10Investigates: East TN eye bank chief's compensation raises questions about what pay is proper
We reviewed decades of documents from the Internal Revenue Service. As the East Tennessee Lions Eye Bank grew, so did the executive compensation.
Editor's Note: On July 28, Executive Director Valerie Stewart provided an email from the non-profit's certified public account, showing Laura Gilleran's hours were incorrectly reported as part-time to the IRS. The CPA said "the cost of filing an amended Form 990 for this one small change was determined to be unnecessary."
The East Tennessee Lions Eye Bank has helped restore sight for thousands of people in recent years.
The nonprofit also paid its executive director roughly $445,000 in total compensation in the 2019 fiscal year, according to documents provided by the Internal Revenue Service.
That's about $1 for every $5 in the ETLEB's total revenue reported that year.
"The more I looked at it, the more it just galled me," LaFollette Lions Club member Patrick Pebley said. "This is not just people donating money. This is people donating their loved ones' eyes."
10News spent weeks reviewing internal emails, meeting minutes, recordings and IRS documents to understand how the organization operates.
The Board At least two expelled after raising concerns
Then-board member Brandon Johnson approached 10News at the end of May with concerns about the Knoxville-based East Tennessee eye bank.
The nonprofit said it helps restore sight to over 400 people annually and funds projects like adding musical toys with Braille instructions on local playgrounds.
Almost all — 95.8% — of ETLEB's money comes from its program services, like tissue processing and cornea transplant programs.
Johnson said he'd reviewed national compensation data from the Eye Bank Association of America, with ETLEB's executive compensation appearing to be the highest.
None of his fellow board members seemed to be interested in his findings, he said.
On April 25 and 26, Johnson exchanged emails with Executive Director Valerie Stewart and the board about her total compensation in 2019.
On April 28, he tried to present his research at the quarterly board meeting. Board members told him it was against policy since no committee had requested he look at the compensation and incentive program.
On May 24, Johnson emailed his fellow board members a four-page letter detailing what he'd learned.
"After looking at the data, our CEO is the highest compensated CEO of an eye bank in the country by a long shot," he wrote. "Monitoring things like compensation is one of our most important responsibilities. I urge the board to take my concerns seriously, and act appropriately in this matter."
Instead, Johnson said he was met with hostility. Valerie Stewart told him in a recorded phone conversation that she didn't trust him anymore.
She gave him two options: resign or the board will vote him off.
On July 5, the board of directors held a special-called meeting to discuss Johnson's removal. 10News attended the meeting, although no recordings or cameras were allowed.
Ten board members — Jim Ragonese, Steve Lewis, Tony Gross, Clare Crawford, Neil Smith, Tony Wright, Frank McCall, Bill McDonald, Mike Vudragovich and Neal Vaughn — voted to remove Johnson without discussion.
"When Mr. Johnson raised his concerns during a recent board meeting, the other Directors listened, but ultimately disagreed with him," the ETLEB said in a statement provided by Stewart. "The Board explained it procedures many times, and he adamantly refused to work with the Board. The Board believes that Mr. Johnson’s conduct during this time is inappropriate and that it is in the organization’s best interests to part ways with him."
10News emailed every board member copied on the email exchanges between Stewart and Johnson. Most of them did not respond to our request for comment, although two of them said they had resigned from their positions in the past three months.
A third told 10News the ETLEB went through the same thing a few years ago, with a board member questioning the incentive program.
That board member, who asked not to be named, said they felt the eye bank was taking advantage of the people who donated their eyes. They were voted off the board as well.
After the first 10News story ran on July 5, the staff page of the ETLEB's website no longer showed any names, titles or pictures. The organization's Facebook page also showed an error.
The Compensation Stewart is highest paid eye bank executive
Executive Director Valerie Stewart started with the East Tennessee Lions Eye Bank in 1998. Documents show she helped grow its annual revenue from about $400,000 in 2002 to $2.1 million in 2020.
Nineteen years of Form 990s submitted to the IRS show her earnings grew with it.
"It's very sickening to me," Lions Club member Patrick Pebley said. "This is not just people donating money. This is people donating their loved ones' eyes."
