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Smithsonian's New Chief Shares Pay Cuts, Lost Perks With Staff
By Kate Andersen
Bloomberg
November 4, 2008
Nov. 4 (Bloomberg) -- The top executive at the Smithsonian Institution in Washington is having to get by on a lot less these days.
Gone are the private chartered planes, the $1.2 million housing allowance, the designer upholstery and $2,000 chairs. Lucrative corporate-board memberships are off limits, too.
Instead, G. Wayne Clough, who took over as secretary of the world's largest museum complex in July, walks to work and flies coach. He makes barely half what his predecessor did, and 16 of his executives are having their pay slashed by as much as $80,000 each in five years.
``The Smithsonian's board of directors were disengaged,'' Senator Charles Grassley said of the free-spending ways that led to last year's resignation of Secretary Lawrence Small and four other top executives, under pressure from Congress.
Grassley had threatened to freeze funding after the Washington Post, an independent panel and the museum's inspector general reported on Small's spending habits. These included a $31,000 bill for designer Berkeley striped upholstery, a $2,535 tab for a chandelier cleaning, and a $4,000 heater for his lap pool, according to the Post, which obtained internal documents.
The threat was withdrawn after Small, a former president of Fannie Mae, stepped down, according to Jill Kozeny, a spokeswoman for Grassley, an Iowa Republican.
``We need to make the administration of the Smithsonian as good as the institution itself,'' Clough, 67, said in an interview. His goal is to modernize the Smithsonian, in part by digitizing its vast collection, and head the first capital- fundraising drive for the entire complex, which gets 70 percent of its $1 billion budget from the federal government.
New Management
His appointment was part of a management overhaul at the 162-year-old institution. Last month, the 17-member governing board elected Patty Stonesifer as its new chairwoman. She assumes the position in January.
Stonesifer, who recently left her position as chief executive of the Bill and Melinda Gates Foundation, will take over from Chairman Roger Sant in January. She'll fill a post created to boost oversight of the 19-museum complex, whose more than 136 million artifacts include everything from the 45.52 carat Hope Diamond to the Wright Flyer, the first successful airplane.
The museum's board also responded by cutting the pay and perks of top executives and prohibiting board memberships.
Hundreds of thousands of dollars were shaved off the secretary's pay -- Clough's base pay is $490,000 -- and other executives will have their compensation set in line with government salaries. Fearing a rapid exodus, the museum won't put the reductions into effect for five years.
Changed Philosophy
``We decided to change the compensation philosophy,'' said spokeswoman Linda St. Thomas. ``Instead of basing it on the private-sector market, we'll base it on federal salaries.''
Under the new rules, employees can no longer demand to stay at five-star hotels, use private car services when they travel short distances, or attend events such as concerts and music awards free.
Clough, a civil engineer who was president of the Georgia Institute of Technology in Atlanta for 14 years until 2008, said he often walks to work from his home along Washington's waterfront. He's also had to resign from all corporate boards.
He makes do with no housing allowance, and all his travel must be approved by the museum's chief financial officer. He said he prefers to fly coach anyway. ``If anybody wants to know what I'm paying for a flight, they are free to find out,'' he said.
`Lavish and Extravagant'
Small, 67, still sits on the boards of Marriott International Inc. and Chubb Corp. By the time he left, his annual salary was $916,000 and he earned millions more on outside work during his seven years at the helm, according to the independent panel's report.
A separate report by the museum's inspector general found ``no evidence of fraud or abuse,'' though it said some expenses ``might be considered lavish and extravagant.''
Small couldn't be reached for comment.
The governing board's decision to tap Clough as the Smithsonian's 12th secretary marks the return of a tradition: Small was the first secretary who wasn't a scientist or an academic. He was president of Fannie Mae from 1991 through 2000 and before that spent 27 years at Citicorp.
The capital-fundraising drive that Clough is planning will be the first for the entire institution, St. Thomas said, although many campaigns have been held for individual museums.
There had been talk of raising $1 billion during a five-to seven-year campaign. ``With the economy the way it is,'' said St. Thomas, ``Clough would never say that now.''
``The economy will affect us the way it does every nonprofit.''
To contact the reporter on this story: Kate Andersen in Washington at kandersen7@bloomberg.net
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