PRIDE defends CEO Michael Ziegler's salary of $594,000 a year

PRIDE Industries wants the chairman of a U.S. Senate committee that slammed its CEO's compensation package as exorbitant to have a closer look at the numbers.The architect of a regional success story that rose from humble roots in Auburn to rank as the nation's No. 1 employer of people with disabilities, PRIDE CEO Michael Ziegler's compensation was slammed earlier this month after the non-profit organization's 2002 tax filing showed he had received $594,000.But PRIDE officials are saying that they weren't approached before the report was released to explain the compensation, how it was arrived at and that a large amount represented a distorted bonus total. PRIDE is now attempting to sort the criticism out with the Committee on Health, Education, Labor and Pensions, chaired by Wyoming Republican Mike Enzi.The Senate committee cited Ziegler's 2002 compensation in a report on two long-standing federal programs designed to promote jobs for individuals who are blind or disabled by tapping into nearly $2 billion in federal procurement contracts. PRIDE, which has revenues of $100 million, derives about $40 million of that total from the federal contracts, paying workers an average hourly rate of $11.41. Wages are established by the U.S. Department of Labor, Sommer said.A release from the Senate committee quotes Enzi as stating the contracts are failing to produce many jobs and instead are helping promote an exclusive class of high-paid, non-disabled CEOs.Ziegler, CEO since 1983, said he's concerned about the impact of the criticism on PRIDE."Forget Mike Ziegler," he said. "PRIDE is this precious community asset founded in the basement of a church by parents who wanted their disabled kids to have jobs. I'm not sure we're perfect but we try to be and we're trying to do God's work."Ziegler, 60, whose current annual salary is $368,000, said that he has abided by salary standards for the past decade established by the board's compensation committee and an independent consultant.Jud Riggs, PRIDE board chairman and member of the committee, said that compensation consultants Hewitt & Asso-ciates served as advisers, using their own proprietary databases to determine an ap-propriate salary range.Arriving at an appropriate salary for Ziegler hasn't been easy, he said.Skewing possible perceptions of PRIDE and management compensation, the organization operates like a hybrid of a business and a charity."It's a blend of a business approach with a traditional not-for-profit approach that seems to work and Michael Ziegler is the highly capable CEO," Riggs said. The full board doesn't vote on Ziegler's salary, he said. The compensation committee is put together by the board with advice from the CEO, he said.Further skewing the 2002 tax figure, bonuses for two years were included in the one year because the tax year overlaps two of PRIDE's July-to-June fiscal years, said PRIDE spokesperson Cynthia Som-mer.Sommer said there are no plans to change the process that arrived at Ziegler's compensation totals.Sommer said PRIDE has received hundreds of e-mails and phone calls of support since the report was made public Oct. 20. The board has also expressed support at a recent meeting, she said."People say he should be making more, that they should look at any other $100 million company," she said.Founded in 1966 in the basement of St. Luke's Episcopal Church, and known for many years as Placer Rehabilitation Industries, the headquarters moved to Roseville in 1979. Ziegler is generally credited with being the driving force behind PRIDE's growth into the nation's largest organization of its type. PRIDE now employs 3,300 full- and part-time workers in 14 states. About 2,500 have disabilities. A PRIDE center is located at the Auburn Airport Industrial Park. Enzi's report said the average salary for a non-profit executive was $126,000. Sommer said PRIDE is still trying to establish how that figure was arrived at, particularly in light of the process her organization used with outside consultants to arrive at Ziegler's compensation.Referring to problems with other non-profits that include lavish perks, Enzi said the situation was "disgraceful" and "an inexcusable waste of taxpayer money." He's calling for more funding oversight to ensure funds are being used efficiently and effectively.PRIDE has sent a fact sheet to the Senate committee, outlining the role of the compensation committee and Ziegler's absence of involvement in setting his salary. The organization has used an independent third-party consultant for the past decade.The Internal Revenue Service has never questioned CEO compensation, Sommer said."Under the procedure, compensation is presumed to be reasonable if the compensation amount is approved by an independent board committee, without the CEO participating and with the reliance on comparability data from an independent compensation survey," the fact sheet states.The CEO's compensation reflects revenues from several sources besides the federal contracts, the outline states. They include commercial non-governmental contracts and state fees for rehabilitation services.The outline goes on to state that PRIDE's total administrative costs, including Ziegler's salary, are among the lowest in the nation for nonprofits at about nine percent.PRIDE worker parents Kazman Zaidi said he's praying for Ziegler as he withers criticism over his salary. PRIDE has provided a paying job for his 22-year-old mentally disabled son. He's met Ziegler and found the CEO to be friendly and approachable. PRIDE has given his son a better temperament on top of a job that pays close to $9 an hour, said the Antelope resident. "He's my lifesaver," Zaidi said of Ziegler. The Journal's Gus Thomson can be reached at gust@goldcountrymedia.com.