Top-paid senior staff (2019)

Gerard’s cumulative pay at API tops all trade group CEOs

New tax documents show Jack Gerard took home $10.3 million in 2018, bringing total pay to $61 million over nearly 10 years

Gerard
Jack Gerard

Jack Gerard, former CEO of the American Petroleum Institute, earned $10.3 million during his final year leading the influential trade group, according to financial disclosures filed in November.

Gerard retired from the $234 million-revenue API in 2018, ending a nearly 10-year run as head of one of the most powerful business advocacy groups in Washington, D.C. He had previously led the American Chemistry Council and the National Mining Association.

Gerard’s final months at API marked the second time his annual salary crossed into eight-figure territory. Only two other trade group CEOs have earned $10 million or more in a single year—Billy Tauzin in 2010 ($11.5 million), the year he left Pharmaceutical Research and Manufacturers of America, and possibly Jack Valenti in 2004, the last year of his 38-year tenure at the Motion Picture Association. (IRS-required reporting on take-home pay before 2008 was less explicit, so it’s unclear if Valenti received all $11 million in that year.)

Other 501(c)(6) CEOs have earned more in a single year, but those organizations were sports-related groups such as the National Football League (which dropped its tax-exempt status in 2015) and PGA Tour.

The biggest chunk of Gerard’s 2018 take-home pay—$7.6 million—came from a supplemental executive retirement plan payout, most likely a 457(f) plan, that had accumulated since the former CEO’s last big payout in 2013, when he took home pay of $13.3 million.

Gerard also has earned more over a 10-year timespan than any other trade group CEO. From November 2008 through July 2018, he earned $61 million. Even Tom Donohue, longtime CEO of the U.S. Chamber of Commerce, can’t match that record. Donohue took home $59.8 million over 11 full years, including his 2018 compensation of $6.9 million.

Tax-exempt groups are still filing their latest reports to the IRS, but it’s highly unlikely any other trade group CEO will come near Gerard’s 10-year earnings.

Well-oiled lobbying machine

Gerard began his political career in 1981 as a staffer for former Rep. George Hansen and later former Sen. James McClure, both Republicans from his home state of Idaho. He partnered with McClure in 1990 to launch a government relations consulting firm.

Gerard joined API at the very end of President George W. Bush’s administration. Bush and Vice President Dick Cheney were both oil men, and their approach to regulatory policy reflected that fact. However, the election of President Barack Obama in 2008 resulted in an administration more open to the concerns of environmentalists and other critics of the oil industry.

API would spend much of the Obama administration fighting efforts to tighten regulations against greenhouse gases, restrict oil and gas drilling on federal lands, and block construction of energy infrastructure projects such as the Keystone XL pipeline. The group is also a major critic of the Renewable Fuel Standard, which requires ethanol to be blended with motor fuels.

One advantage API has long had in its advocacy efforts is the oil industry’s deep pockets. Under Gerard’s watch the group spent more than $400 million on public relations efforts, according to tax returns reviewed by the Center for Public Integrity. Most of the money went to PR giant Edelman, although the firm cut ties with API in 2015, reportedly because it no longer wanted to be associated with organizations that funded climate change denial. (API said at the time it was not a climate change denier.)

Still, the oil industry’s fortunes rise and wane with oil prices, and in 2015 API absorbed America’s Natural Gas Alliance, a trade group that shared many members with API.

Since then the industry’s advocacy outlook has improved. President Donald Trump has rolled back several environmental regulations opposed by API and granted oil refineries a large number of exemptions to the Renewable Fuel Standard.

Gerard’s successor at API is Mike Sommers, who was chief of staff to former House Speaker John Boehner before becoming CEO of the American Investment Council. Gerard has since become a General Authority Seventy of The Church of Jesus Christ of Latter-day Saints, one of the highest positions within the church.

API’S $61 million man

Jack Gerard earned $61 million during his nearly 10 years as CEO of the American Petroleum Institute. The chart shows how much Gerard took home each year in base pay, bonus pay, and “other” pay—usually money that had been deferred from earlier years.

Gerard pay chart

*Partial year payments. Gerard was CEO from November 2008 through July 2018.
Source: Data from IRS form 990 compiled by Association Intelligence and analyzed by CEO Update

Small-group pay rises, is comparable to some midsize groups

Median change in CEO compensation is 3.6%, with big contribution from bonuses

CEO salary small group infographic

Smaller-group CEO salaries continued their modest but steady upward march with another year of a median increase of 3.5% or higher.

CEO Update analyzed the most recent tax filings for associations with revenue between $2.5 million and $5 million. The median change for executive base-and-bonus pay was 3.6%, on par with 3.5% the year before but down a bit from 3.9% in our 2017 survey. Small-group leaders again trailed their counterparts at midsize and large associations, where the median change in our 2019 report (compared to the 2018 survey), was above 4%.

However, compensation at these smaller groups is not as far below that at midsize groups as one might expect, given that association revenue is the biggest determinant of compensation.

Mark Graham, CEO Update’s in-house compensation expert, said the report suggests that there is a de facto minimum wage for association executive leadership.

Two data points make the case: the median and the 10th percentile.

Median pay—the point at which half of CEOs earn more and half earn less—for CEOs who lead organizations with revenue between $5 million to $7 million is only 19% more than that in the smaller associations. That’s only a $47,000 pay bump to run organizations with a median budget 63% larger and 50% more staff. And pay at the 10th percentile—the point at which 90% of CEOs earn more—is just $28,000 apart.

The median revenue of associations in our small group survey this year was nearly $3.6 million, in line with previous years. The median take-home pay (base, bonus and other) of all trade association CEOs in the report was $302,826, compared with $219,082 for professional society leaders.

But in a departure from previous small-group reports, the median change in trade association CEO compensation was much higher (3.8%) than that for professional society chief executives (3.0%). At larger groups, it’s common for trade association pay to rise faster than professional society compensation year after year.

Lyn McCloskey, a principal and compensation expert at consulting firm PRM, said the firm’s own data shows that base pay among smaller nonprofits rising in the 3% range—about in line with salary increases for all employees at such groups. What is different is that at-risk pay as a percentage of compensation is rising for the chief executives.

Gender gap

Gender representation among CEOs at smaller groups is another topic worth examining. Thirty-seven percent of chief executives in the small-group survey are women, compared with 33% in midsize associations ($5 million to $12 million in revenue) and 27% in the largest groups (revenue above $12 million).

McCloskey said promotions from within may partially explain the gap: Such internal advances to the top spot may be more common at smaller groups than larger ones. Larger groups are more likely to hire from the outside, whether from another association or from industry, where men dominate the talent pool, she said.