MONDAY, MAY 21, 2007 | LONG ISLAND EDITION

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Some argueSome argueher pay’s outher pay’s outof line, but herof line, but herbosses say she’sbosses say she’sworth every pennyworth every pennyA4-5A4-5

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COPYRIGHT 2007, NEWSDAY INC., LONG ISLAND, VOL. 67, NO. 260

NEWSDAY PHOTO / KAREN WILES STABILE

Run this and you’re in trouble ifNassau installs red-light cameras. Roslyn Goldmacher of the nonprofit Long Island Development Corp., which makes loans to small businesses

Is her salaryout of line orright on the

money? Talkabout it at

newsday.com

NEWSDAY PHOTO / AUDREY C. TIERNAN

Derek Jeter blasts a two-run homerin last night’s 6-2 Yankees victory.

BY ELIZABETH MOOREelizabeth.moore@newsday.com

Roslyn Goldmacher, presi-dent and CEO of the nonprofitLong Island DevelopmentCorp., which makes loans tosmall businesses Islandwide,made $686,805 in total compen-sation last year.

Her loyal current board of di-rectors believe Goldmacherhas earned every penny. Afterall, they say, she’s an award-winning pioneer in small busi-ness finance and a tireless advo-cate for the little guy.

But others in the region’s eco-nomic development communityhave been unhappy about Gold-macher’s pay, which in recentyears has been more than theheads of the Long Island Associ-ation, United Way of Long Is-land and Vision Long Island puttogether, according to charita-ble tax returns. She also earnsmore than all but one of herpeers at 30 of the busiest com-munity development companiesaround the country for whichNewsday examined records.

Goldmacher emerged victori-ous from a bitter internal battleover her pay seven years ago,one that split LIDC from itsgovernment patrons. But eversince Suffolk County ExecutiveSteve Levy heard about the paypackage this spring, he hasbeen scathing in his criticism.

“It’s off-the-charts outra-geous,” said Levy, who takespride in his own decision togive up more than $32,000 ofthe pay he could have receivedover the past four years to setan example of frugality with thepublic’s money. “This isn’t WallStreet, where you reward yourbest brokers with a bonus formaking the firm more profit-able. It’s a not-for-profit entity.That kind of a salary gives ablack eye to the whole process.”

Nassau County Executive Th-omas Suozzi declined to com-ment.

Goldmacher also declined tocomment for this story. ButPhyllis Hill Slater, chairwomanof the LIDC’s compensationcommittee, passionately de-fends her pay.

“I don’t think she makesenough for what she has to do,”Slater said. “This is her brain-child. There’s no other groupthat has done as much as shehas done for economic develop-ment here on Long Island.”

First certified by the federalSmall Business Administrationin 1980 to provide low-cost sec-ond mortgages, the Long IslandDevelopment Corporation has

been Long Island’s leading smallbusiness lender, offering financ-ing and technical assistance toqualified businesses and non-profits under a variety of govern-ment-backed programs, oversee-ing what board members calleda portfolio of about 1,000 loans.It derives most of its incomefrom fees charged to borrowersfor brokering those loans and ser-vices and from fees from govern-ment and others for work it per-forms. In addition, in its 2005 fis-cal year, about 4 percent of itsrevenue was from governmentgrants and another 4 percentfrom direct public support.

LIDC recently expanded itsrange to the entire tri-state area.

Helped start LIDC in 1980Goldmacher, 54, who co-

founded the LIDC with two now-deceased partners in 1980 andhas run it ever since, got a bache-lor’s degree in labor relations atCornell University, expectingshe would be a “famous union or-ganizer,” as she told the Long Is-land Business News four yearsago. Instead, she earned a law de-gree from Hofstra Universityand threw herself into promot-ing small businesses, which shecame to see as the engine for theregion’s economic development.

Since then, she has perennial-ly topped lists of the region’smost prominent women, garner-ing a slew of awards for initia-tives like the Long Island SmallBusiness Assistance Corp.,which makes micro loans towomen-owned businesses.

For much of its history LIDChad the gloss of a quasi-govern-mental agency, pooling local,county and federal grants topower its programs and stockingits board with officials, includingthe Nassau and Suffolk countyexecutives. That changed in2000, several sources said, afterofficials learned Goldmacher,then the executive director, wasreceiving bonuses that doubledher compensation.

