an orientation period, the new CEO take charge of the association without the continued presence of a long-serving former CEO who was so closely identified with the position. Q6. Was Dr. Fowler forced to retire? No, Dr. Fowler was not forced to retire. The timing of Dr. Fowler’s retirement was mutually agreed upon as being in his own best interest and in the interest of the Association. Dr. Fowler was a well-regarded leader of the Association’s central office for over a decade. However, he had experienced some health problems in 2000 that were of concern to all parties involved in the timing of his departure. The Board of Directors very much wanted to handle Dr. Fowler’s retirement in the fair and respectful manner due to someone who had served the Association for as long as he had. The Board also felt that the outcome of the negotiations with Dr. Fowler that decided his retirement package were fair to all parties, reasonable in the marketplace, and in the long-term best interests of the Association. Q7. What procedures will be put in place to ensure that the Council is better informed of actions taken by the Board of Directors on critical APA business matters? The exact form of new procedures, if any, that will be put into place to keep Council better informed of Board actions is to be determined. The Council tabled a motion on the issue until its July 2004 meeting so any possible new procedures can be more thoroughly considered before any action is taken. The Board of Directors, however, recognizes and acknowledged the need to ensure that the Council is given information on major actions it takes as the agent of the larger body. (American Psychological Association, 2004) Breakout Groups From time to time, frustrations have been voiced that Council members have little to do between Council meetings and that the Council's role has become primarily that of "rubber stamping" an action agenda largely managed by the Board of Directors and shaped by the major boards and committees. This may be more a matter of perception than of substance but, in an effort to promote dialogue among Council members and to provide an opportunity for information exchange with APA staff, President Diane Halpern scheduled breakout groups on Friday and Saturday during the Council meeting. Council members were asked to bring to the breakout sessions on Friday the "three most important issues" for the division or state/provincial/territorial organization represented. At the conclusion of the breakout groups, this information was collected and brief reports from each group were presented subsequently to the entire Council. Participation by Division 42 representatives was informed by deliberations from the February retreat meeting of the division's Board of Directors in New Orleans. The three top priorities for Division 42 that had been identified by the board were to (a) increase revenues and reimbursement rates for practitioners, (b) promote psychology as a primary health care profession, and (c) advance prescription privileges for qualified psychologists. On Saturday, seven breakout groups were organized to discuss specified areas of Association activity, as proposed by the the Presidential Task Force on Governance. The groups were identified by topical areas: Education, Practice, Public Interest, Science, Finances, Priorities, and Association Business (governance, publications, convention). Meeting with Council members were the executive directors of the respective APA directorates and other key staff members, as well as the chairpersons of related governance boards and committees. As recommended by the Task Force, Council members would be expected to rotate through each of the groups over a three-year trial period, at the end of which the Council would evaluate the effectiveness of the "Representation and Information Exchange Sessions" and decide whether or not they should be continued. How well did it work? Only time will tell. My own reaction was lukewarm, based largely upon a sense of "deja vu all over again." Others may have had a different reaction but, in any event, the sessions provided an opportunity for Division 42 representatives to bring forward issues of importance to practitioners. In the past, breakout groups have been described by some as "filler" to take up time in a weak agenda. Budget and Progam Decisions After disposing of several items requesting discretionary funding for specific projects, the 2004 final budget was approved by the Council anticipating a surplus of $633,700. With an annual budget approaching 90 million dollars, it was encouraging to see a projected end of year surplus for 2004 as well as the previous year. This promises to reverse an unfortunate trend of budget deficits over the past decade. From its discretionary funds, the Council allocated $12,000 to support two meetings of the Ad Hoc Committee on Early Career Psychologists in 2004. Because of encouraging results in its first two years of operation, the charge to the committee was extended for two more years in order to allow for coordination and collaboration with the Membership Committee and the Policy and Planning Board. The committee is charged with the responsibility to "research, organize and institute initiatives to increase the number of student affiliate members who transition to full member status, as well as the number of new professionals joining the association for the first time." A