Skip to comments.CA: Filings show Schwarzenegger gets millions as fitness consultant
Posted on 07/14/2005 10:10:00 AM PDT by NormsRevenge
SACRAMENTO (AP) - Gov. Arnold Schwarzenegger is being paid $1 million a year for his role as a consultant to a company that publishes several fitness magazines, a deal critics say represents a serious conflict of interest for the former bodybuilding champion.
The payments, revealed Wednesday in filings with the U.S. Securities and Exchange Commission, are from Schwarzenegger's consulting job with American Media Operations, a subsidiary of the company that publishes Flex and Muscle & Fitness magazines, among others.
Critics say the contract is a conflict of interest because Schwarzenegger's pay comes from the magazines' advertising revenue and the magazines often feature ads about dietary supplements. The governor last year vetoed a bill that would have imposed government regulations on the dietary supplement industry.
Bill sponsor Sen. Jackie Speier, D-Hillsborough, called on Schwarzenegger to cut off all ties with the magazines.
"Whether it is an actual conflict or not, it certainly gives the appearance of being a conflict," Speier said.
Independent political observers agreed, saying the contract showed a lapse in judgment.
"This is one of the most egregious apparent conflicts of interest that I have seen. This calls into question his judgment as to who he is working for, and it calls into question what he thinks he owes the public," said Larry Noble, executive director for the Center for Responsive Politics in Washington, D.C.
State law allows elected officials to keep outside jobs.
Margita Thompson, the governor's spokeswoman, said Schwarzenegger had disclosed all his financial holdings and added that the deal with the fitness magazines does not represent a conflict of interest.
"The governor did not direct sales or marketing activities of American Media and did not have personal contact with any advertisers to generate the advertising revenue," she said.
Schwarzenegger's consulting contract calls for him to receive 1 percent of the magazines' ad revenue each year for five years, a sum that could total $8 million.
Schwarzenegger, who is referred to as "Mr. S." in the SEC filing, announced last year that he had agreed to serve as executive editor for Muscle & Fitness and Flex. He writes monthly columns for both. His salary for those functions has not been revealed.
The SEC filing also shows that American Media is paying $100,000 a year for five years to the Arnold Classic, an annual bodybuilding competition in Ohio.
The Sacramento Bee reported Wednesday that Schwarzenegger attended a March meeting to help dietary supplement companies launch a lobbying group aimed at avoiding government regulation of their products. That meeting took place as a new measure to restrict supplement use was pending at the state Capitol.
Since when is it illegal for such activities. Let's investigate every Democrat governor over the last 40 years in Cali who didn't do otherwise. _ !
I'm pretty sure that Speaker Nunez still has some labor connections.
Since when did this country's elected officials and media worry about the appearances of improprieties much less actual obviouos acts?
Oops, silly me.
I forgot. We are in a New Age of Enlightenment and governance.
He still draws down 35K a year as head of a labor council.
It's a conflict of interest only if the person involved is a Republican (in this case Schwartznegger). If it were a Democrat, well, then, that's ok.
'"This is one of the most egregious apparent conflicts of interest that I have seen ..." said Larry Noble.'
It sounds like this pansy is about to hyperventilate and pass out.
That's nothing... John Kerry is being paid much, much more for his outside consulting (um, I mean consorting) job...
Los Angeles Times, July 14, 2005
Gov. to Be Paid $8 Million by Fitness Magazines
The publications rely heavily on advertising for dietary supplements. Schwarzenegger vetoed a bill that would have regulated their use.
As a consultant, Schwarzenegger's role includes "advising on the direction of the" magazines and "otherwise helping in various ways to further the business objectives of the Weider business," the contract shows.
Weider Publications was started by longtime bodybuilding promoter and Schwarzenegger patron Joe Weider, who brought Schwarzenegger to the U.S. in 1968. Weider sold his magazines to AMI in 2003.
Schwarzenegger's two muscle magazines are crammed with ads for performance-enhancing dietary supplements promising chiseled bodies and surges of energy. The 257-page August issue of Muscle & Fitness contains 110 pages of ads for supplements, from creatine ethyl ester to anabolic/androgenic "absorption technology."
The governor used his regular column in the June issue of Muscle & Fitness to defend the supplement industry. He vowed to oppose any effort to restrict sales of the products in California, writing that he is "so energized to fight any attempt to limit the availability of nutritional supplements."
An article in the August issue of Muscle & Fitness said Schwarzenegger had "lent his support" to a new lobbying group that would work to promote nutritional supplements. "The governor also made it clear that he will remain a phone call away as the coalition progresses," the magazine said.
