Wednesday, March 6, 2019

What is the ethical compensation for nonprofit executives? (Should you boycott PLOS?)

[This is a copy of my blogpost, previously on]

Over the last week, there's been a storm over the executive compensation and financials at the Public Library of Science (PLOS). It was started by a series of tweets from Professor Andrew Kern, looking into the financial disclosures of PLOS and learning that they pay good salaries and have operating margins. Andrew then concluded:
PLOS's financials reveal that they are merely trying to maximize their personal and corporate profit, like any company. They are padding the wallets of their executives and taking our grant money and putting in in the stock market. They are merely another Nature or Science that aims to maximize profits while cloaking itself in the white robes of OA.
Not surprisingly, many scientists were outraged and accused PLOS of being evil. I was puzzled by the strong negative reaction to the fact that PLOS pays the people who work for it competitive salaries. Clearly, many academics were shocked to learn that six figure salaries are normal for executives of large nonprofits. It doesn't seem "fair" to many. So, I asked:
Simple question to Andrew Kern and all upset with PLOS salaries - if YOU were on the board of PLOS, how would YOU set exec salaries? (No doubt there's been corrosive excessive growth of CEO salaries for decades now. But for a given organization that you want to see succeed, given market executive salaries, what would YOU do?
The are many who replied to me. It was a good discussion. But the concerete answers to my question were of the type: 
Let's pick one of them - Andy Kern's maximum of "5x of graduate stipend". That's about 5*$30,000 = $150,000/year. So if Andy ran PLOS, he would pay the executives at most $150K, and that means Andy would simply run PLOS into the ground because he would lose all the talented executives. And since Andy is an advocate for open access, I don't understand why he would want to destroy PLOS. Sure, he says that executives who would leave are simply "not into the mission," so good riddance. 
But, I am genuinely puzzled over how people who support the push for open access can simultaneously advocate for the destruction of PLOS. Looking at 990 forms of other societies, it quickly becomes clear that the executives at PLOS have competitive but not at all obscene compensation. Quick check, comparing salaries from 990 forms at PLOSACSAAAS.
Those are comparisons to other large non-profits. How much lower can PLOS go in paying its executives before they leave to be publishers at other nonprofit societies or to Elsevier/Wiley/Springer?
While much of the outrage was centered around the salaries, some people were upset that PLOS has margins and savings. Again, this seems to stem from the misunderstanding of how nonprofits work. All successful societies have operating margins and reserves. In fact, as Michael Eisen writes, most scientific societies have larger "assets to expenses" ratios than PLOS.
So my plea to everyone who is outraged by PLOS finances and threatening to boycott publishing there - please think about the above as though you are running PLOS and want open access to succeed. Remember that when it comes to publishing, many societies are making $5K-$6K per published paper, from combination of subscriptions and publishing charges. These societies have often 30%-50% margins on the publishing, compared to the 20% at PLOS. And at the end, the papers are locked behind subscription paywalls.
Randy Olson was one of the people upset by the high salaries. Instead of answering my question of what he would pay, he replied that what bothers him most is that PLOS isn't trying to make publishing cheaper. And that's another puzzle. First of all, PLOS already made publishing cheaper at ~2K/paper instead of the average $6K that subscription publishers get. Second, it's clear that PLOS is investing the extra capital into infrastructure, and I imagine the goal of this is exactly to lower the publishing costs. After all, PLOS has to compete with PeerJ, F1000 Research, and a sea of other open access journals. Because PLOS pays its employees well and has devoted and talented folks, I'm sure they are keenly aware of the need to reduce the publication charges.

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