A prime suite at Kansas Speedway. First-class travel. Six-figure salaries for half the staffers. Plenty of plum jobs for family members.
Life is good at the top of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers.
The union, with its headquarters in Kansas City, Kan., represents about 59,000 workers in the U.S. and Canada who make and repair boilers, fit pipes and work on ships and power plants. The recession has hit their trade hard, reducing union membership.
At the same time, the president’s salary has surged 67 percent in the past six years, not counting a recent raise. Add in travel and some other expenses, and Newton B. Jones totaled more than $600,000 last year, putting him at the absolute top of the presidents of the dozen biggest unions in the country.
The Boilermakers value families — of officers, certainly. Many relatives ride the payroll.
The union defends executive salaries and hiring of relatives. But totaling the pay to just the families of Jones and two other executives, the union and its affiliates paid them more than $2 million in annual salary, according to the most recent financial reports filed by the organizations.
Those findings are part of a wide-ranging examination of the Boilermakers over the past year by The Kansas City Star, which reviewed thousands of pages of labor union reports and tax documents.
Pay isn’t the only reason to aspire to an office at headquarters, the newspaper found:
• While few other unions still own planes, the Boilermakers partially own two, paying a half million dollars last year for maintenance and fees. When they travel on commercial flights, officers can go first-class.
• Once they arrive, officers may enjoy memorable experiences — exclusive pheasant hunting expeditions, fly-fishing adventures in Alaska, stays in Paris and on Marco Island, Fla.
• Some officers can supplement their union salaries with pay from the union’s own bank. At least two have made as much as an additional quarter million dollars a year.
• And once their careers are over, retiring officers drive away in gift cars.
“This is one of the more egregious examples of money flowing like crazy that I’ve ever seen,” said Nathan Mehrens, a former U.S. Labor Department lawyer and now general counsel for Americans for Limited Government, a conservative watchdog group.
“It’s really remarkable, and I say that having spent 10 years looking at these issues.”
As a nonprofit, the union and its key employees are prohibited under federal tax law from improperly benefiting from their organization.
In an interview, two union spokesmen defended the spending and hiring practices before requesting other questions in writing. Although they did not respond to every specific question, Michael Stapp, the union’s general counsel, provided a written response that included praise for the Boilermakers.
“The Boilermaker family of organizations, together valued at over $10 billion, has proudly represented the interests of hundreds of thousands of working men and women for over 130 years,” Stapp wrote.
“The history of the International Brotherhood of Boilermakers clearly demonstrates that they operate in strict accordance with all applicable laws and governing documents. They operate in much the same manner as most other labor organizations. And the impact of the Boilermaker contribution to North American society since the development of the steam engine is nothing short of remarkable.”
In the interview, James Pressley, one of the union’s seven international vice presidents, said the union is cutting expenses.
“Some of that has been scaled back because of the economy,” he said.
Attempts to reach rank-and-file union members for comment were unsuccessful. But rumbles of discontent are sometimes felt.
A recent Facebook page created apparently by an East Coast boilermaker was entitled “Lord Newton B. Jones” and criticized Jones’ salary and family ties. The page was taken down in April.
Also last month, an anonymous letter, mailed purportedly by Boilermakers members and obtained by The Star, sharply criticized union leaders.
“While members and their families struggle to make it through this recession, our IBB (International Brotherhood of Boilermakers) leaders have been living high off the hog at members’ expense,” the letter said.
“We regret that we have to be anonymous at this time because we fear retribution from a leadership that regrettably values its own personal and financial interests above the rank and file’s.”
In membership, the Boilermakers are a mere 5 percent the size of the Teamsters union. Yet which president received more in total disbursements from their unions last year — Teamsters President James P. Hoffa or the lesser-known Newton B. Jones?
Jones by more than $200,000.
Jones received $607,022 in total disbursements, compared with $372,489 for Hoffa.
Total disbursements include salary and business expenses, especially travel, which a union spokesman said made up most of Jones’ expenses. The figures should not include benefits, a U.S. Department of Labor spokesman said.
Jones’ salary in the last fiscal year, which ended June 30, 2011, was $307,134 — also more than Hoffa. The figures come from annual reports the unions file with the Labor Department.
Jones’ total disbursements also are more than double those of Richard Trumka, head of the powerful AFL-CIO, a federation of national and international unions with 11.6 million members. Trumka received total disbursements of $293,750.
Assuming that most of Jones’ expenses are travel-related, as the union says, those figures are far beyond the travel costs of other union presidents, said J. Justin Wilson, managing director of the Center for Union Facts, a watchdog group that’s critical of labor unions.
