March 6, 2009

DMA Cuts Staff, Chief Exec’s Salary Grew

By Mark Hrywna

The Direct Marketing Association (DMA) announced its second round of layoffs within six months as expenses outpaced revenues last year. But, the tight financial situation hasn’t stopped pay hikes for the organization’s chief executive officer, whose salary has grown by almost $214,000, or 42 percent, in four years.

In an email to members on March 3, DMA President and CEO John Greco, Jr. announced that 26 employees will be laid off, approximately 19 percent of the workforce, leaving the organization with about 83 employees. Approximately 21 employees had been laid off in October.

The DMA Non-Profit Federation will not be affected by these recent layoffs and in fact appointed Christopher Quinn as its new executive director, succeeding Senny Boone, who became DMA’s senior vice president for corporate and social responsibility.

The DMA’s conferences and events business has been hurt the most by the economic downturn and the recent layoffs affected employees primarily within marketing, research, and conference and events departments. It’s unclear how much savings will result from the latest layoffs as that information is proprietary, but executives were among the almost 50 employees laid off in the two rounds, according to Sue Geramian, senior vice president for communications and media and public relations.

“To serve the needs of our members we will proceed with our signature events such as DMA'09, DMDays, the Non-Profit Federation conferences and the Email Evolution Conference, as well as our partner events such as ACCM, NCOF and NCDM. All other existing events will be cancelled or included within our premiere events,” Greco said in the message to members.

However, sources inside The DMA said that the Non-Profit Federation’s leadership summit in Florida in June will be cancelled and perhaps added as part of the federation’s New York City conference in August.

The DMA suspended its 401(k) match for all staff and instituted a salary freeze at the start of the 2009 Fiscal Year (July 1, 2008). “In October 2008 we took the necessary and appropriate steps to restructure DMA given our understanding of the economic downturn at that time,” Greco said. “Now that we all have a better sense of what to expect over the next 12 to 18 months, DMA must be positioned to continue to provide outstanding member service with less dependence on the more volatile parts of our traditional revenue stream, especially our large portfolio of conferences and events,” he said.

Classified as a 501(c)6 trade association, the DMA had revenue of $39.3 million for the Fiscal Year Ending 2008 but total expenses of $41.3 million, according to its most recent Internal Revenue Service (IRS) Form 990. The organization had positive operating income and met its objectives last year, said Geramian but “reconciliation on the 990 is a result of non-operating pension fund contributions driven by market performance; and various restructuring charges.”

The Form 990 for FYE 2008 only covers the first half of the calendar year, and does not include any effects from the sharp and continued stock market declines this past fall. It’s not certain whether that could mean more layoffs in the future. “We would like this to be it,” Geramian said. “However we cannot make guarantees and we’ll do what’s necessary to continue to serve the needs of DMA members,” she said.

What’s happening at the DMA is not unlike what’s occurring within the industry or the economy in general: cutting back on spending in an effort to ride out the recession, or at least until some bottom is in sight. In an internal DMA briefing paper for external use obtained by The NonProfit Times, the organization cites executive search surveys that indicate some hiring in the sector this year but “overall, we expect direct marketing growth during the first quarter to be flat” and spending to shrink somewhat year-over-year. “Direct marketing is clearly affected by the recession and layoffs have occurred within an number of our members.”

Though DMA’s revenue was down slightly last year, it’s been up in recent years, climbing from $34.8 million in 2005 and $36.2 million in 2006 to $39.4 million in 2007. Membership revenue jumped at least $1 million in each of the past four years, up 32 percent since 2005, from $11.9 million to $15.7 million last year, according to its Form 990s.

At the same time, expenses also have increased, from $33.1 million in 2005, $36 million in 2006, and $37.6 million in 2007. Expenses associated with meetings and conferences have grown by some 37 percent in recent years, from $7.6 million in 2005 to $10.4 million last year.

Greco earned $768,748 in Fiscal Year 2008, along with $128,194 in contributions to benefit plans and deferred compensation plans, according to the Form 990 for the year ending June 30.  

The president’s salary was $506,685 in FYE 2005 and has risen by double-digits each year: 11 percent to $560,188 in FYE 2006; 25 percent to $698,760 in FYE 2007, and 10 percent to $768,748. The compensation package for the president/CEO, Geramian said, includes “incentives that vary with the association’s performance.”