SEKRI chief may propose limit to exec bonuses

The top executive at a local non-profit company created to hire disabled workers claims he intends to offer a plan that would “restructure” a lucrative bonus package that has caused salaries for executives to skyrocket in recent years.
Tom Fields, Executive Director at Southeastern Kentucky Rehabilitation Industries, Inc. (SEKRI), in Corbin said his idea would more strictly limit a “bonus pool” distributed to about 30 employees of the company annually in order to reduce compensation among top brass. His comments came just hours before a meeting of the company’s 13-member Board of Directors Tuesday evening that, according to the meeting agenda, was to focus mainly on questions about executive pay at SEKRI.
“I’m going to suggest that we revamp the whole thing,” Fields said. “Actually, there’s already been some action taken months ago regarding that.”
Fields would not divulge any specifics regarding the plan, nor any of the actions taken in recent months. He said the company would provide more details in coming weeks. He added that “disgruntled” board members have been fomenting dissent by supplying information to the media about the company that is erroneous.
“They have an agenda and a motive,” Fields said. “What we want to do is give them an opportunity … we want to get this fixed. As soon as we can get it fixed, we can make an announcement.”
The issue of executive pay at SEKRI surfaced March 8 when the News Journal published a story detailing huge raises at the company for its top officers. Some former and current members of the company’s Board of Directors defended the raises. Others said they were surprised officials at SEKRI were making so much and claimed never to have seen information about the salaries. Fields said all pay raises were approved by the board and are documented. He also claimed the March 8 News Journal report may have contained inaccuracies. The story was provided to SEKRI executives for review, and Administrative Director Jim Page agreed it was accurate prior to publication.
Board Vice Chairman Louie Martin said he wasn’t aware of many of the details regarding executive pay, and promised the issue would be discussed at Tuesday’s meeting.
“I’m not aware of some of the things that were in the report,” he said. “I’m not saying they weren’t explained … it’s something the board will take a serious look at.”
The meeting was not open to the public or the press and further details were not available at press time.
Fields admitted that some salaries might seem excessive to the outside observer, but only because of how rapidly the company has grown. Executives share in a bonus pool that comprises two percent of gross revenue.
“The problem is the company grew from $40 million to $80 million in one year, and this bonus pool is based upon mathematical foundations,” Fields said. “When the company grows by leaps and bounds, those bonuses grow by leaps and bounds.”
Fields said his base salary, even today, is only about $150,000. He would not reveal his total compensation earned last year and said the company has not yet filed tax forms, open for public inspection, which would give that information.
According to federal tax reports filed for the 2003 fiscal year, Fields was paid $164,807 in compensation, plus $5,406 into employee benefit programs and deferred compensation. The company’s 13-member Board of Directors apparently approved a $483,454 salary for 2004 with $11,452 in benefits and deferred comp. The bump in pay works out to a 293 percent increase in pay.
The Company’s No. 2 executive, Administrative Director Jim Page, made $94,943 in salary in 2003 (plus $13,918 in benefits and deferred compensation), then received a 371 percent pay increase for 2004 in base pay – $352,307.
Rounding out the top five paid personnel at the company in 2004 include: Manufacturing Director Mark Soles – $146,227; Contract Manager Marilyn McCulley – $133,255 plus $13,414 in deferred compensation; Contract Manager Stacy Fields (Tom Field’s wife) – $129,539 plus $7,825 in deferred comp; and Director of Finance Joseph Murray, $120,001.
Some Board members have also expressed confusion about who will lead the company in the near future. According minutes from the Feb. 21 meeting of the Board, chairman Dave Huff resigned in order to become the new Executive Director, replacing Fields. Under the plan, Fields would become a consultant for SEKRI focused on obtaining more private sector contract. He would retain his current salary.
According to the agenda for Tuesday’s meeting, though, Huff would now accept an Assistant Executive Director’s Position at the company and Fields’ consulting option would be tabled.
Martin said it was his understanding that the board approved Huff as Executive Director at their last meeting.
SEKRI is the fourth largest contractor receiving federal contracts under the Javits-Wagner-O’Day Act (JWOD) – a law under which military apparel contracts are awarded to non-profit companies that hire high percentages of disabled workers. SEKRI has total sales annually of over $80 million. Federal regulators, focusing on companies that benefit from JWOD, proposed in 2004 a $207,000 salary cap for executives. The idea died before inception.
Fields took over as head of SEKRI in 1996, a time when the company had one deteriorating manufacturing facility and was diving into bankruptcy. The company now has eight facilities in Kentucky and Tennessee and has a $17 million payroll, employing about 1,300 workers.
Fields contends his salary, along with other top management, is in line with executives at companies of similar size. He said his annual pay is recommended by an independent, third-party firm to a special “compensation committee,” that then makes a recommendation to the company’s board for final approval.