“I just don’t understand how he can spend that much on travel,” Wilson said. “You just don’t see that in labor union leaders.”
Jones’ disbursements also dwarf those of presidents of two similar-sized unions, the International Federation of Professional and Technical Engineers with 68,526 members and the 54,122-member Brotherhood of Locomotive Engineers and Trainmen.
Total disbursements to the Boilermakers’ other eight international officers range from $340,387 to $494,298. And 71 of the union headquarters’ other 123 employees have six-figure total disbursements ranging from $109,192 to $352,107.
All together, the total disbursements last year to the top nine Boilermakers officers — $4.1 million — were $182,000 more than the total disbursements to the 29 executives at the national headquarters of the Teamsters union.
Although the Boilermakers’ general counsel did not compare total disbursements, he did say that Jones’ salary is not out of line.
Jones’ “salary falls somewhere in the middle of comparable union presidents and extraordinarily less than a comparatively valued corporation whose typical compensation packages are in the multi-millions of dollars,” Stapp wrote.
Indeed, in salary only, some presidents in one union alliance that includes the Boilermakers earn more than Jones.
As for Jones’ expenses, Stapp said the union’s travel policy is in strict accordance with its constitution and is approved by union delegates.
Jones “spends the majority of his time traveling to represent the various interests of the Boilermakers’ family of organizations and the members they serve. With the advent of modern electronic communication capabilities, all officers and staff are freed from the limitation of office landline telephone communication allowing for increased mobility and personal representation of our members.”
Like most of the Boilermakers’ top officials, Jones doesn’t live near the headquarters in the Kansas City area. He resides in North Carolina.
One labor expert who is familiar with the Boilermakers said union leaders work very hard for their salaries and need to travel.
“Top union officers, they work,” said Judy Ancel, director of The Institute for Labor Studies at the University of Missouri-Kansas City. “And to do that, they have to travel. They’re traveling all over the country.”
Ancel noted that times have changed for union headquarters.
“As a general rule, union staff, including officers, are working harder than they ever have,” she said. “Because of the decline of membership, unions have also downsized, which means that their staff still has to represent the members, still has to negotiate the contracts, handle the grievances, administer the unions.”
Indeed, Boilermaker leaders acknowledged last year at a convention in Las Vegas that the union faces a struggling economy.
International Secretary-Treasurer William Creeden told the conference that the union continued to face challenges because of plant closures, off-shoring and the recession. Another major concern, he said, was that membership had declined 7.6 percent since 2006.
“Membership loss not only reduces our strength, bargaining power, and political power, but also greatly affects our revenue over time,” he said, according to a union report of the meeting.
Convention delegates were so concerned about making ends meet that a debate broke out over a plan to assess a $1-a-month fee for a new division. Some said the monthly fee would create financial hardships for members.
Yet the conference voted Jones and the other officers a pay raise — although not without debate.
The nine officers ran unopposed for re-election on a slate called the Proven Leadership Team.
“We are fortunate to have candidates of such high caliber,” said the delegate who nominated them.
Then came the proposal for raising their pay.
“Some delegates were against giving the (International president) a raise at a time when many Boilermakers are having trouble negotiating raises because of the recession,” said an article in The Boilermaker Reporter, an in-house publication. Others argued, however, that Jones not only deserved a raise but needed one to bring his salary more in line with salaries of other presidents of unions in the Building and Construction Trades Department of the AFL-CIO.
That wasn’t necessarily true. An examination of leaders’ salaries in the Building and Construction Trades Department — an alliance of 13 skilled-trade unions including the Boilermakers — shows Jones was smack in the middle last year. And when it comes to the total disbursements received from their unions, Jones is the highest. (See the graphic on page A15.)
The Boilermaker Reporter called the debate over Jones’ salary increase “spirited but cordial.”
Delegates agreed to give Jones a raise but to make it smaller.
So how much will his pay be going up? The union did not respond, but the union’s constitution approved last summer sets his new salary at $6,538 per week, or almost $340,000, with 5 percent increases in following years.
Stapp said delegates overwhelmingly voted to adjust the salaries of Jones and other officers.
“President Jones was recently unanimously re-elected by approximately 600 delegates in an open democratic election process, clearly demonstrating membership support for him,” Stapp said.
Stapp added that union leadership has reduced annual expenses by more than $10 million over the past nine years, including the elimination of three officers. Shortly after the 2011 convention, Jones and other officers made an additional $3 million in cuts, with more being considered, he said.
