Hefty salaries, perks for union leaders raise eyebrows

McClatchy NewspapersMay 13, 2012 

— First-class travel. Six-figure salaries for half the 132 officers and staffers. Plenty of plum jobs for family members.

Life is good at the top of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers.

The union, with its headquarters in Kansas City, Kan., represents about 59,000 workers in the U.S. and Canada who make and repair boilers, fit pipes and work on ships and power plants. The recession has hit their trade hard, reducing union membership.

At the same time, the president’s salary has surged 67 percent in the past six years, not counting a recent raise. Add in travel and some other expenses, and Newton B. Jones received more than $600,000 last year, putting him at the absolute top of the presidents of the dozen biggest unions in the country.

Many relatives of union officers also ride the payroll.

Totaling the pay to just the families of Jones and two other executives, the union and its affiliates gave them more than $2 million in annual salary, according to the most recent financial reports filed by the organizations.

“This is one of the more egregious examples of money flowing like crazy that I’ve ever seen,” said Nathan Mehrens, a former U.S. Labor Department lawyer and now general counsel for Americans for Limited Government, a conservative watchdog group.

In an interview, two union spokesmen defended the spending and hiring practices before requesting other questions in writing. Although they did not respond to every question, Michael Stapp, the union’s general counsel, provided a written response that included praise for the Boilermakers.

“The Boilermaker family of organizations, together valued at over $10 billion, has proudly represented the interests of hundreds of thousands of working men and women for over 130 years,” Stapp wrote.

“The history of the International Brotherhood of Boilermakers clearly demonstrates that they operate in strict accordance with all applicable laws and governing documents. They operate in much the same manner as most other labor organizations.”

Attempts to reach rank-and-file union members for comment were unsuccessful. But rumbles of discontent are sometimes felt.

In April, an anonymous letter, mailed purportedly by Boilermakers members and obtained by The Kansas City Star, sharply criticized union leaders.

“While members and their families struggle to make it through this recession, our IBB (International Brotherhood of Boilermakers) leaders have been living high off the hog at members’ expense,” the letter said.

“We regret that we have to be anonymous at this time because we fear retribution from a leadership that regrettably values its own personal and financial interests above the rank and file’s.”

In membership, the Boilermakers are a mere 5 percent the size of the Teamsters union. Yet which president received more in total disbursements from their unions last year — Teamsters President James P. Hoffa or the lesser-known Newton B. Jones?

Jones by more than $200,000.

Jones received $607,022 in total disbursements, compared with $372,489 for Hoffa.

Total disbursements include salary and business expenses, especially travel, which a union spokesman said made up most of Jones’ expenses.

Jones’ salary in the last fiscal year, which ended June 30, 2011, was $307,134 — also more than Hoffa. The figures come from annual reports the unions file with the Labor Department.

Jones’ total disbursements also are more than double those of Richard Trumka, head of the powerful AFL-CIO, a federation of national and international unions with 11.6 million members. Trumka received total disbursements of $293,750.

All together, the total disbursements last year to the top nine Boilermakers officers — $4.1 million — were $182,000 more than the total disbursements to the 29 executives at the national headquarters of the Teamsters union.

Although the Boilermakers’ general counsel did not compare total disbursements, he did say that Jones’ salary is not out of line with comparable union presidents.

Other unions came up last year at a Boilermakers convention in Las Vegas when delegates heard a proposal to raise Jones’ pay.

“Some delegates were against giving the (International president) a raise at a time when many Boilermakers are having trouble negotiating raises because of the recession,” said an article in The Boilermaker Reporter, an in-house publication. Others argued, however, that Jones not only deserved a raise but needed one to bring his salary more in line with salaries of other presidents of unions in the Building and Construction Trades Department of the AFL-CIO.

That wasn’t necessarily true. An examination of leaders’ salaries in the Building and Construction Trades Department — an alliance of 13 skilled-trade unions including the Boilermakers — shows Jones was smack in the middle last year. And when it comes to the total disbursements received from their unions, Jones is the highest.