LIDC board president JohnGarvey, a Roslyn Savings Bankvice president, stumbled onthat fact after a bank founda-tion rebuffed his request for adonation, asking him to explainwhy the LIDC’s IRS returnshowed Goldmacher had beenpaid more than $350,000 a year.

That pay, revealed on charita-ble tax returns that had notbeen shown to him, came as asurprise to other top boardmembers as well, according toLIDC’s then-vice chairmanGeorge Gatta, a former Suffolkdeputy county executive. Hecould find no one on the board

who had known of or approvedany bonus beyond her base sala-ry of about $175,000, he said.

Nassau officials forwardedthe matter to the district attor-ney’s office, but it found nowrongdoing because her fullpay was disclosed on the tax re-turns, sources said.

Goldmacher loyalists thencalled a board meeting in Novem-ber 2000, two months earlier

than usual, voting to reorganizethe LIDC board to reduce thenumber of government boardseats and shorten board termsfrom two years to one. Andthough Garvey, the banker, hadmore than a year left in his termas president, Goldmacher’s allieselected her to take his place.Garvey, now with North ForkBank, declined to comment.

Goldmacher’s defenders insist

her full pay package was never asecret. They say the board reor-ganization was simply driven bychanges in federal policy. Butboard member Tom Junoradded, county officials shouldhave let the LIDC handle thecompensation matter internally.“They went public . . . I was real-ly ticked off at that — why didn’tthey bring it to us first?”

The upheaval led to a mass ex-

BY ELIZABETH MOOREelizabeth.moore@newsday.com

When George Dimitriadiswas looking to move his high-end hotel cabinetry company,Woodmotif, from its longtimeBrooklyn home to bigger quar-ters in Hempstead two yearsago, he wrestled with a classicsmall-business decision: Toown or to rent?

But after a colleague toldhim about the deal he couldget from the Long Island De-velopment Corp., buying

Woodmotif’s new 8,200-square-foot home on ChasnerStreet became affordable.

“They were very good, veryprofessional, they walk youthrough the whole process, andthe deal they helped me put to-gether was better than I couldhave done — wonderful,” Dimi-triadis said in an interview.

Buying the building on itsown, Woodmotif would havehad to pay at least 30 percent ofthe purchase price down, thentake out a commercial mort-gage costing more than 7 per-

cent. But the LIDC helped Dimi-triadis qualify for a second, gov-ernment-backed mortgage cov-ering 40 percent of the price ata rate of just over 5 percent in-terest, and he only needed adown payment of 10 percent.

Of course, they put himthrough a 30-page applicationprocess — “they got to knowmy mother, and my mother-in-law,” Dimitriadis said. “Theycheck you out — of course!This is the government.”

But averaging the two mort-gages, he saved about 1 per-

BY DANIEL WAGNERdaniel.wagner@newsday.com

Executive compensationpolicies at not-for-profit orga-nizations have been an issueof heated contention in re-cent years, with federal regu-latory agencies, academicsand think-tanks weighing inon whether those running tax-exempt, multimillion-dollarcorporations are entitled toprivate-sector salary and ben-efit packages.

Defenders of organizations’discretion say nonprofits haveto compete with private-sec-tor institutions to attract tal-ent; critics argue that large or-ganizations such as hospitals— many of which grant top ex-ecutives millions in compensa-tion — should not be classifiedas tax-exempt at all, giventheir structural differencefrom the charities most peopleassociate with the term “non-profit.”

In 2002, the Internal Reve-nue Service started assessingextra taxes to nonprofit execu-

Split

Big paycheck� Long Island Development Corp. head’s$686,805 pay package angers some observers,but board members say she’s worth the money

Nice fit for cabinet

NEWSDAY / J. STEPHEN SMITHSOURCE: IRS FORM 990 REPORTS

$346

,642

$367

,363 $5

08,13

2

$571

,758

$599

,425

$721

,902

$638

,439

$686

,805

Nonprofit profitsWhat the top executive at leading Long Island-based nonprofits earned in 2004 or 2005. ORGANIZATION TOTAL EARNINGSNorth Shore-Long Island Jewish Health System $1,439,634 Hofstra University (2004) $684,400 Long Island Association $353,050YMCA of Long Island $266,064 Long Island Housing Partnership $212,093Long Island Community Development Corp. (2004) $202,839United Way $199,556Long Island Pine Barrens Society $150,000Vision Long Island $53,600

What she madeLong Island Development Corp. president Roslyn Goldmacher’s pay and benefits from 1998 to 2005.