But the compensation and perks in the Boilermakers headquarters stunned Marcus Owens, a Washington, D.C., attorney who once headed the division of the IRS that oversees nonprofit organizations.
“Those kinds of benefits seem extraordinarily high,” Owens said. “That’s just over the top.”
At the same time, when it comes to representing its members in collective bargaining and enforcement of contracts, the Boilermakers appear to spend a smaller portion than some other unions.
Last year, the union spent $9.7 million, or 14 percent of its total expenditures, on negotiations and enforcement, according to its annual report. In comparison, the Teamsters spent 29.5 percent, the United Auto Workers spent 40.9 percent and the Machinists 28.9 percent.
Boilermaker members pay dues to the international headquarters of $23.15 a month.
Taxpayers, too, have a stake in the Boilermakers’ spending.
The union, like most, is structured as a nonprofit organization, which means it qualifies for exemption from federal income tax. But the law prohibits union officials or key employees from benefiting from the tax-free money they raise — something called “private inurement.” The most common kind of private inurement is excessive compensation paid to insiders.
“I think there are real tax issues and probably Department of Labor issues as well,” Owens said of the Boilermakers. “And the IRS would question whether the income is being used for the benefit of the union members or not.”
An IRS spokesman said the agency could not comment, citing disclosure laws.
The Boilermakers’ spending practices should raise concerns among all tax-paying citizens, Owens said.
“They’re not paying income tax,” he said. “So in a sense, we’re all supporting themI don’t mind tax-exempts that are doing what they’re supposed to do, but if they aren’t, I’d kind of like them to pull on the oars, too.”
While their union pay may seem comfortable, some officers get a second hefty paycheck, thanks to a bank the union controls.
The union is principal shareholder of Brotherhood Bank Trust, which has seven branches in the metro area. The main bank is at the union’s headquarters.
Three of the bank’s 11 board members are union officers, and one is a retired union officer.
The bank’s chairman? Boilermakers President Newton Jones.
In calendar year 2010, Jones received $52,945 as chairman of the bank’s board of directors in addition to his union pay, according to the most recent report he filed with the Labor Department. The previous year, Jones received $79,775 as bank chairman and $260,000 as the bank’s chief executive officer and interim president. In 2008, he received $230,000 from the bank.
“Those both sound like full-time jobs,” Owens said of Jones’ union and bank positions in 2008 and 2009. “It’s certainly full-time compensation.”
Stapp said that Jones played a key role at the bank.
“Chairman Jones’s leadership contribution to this institution is evident in the board’s continuing demonstration of confidence in him, his vision and his labor business outreach initiative,” Stapp wrote.
Other union executives on the bank board received compensation as well.
Creeden, the union’s secretary-treasurer, reported receiving $258,650 from the bank in 2009, the last year he filed. He also received $252,098 in salary from the Boilermakers union in fiscal 2010.
(It’s difficult to calculate the total Creeden or other officers received in a single year because union pay is reported on a July-June fiscal year while bank pay is reported on a calendar year.)
Warren Fairley, an international vice president, received $42,232 from the bank in calendar year 2010. His union salary was $281,517 in fiscal 2010.
At a convention last summer, union delegates voted to require all “Boilermaker subordinate bodies” to bank with Brotherhood when possible — a measure that upset some union members.
Officers who retire from the Boilermakers union get more than a watch.
Each gets to keep his company car, and some become consultants for the union, with at least one continuing to earn six-figure pay.
For example, in 2010 the union “gifted” a vehicle to retiring international vice president Sammy May. The vehicle originally cost $73,998 with a book value of $51,388 when the union gave it to him, the union’s annual report said.
May wasn’t alone. According to its annual reports, the union has a long-standing policy of giving vehicles “as gifts to retiring officers.”
International vice president George Rogers retired in 2008, taking with him his company car that cost $53,380. That same year, the union gave a vehicle that cost $58,959 to the widow of an officer who had died.
Some retiring officers continue to receive union pay by working as consultants. Rogers made $600,000 over two years, annual reports indicate.
Along with the $300,000 in consulting fees he received in fiscal year 2008, the year he retired, Rogers earned $400,871 in salary as a vice president, Department of Labor documents show.
In fiscal year 2009, records show Rogers received another $300,000 in consulting fees.
Rogers said he couldn’t comment on pay.
“I’m not supposed to talk about anything,” Rogers said.
