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CEO: Bonuses in lottery business are necessary

Georgia LotteryGeorgia Lottery: CEO: Bonuses in lottery business are necessary

In a year in which the state is cutting back on spending, freezing pay and laying off staffers, Georgia Lottery CEO Margaret DeFrancisco received a $150,000 bonus.

In all, lottery staffers received about $2.5 million in bonuses this year.

DeFrancisco said the incentives are necessary to keep the lottery — which set sales records again this year — competitive with other businesses in the market for top workers.

"The whole point is to attract and retain really talented people," DeFrancisco said. "I would say, based on the results of this organization, doggone it, it's worked."

But some lawmakers object to the bonuses, especially at a time when they are having to slash state spending anywhere from $1.6 billion to $2.5 billion.

"It's just insane," said House Higher Education Chairman Bill Hembree (R-Winston), who last year pushed a bill calling for more legislative oversight of the lottery. "We are dealing with a revenue shortfall and telling each agency to cut 8-10 percent. And this group, which I still consider [a] quasi-government agency, is having parties and having a good old time."

DeFrancisco's bonus was down from the $236,500 she received in 2007. She also did not get a raise from her $286,000 salary, which is about twice what Gov. Sonny Perdue earns.

Tony Campbell, chairman of the Lottery Corp. board, said the panel gave DeFrancisco a smaller bonus because of the weak economy.

"We had a great year; she did a great job. It was a recognition of the state of the economy in general," he said. "The state of Georgia and the nation are having tough economic times right now."

Collectively, the lottery's approximately 280 employees received, on average,

11 percent less in bonuses in 2008 than in 2007.

Their bonuses didn't shrink for the same reason DeFrancisco's did. The reduction in their bonuses resulted from a compensation study that recommended lottery officials increase base salaries for some staffers and lower bonuses.

The total compensation for lottery staffers — salaries and bonuses — increased on average 3.6 percent for fiscal 2008. That's not much more than state employees received during that period, which ended June 30.

Two top executives, Kurt Freedlund, senior vice president for legal affairs, and Joan Schoubert, senior vice president of finance, planning and development, received

5.7 percent raises in their six-figure salaries but were given the same $55,000 bonuses they received last year.

Georgia's lottery is among the most successful in the nation, increasing sales every year but one since the first tickets were sold in 1993. Those sales pay for HOPE college scholarships and pre-kindergarten classes for 4-year-olds.

The lottery receives no state funding and was set up to operate like a business, with a president who reports to a board.

The governor appoints the board. A legislative panel is supposed to provide oversight, and the lottery must present regular reports of its finances to the state auditor. Legislative oversight has been minimal since the lottery began.

Bonuses have long been part of the compensation package at the lottery, although they are 10 to 15 times what they were in 1993, the lottery's first year. State employees don't get similar bonuses.

State employees are also going without pay raises this year because of budget cuts brought on by the recession.

DeFrancisco said the Lottery Corp. is a sales and marketing business, and similar bonuses are common in the industry.

She said lottery employees earn what they get, keeping the games fresh enough that even in a down economy, sales are up.

"We are really dedicated to what we do," DeFrancisco said. "We're an entertainment dollar. We're not a necessity."

Sales during the first quarter of fiscal 2009, which began July 1, were $871 million, up from $842 million during the first quarter of fiscal 2008.

Nonetheless, lawmakers are sensitive about the administrative costs associated with the lottery. They were irate when the question of bonuses arose in 2004. That year, lawmakers stiffened requirements for students to receive a HOPE scholarship, which led to fewer students getting the award. Legislators did so because projections showed the growth in the cost of the program would outpace the rise in ticket sales.

Last year lawmakers debated a bill giving legislative leaders the authority to appoint two-thirds of the Lottery Corp. board. The legislation, which didn't pass, would have forced the corporation to report details of employees' bonuses to lawmakers each year.

Hembree, who sponsored one of the bills, said he will refile it for the 2009 session, which begins Jan. 12.

"I am glad they (lottery officials) are successful, but there has to be a limit," he said. "There are probably going to be (more) layoffs in the state government coming up. You've got a person losing their job and you've got someone getting a $150,000 bonus."

House Minority Leader DuBose Porter (D-Dublin), who sponsored the legislation that created the lottery, doesn't want lawmakers telling the Lottery Corp. officials how to run the games.

"This is one of the most successful lotteries in the country," Porter said.

"They [lottery officials] have agreements and hired the best people to keep the Georgia Lottery one of the best.

"This is an area where you don't cut the bonuses because they've done a bad job. You give them the bonus because they're doing a good job and they've earned it," Porter said.

But the bonuses are hard for state workers — who will go without raises this year — to swallow.

Carolyn Simmons, 52, who works for a state-funded center in Milledgeville that helps people with addictions and mental disabilities, was incensed by the bonuses because she's not getting a raise this year.

