ACS Executive Compensation and Transparency

Change is everywhere today at the American Chemical Society. We have a new executive director and CEO, as well as a strengthened senior management team. We have several new members of the ACS Board of Directors, many new committee chairs in our governance structure, and numerous new leaders in our local sections and divisions. In addition, the ACS Board of Directors adopted a strategic plan in December, which charts an exciting road map for the future of the world's largest scientific society (C&EN, Feb. 23, page 43).

As part of this change, we made a pledge earlier this year to keep ACS members better informed on financial reporting issues. (C&EN, Jan. 5, page 2). We are pleased to report that ACS remains a financially sound organization, and its finances and investments are well managed. In addition, the ACS Audit Committee regularly takes actions to ensure the independence of its external auditors, the integrity of management, and the adequacy of financial disclosures to the public.

The Board of Directors is committed to disclosing more information on ACS finances than is contained in the society's annual report. In particular, the board voted at the ACS national meeting in Anaheim in March to make available to members information about top management's compensation. We are now doing so.

As a not-for-profit organization, ACS is required to file an informational form, called the "Form 990," with the Internal Revenue Service. Included on the Form 990 is compensation paid to "officers and key employees" of the society as well as to the five highest paid employees other than officers and key employees. Although the Form 990 is in the public domain, it is not easily accessible.

Now, we are taking an unprecedented step for a not-for-profit organization. We are making compensation information contained on the 2002 Form 990 (the most recent information filed with the IRS), as well as additional information, available to our members via the society's website, chemistry.org. To obtain this information, please log in as a member, click on the ACS member tab, and look for the link, "Compensation of ACS Officers and Key Employees" under "Member Information and Benefits." Click on this link and follow the directions. A PDF version of the information will be sent to you by e-mail.

CREATING A LOGIN ACCOUNT ON CHEMISTRY.ORGPlease click the "New User" link in the login box on the chemistry.org home page. Set up your user ID and password and select "Yes" from the drop-down menu to indicate that you are an ACS member. Next, enter your membership number and last name. Finally, complete the necessary registration information.

On the information provided, you will see that many categories comprise "total compensation," including performance bonuses, insurance benefits, and pension and retirement benefits. Thus, an executive's total compensation is typically greater than his or her base salary, and the total varies from year to year. The society is providing members more detail than is commonly submitted to the IRS to make clear these distinctions.

As you evaluate the information, please remember that ACS is a large and complex organization. The society's total revenues in 2004 are budgeted to be almost $420 million. ACS has more than 159,000 members, approximately 1,900 full-time employees, and assets of more than $1 billion. In addition to the society's broad array of member programs, the ACS Publications Division and Chemical Abstracts Service are the leading providers of the highest quality chemical information to the worldwide scientific and engineering communities, with combined revenues of nearly $350 million annually. The society also plays a prominent role in educating the public, policymakers, and professionals on issues of concern to our profession and our nation.

Ultimately, the ACS Board of Directors is responsible for determining the salaries and performance bonuses of society officers (the executive director, the secretary, and the treasurer), and it reviews and approves the performance bonuses for these and other senior executives who report to the executive director and CEO. The society's executive compensation program is designed, administered, and monitored to ensure its fairness, equity, and competitiveness; attract and retain outstanding executives; and support the continued success of the organization.

A word about our executive bonus plans: ACS is blessed with highly talented executives and staff across all programs. The executive bonus program is designed to provide incentives to a limited number of top senior executives who have performed in an extraordinary way in a particular year. The board approves performance goals for the nine top executives, and reviews goals for other senior executives who report to the executive director and CEO and her direct reports. The ACS executive bonus plan is similar to those at some other large not-for-profit organizations and for many companies of comparable size (in terms of number of employees) and revenue.

In determining executive compensation, the board tries to strike an appropriate balance in providing salaries and bonuses that allow the society to remain competitive and to keep costs at an appropriate level. With the assistance of highly regarded external experts, and using independently published survey data, we benchmark total compensation for our executive positions against comparable executive positions in scientific and technical membership organizations and other specific organizations as appropriate. In the past decade, ACS has benchmarked these positions five separate times, and another benchmarking study is now under way. The previous studies have indicated that the salaries and bonuses paid to senior executives are appropriate for the complexity and level of the positions.

Your questions or comments about the Form 990 information or other questions about compensation may be sent to executivedirector@acs.org. We appreciate your interest in seeking accurate information on this important topic.

Views expressed on this page are those of the authors and not necessarily those of the ACS Board.