John Venator did all right for himself heading up a tax-exempt, nonprofit technology industry association.
These days, Venator, who served as president and chief executive of the Computing Technology Industry Association (Comptia) for nearly 20 years, can sometimes be found enjoying life at a 400-year-old hacienda in Valladolid, Mexico, he bought in October 2000. The 18,000-square-foot hacienda, dubbed Casa de los Venados, whose transformation is lovingly detailed at casadelosvenados.com, includes servants' quarters, an Italian-tiled swimming pool with a marble-and-glass bridge, a Jacuzzi, a gym and a backyard bar.
No detail was overlooked in the restoration, which also includes a massive collection of Mexican paintings, sculptures, furniture and more. Yucatanliving.com, a Web site for expatriates "living, working and playing in Merida and Yucatan" described the Venator home as "walking through a museum ... sort of a house-cum-private-hotel that will serve as a place to entertain friends and as a museum for their massive collection of Mexican folk art."
It also referred to the Venators as the "gringo Medicis of Valladolid," a reference to the wealthy and famous Medici family, who inspired the Italian Renaissance.
Venator's ability to invest more in his passion for Mexican art and Casa de los Venados got a big boost in 2006 when he received a board-approved $1 million bonus from Comptia for substantially swelling the membership with organizations that spanned reseller locations to community colleges, school districts and, according to one former employee, even the Easter Seals. That year, Venator received a $1.7 million pay package, more than double his 2005 earnings of $676,584, according to an Internal Revenue Service 990 filing. Venator, who ran the Oakbrook Terrace, Ill.-based Comptia from Feb. 1, 1989 to Aug. 31, 2008, was succeeded by Todd Thibodeaux, former senior vice president of the Consumer Electronics Association, on Sept. 1, 2008.
Venator has the distinction of being the only technology industry association top executive to earn more than $1 million in single-year compensation (not including contributions to employee benefit plans and deferred compensation), according to an examination of numerous IRS 990 filings for technology associations from 2005 to 2007.
One current board member, who did not want to be identified, was disturbed by the fact that Venator received a $1 million bonus three years ago. "I am shocked and mortified," the board member said.
Venator, who has a main residence in the Chicago area, said his hacienda doesn't represent an extravagant lifestyle.
"I'm not rich by any means. Until recently, I had always driven Chevrolets and bought used cars," Venator said, adding that even his Mexican hacienda is not an extravagant purchase. "That house, we paid less [for] than what you pay for a studio apartment [in Chicago] ... We pay $8 per day for labor, for carpenters, plumbers, brick layers. That's one of the reasons so many Americans retire in Mexico. You can have a gardener and a maid and a nice house."
Venator may not perceive himself as wealthy, but from 2005 to 2007, he received $3.1 million in compensation (not including contributions to employee benefit plans and deferred compensation), according to the IRS Form 990s filed by Comptia. The IRS Form 990s for 2008 have yet to be posted online at Guidestar.org, which makes such data available to the public.
All that for running a 501 (c) (6) nonprofit, tax-exempt organization with total revenue of $40.53 million and net assets of $52.34 million in 2006. The filing also states Comptia paid $10.4 million in salaries that year, along with $1.02 million in pension-plan contributions.
The $1.7 million compensation in 2006 for Venator came in a year in which Comptia's excess (as profit is known in nonprofit circles) was $4.03 million, up from $3.0 million in 2005, according to the IRS. The organization's total revenue during that same period increased slightly in 2006 to $40.53 million, from $39.70 million in 2005, according to the documents. The company also had $42.2 million in investments in 2006.
Venator, who is credited with building a robust certification business among other initiatives at Comptia, is now president and CEO of the Comptia Educational Foundation, chartered to help returning Iraq and Afghanistan veterans find opportunities in the technology business. The foundation has surpassed its original goal of serving 300 people this year, Venator said. "We've been extremely successful securing cash and in-kind donations. We will serve 600 and maybe as many as 1,000," he said.
Comptia also donated artwork that formerly adorned its headquarters to the foundation, which will be auctioned off.
Venator declined to release his compensation for heading up the foundation; likewise, Thibodeaux would not detail his pay package to run Comptia.