In 2007, the year he retired, vice president Joseph Stinger was paid $263,910 in salary as international vice president plus $56,406 in consulting fees. He continued to be paid as a consultant, with a total of about $100,000 over 2010 and 2011.
“Those seem extraordinary,” Owens said of Rogers’ consulting fees. “Frankly, I’ve never seen consulting compensation to a retired officer at that level.”
Stinger declined comment and May could not be reached.
All in the family
Being a boilermaker executive can be a family business — especially if your last name is Jones.
Newton Jones and his family members alone make more than $870,000 in salary, according to the most recent filings.
Jones, 58, himself comes from Boilermaker lineage.
He took over the president’s office when his father, Charles W. Jones, retired in 2003 after 20 years. The elder Jones died in 2010.
Among Newton Jones’ family members:
• His brother, Charles, is director of the Boilermakers’ History Preservation Department and assistant to Newton. His salary in 2011 was $150,091, with total disbursements of $187,641.
• His sister, Donna, earns $98,802 as an executive secretary.
• His relative, Michael Peterson, is an aide to Jones and until last year worked for the Boilermakers National Apprenticeship Program, earning $132,746 in 2010, according to the program’s most recent tax document, and $127,252 from the union, according to its annual report for fiscal 2011. He told The Star he is now an international representative for the union as well as an aide to Jones.
• Jones’ son, Cullen, is a video communications technician who lives in North Carolina, earning $68,482 salary with total disbursements of $173,288 last year. He is 23, according to a court filing.
The union in 2009 paid $43,000 to send Cullen to the Vancouver Film School in British Columbia. The school describes itself as “Canada’s premier entertainment arts institution and one of the most distinguished worldwide.”
That seems an extravagant expense to Mehrens, the former Labor Department lawyer.
“What kind of other entities are out there where you could get forty-something thousand dollars for film school paid by your employer?” Mehrens said. “And that begs the question of whether that should have been counted as compensation for him rather than an official business expense.”
But the Boilermakers periodically train staff, as do other unions and businesses, Stapp said. Program locations have included Harvard University and National Labor College, “as well as technical training venues for IT services and communications media so vital to the effective operation of any organization or business,” he said.
Several members of the Creeden family also make a good living working for the Boilermakers, totaling $624,000 in salary.
William Creeden earned $255,836 salary and received $392,117 total disbursements in 2011 as the international secretary-treasurer.
As director of information technology, Creeden’s son, Ryan, received $155,487 salary. Another family member, Brian, made $70,036 as an engineer.
And for his work as assistant director of the history preservation department, nephew Kyle made $142,767.
The wife of vice president Tom Baca is on the payroll as a secretary, and Stinger has two daughters with jobs at union headquarters.
Vice president Lawrence J. McManamon — whose salary in 2011 was $255,844 and total disbursements were $469,058 — has two children of his own working for union affiliates.
His son, Lawrence Jr., is a coordinator of the Boilermakers National Apprenticeship Program, earning $270,622 in salary and benefits, according to 2010 tax records. Daughter Bridget Connors is a representative for the Boilermakers’ Mobilization, Optimization, Stabilization and Training Trust, receiving $172,797 in total compensation, according to 2010 tax records. McManamon Sr. is a trustee for both organizations.
That is only a sampling of the family ties involving union officers.
Besides Peterson, other family members either could not be reached or declined comment.
In his written response, Stapp said he could not comment on individual workers or consultants:
“All Boilermaker employees are hired based on their respective skills and experience as well as their desire to serve the best interests of the Boilermaker organization. The policy of the Boilermakers is to not publicly comment on specific employees or organizational consultants.”
But employing family members is common in large corporations, Stapp said in an interview.
“You’ll find the Hunts working for the Hunt family and the Kempers working for Commerce and United Missouri Bankwe could go on and on,” Stapp said.
Watchdogs, however, pointed out that there’s a big difference between family-owned corporations and nonprofits such as the Boilermakers that don’t pay income tax.
They also called the Boilermaker jobs a classic case of nepotism.
“Especially for some of these young employees who are relatives of officers, it raises all kinds of alarm bells,” Mehrens said. “It begs the question, did that person get the job based upon skills or qualifications, or did they get it based on who their father was?”
Traveling in style
The Boilermakers’ headquarters itself in downtown Kansas City, Kan., is hardly extravagant.
The union moved into the original Old Brotherhood Building in 1921 and an adjoining 11-story New Brotherhood Building was constructed in 1948.
Nearly a decade ago, the union announced it would move its headquarters and main bank office to the Cedar Creek development in Olathe, where it had bought property.
