|By Jason Garcia, The Orlando Sentinel,
Fla.McClatchy-Tribune Regional News
Nov. 25, 2008 --The former top executive at the Orlando/Orange County Convention & Visitors Bureau received nearly $750,000 after he retired at the end of 2006, according to tax documents filed this month with the federal government.
The visitors bureau's 2007 tax return shows that former President Bill Peeper earned $744,441 following his Dec. 31, 2006, retirement, thanks to a complex retirement package negotiated with the agency's board of directors in the mid-1990s.
The compensation was on top of the bureau's regular retirement plan and the $416,000 salary that Peeper was paid in 2006, his 23rd and final year as the visitors bureau's chief executive.
Representatives for the visitors bureau, which receives both public and private money, declined to provide copies of Peeper's contracts or discuss their terms, calling them confidential personnel matters.
But Mark McHugh, president of Gatorland and chairman of the agency's board of directors, said the retirement compensation was "appropriate" because the nearly $750,000 accumulated over time. McHugh credited Peeper, who was the first chief executive in the bureau's history, for building the agency from a small group of staffers into a major player in global tourism.
"He knew the business inside and out," McHugh said. The retirement terms, McHugh added, were designed to ensure that rival destinations could not hire Peeper away from Orlando. "We sure didn't want him going off to some other destination and having to compete against him."
Peeper declined to comment in detail, saying he did not want to discuss his personal finances.
Spending at the visitors bureau has come under heightened scrutiny this month since the Orlando Sentinel reported that the agency spent nearly $9,300 to fly Peeper's successor to Dubai in business class while two other prominent tourism executives flew on the same flight in coach.
The agency is also undergoing a separate audit by the Orange County Comptroller's Office. The results are expected within weeks.
Bundle in public funds
The bureau, which is organized as a private, nonprofit organization, has received about $100 million in hotel taxes from Orange County during the past two fiscal years and expects to receive another $30 million this year. The bureau raises about $20 million a year from private sources such as corporate membership dues.
County Comptroller Martha Haynie said it is important that the visitors bureau offer competitive salaries and benefits to recruit and retain talent. But she also said an agency that receives public funds has an obligation to ensure that its executive compensation is not overly extravagant.
"The board of directors has a responsibility to make sure that they have done their due diligence that across the country, across the industry, their compensation packages are in line," Haynie said.
Peeper's $744,441 in retirement compensation -- which was in addition to a common retirement plan that the bureau offers all employees -- stemmed from employment contracts he negotiated with the bureau in 1993 and 1997.
As part of those agreements, Peeper purchased life-insurance policies but had the visitors bureau pay the premiums on his behalf. Those policies, known as "split-dollar" life insurance, grew tax-free over time as the payments accumulated and earned investment gains.
Split-dollar insurance policies were a common form of executive compensation in the private sector during the 1990s, with recipients including corporate executives at BellSouth, Starbucks and Enron, among many others, according to The New York Times. Their use has dwindled this decade because tax-related crackdowns by Congress and the Internal Revenue Service made them less attractive as a corporate benefit.
It's unclear how common such arrangements were among convention-and-visitors bureaus, which are often organized as nonprofits or government agencies. A spokeswoman for the Destination Marketing Association International, a trade group for tourism bureaus, said the organization does not track such information.
Vegas, New Orleans say no
A spokesman for the Las Vegas Convention and Visitors Authority, which is a public agency, said it does not offer its chief executives supplemental retirement compensation beyond what is available to all employees. But employees at the Vegas authority, unlike their counterparts in Orlando, are eligible for public pensions.
A spokeswoman for the New Orleans Metropolitan Convention & Visitors Bureau, which like the Orlando bureau is a nonprofit agency, said it has never provided supplemental retirement packages to its top executives.
Under typical split-dollar insurance arrangements, enough money accumulates within the policies that, once the executives retire, they can dip into the proceeds to repay their employers for the premiums it has paid -- and still have enough remaining to either continue the policy for the rest of their lives or surrender it for a large, lump-sum payment.
But under Peeper's contract, the visitors bureau also agreed to award him deferred compensation in amounts large enough to offset the premium amount he had to repay. As a result, according to tax experts interviewed by the Sentinel, Peeper -- who cashed out the policy upon his retirement -- was essentially entitled to the policy's full cash surrender value.
Although bureau officials declined to discuss the package, the tax lawyers and financial planners interviewed by the Sentinel said the agency's public filings indicate that Peeper ultimately received about $434,000 in deferred compensation -- matching the total amount of insurance premiums that he owed the agency -- plus about $310,000 more in apparent gains from the insurance policies or other retirement compensation.
No laws broken
"There's nothing wrong with what they did. They just took advantage of what the law allowed them . . . [which was] to put money aside in the form of life insurance to pay him out at retirement at a level they wanted him to get," said Martin J. Satinsky, a certified public accountant and tax attorney in Nashville, Tenn., who specializes in personal financial planning. "In addition, by using the life insurance, they also were able to fund a death benefit for his family if he died prematurely."
Peeper's successor as president and chief executive officer of the visitors bureau, Gary Sain, earns a base salary of $287,000 with the opportunity to earn as much as $100,000 in annual bonuses, according to the terms of the contract he signed last year. The bureau said Sain's contract does not include a retirement package similar to Peeper's.
Jason Garcia can be reached at email@example.com or 407-420-5414.
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