Comptia Chairman Bob O'Malley said the association determines compensation with the same kind of rigor and processes a corporation would follow. "We do competitive assessments on salaries and subscribe to salary surveys," he said. "We aim to keep our compensation somewhere at, or slightly above, the midpoint so we can attract the talent both from a leadership standpoint and talent from a staff standpoint."
O'Malley, the president and CEO of projector vendor InFocus, which is in the process of selling itself, himself received a salary of $395,000 in 2008 along with a bonus of $98,750 and stock, bringing his total compensation to $843,525, for running a $256 million company.
To put Venator's 2006 compensation in perspective, the average CEO pay package for a 501 (c) (6) organization such as Comptia, which includes chambers of commerce, business leagues and real estate boards, with a budget size greater than $5 million, was $427,231, according to a 2006 compensation report by GuideStar, the leading provider of nonprofit compensation data.
NEXT: How Many Members Now?
Comptia's 2006 "total expenses" (budget) was $36.49 million. The average compensation in 2006 for a CEO/executive of any nonprofit, tax-exempt organization, including hospitals and universities, with a budget (or expenses) of $25 million to $50 million was $274,610, according to GuideStar.
To compare Comptia to a like-sized publicly held company, New Horizons Worldwide CEO Mark Miller, who heads New Horizons Computer Learning Centers, received a pay package in 2008 of $862,569 for running a company that posted $37.2 million in sales.
The next highest annual salary behind Venator's for technology industry associations in 2006 was CTIA -- The Wireless Association. Compensation for its CEO, Stephen Largent, amounted to $960,847 for running an association with $53.96 million in total revenue. Largent is followed by Consumer Electronics Association CEO Gary Shapiro at $888,540 for running an association with total revenue of $74.27 million. Then there is American Electronics Association CEO William Archey, who pulled down $669,965 for running an association with $16.72 million in total revenue, and Business Software Alliance CEO Robert Holleyman at $666,588 for running an association with $68.58 million in total revenue.
Comptia Education Foundation Board Member Jim Wittry, formerly an area director for Avnet Technology Solutions, said Venator has not been overcompensated for his contributions to Comptia.
"You have to think about the lifetime value he's brought to the organization and to the client base. There's a lifetime value for some of this compensation. I think the industry has benefitted from this compensation. I think you'll find with salary surveys that Comptia is definitely not overpaying for the performance they got," Wittry said.
Venator said his $1 million bonus was designed and implemented by Comptia's board as a five-year incentive to increase membership. It was approved by then-Chairman David Smith, Venator recalled.
Smith, who was chairman of Comptia in 2003 and 2004, said Venator's employment contract with the $1 million membership increase bonus plan was put in place by a previous chairman and board.
In fact, Smith, who is vice president of services at CompuCom Systems, a Dallas-based solution provider, said he requested an outside independent audit be conducted before the bonus was paid to Venator. "My personal feelings were that it was a lot of money and I wanted to validate it," he said. "That was a lot of the association's money to pay out. Once the audit was done, honestly, I felt better," Smith said.
The audit validated that the membership target had been hit. "The contract didn't specify types of memberships or paying members. All it said was members," he said.
Smith said it may have been "bad judgment on whoever did the contract maybe, but it was in the contract."
Venator's compensation should be looked at in light of his accomplishments throughout his tenure, he said. "You have to go back and look at the whole big picture. Was I happy about paying a $1 million bonus? No," Smith said. "Is John's really unreasonable? That is not for me to say. My thing was to validate that, according to the terms of the contract, we lived up to from our side."
Venator said he and the entire organization were inspired and galvanized by the financial goal and accomplished it in three years' time, securing 12,000 member locations as Comptia's ranks swelled to 20,000. The results were certified by an outside auditor and Venator recalls a sheet cake and champagne celebration. The celebration would be short-lived as Comptia's membership ranks would be condensed to 2,160 as it redefined "membership" as company members. It also did away with "blanket memberships" to organizations like Ingram Micro's VentureTech Network and Tech Data's TechSelect.
Venator said a bonus of that magnitude had never been proposed at Comptia, and he told the board if the target was that important, he needed other Comptia employees to receive incentive bonuses as well, which he said the board approved. "The board knew it and commended me for it," Venator said.