Schwarzenegger's office characterized the article as "hyperbole."
Last year, the governor vetoed a bill by state Sen. Jackie Speier (D-Hillsborough) that would have required coaches to take a course in performance-enhancing supplements, created a list of banned substances for interscholastic sports and barred supplement manufacturers from sponsoring school events. In his veto message, the governor said that most dietary supplements were safe and that Speier's bill would have been difficult to implement. He also said the bill unfairly focused on "performance-enhancing dietary supplements (PEDS) instead of focusing on ensuring that students participating in high school sports are not engaged in steroids use."
SEC Filing: EX-10.1 Consulting Services Agreement
Governor's contract with Fitness magazine at a glance
The Associated Press
Gov. Arnold Schwarzenegger's contract with Weider Publications, a subsidiary of American Media Inc., will pay him at least $5 million over five years. The two entered a memorandum of understanding on Nov. 15, 2003, two days before Schwarzenegger was sworn into office. The contract took effect the following January.
In March 2004, the governor announced he would become executive editor of two American Media magazines, Muscle & Fitness and Flex. He writes a column for the magazines but otherwise has no day-to-day editorial responsibilities.
Oak Productions (referred to in the contract as Oak) is Schwarzenegger's production company. He is referred to as Mr. S in the contract. Here are some key passages from the agreement:
- Weider is engaged in the magazine publication business and would like to obtain certain consulting services from Oak, and Oak would like to provide such consulting services to Weider.
- Weider and Oak shall agree from time to time upon the specific consulting services to be provided pursuant to the terms of this agreement, which will include advising on the overall editorial direction of the specific Weider magazines and otherwise helping in various ways to further the business objectives of the Weider business by either (i) performing services suggested by Mr. S and consented to by Weider or (ii) being responsive to the reasonable requests of Weider. Such consulting services of Oak to be furnished to Weider pursuant to this agreement will be provided exclusively by Mr. S and are subject to Mr. S's other commitments and his professional and personal availability as determined in his sole discretion. Mr. S shall seek in good faith to make himself available from time to time to Weider after regular business hours or on weekends throughout the term (defined below). For the avoidance of doubt, Mr. S shall not provide any consulting services to Weider pursuant to this Agreement during normal business hours on business days.
- Mr. S will serve as the "Executive Editor" of Muscle & Fitness and Flex in relation to the consulting services being provided to Weider pursuant to the terms of this Agreement. ... Such title of "Executive Editor" will not confer upon Mr. S any management authority or the authority to make any representation, contract or commitment on behalf of Weider.
- In consideration of Oak's agreement to furnish Weider with Mr. S's consulting services pursuant to Section 2.1, Weider (i) will pay Oak a percentage of the net print advertising revenues...
- For each calendar year during the term, Weider will pay Oak a cash amount equal to 1 percent of the net print advertising revenues for such calendar year; provided, however, that in no event shall such 1 percent advertising payment be less than $1,000,000 in any full calendar year.
- The advertising payment will be paid to Oak as follows: (i) $ 250,000 each March 31, June 30, September 30 and December 31 during the Term commencing on March 31, 2004 ... and (ii) any remaining balance of the 1 percent advertising payment due to Oak in a calendar year (i.e. the amount, if any, by which the 1 percent advertising payment exceeds $1,000,000 for such calendar year) within ninety (90) days after the end of such calendar year.
Source: SEC filing, American Media Inc.
Just ranting. ;-) lol
He signed the deal 2 days before he was sworn in as Gub.
Conflict in Schwarzenegger magazine deal unclear
The Associated Press
Here's a look at some of the legal questions surrounding Gov. Arnold Schwarzenegger's financial arrangement with several fitness magazines:
Q: What does state law say about conflicts of interest for legislators and the governor?
A: In a statement issued Thursday, the California Fair Political Practices Commission said the governor, like any other public official, is prohibited under the Political Reform Act from making, participating in making or influencing any decision that will have a foreseeable material financial effect on a source of income. Each of these factors is determined on a case-by-case basis under the law and FPPC regulations. The governor also must publicly disclose his financial interests on his annual statement of economic interests.
Q: What must lawmakers and the governor disclose on their financial disclosure statements?
A: Officials must disclose all income greater than $500 from entities doing business in California. But they only have to designate a range of income. For instance, Schwarzenegger needed to merely disclose that he was receiving more than $100,000 from American Media Inc., which publishes magazines including Flex and Muscle & Fitness. A Schwarzenegger spokeswoman said the governor has disclosed all his financial holdings.
Q: What does state law say about outside income for lawmakers and the governor?