The Boilermaker Reporter called the debate over Jones’ salary increase “spirited but cordial.”

Delegates agreed to give Jones a raise but to make it smaller.

Stapp said delegates overwhelmingly voted to adjust the salaries of Jones and other officers.

“President Jones was recently unanimously re-elected by approximately 600 delegates in an open democratic election process, clearly demonstrating membership support for him,” Stapp said.

Stapp added that union leadership has reduced annual expenses by more than $10 million over the past nine years, including the elimination of three officers. Shortly after the 2011 convention, Jones and other officers made an additional $3 million in cuts, with more being considered, he said.

The compensation and perks in the Boilermakers headquarters stunned Marcus Owens, a Washington, D.C., attorney who once headed the division of the IRS that oversees nonprofit organizations.

“Those kinds of benefits seem extraordinarily high,” Owens said. “That’s just over the top.”

Taxpayers have a stake in the Boilermakers’ spending, he said.

The union, like most, is structured as a nonprofit organization, which means it qualifies for exemption from federal income tax. But the law prohibits union officials or key employees from benefiting from the tax-free money they raise.

“They’re not paying income tax,” Owens said. “So in a sense, we’re all supporting them…I don’t mind tax-exempts that are doing what they’re supposed to do, but if they aren’t, I’d kind of like them to pull on the oars, too.”

While their union pay may seem comfortable, some officers get a second hefty paycheck, thanks to a bank the union controls.

The union is principal shareholder of Brotherhood Bank & Trust. Three of the bank’s 11 board members are union officers, and one is a retired union officer.

The bank’s chairman? Boilermakers President Newton Jones.

In calendar year 2010, Jones received $52,945 as chairman of the bank’s board of directors in addition to his union pay, according to the most recent report he filed with the Labor Department. The previous year, Jones earned $79,775 as bank chairman and $260,000 as the bank’s chief executive officer and interim president. In 2008, he received $230,000 from the bank.

“Those both sound like full-time jobs,” Owens said of Jones’ union and bank positions in 2008 and 2009. “It’s certainly full-time compensation.”

Stapp said that Jones played a key role at the bank.

“Chairman Jones’s leadership contribution to this institution is evident in the board’s continuing demonstration of confidence in him, his vision and his labor business outreach initiative,” Stapp wrote.

Other union executives on the bank board received compensation as well.

International Secretary-Treasurer William Creeden reported earning $258,650 from the bank in 2009, the last year he filed. He also received $252,098 in salary from the Boilermakers union in fiscal 2010.

And officers who retire from the Boilermakers union get more than a watch — each gets to keep his company car.

In 2010 the union “gifted” a vehicle to retiring international vice president Sammy May. The vehicle originally cost $73,998 with a book value of $51,388 when the union gave it to him, the union’s annual report said.

According to its annual reports, the union has a long-standing policy of giving vehicles “as gifts to retiring officers.”

International vice president George Rogers retired in 2008, taking with him his company car that cost $53,380. That same year, the union gave a vehicle that cost $58,959 to the widow of an officer who had died.

Some retiring officers continue to receive union pay by working as a consultant. Rogers made $600,000 over two years, annual reports indicate.

Along with the $300,000 in consulting fees he received in fiscal year 2008, the year he retired, Rogers earned $400,871 in salary as a union vice president, Department of Labor documents show.

In fiscal year 2009, records show Rogers received another $300,000 in consulting fees.

Rogers said he couldn’t comment on pay.

“I’m not supposed to talk about anything,” Rogers said.

“Those seem extraordinary,” Owens said of the union’s consulting fees. “Frankly, I’ve never seen consulting compensation to a retired officer at that level.”

Being a boilermaker executive can be a family business.

Newton Jones, 58, took over the president’s office when his father, Charles W. Jones, retired in 2003 after 20 years.

