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Pittsburgh’s tourism agency is rethinking how much it pays its top executives.
Leaders at VisitPittsburgh won’t say how much that review will cost, but paying for an outside consultant to measure its salaries against those of other U.S. tourism agencies is cutting into every departmental budget.
“If any individual salaries are out of line, we will make adjustments,” Bill Cagney, chairman of VisitPittsburgh’s board of directors, said Wednesday.
The agency is responding to criticism from some politicians, most notably Allegheny County Executive Rich Fitzgerald, that it overpays executives. VisitPittsburgh must justify six-figure salaries that topped out in 2011 at $386,025 in total annual compensation to Executive Chairman Joe McGrath, who is set to retire in June after more than 22 years as its head.
Most of VisitPittsburgh’s $10.2 million in annual funding comes from a portion of Allegheny County’s 7 percent tax on hotel room stays.
In 2012, the hotel tax generated $8.3 million. Compensation and benefits paid to about 50 staff members accounted for about 57 percent of expenses, according to a tax filing VisitPittsburgh submitted to the IRS in 2011.
VisitPittsburgh does not list the salaries of all employees in its tax forms. It identified six of its “highest compensated” employees in the 2011 filing.
Cowden Associates Inc., based in Gateway Center, Downtown, is scheduled to complete the executive compensation study in about two months, said Connie George, VisitPittsburgh’s spokeswoman.
George declined to disclose the cost of the study. She said the cost is eating into all of the agency’s departmental budgets.
VisitPittsburgh conducts similar studies periodically, George said, but it is employing a different firm this time and doing it sooner than scheduled.
“We bumped it up because of all the questions,” she said.
In September, the Tribune-Review highlighted concerns from Fitzgerald and state Sen. Jim Ferlo, D-Highland Park, about high compensation and a budget that prioritizes salaries ahead of what it spends to attract conventions and market the region.
Fitzgerald said he is pleased the tourism group is examining the salaries.
“All of us that are in public life are accountable for how we spend the public’s dollars. We’ve obviously seen that with some of the things happening in city government right now,” Fitzgerald said, referencing a widening scandal over a secret Pittsburgh police slush fund.
“It’s important the public has confidence that their dollars are being spent wisely to promote events like we’re talking about today,” he said. “We want these events to come here, and we want the sales and marketing dollars that we put forward to be used strictly for that.”
Fitzgerald made the comments after a news conference at the Consol Energy Center to announce the U.S. Gymnastics Championships will be in Pittsburgh in August 2014.
Fitzgerald declined to say if he would be satisfied with the agency’s salary structure if the compensation study shows it is in step with tourism groups in other cities.
Elliott Dinkin, president and CEO of Cowden Associates, said his firm compares compensation based on job functions, not titles, and tries to produce a range of salaries to show nonprofit and for-profit agencies where employees fall on a spectrum.
It will be up to VisitPittsburgh’s board of directors to decide what to do with the results, he said.
If a compensation study finds executives make more than in most comparable markets, that doesn’t mean a company will suddenly slash salaries.
“But they might slow down and not make any increases in base pay,” Dinkin said, speaking generally. “They’re probably not going to come in and say we’re going to chop your pay by 50 percent.”
(c)2013 The Pittsburgh Tribune-Review (Greensburg, Pa.). Distributed by MCT Information Services.