Outback speaks out.
Your false premise is that regional partners and proprietors (general managers) have an incentive to pressure lower-level management to contribute to the PAC to 'look better in the eyes of senior management." Outback is well known for its innovative regional partner and proprietor programs. Regional partners are true owners in every restaurant. Our regional partners and proprietors enjoy substantial incomes (six figures) and have the protection of a five-year employment contract that can only be terminated for cause. Regional partners and proprietors all receive the same base salary and the same percentage of cash flow from their restaurants. I am in charge of the PAC because as general counsel I do not have line authority over our restaurant management and cannot affect their careers based on PAC contributions. Where is the incentive?
Perhaps your biggest blunder is your statement that our PAC is primarily funded by our lower-level managers. Not true. If you had counted accurately, you would have found that regional partners, proprietors, and vice presidents contribute 85 percent of all dollars in our PAC.
Our lower-level managers and kitchen managers contribute because they receive, in addition to a base salary, a monthly bonus based on the profitability of their restaurants. We educate our management on the impact that government policies can have on their business. It is for this reason that we enjoy such strong support for our PAC.
Our PAC enrollment form, which each contributor signs, clearly states: (1) that contributions are voluntary, (2) that contributions may be stopped at any time, and (3) that managers will not be favored or disadvantaged by contributing or not contributing to the PAC.
Do we encourage (as allowed by law) our management to voluntarily contribute to our PAC? Absolutely and without apology.
You state that the Outback PAC received contributions of $565,600 in the first six months of 1998, of which $458,000 (81 percent) were donations of less than $200, which the Federal Election Commission does not require to be itemized. Not one of these numbers is accurate.
The contributions of $565,600 on our June 30, 1998, Florida report represent cumulative contributions for the 18 months from January 1, 1997, to June 30, 1998. The $458,000 of contributions you claim are under $200 is unfathomable.
For the first six months and nine months of 1998, our unitemized contributions were 49 percent and 37 percent, respectively, of total contributions. In 1996 and 1997, our unitemized contributions were 27 percent and 29 percent, respectively, of total contributions. As the calendar year progresses, more contributions exceed the $200 level and the percent of unitemized contributions decreases. I expect that our report for the full calendar year of 1998 will again show unitemized contributions of less than 30 percent. FEC rules do not give us the option of itemizing contributions of less than $200. As you know, our Florida reports list every contributor regardless of amount. We have nothing to hide.
JOSEPH J. KADOW
Vice President and General Counsel
Editors respond: Kadow is correct in pointing out our incorrect numbers. We relied on flawed data to compute the percentage of Outback's PAC that is funded by contributions less than $200. The passage referring to the portion of contributions to Outback's PAC from small donors should have read: "Contributions of less than $200 accounted for $104,067 of the $356,368 the Outback PAC received in 1997. Because the FEC does not document sub-S200 PAC donations, 29 percent of the PAC's receipts last year would be untraceable if not for Florida's unusual full-disclosure requirements."
However, the premise of the story is not, as Kadow suggests, that the "PAC is primarily funded by lower-level managers" The story reported that fully one-third of the 30 current and former Outback managers we interviewed, including lower-level managers making $22,000 a year, said they felt pressured to fund the company's PAC through deductions from their paychecks.
When Kadow asks, "Where is the incentive?" he should be directing the question not to us, but to his own management. When anyone in Outback's senior management--regional partners or proprietors--asks lower-level staff for contributions, it's easy to see how it can turn into pressure, which is exactly what employees, such as former kitchen manager Andrew Fitzgerald, described to Mother Jones: "Let's face it. When the big boss asks you to do something--and not doing that may hinder reaching your ultimate goal--you're going to do it."