Papering over the Pay Problem at CIRM: When is a $400,000 Salary Not $400,000?

Three top leaders of the California stem cell agency have come up with a plan that they hope will allow CIRM to avoid the wrath of the public when its new chairman is paid a salary that could be seven times the income of an entire, typical California household.

The proposal, which has not been laid out in public, was advanced in a March 17 letter sent to the four state officials who have responsibility for nominating a person this spring to replace outgoing Chairman Robert Klein, who is a real estate investment banker. He and Art Torres, co-vice chair of the agency and a former state legislator, and Ted Love, a San Francisco area biotech executive, signed the letter.

Under terms approved last month by the CIRM board, the new chair could be paid as much as $400,000, which is nearly seven times the median California household income of $61,000. The Klein proposal calls for only $150,000 of the $400,000 to come from "taxpayer" funds. The remainder would come from so-called "private" funds donated to CIRM several years ago by philanthropists. In fact, those "private" funds are now "taxpayer" funds, just as any gift becomes the property of the recipient, and the cash is in state/CIRM coffers.

The plan also would establish a dubious precedent and raise conflict of interest questions. It would place private individuals and possibly biotech companies in the position of paying for the salaries of CIRM leaders, as John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., pointed out.

Asked for a comment, Simpson said,

"This plan sounds like an incredibly dubious course to me. If you want to influence CIRM, just donate to the ICOC(the CIRM governing board) chair's salary. Folks used to call that bribery."

In their letter, Klein, Torres and Love wrote,

"We are...cognizant of the difficult financial situation confronting the state and the need for agencies like CIRM to ensure fiscal restraint."

They also said,

"It is very important, however, for CIRM to have the right leadership and not limit our choice to individuals who have sufficient personal wealth to serve for little or no compensation. CIRM is at a critical juncture as it moves towards the funding of human clinical trials, Given the complexity of this effort and the importance of providing rigorous overesight, it is essential for CIRM's governing board to have strong leadership."

In addition to attempting to minimize negative public reaction, the pay plan would provide political cover for the state officials nominating candidates for chair. The officials are the governor, treasurer, controller and lieutenant governor.

As Torres mentioned at the March board meeting, none of those officials are likely to be enamored of the idea of recommending somebody for a lucrative state post while state funds to aid the poor and children are being slashed in the face of California's financial crisis.

High salaries for public officials are an anathema to much of the public, which has a visceral, hostile reaction to them. That is the case whether the salaries are deserved or necessary to attract the appropriate talent. The Klein plan, however, only compounds the PR problem. Attempting to make a $400,000 salary appear to be a mere $150,000 only makes CIRM appear deceptive and less than trustworthy. That is not to mention the dubious precedent it would set for the agency by relying on private handouts for essential operations.

The pay plan has yet to be acted on by the CIRM board. The letter said it would go to the directors' Governance Subcommittee at its next meeting and then to the full board if it is approved by the subcommittee. That could take place at the May meeting of the directors.

(An earlier version of this item incorrectly said that the letter was signed by Duane Roth, co-vice chair of the agency.)