1998 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 2005

PAY PACKAGE CONTROVERSY

WHAT MAKES A NONPROFIT?

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odus. Islip economic develop-ment commissioner WilliamMannix said he quit the board inprotest over the reduced voiceof government in the body,though Islip Industrial Develop-ment Agency still contributes$6,250 he called a required localmatch for a longtime federalgrant. Gatta also resigned in pro-test. The county seals weredropped from the LIDC letter-

head and county support wasended.

“I felt very strongly that it wasflouting its responsibility tomaintain the public’s trust,” saidGatta, now Suffolk County Com-munity College vice presidentfor workforce and economic de-velopment. “I have always be-lieved that not-for-profits likethe LIDC exist to benefit thecommunity, not to enrich their

senior executives with inflatedsalaries and bonuses.”

But Goldmacher’s new boardfollowed up by hiring a com-pensation specialist to studyher pay package, concluded shewas actually underpaid, andgave her a raise.

Pay at other nonprofitsDouglas Asofsky, a Citibank

vice president and 15-year board

member who became chairmanin the reorganization, said thestudy looked at executives atnonprofit community develop-ment companies as well as for-profit small banks with similarportfolios. Slater said it took intoaccount Goldmacher’s longyears of service to the LIDC. ButAsofsky, Junor, Goldmacher andSlater declined to provide a copyof the study or any more details

from it. They also declined tospecify her base salary or the for-mula for determining her bonus.

Pay and benefit packages forsalaried executives of Long Is-land’s leading nonprofits varywidely, from $53,600 takenhome last year by Vision Long Is-land’s Eric Alexander to the $1.4million collected by Michael

See LIDC on A45

centage point on his loan.So it has gone with hundreds

of other Long Island businessessince 1980, such as Jennick AutoRepair, which got LIDC help tobuy a Sunoco station that hasbeen a Sayville fixture, or UncleWally’s, which got LIDC help tobuy equipment for its muffinplant in Shirley, or Bayview Flo-rist & Montage, which used theloan program to buy a biggerstore in Massapequa Park.

LIDC, one of the nation’s firstnonprofits offering below-prime second mortgages under

the SBA’s Section 504 program,now serves the whole tristatearea but also has new competi-tion from another nonprofit,the Empire State Certified De-velopment Corp., since achange in SBA rules erased ter-ritorial boundaries. But LIDCruns several other programs,too, such as loan funds for thoseaffected by the downturn in thefishing and defense industries,and a federal program that hashelped local small businesseswin more than half a billion dol-lars in government contracts.

tives whose salaries it deemedto be excessive, according to areport from the Washington,D.C.-based think-tank TheUrban Institute.

But the report said that in anincreasingly competitive mar-ket for executives, “nonprofitshave little choice but to pro-vide leaders with salaries andbenefits that are comparable tocompensation rates in the for-profit sector.”

For community developmentcorporations, the most impor-tant issue is what balance theboard strikes between compen-sation and expenditures on pro-grams that fulfill the missionthat grants a group its tax-ex-empt status, according to Mari-anne Garvin, president andchief operating officer of theCommunity Development Cor-poration of Long Island. Thatgroup performs some of thesame functions as the Long Is-land Development Corp., butalso develops real estate andprovides loans for low-incomehousing.

“What makes it a not-for-

profit is that the revenues ofthe corporation go to further-ing the mission of the corpora-tion,” Garvin said. “Having saidthat, we operate in a business-like manner . . . and the staff isgeared and evaluated on perfor-mance and outcomes.”

Garvin said compensation pol-icies should be judged by thecomparison of core programspending to compensation. Shesaid 75 to 80 percent of revenuesdedicated to core programs isthe going standard; in hergroup’s case, she said, that num-ber is above 90 percent.

