Executive Compensation issues:
Top Pearson Exec @ $1.7M
Top Hewlett Foundation Exec @ $2.3M
Top Creative Commons Exec @ $385K
Digital learning systems now charge students for access codes needed to complete coursework, take quizzes, and turn in homework.
posted on Aug. 26, 2016, at 5:28 p.m.
The bias that some people have against educational publishers has been fuelled by repeating factual inaccuracies and unfair analysis.
I’m not sure what your profession is or how much experience you have with financial statements.
I did pull their 10-K statement. You’re correct that their Net Profit was approximately 3% of their revenues. However. Some of that is their fault though.
Their cost of goods sold is approximately 25% which is EXTREMELY low for a manufacturing company. If they’re only turning a 3% profit, that money is being spent on operations–mismanaged operations I’m sure.
Their Administrative and Operating Costs are EXTREMELY HIGH. Probably because of salaries and such. (In manufacturing, hourly workers that work in warehouses and directly contribute to the making of their product—those costs are part of their cost of goods sold–managers salaries and office workers etc go into the Admin/Operating Expenses
So let’s see….They pay their president an annual salary of $1,000,000. They pay the next 5 people in line between $350K-$800K a year. He also received a bonus of $1 million in 2015 and the other people I mentioned received a bonus between $300K and $700K. A bonus. I’m going to say it again. They paid their president a bonus that was 100% of his salary. On top of this bonus and salary, he was awarded approximately $9 million in stock options (which when exercises are going to be much much more if in the money). Let’s see. Oh yes! He received a MONTHLY housing allowance of $20,000 and the company paid for his $1200/yr gym membership. Oh! You’re really gonna like this! We also paid approximately $15,000 to reimburse business trips HIS WIFE took in first class. Now, we’re not even talking about pensions and all the other frills.
So, yes. The financial statements report that they cleared approximately 3%, but that’s because they’re squandering their money and being very “creative” with their financial statements (that’s why they hired the best of the best ‘Ernst & Young’ to do their statements). They have a 75% gross profit. They’re making a SHIT TON of money. If they weren’t, I ASSURE you they wouldn’t be paying out million dollar bonuses.
B.B.A in Accounting
B.B.A in Finance
A.A.S. In Accounting
I expect that the nature of publishing [high-value talent and high-cost labour] explains why, as you’ve pointed out, “Administrative and Operating Costs are EXTREMELY HIGH”.
Underscoring the sense that Executive Compensation often seems irrational, this may of interest too:
The Hewlett Foundation has provided $190M since 2000 to Grantees in support of their efforts to replace commercial textbooks with open educational resources.
The Hewlett Foundation’s 990PF indicates the top executives listed earn between $2.3M – $440K. [ http://www.hewlett.org/…/Hewlett-%202014%20Form%20990… ]
A key Hewlett Foundation Grantee is The Creative Commons Corporation where the CEO earned $385K in 2013 [ http://990s.foundationcenter.org/…/043585301_201312_990… ]