At a time when the Ontario provincial government is feeling heat on the executive compensation of public-sector CEOs, I think a deeper look into MaRS Discovery District is warranted. Growthroute had some affiliation with the hub last year as we were referred a couple of projects. I raised my concerns with some insiders about the opacity of those decisions and general “clubiness” level of the institution.

Since then, and in spite of excellent results (I’ll expand and back this in one of the next posts), we have not been referred anything – as expected when I raised my concerns. Instead, we continue to see money handed over to consultants through personal networks, expansion into viable private services, and a hiring frenzy at salaries most start-ups would be envious of.

To those who think bad feelings may affect this post, you are right – and that’s why I have documented all facts and tried to highlight personal experience and opinions as such. And as I found out, I am certainly in good company in Toronto, as so many entrepreneurs and leaders have issues with the way things are run at this innovation hub!

In the first post of this series, I will focus on compensation, expanding on numbers recently raised by @StartupNorth on twitter, and the deficit in public reporting.

“Competitive” compensation

The CEO of MaRS Discovery District in Toronto was paid $471,874 in 2008 and $437,500 in 2007. The information first surfaced in a 2008 MacLeans article on the President of UofT – who happens to be the husband of MaRS’s CEO and makes over $380K from UofT, before substantial benefits.

That salary made MaRS’s CEO one of the highest-paid public employees in Ontario, and the 4th highest-paid person in the “Other Public Sector Employers” category – right after the leaders of Canadian Blood Services, the Ontario Institute for Cancer Research, and the Ontario Power Authority. This is more than the salary of CBC’s head, although he manages an organization that is a hundred times larger.

The original source is the Ontario Ministry of Finance’s “Sunshine report”, which discloses public sector’s salaries above $100K. Run a search for “Ilse Treurnicht” in the report’s addendum to find for yourself, she is in company of eleven other MaRS members paid more than $100K (they had 42 employees in 2008, as reported here).

Deficit in public reporting in spite of over $130M in public subsidies

We would most likely never have known was it not for the sunshine report. Public reporting by the institution is virtually non-existent, in spite of $130M in public subsidies between 2002 and 2008, and that’s excluding another $15M for “MaRS Innovation”, which MaRS Discovery District (and UofT, of course) contributed to. The institution received $8.7M from the provincial government in 2008. The subsidies for 2009 haven’t been reported yet.

For all that, the only public report MaRS has to file, as confirmed by the institution’s communications head in october of last year, is a Registered Charity Information Return. There was a “Where does my money go” page on their site, but since the launch of a new site last year, there is no sign of it (or it’s well buried). Unlike most non-profit organizations, MaRS does not issue any public annual report.

[April 10 update: a reader under the name of William Howitzer (with IP address from the Hospital for Sick Children) pointed out in a comment, unpublished due to strong language content, that the Where does your money go? page actually exists - http://www.marsdd.com/donate/where.html - I ran searches with those exact terms on google and on the mars website when researching this article and could not find it - but as I mentioned I could have missed it.

Beyond his strong language, I would like to thank that commenter for the find: the page is a perfect illustration of my thesis. Let's see: it only highlights inputs e.g. time spent etc, not actual results (see part 2 of this post series for more on that). It mentions that MaRS "spent more than 2300 hours helping companies with their businesses". That's a whopping 5 days a year per advisor assuming an average of 15 advisors over the past 4 years (generous assumptions since they likely count time spent since MaRS's inception), or 1.45h per company helped (2,300h divided by 1,300 entrepreneurs), assuming that later-stage companies did not get much more time than bootstrapping entrepreneurs. Now we can rest assured our $130M was put to productive use.]

To make things even muddier, the institution also runs a private for-profit organization, which has no public reporting obligations. If this structure is legal (as can be expected), then rules should be changed to increase public oversight and include better reporting on actual results.

One thing we learn from analyzing the Registered Charity Information Return is that  the average salary there was over $95,000 in 2008, dividing a reported $4M in salary expenditures by 42 employees. That tells us the top employees didn’t decide to emulate most of the start-ups they serve and take sub-$100K salaries.

In the next part, to be published on Friday, I will focus on performance management and the opacity in grant attribution decisions.

Tags: innovation hubs, innovation policy, mars discovery district, marsdd, ontario