In 2005, the corporation’schief executive, WilburKlatsky, collected $202,839 inpay and benefits, according tothe organization’s most recentfiling.

She said strong oversight bya group’s board of directors is akey to striking the proper bal-ance, but that most grant-fund-ed programs, including theHUD- and SBA-backed loansthat groups like hers adminis-ter, are audited frequently andthoroughly.

RoslynRoslynGoldmacher, ofGoldmacher, ofthe nonprofitthe nonprofitLong IslandLong IslandDevelopmentDevelopmentCorp., madeCorp., made$686,805 last$686,805 lastyear.year.

on what to pay

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BUSINESS & TECHNOLOGY

BY DANIEL WAGNERdaniel.wagner@newsday.com

Steve Madden Ltd. has ac-quired its e-commerce provid-er and named that company’sleader president of the entireenterprise.

Acquiring Westport,Conn.-based Compo Enhance-ments, which was founded inlate 2005 to manage the LongIsland City-based shoe com-

pany’s online business, willcontribute 1 to 2 cents to an-nual per-share earnings for2007, the retailer said in an-nouncing the move Thurs-day.

Compo’s handful of employ-ees will be transferred to thebuyer, which then will beginmanaging its online opera-tions internally.

“We view this acquisitionas a natural progression in ex-

panding our already success-ful online business . . . thatwill drive immediate value toour shareholders,” Steve Mad-den’s chairman and chief exec-utive, Jamieson Karson, saidin a statement.

Jeffrey Silverman, the com-pany’s new president, hasworked for numerous high-profile footwear companiesduring his 23-year career inthe industry. Karson de-

scribed Silverman as “a sea-soned footwear executivewith an entrepreneurial back-ground that is a perfect fit forSteve Madden.”

Silverman received a warmwelcome: 300,000 stock op-tions exercisable in the nextthree years, a $600,000 basesalary and additional compen-sation “generally provided bythe company to senior execu-tives,” according to filings

with the Securities and Ex-change Commission.

For fiscal 2006, the compa-ny’s top base salary was Kar-son’s $500,000, though histotal compensation was $2.1million.

Steve Madden Ltd. has notlisted a president in its finan-cial disclosures since the de-parture of former president Ri-chard S. Olicker in January2006.

BUSINESS & TECHNOLOGY

Madden Ltd. buys Web unit, makes boss chief

“It’s how you serve it that dis-tinguishes you from the restof the world.”

Two banks still in the plan-ning stage also are being orga-nized by former executives ofa bank that was acquired byNew York Community. Auer-bach, who would head a pro-posed institution named GoldCoast Bank, served as chair-man of Islandia-based Long Is-land Commercial, purchasedby New York Community inDecember 2005. And DouglasManditch, Long Island Com-mercial’s former chief execu-tive, is leading an investorgroup seeking to open an insti-tution to be called Empire Na-tional Bank, also to be basedin Islandia with a secondbranch planned in Shirley.

Empire National’s target cus-tomers will be privately ownedcompanies with annual sales ofup to $50 million a year, Man-ditch said, although he expectsmost clients will be much small-er. “The company that boughtus [Long Island Commercial] isa $30 billion company,” he said,explaining the strategy. “Quitefrankly, they don’t provide thesame services we [will] pro-vide.”

A spokeswoman for NewYork Community said that thebank’s size “is actually of ben-efit to business customers be-cause of the breadth of prod-ucts and services we provide”to all customers. She said thebank’s commercial lending of-ficers are “dedicated to meet-ing the needs” of its businessclients.

Smaller is betterBut Danielson, the consult-

ant and investment banker,said business customers canbe disappointed if they walkinto “the Bank of Americas ofthe world or the Citigroups”looking for quick action onwhat he said was a typicalsmall business loan of$500,000 to $3 million, backedby equipment, or a building,as security. He said branchmanagers for huge banksdon’t usually have the authori-ty to grant such loans.

By contrast, “a local bankboard, that’s based right there,will go, ‘I grew up with him, Iknow him,’ ” Danielson said.“It’s a whole different environ-ment.”

