02/22/2010 12:00AM

NYRA defends its executives' pay


Responding to a request made two weeks ago by a state oversight panel, the New York Racing Association disclosed on Sunday the salaries of its top officials, including its chief executive officer, Charles Hayward, who was paid $460,000 in 2009.

The salaries were disclosed in a response to a request by Robert Megna, the chairman of the New York State Franchise Oversight Board, which has broad supervisory powers over NYRA after a reorganization of racing regulation following NYRA's emergence from bankruptcy in 2008. Megna requested the data two weeks ago as part of the board's analysis of NYRA's financial position. The board released the documents supplied by NYRA.

In a statement accompanying the salary data, NYRA chairman Steven Duncker said Hayward and other NYRA executives are paid at "levels on par with the industry as a whole." The salary data was listed in a chart showing what NYRA considered to be comparable data from other racing companies and analyses of executive salaries at companies similar in size to the association, a not-for-profit organization that operates Aqueduct, Belmont, and Saratoga under a 25-year lease with the state.

The chart shows that Hal Handel, NYRA's chief operating officer, was paid $440,000 in 2009. NYRA's chief financial officer, Ellen McClain, was paid $325,000 in 2009, according to the document. The association's legal counsel, Patrick Kehoe, who also conducts lobbying for NYRA, was paid $413,000.

In a chart detailing salary data, NYRA said chief executives of other major racing companies, such as Churchill Downs Inc. and Magna Entertainment Corp., received much higher salaries. For example, NYRA said that Robert Evans, the chief executive officer of Churchill, received $4.1 million in total compensation in 2008, and that Michael Neuman, the most recent paid chief executive of Magna, would have received $1 million in guaranteed compensation for the 2007 fiscal year. Neuman left after only four months, and received $835,000 in total compensation.

The compensation figures were independently verified by Daily Racing Form from financial reports filed by the companies with the SEC.

NYRA at first resisted Megna's request to provide the salary data, claiming that release of the information would put the company at a disadvantage when attempting to hire and retain employees. Duncker said in the statement that NYRA agreed to release the data to the board "because we recognize the political pressure you are under to make this information available to the press and the public, regardless of the propriety of doing so given NYRA's status as a private corporation."

NYRA is facing significant political pressure because of its claim that the state is obliged to provide financial assistance to the organization until a long-delayed casino at Aqueduct is up and running. The state is trying to close a budget deficit of $5 billion, and politicians are reluctant to extend the assistance at a time when most state agencies are facing significant cuts.

Duncker said in the statement that NYRA executives do not benefit from stock options and other compensation tools used by publicly traded companies. NYRA reorganized as a private not-for-profit company after emerging from bankruptcy in 2008.

The comparisons also included data from a study of executive salaries by Economic Research Institute and a widely used salary tool called the Watson Wyatt Executive Compensation Calculator. The study by the institute indicated that the average chief-executive compensation for a company of NYRA's size was $695,000 in 2008. The calculator indicated that the average salary of a chief executive was $692,000 in 2008.

For chief operating officers such as Handel, the institute average was $466,000. The calculator's average was $481,000. Churchill's chief development officer, William Carstanjen, received $741,000 in compensation in 2008, according to NYRA and Churchill financial statements. Magna, which filed for bankruptcy in March 2009, paid two vice presidents of operations $337,000 and $265,000 in 2007, the latest figures that are available, one year after paying compensation at the two positions of $490,000 and $436,000.

Hayward began issuing warnings late in 2009 that the association would run out of cash in mid-2010 without state assistance. The association had included revenues from the casino in its 2010 budget. An operator for the casino - which will likely be the most lucrative on the East Coast, according to gambling analysts - was selected by state political leaders nearly three weeks ago, but the selection has been targeted for criticism by other politicians and losing bidders.

Gov. Paterson, who made the selection of the casino operator with assembly speaker Sheldon Silver and senate democratic conference Leader John Sampson, has said that criticism of the deal will not affect the state's negotiations with the company selected to run the casino. The company, Aqueduct Entertainment Group, is a sprawling partnership of politically connected real-estate and casino companies.

NYRA filed for bankruptcy late in 2006. Under an agreement with the state reached in 2008 that allowed the association to emerge from bankruptcy, NYRA received $105 million in debt forgiveness and cash in exchange for ceding the deeds to its three tracks.