Governor Cites State Deficit In Opposing Leaders’ Pay

Gov. Arnold Schwarzenegger has expressed “deep concern” about the state stem cell institute’s plans to set the salaries for the chairman and vice chairman of its board, two positions for which no one has accepted pay in three years.

With the state facing a possible $28 billion deficit, Schwarzenegger sent a letter Thursday to the stem cell institute’s board urging it “to ensure that compensation for these positions is offered only if and to the extent absolutely necessary to implement its mission.”

Setting a salary for the chairman of the California Institute for Regenerative Medicine is on the agenda for its next board meeting Tuesday and Wednesday in Irvine.

Meanwhile, the vice-chairman job is open, and the top state officials will submit nominees for the post. Reportedly, Schwarzenegger will nominate a candidate who does not need to take a salary, while the lieutenant governor, treasurer and controller are expected to nominate a candidate who would need a salary, said Robert Klein, chairman of the state stem cell institute.

Klein and Edward Penhoet, the institute’s former vice chairman, have declined salaries since the institute’s formation three years ago.

Klein, who is chief executive of a financing company that funds affordable apartment developments and market-rate projects, said market conditions dictate that he can no longer afford to donate his time to the state.

“For the first three years, I wanted to make certain that all of our scarce initial funds were going for hiring critical staff and getting grants out and making certain we got past right-wing litigation that tried to stop this agency,” Klein said.

He said he also wanted to ensure that the state first repaid loans from philanthropists that funded the institute while it fought the legal challenges.

Klein informed the board in September that he wanted a salary. He said that in consideration of the current economic climate, he would continue to provide at least 15 percent of his time to the institute for free. He said his institute workweek has always surpassed 40 hours and will continue that way.

Meanwhile, his financial firm has become “my night job,” with daily responsibilities handled by its staff.

Klein’s salary has already been discussed by the institute’s governance committee, but that figure has not been made public. The institute’s board will vote on the committee’s recommended salary at next week’s board meeting.

The board previously set the salary range for the jobs of chairman and president from $275,000 to $508,750. Alan Trounson, the current president, is paid $490,000.

The salary range set for the vice chairman’s position is $180,000 to $332,000.

Since the board does not have the authority to fire its chairman, the salary determination is the closest thing it has to a job-performance review for the position.

Penhoet will now serve as a nonsalaried board member, after being appointed to fill the vacancy created by the resignation of San Diego biotechnology executive Tina Nova.

Since the institute’s inception, the salaries of its employees have been the subject of much debate.

Institute leaders say its salaries are commensurate with those paid for similar jobs in the University of California system, although some consumer advocates have criticized them as being too high.

A consumer advocate who watches the institute’s actions closely said he shares the governor’s concerns about the chairman and vice-chairman salaries, calling them “wildly out of line in these economic times.”

“A useful benchmark for the chairman’s salary is what the director of the National Institutes of Health makes – $191,300,” said John Simpson, of the Santa Monica nonprofit Consumer Watchdog. “Paying Bob Klein more than $200,000 would be outrageous.”

On Wednesday, legislation was introduced to freeze salaries of state employees who make more than $150,000 a year.

The legislation, introduced by the chairman of the Assembly’s higher-education committee, specifically includes executives and other highly paid officials of the California State University system. It also urges the University of California system – which enjoys constitutional autonomy, just like the stem cell institute – to impose the same restraints.

“(The institute) has a responsibility to spend taxpayer money with great care,” Schwarzenegger said.

Terri Somers: (619) 293-2028; [email protected]