Archive for the ‘taxes’ Category

Beyond Wall Street:

April 26, 2010

Executive Salaries in the Arts

A topic that has been sharply focused upon within the boundaries of the financial industry, lavish salaries and bonuses, is now coming under greater scrutiny in the non-profit art world.  The subject is not new, but the top-heavy structures of some cultural not-for-profits appears even more unseemly in these times.  The art blogs and such have been pointing to this phenomena for some time, but mainstream media like the New York Times, and the IRS as well, are now starting to look at the issue.

In apparent response to questions about the Metropolitan Museum of Art’s highly compensated executives, amid the lay off of about 200 employees, Chairman James Houghton said, “We want to keep the best people — it’s very simple,”  New York Times 4/25/2010.   According to the same piece, upon his retirement in 2006 Philippe de Montebello received a $3.25 million bonus.  One may wonder how Mr. Houghton and his fellow Board members calculate who comprises the “best people” for the museum and how this relates to the overall staff compensation structure.

One argument put forth has been that these well-paid non-profit executives bring in more donations.  One problem is, what volume of those donations are diverted towards paying that very executive’s salary and bonuses?  No doubt that the administration of a large museum is not a simple job, but it seems fundamental that the paycheck of a head of a “non-profit” should not draw significant funds away from the very institution.

In a broader perspective, a multitude of issues are obviously involved, including the lack of significant government funding for the arts in general–but it seems like there must be a more egalitarian approach to pay scales in our cultural institutions.  This is particularly significant because non-profit is essentially a tax status, and the organizations that claim to be non-profits derive benefits from the public (the tax payer) in this way.  Although some have decried the publication of individual’s salaries, in light of the benefit given to these organizations, transparency to the public should be open and expected.

A few incidental numbers:

Museum of Modern Art Director, Glen Lowry:  $2.7 million + bonuses & benefits (through June 2008, since reduced).  Mr. Lowry reportedly earned $1.32 million in 2009 (through June).

Los Angeles County Museum of Art, Director Michael Govan, $1 million (2006).

The financially troubled Museum of Contemporary Art (MOCA), Los Angeles, reduced its staff by 20%.  In 2007 (fiscal) it’s then director was reportedly paid $494,474.  Controversial new director, Jeffrey Deitch, has apparently complained, to a degree, about his own salary.

Art Institute of Chicago, President James Cuno received $626,175 for 2009, an increase of 46%.

Museum of Fine Arts, Boston, Director Malcolm Rogers received $719,621, an increase of 23 percent, but seems a veritable bargain compared to the executives of other large art institutions.

Top leadership at the Getty Museum took pay cuts last July, specified in its online disclosure, here.  According to the documentation, former director received total compensation of $891,114 for the relevant period.  Acting Director David Bomford received $247,499 total compensation.

Selected References:

Reducing Pay for New York Cultural Executives

Financially strapped MOCA announces layoffs

Museum of Modern Art’s Lowry Earned $1.32 Million in 2008-2009

74 Are Laid Off at Met Museum; More May Follow

Deitch walks back comments on selling art as MOCA director

Interview Scratched: My Questions for Jeffrey Deitch Go Unanswered / CultureGrrl

Getty Compensation Disclosure 2010

Major Earners in the Cultural World

Leveraging the Art, Collateral Matters

March 20, 2009

Along with the deaccessioning controversies surrounding museums, closed institutions and staffing cuts, another side of the growing financial burden on art institutions and individual artists is increasingly being reflected in surprising forms.  One of these is the practice of using artwork as collateral on loans.

It was recently disclosed in the media that the Metropolitan Opera at Lincoln Center in New York has taken $35 million in loans, using its Marc Chagall murals as collateral.  The paintings are such an integral part of the structure, traditionally and aesthetically, it is disconcerting to think of them as moveable property.  If the Met were to default on the loans, which is apparently unlikely, it is unclear as to what exactly would be the fate of the large scale mural paintings and this raises the spector of a different kind of deaccessioning.  The 30’x36’ paintings, which were installed in 1966, are “The Triumph of Music” (pictured, right) and “The Sources of Music.”  The loan was apparently initiated some years prior.

Perhaps even more surprising because of its potential effect, are the artwork-as-collateral loans agreements reportedly entered into by celebrity photographer Annie Leibovitz.  Leibovitz apparently put up, not just her physical prints, but her copyrights–past and future–as collateral. 

If the agreement is structured so that all copyrights go to the lender upon default, which might be assumed based on the information available, Ms. Leibovitz could face losing virtually all control over images that she creates.  Because copyrights are established automatically upon completion of a work, in the event of default, she may be barred from reproducing her own images immediately upon creation without the permission of the copyright owners. Considering the volume of Leibovitz photographs reproduced in the form of art books, magazines, and other publications, the licensing fees from the copyrights are likely to represent a not insignificant portion of her income. In the event of a default, Leibovitz may face working for little more than the actual fee for  photography services that she provides.

One may wonder what dire circumstances would lead Ms. Leibovitz to risk what is potentially nearly all of her future income to secure a loan.  However, lawsuit filed in New York last year claim that Ms. Leibovitz failed to pay hundreds of thousands of dollars in bills.  PDN provides court documents indicating that one suit, Briese USA v. Leibovitz,  has asserted a total claim for relief of $392,000; and another, JS Reps Corporation v. Leibovitz Studios, claims $386,467 in relief.  Annie Leibovitz has also reportedly borrowed $5 million against her New York apartment.

1980’s artist turned film director Julian Schnabel is another artworld figure that has utilized art based collateral to secure a multi-million dollar loan.  Schnabel put up artwork as collateral on loans to pay for the development of an ornate condominium building in New York that he named Palazzo Chupi.  Initially Schnabel took on an $8 million loan, using the real estate as collateral.  A later loan to pay down the first pledged artwork as collateral.  However, the artworks in question are apparently from his private collection and do not include his own work.

Ms. Leibovitz’ loans, apparently totaling $15.5 million were made through Art Capital.  Mr. Schnabel’s first loan was also with Art Capital and the second was made through Commerce Bank.  Citibank and Bank of America have also been involved in fine art as loan collateral deals.  Sotheby’s and Christies offer artwork collateral structured loans, but reportedly focus more upon bridge loans for works that will be up for auction.

 

The Met Offers Chagalls as Collateral, New York Times

Art Owners Turn Collections Into Collateral, AP/Dallas Morning News

Borrowing with Fine Art as Collateral, NY Sun

Annie Leibovitz Pawns Copyright to Life’s Work to Pay Debts, Telegraph U.K. 

Annie Leibovitz Pawns Rights to All Future Work, Guardian, U.K. 

Lawsuits Claim Annie Leibovitz Owes $778K For Photo Services

Biese USA v. Leibovitz (pdf)  

The Painter and the Pink Palazzo, NY Times 

That Old Master?  It’s at the Pawn Shop, NY Times