Amid a media controversy over an annual salary exceeding $900,000, Jim Henwood has announced his resignation after 20 years as President & CEO of the Los Angeles County Fair Association (LACFA), Michael Ortiz, Chairman of the LACFA Board and former president of California State Polytechnic University, Pomona, will serve as Interim CEO until Henwood's replacement has been found. He will also remain as Board Chairman during the selection process.
"I am honored to step into the role of Interim CEO during this time of transition," said Ortiz. "Jim Henwood was hired 20 years ago to continue the great tradition of the LA County Fair, promote LACFA's agricultural and education programs as well as to develop LACFA into an economic engine for the region and a dynamic asset to the community. With
Board support, I want to help the organization maximize our current programs and resources."
About a week before this switch in the captain's chair, the Los Angeles Times Published a scathing article about the LACFA, with the searing headline: "Head of money-losing L.A. County Fair Assn. made nearly $900,000 in total compensation."
The article stated : "The fair's chief executive, James Henwood Jr., 69, collected nearly $900,000 in total compensation in 2013, dwarfing that of other fair managers in California, according to the tax filings and state records. That same year, the association lost $3.4 million..."
The article went on to point out that "The San Diego County Fair brought in about as much total revenue in 2013, $66 million, as L.A. County's, at $68 million, and has long been profitable, according to state records. Timothy Fennell, CEO of the Del Mar Fairgrounds, where the San Diego County Fair is held, had a salary-and-benefit package that year of about $184,000, roughly a fifth of Henwood's compensation... Like the fair in San Diego County, Orange County's event drew more visitors than L.A. County's this year and in 2014. The Orange County Fair regularly posts a profit, state records show. Its CEO made about $212,000 in 2014."
With the news spotlight glaring on him instead of the organization he represents, prompted Henwood to tender his resignation, "I am very proud of my 20-year tenure at LACFA and have seen this organization through great growth and innovation," he said. "However, lately I have become a distraction from the great work that LACFA does. I love this organization too much to let that happen. Accelerating a change in leadership will allow LACFA to refocus on its important role in the community."
While it may seem that bad publicity pushed Henwood out of his position, Ortiz and the LACFA pointed out that that Henwood had already informed the Board in June of 2015 of his plans to leave the LACFA at the end of 2016 when his contract expired. According to Ortiz, Henwood actually wanted to leave earlier. His previous two-year contract was from 2012-2014, and he was midway in a two-year extension of that agreement when he announced that he would not renew the contract. "I don't think anyone on the board wanted Jim to leave," said Ortiz.
But the original plan was for a longer executive search period and for the 2016 edition of this September Southern California celebration to be Henwood's last fair.
"We wanted to move slowly in the process," said Ortiz. "We started the search in June, we hired a search firm and we wanted input from staff and county residents, we wanted input about what they are looking for, we were creating a new job description. Everyone has a stake in the new president and we wanted different perspectives."
He added that after an executive search firm was hired, they surveyed residents, staff and other interested parties, and then the data from the search was processed and evaluated. But what was expected to be a smooth transition following the selection of a thoroughly vetted candidate has been fast tracked with Henwood's departure and increased focus on the financial structure of the LACFA.
As chairman of the board, Ortiz was the most plausible person to fill in as interim president of the fair, but he said he expects a replacement to be named prior to the 2016 fair. "We are speeding up the search. There is a little more urgency then there had been. I expect it to take another four or five months."
The 2016 fair will go one as scheduled regardless, although Ortiz stated that he anticipates a new Interim CEO to in place by opening day. "It is not my intention to still be the interim CEO when the fair begins."
Given that the salary had caused such a furor in the press, how the new CEO's compensation package will compare to Henwood's is yet to be determined, but Ortiz points that out that Henwood's salary, which was also based upon performance, included not just one of the largest county fairs in the U.S., but overseeing the other facilities and businesses LACFA operates, such as the Sheraton Fairplex Hotel and Conference Center, the NHRA Motorsports Museum and Auto Club Raceway at Pomona, McKinley's Grille, KOA RV Park, Finish Line Sports Grill, Cornucopia Foods and the Learning Centers which encompasses Fairtime Learning, The Child Development Center, The Career and Technical Education Center (CTEC) and the Junior Fair Board.
"I don't believe the L.A. Times reporters really understand the accounting of the business," said Ortiz. "They were looking at how much money was lost, but they didn't take into account that we built a hotel and conference center, refurbished facilities, it is not an accurate representation of our business or the work that Jim is responsible for. It's not just the annual fair, we have events and facilities throughout the year."
LACFA is a private business that leases the LA County fairgrounds, with the stipulation they organize and operate the annual LA County Fair, making the actual fair a public-private hybrid. Ortiz emphasizes that while they are under minimal obligations to do, the LACFA strives towards full transparency. He added that the compensation package for Henwood was recommended by Frederick W. Cook, Inc., an executive compensation consulting company. "We used their recommendation, and everything was done with due diligence in how we ended up with his package," said Ortiz. "There was an increase in his base pay, but also it was based in part on bonuses and performance and he had to reach certain goals. His compensation fluctuated during the years. The head of our fair is a very different job than the San Diego County Fair."
He added, "we hired Jim to build the company, to expand our business. We are always looking at development and what we can do have a greater positive economic impact on the region. With the new person, we will be looking at several opportunities for managing what we have built and growing in very specific areas."
Other than Henwood's resignation, the most immediate ramification in the wake of the L.A. Times coverage of the LACFA, the Los Angeles County Board of Supervisors directed the county's Auditor-Controller to conduct an audit of the Fair Association's financial operations. Assemblyman Freddie Rodriguez (D-Pomona), whose district includes the Fairplex grounds, was reported to have persuaded the state Legislature's audit committee to order a state audit of the finances and operations.
Ortiz said he welcomes any audits and is confidence there are no hidden smoking guns, mainly due to the transparency of the LACFA. "We have a third party audit every year," he said. "The county audits us every three years, so they are going to just do another audit. They are going to be auditing themselves."
He added, "we're a 501 (c) (5) nonprofit, which I don't think everybody understands. But we've been very cooperative, we've already shared all our information. We welcome the audits."
What about the negative publicity? Is Ortiz worried that the turmoil surrounding the Henwood resignation will have repercussions come opening day of the fair? " It is my sense that the success of the fair is always more dependent on the weather than on what is said in the media," he said. "We look at our satisfaction surveys of our customers, and they are always up."