The Eye Bank is independent from the Lions Club International, although it carries the Lions name as a tribute to how it began.
The board is almost exclusively composed of Lions, but none of its associations at the district, state or internal association have jurisdiction over it, according to Johnson.
"One of the main visions of Lions Club is — well — vision, and the eye bank is just the ultimate extension of that," Pebley said. "The more I looked at [the data], the more it galled me."
10News reviewed nearly two decades of paperwork ETLEB submitted to the IRS. We found Stewart's total compensation has always equaled roughly $1 of every $5 the nonprofit makes.
In the paperwork filed to the IRS in 2002, she earned nearly $89,000.
In the paperwork filed to the IRS in 2020, she earned more than $445,000, records show.
"She has to cross every T and dot every I and she's the one that they're coming to talk to," community activist and former ETLEB board member Vivian Shipe said. "I believe that she is worth every penny they're paying her. I absolutely do."
IRS paperwork lists Shipe as board member from July 2017 to June 2020. She said she witnessed firsthand how hard Valerie Stewart works to change lives.
"She has been doing that for 25 years — passing all the different inspections, all the different audits, meeting the people where they are," Shipe said. "She's a very Christian woman. She is a woman of fine integrity, and a laborer is worth their wages."
Tiffani Mensch with the Alliance for Better Nonprofits in Knoxville said compensation can vary.
"That's just going to depend on the organization and their scope," she said. "It's really important to do your research on what that sort of fair compensation looks like."
There are 73 eye banks currently accredited by the Eye Bank Association of America. Six of those are in Canada and one is in Puerto Rico.
Twelve of them specialize in all organ donation, like Tennessee Donor Services in Nashville and OneLegacy in Los Angeles. Nine are divisions of larger eye banks and do not file paperwork with IRS independently.
Donations to the Iowa Lions Eye Bank and Utah Lions Eye Bank are run through the universities that oversee them.
The IRS did not have any results for Form 990s from the Lions Eye Bank for Long Island. 10News downloaded the most recently available Form 990s for the remaining 42 eye banks.
On average, our investigation showed the top paid executive for a nonprofit eye bank is $154,324. Eight eye banks listed no compensation for their top leaders.
The ETLEB's Form 990 from the 2019-2020 fiscal year shows Valerie Stewart received total compensation of roughly $445,000. That figure included about $200,000 in bonus and incentive compensation.
That number makes her the highest compensated nonprofit eye bank executive in the country, WBIR found.
The most recently available IRS filings — which reflect the 2019 fiscal year — show the Eye Bank for Sight Restoration in New York City reported about $10.1 million in total revenue that year.
Its executive director made about $259,000 in total compensation.
Records for the Central Ohio Lions Eye Bank in Columbus show it reported about $1.7 million in total revenue for the 2019 fiscal year.
Its executive director was paid about $146,000 in total compensation.
10News asked Stewart why her compensation was so high. She emailed us a statement on behalf of the ETLEB, saying the board has the sole authority and responsibility for determining her compensation.
"Considering her years of service and success, Ms. Stewart’s compensation is reasonable and well earned," the statement sent by Stewart reads. "In 1991, the Board adopted an incentive program that rewards the hard work and dedication of its team. The incentive program is funded exclusively from earned program service fees."
10News shared our findings with Stewart and again asked why it's so high. After two emails and multiple text exchanges, Stewart texted a picture of a statement attributed to Board President Mike Vudragovich.
"East Tennessee Lions Eye Bank allowed WBIR to attend its special called meeting to handle an internal matter related to a board member. ETLEB previously provided a statement to WBIR," it read. "ETLEB has policies and procedures to ensure its activities are compliant with state and federal laws and will have no further comment at this time."
Emails obtained by 10News from April 25 and April 26 show Stewart elaborating on why the money is so high.
"The conclusion is this: Some EBAA Eye Banks have a CEO, COO, CFO, and other positions, however, ETLEB only has one person filling these positions to save money," Stewart wrote. "Totaling the averages below the average salary for an Executive Director having just these responsibilities listed below would be $565,240.89."
No nonprofit eye bank reported paying its chief executive that much.
