September 28, 2009

DMA And Board Members Are Dueling Proxies

It might be proxy statements at 30 paces during the upcoming Direct Marketing Association (DMA) annual conference in San Diego next month. After board member Gerry Pike sent an email blast Sept. 25 asking for proxy votes from the membership, the DMA launched a campaign of its own.

Pike, CEO of DMSA, Inc. in Newfoundland, Pa., is a DMA board executive committee member who was not nominated for a second term, which is normally a routine procedure. Pike launched a Web site (www.abetterdma.org) attacking the DMA’s management. The Web site links to stories about the DMA -- including stories by The NonProfit Times -- that described employee layoffs and the organization’s compensation practices for senior staff.

According to Pike, the DMA’s by-laws state that a voting quorum at the annual business meeting is 10 percent of membership or 100 people, whichever is smaller. Someone with a fistful of proxy votes at a meeting that is poorly attended could wield considerable clout. The goal, Pike said, is to force greater transparency and better member service and to position the organization for the future of direct response.

Asked for the number of members pre-registered for the annual conference, Sue R.E. Geramian, senior vice president, communications, media and public relations at DMA, responded by email saying that the “registration is tracking consistent with our plan in a positive manner.” She did not disclose a number or if the plan included a light turnout for the event. DMA does not disclose attendance at the annual conference but it is known to generally be between 10,000 and 15,000. Sources told The NonProfit Times that as of a few weeks ago the number was fewer than 5,000 registered.

In an urgent email from DMA leadership, members were asked for their proxies after making reference to some of Pike’s complaints. “There are many other points open to discussion in Mr. Pike’s email, but he offers no prescriptive actions. Accordingly, I urge you to send back your signed voting proxy to the Chairman or Secretary, or to vote directly by signing and returning the ballot enclosed in the recent DMA ballot mailing. As always, all voting members are welcome to attend the annual business meeting for the actual vote,” according to the message.

The message was signed by both DMA CEO John Greco, Jr., and Board Chair Kelly B. Browning despite the “I” reference in the text.

Pike said the email Sept. 25 is the first in a series that are planned to bring issues to DMA members. He declined to disclose how many emails were sent or if the emails went to all DMA members. The messages will center on the DMA administration, positioning, responsiveness to members and opening up the process whereby members have more communication with senior staff.

Pike claims that board members, including himself, often do not receive information from staff and many were surprised to read Greco’s salary in various trade publications. Greco’s contract runs through June 30, 2010 and at this time there is no search going on for a successor, said Geramian.

In an email to members this past March 3, Greco announced that 26 employees were laid off, approximately 19 percent of the workforce, leaving the organization with about 83 employees. Approximately 21 employees had been laid off last October, right after the organization’s annual conference. Greco’s annual salary and benefits were reported on the organization’s federal Form 990 as $838,528 for the most recent reporting year.

In their joint email, Greco and Browning took direct aim at the compensation and financial information claims made by Pike. “With regard to executive compensation, again Mr. Pike only provides limited information and tellingly omits salient points. The Compensation Committee of the Board of Directors reviews and approves the president’s compensation with close attention to comparable organizations. The Committee believes the terms of compensation have been appropriate in years when the business was growing rapidly. When the current recession took hold and the impact on DMA became apparent, the Compensation Committee froze all executive compensation, including that of the president, effective months ago. Mr. Pike does not mention this although he was aware of it as a member of the Board’s Executive Committee (EC). Mr. Pike also neglects to mention that he never voiced concern about compensation at a meeting of the Board of Directors, or of the EC. In fact, it was his colleagues on the Compensation Committee, all of whom continue to serve on the Board, who properly and responsibly ensured sound governance with respect to executive compensation.”

Pike said that he was told by The DMA that he was not re-nominated because the executive staff and fellow board members didn’t like “the tone” of questions he asked. Greco and Browning pointed out in the email that Pike was the only person eligible who was not re-nominated. There was no explanation as to why he was not re-nominated. According to The DMA’s statement, “This year, the Committee of Nominations, after reviewing a list of candidates, did not re-nominate Mr. Pike for a second term. Every other sitting member of the Board whose first term was ending was re-nominated for a second term. Recently, the committee’s recommended slate of candidates was sent to you for consideration.”