A spokeswoman for Bank ofAmerica, which had 83 branch-es on Long Island as of June2006, said that its company “of-fers small business ownerscomplete solutions for theirneeds, including access to capi-tal,” at all of its banking outlets.

Citigroup said it also pro-vides a “full array” of productsfor small businesses, and thatfor such businesses “conve-nience, access and service” arehighly important. Citi had 82branches in Nassau and Suffolklast year.

A third proposed bank willaim at Long Island’s Asian-American community, accord-ing to Ed Lutz, chief executiveof Greenlawn-based Lutz Ad-visors Inc., which is consult-ing on the start-up. That bankhopes to open in Garden CityPark this fall under the nameHanover Community Bank.

Lutz, a former regional di-

rector for the Federal DepositInsurance Corp., said he coun-sels investors that they “needto be patient” in terms of ex-pecting returns on theirmoney. It takes an averagenew bank about a year and ahalf to become profitable, butmost investors don’t get theirmoney back until the institu-tion is sold, experts say. Thatprocess usually takes aboutfive years, according to SNL’sRaab.

Great Neck-based Communi-ty National Bank, one of thetwo banks that opened on LongIsland in 2005, is “right ontrack” with its business plan,currently with $160 million inassets compared to its initialcapital of $30 million, said Stu-art Lubow, Community Nation-al’s chief executive. That bank,which has a mix of both retailand business customers,opened a second branch in Gar-den City early this past yearand plans to open four more onLong Island this year, Lubowsaid.

Lubow founded a bank inNew Jersey in the late 1990sthat was later acquired by alarger company. But he saidthat rather than thinkingabout an eventual sale, Com-munity National’s organizersare taking “a very long-termview” and concentrating onbuilding a franchise on LongIsland. Other organizers ofstart-ups say they have thesame mind-set.

Paying attentionUsing his food image again,

Murphy, of Madison National,explained why he thinks that

his bank has plenty of roomto grow on its own if it paysclose attention to customers.

“Down the road, there’s ahamburger place not affiliat-ed with any national chains,”he said. “The place is always,

always packed. Always. It’snot as though they advertise,it’s not as though they serve adifferent product, per se. Ithink it’s how they treat theproduct and how they serveit.”

BANKS from A40

New banks grow on LI

Dowling to run the North Shore-Long Island Jewish Health Sys-tem. Last year, Long Island Asso-ciation President Matthew Cros-son received $353,050; PatrickFoye was paid $199,556 to headthe United Way.

Though 44 nonprofit lendersin the U.S. have processed morethis year of the type of govern-ment-backed second mortgage

the LIDC specializes in, Goldma-cher’s pay is extraordinarily highamong those executives. Of 30such companies for which taxrecords were available, the aver-age pay was less than $250,000.Only one pay package could befound that was bigger than Gold-macher’s: the $734,250 collectedby Jacklyn Jordan, president ofCapital Access Group of SanFrancisco, which processed$39.4 million in loans so far this

year, more than twice theLIDC’s $17.2 million.

Asofsky said the scope ofGoldmacher’s duties and theLIDC’s wider range of pro-grams merits her premium.

“She’s our corporate counsel,she’s our CEO and president,and she’s really the best in the in-dustry if you check with thetrade association,” he said. “Sheworks seven days a week, she’sabsolutely incredible, she’s on

every board you can think of andwe’re thrilled to have her.”

But even some of her loyal-ists are still not quite clearabout how much she is paid.Martin Cantor, a longtime di-rector who backed Goldmach-er in the 2000 reorganization,estimated that she made “some-where in the neighborhood of$450,000.” Told his guess was$236,805 too low, he said hewas still “comfortable” with it.

“If they knew the depth andbreadth of her responsibility . . .they’d realize she’s fairly com-pensated,” said Cantor, who pub-lished a book last year withLIDC help and left the board thisyear to take a paid position asLIDC’s chief economist.

The Suffolk County executivebegs to differ. “We can hiresome major talent for one-thirdof that price,” Levy said. “Theboard has to address this.”

LIDC from A4

NEWSDAY PHOTO / BRUCE GILBERT

Stuart Lubow, head of Community National Bank, based inGreat Neck, plans to add four branches this year.

Big paycheck at nonprofit draws criticism

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