On average, the nonprofit eye banks we reviewed reported spending about 37% of their total revenue on salaries, other compensation and employee benefits.
The ETLEB reported spending 58% of its total revenue during the 2019 fiscal year on that same category.
Almost all — 95.8% — of the ETLEB's money comes from its program services, like tissue processing and cornea transplant programs. It does not rely on monetary donations.
Laurie Styron, executive director of CharityWatch, said setting appropriate compensation for a charity's leader is one of the board's primary responsibilities.
"It can be worth it in some cases for a charity to pay a higher amount to an exceptionally skilled leader who can run a charity more efficiently and effectively than someone with lower pay but less talent," Styron said. "That said, the higher pay needs to be rigorously substantiated and justified."
Personal Ties IRS: Daughter makes $137k in part-time role
The East Tennessee Lions Eye Bank must follow strict guidelines set by the Food and Drug Administration, as well as the Eye Bank Association of America.
"Who would want to do that job? When you are looking for someone to do a job and you have all these requirements or regulations upon you to stay open, you're going for the best," Shipe, the former ETLEB board member, said.
In an email sent to board members on April 25, Stewart said that's why the staff asked her to bring her daughter, Laura Gilleran, on board.
"I did not set Laura's salary, nor did I hire her. Laura had been our outside source many years, since she has a master’s degree in Education, and we needed someone to read our manuals for any errors before an EBAA inspection," Stewart wrote. "Since an employee left right before an EBAA inspection the staff asked me to replace that person with Laura because she knew our business so well. It paid off!"
The most recent ETLEB Form 990 available from the IRS covers the 2019-2020 fiscal year. That record shows the ETLEB paid Laura Gilleran $137,048 for a part-time role of 24 hours a week.
"The daughter part time... That's beyond ridiculous," Lions Club Member Patrick Pebley said. "And to me, that's the most concerning thing about this."
Stewart told 10News that Gilleran works "40 plus hours a week." She provided an April 28 email from the non-profit's certified public accountant, James Booher, explaining the mistake.
"After the 990 was filed with the IRS, the error was brought to my attention by Valerie, however the cost of filing an amended Form 990 for this one small change was determined to be unnecessary," he wrote. "I made a note in my file to update to 40 hours on the next Form 990 that is filed according to Valerie."
A 10News review of accredited eye banks in the United States shows Gilleran's compensation is closer to what most eye bank CEOs, executive directors and presidents make.
Gilleran is listed as the organization's office manager on IRS paperwork.
"They do expect to be compensated, but they're not in it to get rich," Pebley said.
ETLEB Board meeting minutes from October 28, 2021, show the personnel committee formally selected Gilleran to replace Stewart upon her retirement.
"The motion carried unanimously," the minutes read. "Laura and Mark Gilleran joined the group where she wholeheartedly accepted the position being offered to her to take over as Executive Director when Valerie retire[s] in 2026."
The IRS paperwork also shows the ETLEB paid $34,657 to "Eye on Transport," a private company owned by Valerie Stewart.
10News asked Stewart about Gilleran's compensation and the private company. She declined to answer our questions and referred us instead to the statement attributed to Board President Mike Vudragovich.
"East Tennessee Lions Eye Bank allowed WBIR to attend its special called meeting to handle an internal matter related to a board member. ETLEB previously provided a statement to WBIR," it read. "ETLEB has policies and procedures to ensure its activities are compliant with state and federal laws and will have no further comment at this time."
In an April 28 email obtained by 10News, Stewart said she bought the company many years ago and is the only owner.
"This company was established to take tissue to Johnson City in a mannerly fashion. We have used other carriers in the past that put ETLEB in a liability situation by being intoxicated," Stewart wrote. "The board has full disclosure of this business and they sign a conflict of interest each July at the beginning of our fiscal year. ETLEB has benefited from this service."
East TN Non-profits Survey: Local CEOs make an average of $128k
As chief capacity building officer for the Alliance for Better Nonprofits, Tiffani Mensch knows all about paying nonprofit executives in East Tennessee.
The ABN conducts an annual compensation survey to help give local nonprofits a baseline for setting salaries.
