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TechnologyDaily Mobile
Washington's Tech Trades Doing Just Fine
by Randy Barrett
Washington's high-tech lobby industry might be deeply balkanized, but the 25 groups that make up its core are fiscally strong and tend to pay their top executives more than other sectors.
Technology Daily's first annual review of lobby associations' pay packages and internal finances presents a few surprises. Nearly all the data was gleaned from the associations' most recent IRS 990 documents from 2003, the public disclosure revenue and expense forms required by the government. However, some corner offices have changed occupants since that time.
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Sachs said his pay was commensurate with what he would have earned as an executive in the cable industry, where he worked for 20 years before joining NCTA in 2000. For Sachs, the job meant committing 70 to 80 hours a week to the cause.
"Just about every waking hour was spent working on mapping strategy," he said. "It was an all-consuming job."
Besides running the 100-employee organization, Sachs lobbied Capitol Hill, the FCC -- and his own 32-CEO board. "You can't do all that between 9:30 and 5:30. It's weekends and while you're on vacation."
Placing second on the list is K Street veteran Jack Valenti. The CEO of the Motion Picture Association of America (MPAA) earned a combined package of $1,473,997. Valenti retired last year and was succeeded by former Agriculture Department Secretary Dan Glickman.
Rounding out the top three is Recording Industry Association of America (RIAA) CEO Mitch Bainwol, with a compensation package of approximately $1,412,326. Bainwol succeeded Hillary Rosen when he joined the organization in 2003.
The RIAA also delivered the highest salary in the industry to its second in command, President Cary Sherman, who earned $1,133,261, including benefits. A spokesman for the group said Sherman was paid extra bonuses in 2003 because he ran the organization while the search committee looked for potential CEOs.
Tech trade CEOs tend to reap higher salaries because the sector -- particularly telecommunications -- is deeply affected by federal regulation. "They are paid well because the support they can give can [affect] the direction of the industry," said executive compensation expert Charlie Quatt.
Good access to federal policymakers is clearly valued by the trade associations, and some are run by former lawmakers and agency directors. But there is more to it, said Consumer Electronics Association (CEA) President and CEO Gary Shapiro, who ranked 11th on the list.
"I am skeptical that a savvy association board would pay based on who you know in D.C., as the political players change frequently and strategy and substance do matter," Shapiro said.
Other important factors include the ability to create industry growth strategies and consensus building, he said. "Being media savvy, giving compelling testimony and giving great speeches also helps."
While 2003 saw the tail end of the tech downturn, most of the industry trade associations ended the year in strong financial condition. Total revenues -- including membership fees -- for the group were $473 million. More telling is the accumulated war chest of $285.8 million in securities holdings. Notable in this category are the National Association of Broadcasters (NAB) with $101 million and the CEA with $54 million.
Many of the associations have sizable operations funds in addition to their securities portfolios. CEA posted an "unrestricted" fund balance of $32 million. The Electronic Industries Alliance, CEA's former parent, also had a balance of $32 million and the RIAA posted $19 million. Again, NAB topped the pack with $64 million.
Not all the associations had large fund balances and more than half of the 25 groups posted losses in 2003. However, the funds offer cushions for shortfall years and also act at the primary bucket for earnings. The winner there was CEA with $3.6 million in profits on revenues of $48.3 million.
"The ability to enter partnerships, build revenue and enhance business are valued by my members," Shapiro said.
Despite their non-profit status, some of these trade associations are big businesses. CEA's annual Consumer Electronics Show generated $41.4 million for the group, and the association spent $106,000 on “gifts, awards and flowers” during the year. The NAB grossed $29 million from its yearly convention.
The Business Software Alliance (BSA), which acts as a private copyright police force for the sector, posted $29 million in license settlement revenues. Chasing software pirates around the globe apparently does not come cheaply -- the group spent $18 million on legal fees, by far the highest of any of the trade associations. BSA ended the year with a profit of $800,000.
The Telecommunications Industry Association grossed $19 million from its trade shows with the majority of revenue coming from the SuperComm convention. The group's tax documents include more than $18 million in show-related expenses, leading to a profit of over $700,000 from the events.
The tidy profit could shed some light on the contractual disagreement with SuperComm partner U.S. Telecom Association. They decided that 2005 would be the show's final year. USTA posted revenues of $7 million from the show.
The CEO list this year is dominated by men with the single exception of Susan Miller, CEO of the Alliance for Telecommunications Solutions, who ranks 17th. The group does lobbying and technical standards setting for the telecom industry.
Miller said it can be a little lonely at times, but being female in a male-dominated sector has not been an issue. "I still think it's very much about working hard and competing hard," she said. You either know your stuff and get respect, or you don't, she said.
At the tail end of this year's survey is the Voice on the Net Coalition, a group of Internet telephone firms. In 2003, explains Executive Director Jim Kohlenberger, the organization was being restarted after a fallow period. Its members now include AT&T, Cisco Systems, Intel, Level 3 Communications and Microsoft.
"We're now four times larger and we believe we're making good progress educating policymakers," said Kohlenberger, who was a senior policy adviser to former Vice President Al Gore.
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