"In my 20 years with the association, I have never gone to the board and requested compensation or bonuses. I've always felt my work speaks for itself," Venator said. "Every year, the board gave me new challenges, whether it was the bottom line or to grow other aspects of the organization. This was one they felt very special about."
Venator believes that the million-dollar bonus was proposed by Mark Romanowski, executive vice president of ASI System Integration, a New York solution provider, when he was on the Comptia board. Romanowski did not respond to repeated attempts to contact him.
The association gave Venator challenges over the years, such as increasing attendance at Breakaway conferences. "Each time, I met those goals," Venator said.
At times, those goals also included increasing revenue from certifications such as A+, a series of tests ranging a wide gamut of technology areas.
But in a conference call with Comptia, Thibodeaux was quick to add that the majority of certifications issued by the association do not go to solution providers, the very individuals Venator was incented to recruit.
"There are a number of school districts, community colleges, IT training companies [that get certifications]. There were benefits for them to be members," Thibodeaux said.
Old Comptia press releases from 2002 to 2007 illustrate how the group marketed its growing global membership base. In 2002, a release notes "more than 8,000 computing and communications companies." The number jumps to 19,000 members in 89 countries in a 2004 release, and then to 20,000 members in a 2005 release. That figure remained in press releases in 2006 and 2007.
NEXT: Where Comptia's Money Goes
Comptia no longer lists how many members are in the association because it has changed the way it defines its membership, said Venator and Thibodeaux. The association now counts companies as members, not locations.
So, three years after Comptia awarded Venator a $1 million bonus for hitting a membership target, the association has discounted that definition of membership. When asked whether that change undid all the work he did to reach the bonus, Venator said "yes and no." He added, "If you look at the participation income and you see the member vs. nonmember participations and certifications, clearly all those members of VentureTech and [TechSelect] and others were using the fact that they were members to get the discounted price to put all those people through A+ and Network+ and other things. Especially in cases where the vendors were requiring it."
Venator said one reason Comptia had counted individual locations, was that, at the time, members of the board believed a larger number might show more influence in political circles, because the membership number represented a more accurate picture of local employers.
"[The bonus] was specifically structured and voted on by the full board after it was vetted by an outside compensation consultant as well as vetted by a CPA firm in terms of fairness and whatever other questions they asked," he said.
Comptia expected to recoup the $1 million and more through increased subscription dues and certifications. The bonus was awarded while the amount that Comptia received from "dues, assessments and similar amounts from members" dropped slightly from $2.20 million in 2005 to $2.18 million in 2006, according to IRS 990 filings, yet overall revenue increased by 2.2 percent.
"The reseller increase was very important to the group as we were going forward. The membership increase was driven by more than dues and subscriptions," Wittry said. "We were looking to represent the community and to have a more representative size of the community involved."
One way Comptia increased its membership was to offer umbrella memberships to numerous organizations.Under an umbrella membership agreement, a distributor or vendor would pay a fixed fee to automatically enroll all of the members of its community in Comptia.
But some groups were as varied as Sears, which required its Sears Connected Home installers to earn Comptia's Home Technology Integrator (HTI+) certification, and the Easter Seals could hardly be referred to as resellers, according to a former employee.
Under the umbrella agreements, many solution providers were surprised to learn they were members of Comptia, the source said. "These people got memberships without knowing they were members. It brought no value to the organization or the membership. It diluted the value and credibility of our trade association," the source said.
A former Comptia employee characterized the board mandate to increase membership under Venator as a bid to "enrich Comptia" with active, engaged, dues-paying members. "He didn't follow the spirit of what the board truly wanted him to do," the source said.
At one point, the average cost of membership was down to $5 per member because of all the blanket memberships, said the same source.
Tech Data and Synnex said they are no longer active Comptia partners. Ingram Micro said it does offer VentureTech members a 33 percent discount on Comptia's membership dues.
In addition, Comptia is no longer interested in umbrella relationships because they are rarely effective, Thibodeaux said.
"Regardless of the best intentions, those tend not to work over the long run. A huge run-up would tax the ability of any group to service those members effectively," Thibodeaux said. "We also tried that at CEA. We would bring in numbers but it was difficult to bring in those renewals. Unless you reach out in a high-touch environment, it can be difficult. It's not a surprise that some people didn't renew."