"It's important that people understand that nonprofits are businesses," she said. "We have staff that are paid and they should be compensated fairly. But, it's really important just to do your research on what that sort of fair compensation looks like."
Nearly 200 organizations participated in the ABN's most recent survey, completed in 2021. The East Tennessee Lions Eye Bank was not one of them.
"We looked at benefits, executive director and CEO salaries," Mensch said. "We looked at other frontline staff and support staff salaries so that nonprofits have this baseline."
Nonprofit leaders with the president or CEO title made an average of $128,611 if the organization's budget was over $1 million.
Nonprofit leaders with the executive director title made an average of $100,481.
Nonprofit office managers in East Tennessee made an average of $38,154.
In the most recent IRS documents available for the ETLEB, filed at the end of the 2019 fiscal year, Stewart's total compensation for her role as executive director is more than $445,000.
The paperwork shows her daughter, Laura Gilleran, made about $137,000 for a part-time role as office manager.
That means the two of them received roughly $1 in every $4 the ETLEB made that fiscal year.
AUGUST 10, 2022 STATEMENT FROM VALERIE STEWART:
No, we were not trying to hide anything Grace. Some people as I told you before are afraid of Brandon. The meeting place was for their safety. Also, we need to focus on the Eye Bank and do our job. If your news station covers only negative false news why we would want you there. Sorry you are not professional enough to find another story. Seems you have wore this one out since your last episode was about being asked to leave a board meeting. 🥲 I feel sorry for you that this is the only thing you can report about and it seems to be the same thing over and over again. If you were good at your job you might find that lots of people are helped in this community by us and we are very giving and concerned about other people than trying to make a name by destroying someone else's. I pray you don't find another target to destroy. We are moving forward even with your negative twisted comments. If you can't help with our mission then please don't try to stop us from doing such great work.
JULY 4, 2022 STATEMENT FROM ETLEB:
East Tennessee Lions Eye Bank is aware of allegations by Brandon Johnson, a current member of its Board of Directors, that its employee incentive program is excessive. Mr. Johnson has also alleged that the other Directors are retaliating against him for voicing his concerns. These allegations are not true. When Mr. Johnson raised his concerns during a recent board meeting, the other Directors listened, but ultimately disagreed with him. The Board asked Mr. Johnson to substantiate his allegations; invited him to serve on a committee; and meet with the leadership team to discuss his concerns further; however, he refused. The Board explained it procedures many times, and he adamantly refused to work with the Board. The Board believes that Mr. Johnson’s conduct during this time is inappropriate and that it is in the organization’s best interests to part ways with him.
The Board is comprised of independent, community volunteers. It has many responsibilities, including setting compensation policies. In 1991, the Board adopted an incentive program that rewards the hard work and dedication of its team. The incentive program is funded exclusively from earned program service fees. No portion of the incentive program is paid from public contributions.
Since 1998, Valerie Stewart has led the organization with steadfast dedication and grace. She and her team are tireless advocates for persons suffering from sight impairment and blindness. The Board works closely with Ms. Stewart, and it has the sole authority and responsibility for determining her compensation. Ms. Stewart was not an employee or a director when the Board adopted the incentive program. Considering her years of service and success, Ms. Stewart’s compensation is reasonable and well earned.
East Tennessee Lions Eye Bank is proud to have earned high scores for its financial health and commitment to governance practices from independent nonprofit watchdog groups like Charity Navigator. Over 80% of every dollar received goes toward fulfilling its commitment to the community by helping restore sight in over 400 people annually and funding projects like adding musical toys with Braille instructions on local playgrounds. The remaining dollars spent allow the organization to pay its team fairly and cover routine, but necessary business operations. Information about the organization’s revenues, expenses, and other important information is accessible on the Tennessee Secretary of State’s website (sos.tn.gov/charities).
JULY 13, 2022 STATEMENT FROM ETLEB:
"East Tennessee Lions Eye Bank allowed WBIR to attend its special called meeting to handle an internal matter related to a board member. ETLEB previously provided a statement to WBIR. ETLEB has policies and procedures to ensure its activities are compliant with state and federal laws and will have no further comment at this time." -Mike Vudragovich, Board President
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