A: It is permitted, with no limits, if it is properly disclosed. Bob Stern, president of the Center for Governmental Studies in Los Angeles, said he knows of no other modern governor receiving outside income, particularly from an industry that could be affected by legislation under consideration.
"It seems to me if this isn't covered in the conflict of interest laws, then there's a big hole in the conflict of interest laws," said Bruce Cain, a University of California, Berkeley political scientist. "The intent of the law was to cover precisely these kinds of activities. ... You're not supposed to have anything that can compromise your objectivity."
Q: What does state law say about lawmakers or the governor holding outside jobs?
A: California law allows elected officials to keep outside jobs, although there are limitations on what several experts defined as incompatible activities. According to state law, "No member of the Legislature, state elective or appointive officer or judge or justice shall, while serving as such, have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity, or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest and of his responsibilities as prescribed in the laws of this state."
Q: Is there a method for a governor to recuse himself from signing or vetoing a bill?
A: No. If he doesn't act, the bill automatically becomes law. Stern and others suggested the only way to avoid a potential conflict of interest would be for Schwarzenegger to physically leave the state and let Lt. Gov. Cruz Bustamante act in his place.
The governor's office denies any conflict of interest in the governor's veto last year of a bill by Sen. Jackie Speier, D-Hillsborough, that would have restricted the use of performance-enhancing substances in high school sports. Stern said that may be legally correct because the bill was aimed at an entire industry and didn't benefit or harm any particular individual or company.
On the Net:
Political Reform Act: http://www.fppc.ca.gov/Act/2005Act.PDF
Schwarzenegger Slammed for Fitness Fortune
By TOM CHORNEAU - AP
SACRAMENTO, Calif. (AP) - Gov. Arnold Schwarzenegger came under fire Thursday for accepting millions of dollars from fitness magazines in a consulting deal that critics say represents a clear conflict of interest.
Schwarzenegger is being paid at least $5 million over five years to serve as a consultant for several magazines published by American Media Inc., including Flex and Muscle & Fitness, according to a Securities and Exchange Commission filing Wednesday.
The publications derive much of their profit from advertisements for nutritional supplements. Last year, Schwarzenegger vetoed a bill seeking to crack down on the use of performance-enhancing substances in high school sports.
The bill's sponsor, Democratic state Sen. Jackie Speier, called on Schwarzenegger to sever his ties with the publisher.
"The governor of the state of California makes some important decisions every day. Today, he has to make a decision about a conflict of interest - his own," Speier said during a Capitol news conference.
A spokesman for the governor defended the arrangement, saying Schwarzenegger has had dealings with the magazines for more than three decades. "There is no technical conflict," spokesman Rob Stutzman said.
He said the arrangement was fully disclosed last spring when Schwarzenegger announced he would become executive editor of the two magazines. The governor also filed a financial report with the state saying he was being paid, although the filing did not specify the amount.
Stutzman said the business relationship did not create a conflict because Schwarzenegger had no contact with the advertisers. He added that Schwarzenegger has been a proponent of dietary supplements since his days as a bodybuilder.
The contract between Weider Publications, a subsidiary of American Media, and Schwarzenegger's production company, Oak Productions Inc., states Schwarzenegger will receive 1 percent of the magazines' advertising revenue each year for five years. The payment will be no less than $1 million a year but could reach much higher, according to the contract.
The governor does not accept his $175,000 annual salary from the state, and California law allows elected officials to keep outside jobs.
"He has broken his trust to the people by vetoing legislation to protect young people from dangerous supplements without ever telling us that he is earning millions of dollars from these companies," said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights in Santa Monica.
Schwarzenegger writes monthly columns for Muscle & Fitness and Flex, and last year announced that he had agreed to serve as executive editor for both magazines.
At the time of the announcement, Schwarzenegger said he would take a salary that was "petty compared to the movies." The magazines also agreed to donate $250,000 a year to the California Governor's Council on Physical Fitness.
The SEC filing, which refers to Schwarzenegger as "Mr. S," also shows that American Media is paying $100,000 a year for five years to the Arnold Classic, an annual bodybuilding competition in Ohio.
The bill that Schwarzenegger vetoed last year would have required high school student athletes to pledge not to use performance-enhancing substances, banned some substances and barred supplement makers from sponsoring school events.
In his veto message, Schwarzenegger said key parts of the bill were unclear and that it was focused erroneously on dietary supplements rather than on steroids, which he has acknowledged using during his bodybuilding career, when they were legal.
Associated Press Writer Beth Fouhy in San Francisco contributed to this report.
And this has what to do with politics?
Have you read any of the articles?