Pan-Am bonuses a sports industry norm

News that Pan-Am Games executives will share $5.7 million in bonuses for getting their jobs done on time and on budget is raising some eyebrows.

Games CEP Saad Rafi says the bonuses - as much as 100 per cent of the annual salary in at least his case – are the norm in the world of major sporting events.

Indeed, they are, and so is the ensuing uproar.

Organizers of the 2010 Winter Games in Vancouver were called onto the public carpet a year before the Games when they disclosed that $33 million in “retention bonuses” would be paid to hundreds of employees who stayed on track to the finish line.

John Furlong, CEO of the Vancouver organizing committee, said at the time that it would be a significant challenge if staff left as the Games – and the end of their employment – drew near.

“Other committees have faced that and it’s hurt them,” he told reporters. “We need to protect ourselves from that.”

Though they likened the bonuses to severance pay, the Vancouver organizing committee ultimately cancelled almost half the promised extra pay, citing the global financial crisis.

In the end, Vancouver organizers said $17 million raised from television rights, sponsorships and ticket sales was doled out.

There was a similar outcry when it became public that Dennis Hone, the former chief executive of the Olympic Delivery Authority responsible for the 2012 London Games, received $1.9 million in salary, bonuses, pension contributions and severance pay for his final year on the job.

A year after the Games ended, the public found out that Hone and three other executives received $1.2 million in payouts.

“I am deeply concerned to learn of these staggering pay-offs, which are clearly out of touch with the principle of the Olympics legacy and supporting grass-roots sport,” Stephen Barclay, a Conservative member of the House of Commons public accounts committee, said at the time.

And last year, FIFA was embroiled in one of its many scandals over bonuses for its executives.

The non-profit governing body of world soccer doesn’t report details of compensation for its 25 officials but a 2012 financial report cited $33.5 million for “key management personnel.”

On the recommendation of an external audit panel, the organization agreed to scrap bonuses but London’s Sunday Times reported that the executive committee then secretly doubled salaries.

The newspaper said six-figure World Cup bonuses were replaced by salaries that increased from US$100,000 to $200,000 a year for part-time roles, in addition to expense budgets of up to $100,000.

Michel Nadeau, CEO of the Quebec-based Institute for the Governance of Private and Public Organizations, says bonuses for such one-time events are common.

Nadeau, whose organization has audited expenses for such celebrations as the 250^th anniversary of Quebec City, said organizing the Pan-Am Games is a stressful and difficult endeavour.

It’s also a one-time event with no possibility of continued employment.

“It’s very important to keep your staff. The last thing you’re looking for is to have someone one month before the Games is say I’m leaving because I can’t miss another opportunity,” Nadeau tells Yahoo Canada News.

“You have to have some carrots in order to keep the staff motivated until the end.”

The $5.7 million in bonuses for Pan-Am organizers, in relation to the $1.44 billion cost of hosting the Games, is not too much, he says.

But those bonuses should be paid after the event is delivered on time and on budget, he says.

“I think it’s very important to have a complete picture of the success of the event.”