Summerfest CEO Awarded $2.33 Million

The federal tax form of Summerfest shows its CEO Don Smiley was awarded compensation of $2,344,122 in 2017, which included about $971,000 in base salary and “deferred compensation” for his work that year, and an additional $1.37 million deferred from prior years. City officials learned about that $2.3 million payout earlier this week, at the same time Summerfest officials refused to attend a meeting with members of the Harbor Commission, which oversees the festival.

Milwaukee Alderman Michael Murphy says he was “shocked” when he heard the $2.3 million figure, “and when I shared that with the mayor he was shocked as well.”

When told the actual compensation for 2017 was $971,000, Murphy said “that’s a nice piece of change” and still out of line “compared to other non-profits, which pay substantially less.”

That compensation is a 331 percent increase in the salary of $225,000 Summerfest offered Smiley when he was hired in 2004, after doing a national search for the position. Had Smiley’s compensation risen during that period at the rate of inflation, he would now be earning $305,827. 

“Most people in the community would have been thrilled to get a 30 percent increase” over that period, Murphy says. 

Smiley’s compensation is 7 times more than the annual salary of State Fair director Kathleen O’Leary, which is $137,000. State Fair is actually a bigger event than Summerfest in terms of people served, with annual attendance of 1,130,572 people over 11 days in 2018, versus just 766,192 people over 11 days for Summerfest. 

State Fair is run by state government and has an annual budget of about $24 million versus Summerfest’s $46.7 million budget in 2017. 

Murphy asked the city’s Legislative Reference Bureau to check for salaries of other entertainment festivals and besides State Fair, the bureau listed several festivals that pay much less for directors of festivals that run longer but attract fewer people. The head of the Bravo! Vail Music Festival in Colorado (6 weeks long, 62,000 attendance) earns $262,295, the head of the Newport Jazz and Folk Festivals (6 days total, 60,000 people) earns $366,885, the head of the Cleveland International Film Festival (12 days, 105,339 attendance) earns $188,700, the head of the Breckenridge Music Festival in Colorado (one month, 15,000 attendees) earns $100,000.

But Howard Sosoff, chairman of the board of Milwaukee World Festival, the parent organization of Summerfest, tells Urban Milwaukee “the position held by Mr. Smiley goes far beyond the production of a music festival” and includes “fund raising, construction management, facilities management and the production or hosting of over 35 events.”

Sosoff says the board “retained Mercer, an independent global firm which provides executive compensation consulting, to attest to the fairness of the President/CEO’s compensation when compared to other similar positions throughout the country.” 

But Sosoff declined to provide a copy of the report, calling it “an internal document related to personnel matters.” When asked to simply provide a list of the executive pay at comparable organizations used to determine Smiley’s pay, he declined to do so. 

Back in 2013, when questions first arose about Smiley’s pay, the board also declined to provide a copy of the study it said was used to determine his compensation. Back then Smiley was paid a base salary plus a huge bonus. Since then the board has switched to a base salary plus deferred compensation, based on Smiley meeting certain “goals and objectives,” also not disclosed by the organization. 

Sosoff says the $1.37 million in deferred compensation collected in 2017 was for Smiley’s work in the years 2012 to 2016, but declined to provide Urban Milwaukee with copies of the organization’s federal tax forms for those years.   

The disclosure of Smiley’s pay package comes after Mayor Tom Barrett and other city officials have called on the festival to pay the full cost of police services provided by the city for Summerfest. The estimated cost of that was $813,297 in 2019, but under Summerfest’s lease, Milwaukee World Festival will pay only $134,392, leaving a difference of $678,905. City officials noted this was the fourth year in a row that taxpayers had been forced to pay for uncompensated costs of police services

“There’s an unfairness here, and the unfairness has a very negative impact on the taxpayers in the City of Milwaukee,” Barrett said back in August. 

Ald. Mark Borkowski, a member of the Harbor Commission board, urged the festival to reconsider, in an email to Urban Milwaukee.

“Don Smiley has no sense of self-awareness if he believes Milwaukee taxpayers are not insulted by his unwillingness to have the festival reimburse Milwaukee taxpayers for the cost of providing a safe and secure venue, approximately $675,000, while his pay package is 37 times greater than the average salary in Milwaukee. That’s a tough argument to make to Milwaukee taxpayers who are footing the bill to subsidize his bottom-line and salary,” Borkowski writes.

“Milwaukee taxpayers view themselves as partners with Milwaukee World Festival, Inc.,” he adds, “and the staff and board of MWF should be thankful for their support and commitment.”

The idea that Summerfest is a partnership with the city, which founded and has spent countless millions over the years subsidizing the festival, was rejected by Sosoff in comments to Urban Milwaukee. “Milwaukee World Festival, Inc., is not a public-private entity,” he said. “It is a private corporation.” 

In that case, Murphy says, it can pay the full cost of police services, as the Milwaukee Bucks and Milwaukee Brewers do. 

“Milwaukee is one of the poorest cities in the country,” Murphy notes. “For the city to provide a high subsidy to a very profitable ‘private entity’, which is their words, is simply unacceptable.”

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