Among Newton Jones’ family members:

  • His brother, Charles, is director of the Boilermakers’ History Preservation Department and assistant to Newton. His salary in 2011 was $150,091, with total disbursements of $187,641.
  • His sister, Donna, earns $98,802 as an executive secretary.
  • His relative, Michael Peterson, is an aide to Jones and until last year worked for the Boilermakers National Apprenticeship Program, earning $132,746 in 2010, according to the program’s most recent tax document, and $127,252 from the union, according to its annual report for fiscal 2011. He told The Star he is now an international representative for the union as well as an aide to Jones.
  • Jones’ son, Cullen, is a video communications technician who lives in North Carolina, earning $68,482 salary with total disbursements of $173,288 last year. He is 23, according to a court filing.
The union in 2009 paid $43,000 to send Cullen to the Vancouver Film School in British Columbia. The school describes itself as “Canada’s premier entertainment arts institution and one of the most distinguished worldwide.”

Several members of the Creeden family also make a good living working for the Boilermakers, totaling $624,000 in salary.

That is only a sampling of the family ties involving union officers.

In his written response, Stapp said it is policy not to comment on individual workers or consultants:

“All Boilermaker employees are hired based on their respective skills and experience as well as their desire to serve the best interests of the Boilermaker organization,” he said.

And employing family members is common in large corporations, Stapp said in an interview.

Watchdogs, however, pointed out that there’s a big difference between family-owned corporations and nonprofits such as the Boilermakers that don’t pay income tax.

They also called the Boilermaker jobs a classic case of nepotism.

“Especially for some of these young employees who are relatives of officers, it raises all kinds of alarm bells,” Mehrens said. “It begs the question, did that person get the job based upon skills or qualifications, or did they get it based on who their father was?”

When the union’s officers get away, they do it in style.

The union has an 18.75 percent ownership in a Piaggio airplane, which holds up to nine passengers. Today, a new one sells for about $6 million. The Boilermakers also have a 6.25 percent share in a second airplane, according to its Labor Department filing.

In 2011, the Boilermakers paid $521,160 to Avantair, its aviation service provider, for maintenance and other fees associated with the planes.

Union watchdog groups say few unions have ownership in planes. The Machinists union has a Learjet, but the Teamsters union — which used to own several private jets — sold them years ago because of criticism.

Union officers and their relatives also are allowed to fly first-class on commercial airlines, the union’s tax documents show.

Once they’re on the ground, officers make sure their stays are memorable.

About a year ago, members of the union’s International Executive Council treated themselves to at least one gathering at a renowned hunting lodge in Gettysburg, S.D. The council — the president and eight other officers — listed the trip as a council meeting.

The lodge, called Paul Nelson Farm, is a favorite hunting spot of former Vice President Dick Cheney and Hall of Fame quarterback John Elway.

It’s a luxurious resort that “attracts 700 hunters a year who are prepared to pay for the very best,” according to a 2009 review in the magazine Business Jet Traveler.

The Paul Nelson Farm website offers a package that includes three days of hunting with guides and dogs, pheasant cleaning, and meals and beverages. For a group of six or more, a three-day package runs $4,595 per person.

The Boilermakers paid a total of $163,000, according to Labor Department reports they filed.

The union also paid $12,854 in 2010 to Alaska Fly Fishing Adventures in Sterling, Alaska, but it is unclear who enjoyed the service, described as an “outfitter and tour guide.”

That year, the union held an Alaska conference at which union officials met with contractors and owners.

In France, where officers went in fiscal 2009 to negotiate contracts, the union paid $5,232 to Yachts de Paris, a “dinner cruise service provider.”

Stapp defended spending for recreational events.

“As most successful organizations recognize, sporting and entertainment activities and venues are important tools for relationship building with business partners and fellow organizations and are used in this organization’s efforts to insure and expand the work opportunities of its members,” he wrote.

But watchdog groups find the perks and benefits enjoyed by union officials to be unusual and profligate.

“This is a pork fest,” said Ken Boehm, chairman of the National Legal and Policy Center in Falls Church, Va., a conservative union watchdog group.

“These things sound way out of line. They’re not even in the same ZIP code as the line.”

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