State-Funded Nonprofit Paid 2 Directors $433k in 2010
Saturday, January 21, 2012
The state of Rhode Island gave $2 million to a private, non-profit in 2010 to invest in technology businesses and paid its two managing directors, Richard Horan and Thorne Sparkman $433,000, more than double the salary of the executive director of the state’s Economic Development Corporation (RIEDC).
Since 2002, the Slater Technology Fund has recieved more than $33 million in state funding to invest in technology businesses, but excessive overhead has forced organizers to downsize the number of centers, space and personnel.
The state provided Slater with more than $2 million in the fiscal year 2010 and the fund ended the year with $460,000 in revenue. During that time, Horan was paid a $195,000 and Sparkman received $170,000. The two managing directors also received another $35,000 and $25,000 in other compensation, respectively.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“Salary compensation and end-of-year bonus compensation is based on the performance of the Slater Technology Fund and the bonus is based on a decision by the compensation committee and Slater’s Board of Director,” Sparkman said. The end of the year bonus, he added, is voted on by the compensation committee, which are made up currently of two people, Kenneth Arnold and Donald McNaughton, and its Board of Directors.
Before Cuts, Company Paid $9k Month in Rent
Having its first reduction in state funding in 2010, Horan said concerns loomed about the state‘s infusion of aid.
“With concerns about state support, Slater became heightened and with that we throttled back in investment funding,” Horan said.
Slater then also throttled back on its directors’ salaries and office space. Horan’s base salary is now $165,000 down from $195,000 and Sparkman’s is $155,000 down from the previous year’s base salary of $170,000.
The directors began winding down its space at Davol Square from a 5,600 square-foot space, which cost nearly $108,000 annually, to a 2,601 space with a $47,000 lease agreement. The space is currently used to house three people, the two directors and an office manager.
Included in the cost-savings renovation was a new bathroom and shower, which has sparked some questions in the close-knit technology community.
“We cut down our office space two years ago and put in a bathroom and it does have a shower,” Sparkman said. “Most high tech companies have showers.”
The shower is used by both directors who ride their bikes from their homes into the office each day and by entrepreneurs sometimes occupy space at the office and who run during their lunch hour, the directors explained.
Slater’s directors say their performance should be based on the success of their investments, not a shower stall.
“This is not a case of the gold-plated waste basket,” Horan said. “The piping was there. There was room for a shower so the landlord included it.”
“If you look at our track record we have invested $22 million in the past 11 years to more than 110 companies and something like $350 million has come into those companies from venture capitalists and angel investors,” Sparkman said.
Batting EDC
Slater needs more than a shower; it needs the $9 million infusion from the U.S. Treasury. The Treasury’s State Small Business Credit Initiative infused $13 million into the organization, but Slater is battling the RIEDC for those dollars.
The EDC’s Small Business Loan Fund Corporation withheld $1.2 million or the first portion of the grant air marked for Slater.
“Grants like this lend its way through a variety of stages and bureaucracies and this one is no different,” Sparkman said.
Negotiations with the RIEDC are ongoing. Sparkman said he would be surprised if it took more than a month for the two parties to agree. “We have investments pending and ready to go,” Sparkman added. “But we have more deals than there will be money.”
Of those investments $400,000 is slated to go to software companies. Additional funding in the area of life sciences is in the pipeline, but not pending. “Whatever we get out of this particular program we will turn it around immediately and invest in it.”
“I’ve stated publicly that I’m quite optimistic that we will be in a position to deploy the capital in a timely fashion,” Horan said. “We are all on the same team here.”
EDC Director Keith Stokes, who makes $180,000 annually, would not provide comment on the negotiations.
Slater’s History
Slater would not provide information on the number of businesses still in operation in Rhode Island in time for deadline. Horan said it would take some time to go through all of the data.
Once they negotiate a deal, the funding will be distributed to Slater in three installments over two years, according to Horan.
Slater’s performance in terms of funding and job creation has been successful, according to one former Slater director, David Livingston who referenced the federal grant from the U.S. Treasury.
“Originally all $13 million was to go to Slater; the EDC was riding their coat tails. My understanding is at the end of the day [Slater] will have the lion share.”
Livingston would not comment on the performance of Slater’s portfolio saying he has not followed the businesses closely enough.
“Under Rich, the funding model has changed and they are funding fewer companies.
with much larger infusions of capital,” he said. “I don’t know much about the operational details, but I do think they’ve brought in revenue and have monetized on their investments.”
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