It's difficult to provide outreach to all the umbrella members to show them the value proposition of the association, he said.
"It's difficult for a small business that's running lean to even afford a $250 dues fee. They're going to want to see the value."
Associations often wrestle with umbrella memberships, Thibodeaux said: "I want everybody to make a conscious decision to join. It's more work, but it's more rewarding because you have an engaged group."
Full disclosure: Everything Channel,which owns Channelweb, publishes CRN and is part of United Business Media, has participated at various times with Comptia initiatives and business ventures.
O'Malley did not know how many active dues-paying members the association has at this point in time. "I don't have those numbers off the top of my head, and I'd hate to speculate on that," he said.
While some for-profit corporations have come under scrutiny for executive compensation, neither Venator nor Thibodeaux see any reason to examine the tax-exempt status of industry associations sitting on large piles of cash in this economic climate.
"Now, more than ever, people rely on associations, technology or not," Thibodeaux said. "Should a hospitality association have to give up its tax-exempt status now? It's about the money that's poured back into the industry to allow for these times. To single out IT industry associations for [losing their] tax-exempt status would hurt the industry."
Industry associations benefit members more than for-profit companies because they can be more objective toward their mission, Thibodeaux said. "A lot of companies want to talk [about] only their products," he said.
NEXT: How Comptia's Salaries Stack Up
Lester Keizer, the CEO of solution provider Connecting Point in Las Vegas, who is currently a member of the Comptia board, would not comment specifically on Venator's compensation, but he applauded Venator for building a trade association for solution providers that is national and international in scope. He said he sees a need for a nonprofit trade association as long as it meets its "goals and objectives as a truly not-for-profit that serves its constituents. As long as it stays that course, it is necessary. I need a vendor-agnostic nonbiased association to filter through the propaganda of manufacturers."
The current board formally thanked Venator for his 20 years of service at its recent April meeting and voted to continue to provide a dollar-for-dollar match for every cash donation up to $1 million that the Comptia Educational Foundation receives on its own.
"We think it is our mission at Comptia to get the Education Foundation up on its feet," O'Malley said. "We believe very much in the endorsement matching funds provide. It also reassures donors that their money will not just be dollar-for- dollar, but one dollar donated equals $2 of benefit. We have done that for the last couple of years. And it is our intent to continue to support it until that Education Foundation is self-sustaining."
At the same recent meeting, Comptia's board voted to match up to 10 percent of employees' 401(k) contributions for 2008. In an e-mail, Thibodeaux said the board was unanimous in their support of the 401(k) match "recognizing staff for the great performance in 2008."
Besides the concerns regarding how Venator achieved his bonus, former board members also expressed concern about Comptia's direction under Venator because he was a CEO who did not like to be questioned or challenged and preferred carefully choreographed board meetings with little open and frank debate. Interviews with six former board members said a number of board members over the years had challenged Venator only to find themselves not renominated for membership to the board.
One board member that served two years said that it was just not long enough to effectively regulate or oversee the association. "You are only in a few meetings a year," he said. "It takes a few meetings to get to know the ropes -- and then you are exiting. The first year you are a newbie. The second year you are a lame duck. You can't do a lot in that short period of time. That's one of the fundamental structural problems at Comptia," the board member said.
Comptia board members now serve three one-year terms that can also be extended.
"To be fair, John had some association executive skills and had some vision as far as public policy and charitable efforts, but he was a very controlling person, a very insecure person who didn't like any debate," said one of the former board members interviewed for this story. "John managed that thing like his own personal little private company. Strong board members were kind of frowned upon."
Further, the ex-board member said there were some board members who looked at board participation as a ceremonial position. At one contentious meeting, a board member commented: "I thought this was just an honorary board," recalled the former board member. "That was a very telling comment. It was such a meaningless exercise when someone spoke up."
Venator laughed at the idea that he could control Comptia's board. "I have no idea where that's coming from. If anybody thinks they could ever control a Comptia board in 20 years, good luck with a gun, a whip and a chair in hand. There are 17 strong-willed individual people," Venator said.
-- With additional reporting by Edward F. Moltzen