"They're getting the money for what?" asked Simmons, who said she's paid $8 an hour. "If anybody should get it, is should be state employees, because we're already getting low pay. I don't think it's right for them to get bonuses or raises in salaries."

AJC

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6 comments. Last comment 8 years ago by KY Floyd.
Page 1 of 1
Stew12's avatar - bad egg-64x64.png
CT
United States
Member #61398
May 21, 2008
781 Posts
Offline
Posted: December 29, 2008, 11:49 am - IP Logged

That is pretty ridiculous.

"The whole point is to attract and retain really talented people," DeFrancisco said. "I would say, based on the results of this organization, doggone it, it's worked."

I'm willing to bet there are thousands of "really talented people" that would take the job [and do it well] for the $286,000 salary alone, never mind the bonus's which are apparently around 100% of your salary. 

What happened to doing your job well simply because it is YOUR JOB?  It sounds like the spolied brat attitude, "Give me more or I will work less" when the pay is already astronomical.  Instead of a $150,000 bonus this year they should post her job at $286,000 with no bonus's and use the extra $150,000-$250,000 each year for education.  The could hire 3-5 well paid teachers with that money alone.

Tony Campbell, chairman of the Lottery Corp. board, said the panel gave DeFrancisco a smaller bonus because of the weak economy.

Well that was nice of her to take a huge hit, hopefully she can survive off of that $150,000 extra Roll Eyes

That year [2004], lawmakers stiffened requirements for students to receive a HOPE scholarship, which led to fewer students getting the award. Legislators did so because projections showed the growth in the cost of the program would outpace the rise in ticket sales.

Gee, seems like the bonus's would cover a number of additional scholarships. 

"This is an area where you don't cut the bonuses because they've done a bad job. You give them the bonus because they're doing a good job and they've earned it," Porter said.

What happened to earning to keep your job?  Seems like they could do a terrible job and the only downside would be no bonus to the already-high salary?

The idea of a bonus is always a touchy subject.  I would much rather see a higher base pay (sometimes) with employees having to earn that pay, than a base pay that means nothing and have employees working simply for bonus's.

    dumars798's avatar - batman17
    Atlanta
    United States
    Member #28656
    December 20, 2005
    5675 Posts
    Offline
    Posted: December 29, 2008, 6:39 pm - IP Logged

    Must be  nice  2  get  a  bonus  big enough

    to buy a houseBS.All i wanted for Christmas

    was 798. With a $286,000 salary i guess

    i'm in the wrong profession!

            Smart bets...... Equal Phat Pocket$!

                         

                 





      ThatScaryChick's avatar - x1MqPuM
      Idaho
      United States
      Member #56506
      November 21, 2007
      6537 Posts
      Offline
      Posted: December 30, 2008, 12:34 am - IP Logged

      Geez, $150,000 bonus. That sure is a nice way of saying thank you.

      "No one remembers the person who almost climbed the mountain, only the person who eventually gets to the top."

        bashley572's avatar - starwars14
        West Side of Sunny Florida
        United States
        Member #55048
        September 8, 2007
        3371 Posts
        Offline
        Posted: December 30, 2008, 7:44 am - IP Logged

        Yea, I agree that in today’s economic environment it’s hard to justify bonuses.  Too many people out of work.

        Money won is twice as good as money earned!

          Avatar
          New Member

          United States
          Member #67179
          November 19, 2008
          12 Posts
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          Posted: December 30, 2008, 9:55 am - IP Logged

          Funny how this story is about Georgia, where this whole insane bonus thing started as a result of the people who are now in Tennessee.  THAT'S where this story should go next, where they can talk about the $100,000 bonus Paul-Hargrove got as a result of meeting sales figures before five years was up, in addition to her regular $500K salary AND bonus!

            Avatar
            NY
            United States
            Member #23835
            October 16, 2005
            3474 Posts
            Offline
            Posted: December 31, 2008, 5:02 pm - IP Logged

            Yea, I agree that in today’s economic environment it’s hard to justify bonuses.  Too many people out of work.

            Plenty of people are out of work even in good times, but that has nothing to do with how much anyone else deserves to be paid (well, except perhaps for  congress critters). I think the lottery is far more recession proof than many businesses, but this is exactly the time when some people deserve bonuses. If other people are losing business and you maintain, or even increase your business, you're probably doing an above average job. As the article says, the lottery is a sales and marketing business, and if you're in sales there's nothing wrong with tying your compensation to your sales.

            That said,  nobody has complete control over everything that affects their sales, for better or for worse. There needs to be some realistic balance between a base salary, commissions and bonuses. When somebody gets a bonus of 50% or more of their base salary, they've either wildly exceeded realistic expectations, or something is seriously out of whack.