A dissident member of the Direct Marketing Association’s board of directors is collecting proxy votes. In an e-letter sent Friday morning to the DMA board, executive committee members and general members, board member Gerry Pike alleged “The DMA is managed with casual regard for the By-laws that ensure that members come first and that DMA stays a leader.”
Pike’s letter further contends “As membership, revenue and reserves have plunged DMA's management has cloaked its intentions from members and closed off communication”, and “DMA's relevancy is fading as competitors take the lead in a digitally-driven direct marketplace.”
It also mentioned DMA president and CEO John A. Greco’s salary, raised concerns regarding the organization’s value to members, questioned its efficacy as an industry advocacy organization and took issue with recent staff cuts and responsiveness to member concerns. Pike is requesting DMA members authorize him to serve as their proxy representative at the Oct. 18th DMA annual business meeting, which will be held during the DMA’s annual conference in San Diego.
Pike’s letter also referred members to a Web site, http://www.abetterdma.org.
Friday evening, DMA president and CEO John A. Greco and DMA chairman of the board Kelly B. Browning issued a reply which said, in part, “…when someone communicates partial information and engages in misrepresentation and innuendo, a full review of the facts is needed.
“Mr. Pike’s charges are wide-ranging and general, but a few issues stand out as demanding clarification,” Greco and Browning wrote. “First among them is any suggestion that DMA and its professional staff have done anything other than work hard to continue delivering the value most important to members during the unprecedented and tumultuous economic changes of the past year. Staff reductions were painful but prudent, and despite the cuts we have managed to aggressively pursue many opportunities to not only survive but to thrive when the economy moderates. Chief among these are a major global curriculum for direct marketing education and professional development, our new DMA Certified Marketing Professional program kicking off at DMA09. We have also taken the leading role in a broad coalition of marketing and advertising organizations to develop self-regulation of online behavioral advertising in the face of a major governmental threat to continued growth of Internet marketing. Moreover, the downturn and staff reductions have not restrained any of our environmental efforts on behalf of the direct marketing community. In fact, we have re-doubled them with our new Environmentally Responsible Marketing certification.”
Greco’s compensation, according to the DMA’s letter, is approved by the board of directors’ compensation committee, and is set “with close attention to comparable organizations. The Committee believes the terms of compensation have been appropriate in years when the business was growing rapidly. When the current recession took hold and the impact on DMA became apparent, the Compensation Committee froze all executive compensation, including that of the president, effective months ago. Mr. Pike does not mention this although he was aware of it as a member of the Board’s Executive Committee (EC). Mr. Pike also neglects to mention that he never voiced concern about compensation at a meeting of the Board of Directors, or of the EC.”
According to the DMA’s Form 990 which was filed for the year ending June 30, 2008, Greco’s salary was $720,671, with an additional $117,857 in contributions to employee benefit plans and deferred compensation plans. The documents do not indicate what per diems or other considerations Greco receives, if any. A more recent Form 990 from the DMA is not available.
The Greco/Browning letter also addressed Pike’s contentions regarding the organization’s willingness to receive input, and its communication practices, saying “DMA management operates with an "open door" policy and reports regularly to both the Board of Directors and the EC. In addition, DMA financial performance is monitored closely by the Board’s Finance Committee, which like the EC, has been holding meetings more frequently over the past year than is customary due to the unusually volatile economy.
“DMA communicates regularly with members on all issues and at times some members have even suggested that we err on the side of sending too much information. We have made significant efforts to be responsive to such comments, and to strike a balance that satisfies the majority of you. It is simply untrue to say that DMA has cut off communication with members, or that we have cloaked any intentions in any way. We have been clear that DMA is taking advantage of this reorganization period to intensify our focus on all the interactive marketing channels – online to offline. We are working to help members take advantage of tremendous opportunities growing from a multichannel, integrated and intelligent approach to the direct marketing process.”
The letter also notes “In 2006, Mr. Pike was nominated by the DMA Board’s Committee of Nominations and elected by DMA members to a three-year term on the Board of Directors. This year, the Committee of Nominations, after reviewing a list of candidates, did not re-nominate Mr. Pike for a second term. Every other sitting member of the Board whose first term was ending was re-nominated for a second term.”