The buildings were to be located on a 23-acre site overlooking the Shadow Glen Golf Course at Cedar Creek. The project was expected to cost about $25 million.
Construction is on hold, though, said Pressley, a union vice president. “Nothing’s been done,” he said.
But when the union’s officers get away from headquarters, they do it in style.
The union has an 18.75 percent ownership in a Piaggio airplane, which holds up to nine passengers. Today, a new one sells for about $6 million.
The Boilermakers also have a 6.25 percent share in a second airplane, according to the union’s Labor Department filing. The report says the union has “fractional ownership” in the two airplanes to “facilitate air travel by the international executive council and international employees throughout the United States and Canada.”
Family members of some Boilermakers executives also fly on the private planes.
In 2011, the Boilermakers paid $521,160 to Avantair, its aviation service provider, for maintenance and other fees associated with the planes.
Union watchdog groups say few unions have ownership in planes. The Machinists union has a Learjet, but the Teamsters union — which used to own several private jets — sold them years ago because of criticism.
“It’s not a common thing,” Mehrens said of the planes.
The planes haven’t gone unnoticed by some of the rank-and-file members.
“Jones uses our dues money to pay for a time share on a private jet,” the anonymous letter alleged, adding that Jones uses the jet “for his own convenience to attend all expenses paid conferences at warm locations in winter months”
Union officers and their relatives also are allowed to fly first-class on commercial airlines, the union’s tax documents show. Neither the first-class travel nor the charter travel by the union officers is considered taxable compensation, but travel by their family members is.
As for their destination, the union looks for inviting locales when it schedules conventions. In fiscal 2011 alone, Boilermaker officials traveled to:
Hilton Marco Island Beach Resort and Spa, which one event planner describes as an “island paradise” on the Gulf of Mexico, for the Boilermakers Annual Construction Division Conference. Cost: $254,125. Marco Island is an annual destination for that meeting, which includes contractors.
• Kingston Plantation in Myrtle Beach, S.C., for an annual meeting of Boilermaker leaders, contractors and owners. Cost: $71,405.
• The Fairmont Tremblant in Quebec for a conference. Cost: $91,097.
Several of the conferences are required by the union’s constitution and designed mainly for training of staff and local lodge officials, Pressley said in the interview.
Stapp said the Boilermakers are no different from other unions and businesses that conduct training and business meetings throughout the country.
“Business meetings conducted in countries other than the United States and Canada are in conjunction with world labor organizations whose important work is critical to the representation of Boilermaker members in a global economy with multinational employers,” he said.
Pheasants and fish
Once they’re on the ground, officers make sure their stays are memorable.
About a year ago, members of the union’s International Executive Council treated themselves to at least one gathering at a renowned hunting lodge in Gettysburg, S.D. The council — the president and eight other officers — listed the trip as a council meeting.
The lodge, called Paul Nelson Farm, is a favorite hunting spot of former Vice President Dick Cheney and Hall of Fame quarterback John Elway.
It’s a luxurious resort that “attracts 700 hunters a year who are prepared to pay for the very best,” according to a 2009 review in the magazine Business Jet Traveler.
The Paul Nelson Farm website offers a package that includes three days of hunting with guides and dogs, pheasant cleaning, and meals and beverages. For a group of six or more, a three-day package runs $4,595 per person.
The Boilermakers paid a total of $163,000, according to Labor Department reports they filed.
The union also paid $12,854 in 2010 to Alaska Fly Fishing Adventures in Sterling, Alaska, but it is unclear who enjoyed the service, described as an “outfitter and tour guide.”
That year, the union held an Alaska conference at which union officials met with contractors and owners.
In France, where officers have traveled to negotiate contracts, the union paid $5,232 to Yachts de Paris, a “dinner cruise service provider.”
But union officials also have fun much closer to their headquarters, especially at sporting events.
For example, the union has held a suite for several years at Kansas Speedway. The cost last year: $40,210.
Stapp defended spending for recreational events.
“As most successful organizations recognize, sporting and entertainment activities and venues are important tools for relationship building with business partners and fellow organizations and are used in this organization’s efforts to insure and expand the work opportunities of its members,” he wrote.
But watchdog groups find the perks and benefits enjoyed by union officials to be unusual and profligate.
“This is a pork fest,” said Ken Boehm, chairman of the National Legal and Policy Center in Falls Church, Va., a conservative union watchdog group.
“These things sound way out of line. They’re not even in the same ZIP code as the line.”