website (http//www.apa.org/earlycareer/) for early career psychologists has been established, and some 4,000 subscribers have been attracted to the NewPsych email list. Convention programming and other methods of communicating with this important constituency are being utilized. In my view, this initiative dovetails nicely with the efforts of Division 42 to engage students and early career psychologists anticipating a career in independent practice. Also of interest to Division 42 is a proposal from the Board of Educational Affairs (BEA) to establish a Task Force on the Assessment of Clinical Competencies in Professional Education and Training. The Council allocated $9,300 from its discretionary funds for this purpose. Funds would be used to support a two and one-half day meeting of the task force in 2004. The task force is to produce a report with recommendations to the BEA in 2005 that will be used to inform educators and practitioners about models for the assessment of competencies in professional education and training. The task force is to be composed of appointees from the following APA boards and committees: BEA, Board of Scientific Affairs, Board for the Advancement of Psychology in the Public Interest, Board of Professional Affairs (BPA), Committee for the Advancement of Professional Practice. The proposal for the task force is, in part, an outgrowth of the 2002 Competencies Conference in Professional Psychology of which Division 42 was a co-sponsor. Introduced as a new business item was a motion to "establish a Working Group that would develop policy recommendations on same-sex families and relationships based on the extant literature that would prepare psychologists to respond appropriately to their clients, communities, and the media." The motion passed, and the Council approved inclusion of $9,000 in the 2004 final budget to support this initiative. Division 42 board member-at-large Douglas Haldeman, representing Division 44, spoke eloquently on the floor of Council in support of the motion. The Council allocated $12,500 in discretionary funding to support the activities of the Coalition for Psychology in the Schools and $15,000 for the BSA Task Force on Research Regulation. The Council also voted to approve a revision of the "Responsible Spending" Policy clarifying limits on travel expenses by the President and other members of the Board of Directors. Education and Training After extended debate, the Council adopted as APA policy the document, "Developing and Evaluating Standards and Guidelines Related to Education and Training in Psychology: Context, Procedures and Criteria." This document sets forth criteria for evaluating standards and guidelines and differentiates between the two consistent with current practice among educators. The document is intended "to improve the quality of teaching and learning in the scientific discipline and profession of psychology." During the period of governance review prior to the document's coming to the Council for approval, BPA had expressed concern about a number of issues and requested revisions to the document. In particular, BPA had been concerned about the potential for confusion in use of the terms, "standards" and "guidelines" and the implications for practice. Prior to the vote on this action item, BPA Chair Lisa Grossman expressed her view that BEA had taken these concerns into consideration and that the revised document was ready for adoption as APA policy. Other Action In other action, the Council endorsed the revised Code of Fair Testing Practices in Education, published by the Joint Committee on Testing Practices. A "Resolution on HIV Prevention Strategies Involving Legal Access to Sterile Injection Equipment," developed by the Committee on Psychology and Aids, was adopted. The Report of the APA Task Force on Advertising and Children was received and its recommendations were adopted as APA policy, including a public policy recommendation to restrict television advertising to children eight years of age and under. Also received was the report of the Early Mental Health Interventions Working Group. After clarifying serted to make clear that the term, "evidence-based," as used in the document refers to various types of useful evidence, the Council adopted as policy the APA Resolution on Children's Mental Health. The resolution was developed by the Working Group on Children's Mental Health in response to The Report of the Surgeon General's Conference on Children's Mental Health: A National Action Agenda. The resolution calls upon APA "to support and advocate that it is every child's right to have access to culturally competent, developmentally appropriate, family-oriented, evidence-based, high-quality mental health services that are in accessible settings." Division 42 has been active in opposing a narrow interpretation of evidence-based practice. As Goodheart (2004) has observed, "Our 'best practices' are built on a foundation of empirical research, comprehensible and reasoned theories, clinical observation and expertise, and our patient's values, contributions, and responses." (p. 10) References American Psychological Association. (2004). Q and A regarding Raymond Fowler Retirement Package. Washington, DC: Author. Goodheart, C. (Winter 2004). Evidence-based practice and the endeavor of psychotherapy. The Independent Practitioner, 24, 6-10. |
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