Sunday, February 12, 2006

Executive Pay Takes the Stage

The Wall Street Journal's Jacob Hale Russell takes up the issue of compensation in the arts in this February 11 article. Some excerpts:
Even as performing-arts groups struggle, star salaries are soaring -- with music directors making almost $2 million. Can orchestras afford to conduct themselves this way?
By JACOB HALE RUSSELL
February 11, 2006; Page P8

It's been a tough couple of years for one of Chicago's better-known institutions, with sales down 5.7% this year, mounting red ink and a recent round of heated union negotiations ending in concessions from the rank and file. But one man at the top of the ladder has seen his paycheck swell -- by 69% in five years, to nearly $2 million.

He's Daniel Barenboim, conductor of the Chicago Symphony Orchestra.

Executive pay has been a hot-button issue in the corporate world for more than a decade. That's especially true in struggling industries like airlines and autos where profits are slim and salaries aren't -- as General Motors chief Rick Wagoner demonstrated this week when he agreed to a 50% pay cut. But the debate over compensation is playing out in another realm as well. At a time when audience numbers are trailing off and many groups are struggling to stay in the black, some salaries in the performing arts world are climbing at remarkable rates.

Nowhere in the arts world is this more visible than among orchestra conductors. In the 2003-2004 season, the New York Philharmonic paid conductor Lorin Maazel $1.9 million, or 23% more than they paid his predecessor, Kurt Masur, five years earlier, according to the nonprofit group's tax filings. In the same period, the Philharmonic's ticket sales barely budged, and it posted a $1.3 million deficit. At the Cincinnati Symphony Orchestra, conductor Paavo Järvi's compensation climbed 37% to $626,000, during his first three years starting in fall 2001, while program revenues increased only 7% and operating deficits were posted the first two years.

Overall, roughly a dozen conductors made more than $500,000 in the season ending in 2004, the most recent period for which data are available. The top half-dozen earned between $1 million and $2 million. The rich pay extends beyond the biggest metropolitan areas to cities like Atlanta, Detroit and Cleveland.

The gap between performance and pay is sparking debate in some orchestra circles about just how much is too much when it comes to compensating the most visible figure in the pit. For years, orchestras have been willing to pay a premium for star conductors whom they count on to fill seats, attract talented musicians and recruit donors. But while that strategy has often worked in the past, it isn't clear it will continue to be viable. "Orchestras have to be rethinking every aspect of the way this business is run," says Henry Fogel, president of the American Symphony Orchestra League.

Orchestras say they need to pay competitive salaries because there are only a handful of top-notch conductors, and they can be easily snatched up by state-supported European groups that can afford to pay even more. They also say conductors account for a relatively small part of overall expenditures -- about 3%. "It's not the orchestra itself that attracts the donors, it's the person on the podium" and soloists, says Leonard Slatkin, music director of the National Symphony Orchestra in Washington, D.C. "Somebody has to decide the musical personality of the orchestra."

...Even a big name doesn't guarantee success at the box office. Since taking the baton at the Boston Symphony Orchestra last season, James Levine has won critical acclaim for his atonal modernist programming. While single-ticket sales have gone up during his tenure, the company's subscription-renewal rate, which accounts for a greater portion of overall revenue, fell from 84% to 80%. Mr. Levine maintains his position as music director of New York's Metropolitan Opera, which pays him through his management company. In 2003-2004, the figure reported to the IRS was $1.9 million. Mark Volpe, executive director of the Boston Symphony Orchestra, says a star name like Mr. Levine is worth the cost: "It's first and foremost an artistic matter."

...To determine pay at some of the country's top performing-arts groups, we used compensation figures from I-990 IRS filings for 2003-2004, the most recent data available for the majority of institutions. In cases where conductors are salaried employees, our figures do not include extras like benefits or expense accounts. For those hired as contractors, compensation may or may not include benefits and can vary depending on the number of conducting and solo performances....

Examples given in article include:

Daniel Barenboim $1,974,546
James Levine (Met only) $1,912,000
Lorin Maazel $1,909,155
Michael Tilson Thomas $1,584,460
Christopher Eschenbach $1,422,000
Esa-Pekka Salonen $1,260,639
Leonard Slatkin $1,113,846
Franz Welser-Most $1,000,360
Paavo Jarvi $ 626,000
Neeme Jarvi (Detroit) $ 586,672
James DePreist (Oregon) $ 342,000
Andreas Delfs $ 326,366

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