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Eric Litke
By Eric Litke September 9, 2016

Did Ron Johnson approve a $10 million payout for himself?

Republican U.S. Sen. Ron Johnson has touted his private-sector experience in his 2016 re-election bid, just as he did in 2010.

But it’s a big final payday his opponent wants you to remember.

Russ Feingold invoked the matter in a campaign ad in June. Then again in early July. And again in late July.

The central claim in all three is that Johnson gave himself a $10 million payout when he left his Oshkosh manufacturing firm after winning the 2010 election. The ads imply there’s something shady about the payment, particularly one launched June 14, 2016.

Black and white images of Johnson, the U.S. Capitol and cash fill the screen as a narrator ominously states: "Before Sen. Johnson left for Washington, he gave himself $10 million, a sweetheart corporate payout."

Was such a payment made, and, if so, is there anything questionable about it?

Let’s dig in.

Johnson’s $10 million

At issue is money Johnson received shortly before taking office in 2011.

It came to light in a federal Financial Disclosure Report that listed the payment as compensation from Pacur, the company he helped found and bought in 1997.

Johnson told the Milwaukee Journal Sentinel’s Dan Bice in 2011 the payment was back pay for serving as CEO the previous 13 years, as he had not taken a paycheck since purchasing the company. Johnson sold most of the company in 2010 and stopped active involvement in its operations, though he retains a 5 percent stake, according to campaign spokesman William Allison.

Johnson hasn’t gone into much detail on the nature of the payout, saying at the time, "It's a private business. I've complied with all the disclosure laws, and I don't have to explain it any further to someone like you."

The column noted the pay didn’t appear to be part of a pre-determined compensation package. Johnson described the payment in 2011 as an "agreed-upon amount," then acknowledged the person who agreed to it was the owner — himself.

Allison said Pacur followed "followed standard business practices to settle the account and independently calculate the back pay (Johnson) was owed as a result." He said the payout was reviewed as part of a routine IRS audit and the IRS "took no issue with it."

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Allison declined to elaborate on the process by which the $10 million amount was decided and approved.

So Johnson received $10 million. Does that make it a "sweetheart corporate payout" as the ad claims?

That’s a pretty subjective description, but it implies there was something special or unusual about the amount.

When considered as back pay, the $10 million works out to about $770,000 per year. That would be a "fairly typical" compensation package for an owner and CEO of a company the size of Pacur, according to a blog post last year in Plastics News.

The trade publication does an annual executive pay study for the plastics industry, though it noted it had to estimate the size of Pacur since the private company does not release sales information.

David Walker, a professor and executive compensation expert at Boston University School of Law, said that annual amount "doesn’t seem implausible," for someone in Johnson’s position, since many owners of small businesses take out most of the profits as compensation.

But like other experts contacted by PolitiFact Wisconsin, Walker said it’s hard to put the amount in context since Pacur is a private company, so we don’t know key factors like its size, profits and other executive compensation.

The timing of Johnson’s payment is also noteworthy, though it’s not directly addressed in any of Feingold’s ads. The original column points out the $10 million payment came on the heels of a campaign where Johnson spent $9 million of his own money.

Critics said the payout looked like an attempt to circumvent federal regulations and have the company pay for Johnson’s campaign. Corporations are not allowed to contribute directly to federal or state campaigns, and they can’t give money to a candidate for the express purpose of reimbursing campaign costs.

The Federal Election Commission never issued a public finding regarding the payment to Johnson. A group claimed to have submitted a complaint last year, but an FEC spokeswoman said it the agency never received it.

Election lawyers told Bice in 2011 that Johnson likely didn’t violate any election laws, and proving otherwise would have required a written agreement or other direct proof of a prior plan to reimburse campaign expenses. Such proof never surfaced.

Our rating

In a recent TV ad, Feingold claims Johnson gave himself $10 million in a  "sweetheart corporate payout."

The amount is accurate, and Johnson did essentially give it to himself since he acknowledged he was the one to approve it.

But there’s no evidence to show this payment was unusual or out of line, as the tone and use of the "sweetheart" descriptor imply. An industry trade publication said the amount is reasonable given Johnson’s role and longevity.

For a statement that is partially accurate but leaves out important details or takes things out of context, our rating is Half True.

Our Sources

YouTube, "Truth," Russ Feingold campaign, June 14, 2016

YouTube, "Bill of Goods," Russ Feingold campaign, July 4, 2016

YouTube, "I Win Either Way," Russ Feingold campaign, July 30, 2016

Email, Michael Tyler, spokesman for Russ Feingold campaign, Aug. 24, 2016

Email, William Allison, spokesman for Ron Johnson campaign, Aug. 25, 2016, Sept. 7, 2016

Milwaukee Journal Sentinel, "Johnson proves to be a big spender - and taker: Firm pays him $10 million," June 23, 2011

Talking Points Memo, Ron Johnson Ducks TPM Questions On His Own $10 Million Payday: ‘It’s a Private Company,’ June 28, 2011

Financial Disclosure Report, Ron Johnson, May 16, 2011

Plastics News, Plastics executive pay pops up in Wisconsin US Senate race, Sept. 18, 2015

Federal Election Commission, Citizen’s Guide, accessed Sept. 2, 2016

Email, Judith Ingram, press officer, Federal Election Commission, Sept. 1, 2016

Email, David Walker, law professor and executive compensation expert, Boston University, Sept. 2, 2016

C-SPAN, "I win either way" (45-second mark) clip posted March 29, 2016

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