Greco and Browning conclude the letter by writing “There are many other points open to discussion in Mr. Pike’s email, but he offers no prescriptive actions. Accordingly, I urge you to send back your signed voting proxy to the Chairman or Secretary, or to vote directly by signing and returning the ballot enclosed [emphasis theirs]in the recent DMA ballot mailing. As always, all voting members are welcome to attend the annual business meeting for the actual vote.”
Pike, who is also managing director of DM firm DMSA, did not disclose how many people he had sent his letter to. But roughly two hours after its mailing he said he’d received 200 responses.
Ever the direct marketer, Pike cautioned against drawing any conclusions from this level of reaction. A Friday mailing, he noted, wasn’t an optimal time for any message.
Pike added that last Friday’s letter is not the only communication he will send out. He plans several more mailings in the weeks leading up to the annual conference.
Pike has an extensive resume regarding his involvement with the DMA. In addition to his current seat on the DMA board, he is a member of the organization’s executive committee. He also serves as a member of the DMA’s committee on the environment and social responsibility; he is the current chair of Direct Voice, the DMA’s political action committee; he is a member of the DMA’s international advisory board; has chaired the Direct Marketing Education Foundation’s 2008 spring dinner; and sat on the organization’s acquisitions steering committee.
Given his extensive activities on behalf of the DMA, why is he throwing stones now? “As a member of the board and the executive committee, I am a fiduciary,” he told Direct Newsline, adding that as a fiduciary he had a legal obligation to provide certain kinds of oversight.
“I have been told by chairman [Browning] [that I was not re-nominated to the board] because of the tone of the things I asked,” Pike continued. “Not that the things were wrong, not that I was proven wrong. The tone is unappreciated. The only tone I know of is inflicted by urgency.”
In an e-mail message, DMA senior VP and chief communications officer Sue Geramian returned a call placed Friday afternoon to Browning’s cell phone, saying that Browning was unavailable for comment as he was traveling.
As for the circumstances surrounding his being excluded from a second term on the board, Pike said “The DMA put together a nominating committee in numerous contraventions of the by-laws. Management, in my opinion, leveraged that committee to reach into the board room and extract a skeptical perspective from the board. And to me, that is the diametrical opposite of the concept of corporate governance.”
Pike continued, “And then there was an offer to reconstitute the nominating committee, allegedly in compliance with the by-laws, and lo and behold it was reconstituted with the same personalities, save one.”
According to article VIII, section 2 of the DMA’s by-laws, “Within ninety (90) days after the Annual Meeting the Board of Directors shall appoint a Nominating Committee of nine (9) members consisting of the immediate past Chairman, one (1) other past Chairman, one (1) incumbent Board member, two (2) other members at large, the Association’s president, and the Chairman, Vice-Chairman and the Chairman of the previous year’s Nominating Committee whose duty it shall be nominate candidates for Director to be elected at the next annual election designating one (1) name for each vacancy.”
Ultimately, what does Pike expect or want to achieve by his actions? To give voice to a wider swath of member concerns, he said, and to reform the organization’s by-laws to include stricter accountability and performance measurements and greater financial transparency.
He knows he has, overnight, made himself a highly controversial figure. “It is no credit to me to sacrifice integrity for comity,” he told Direct Newsline. “My first obligation as a board member is to look out for the best interests of the membership. And I believe the best way I can do that is through the action I’m taking. The proxy process is a means by which members themselves can have a direct voice, a direct written voice. They are heard through their proxies. And this is the way we can protect the integrity of the bylaws, which manifests in the equity of the members.”
He similarly dismisses the idea that he is undertaking his current actions for personal gain or glory. “In my nearly 30 years in this business, I have run my own companies. Having a DMA seat does not polish my apple with senior management – I am senior management. I don’t do business with my fellow board members. They are not my clients. It is not that I am losing income. I don’t do business with them. I don’t socialize with them.”
What motivates Pike is “the single opportunity to express an opinion, to register [members’] content, discontent or otherwise with the management with the direction and positioning of their association. It is their association. They are entitled to have their voice be heard. And many people have told me they believe the DMA has lost its way, and they want it reoriented back to the best interest of the membership. The proxy process is a way for them to exclamation point that process.”
