Oct. 28 (Bloomberg) -- Fresh out of the Yale School of Management, Todd Haimes joined the nearly bankrupt Roundabout Theatre Co. in 1983 and led its transformation into one of the largest U.S. nonprofit theaters.

With two Broadway houses, a third opening in 2009 and a budget last year that totaled $50 million, the Roundabout has become a major player in the heart of New York's commercial- theater district. Last season, it presented 6 of the 36 shows opening on Broadway, in addition to fare in its off-Broadway space and a new ``black box'' theater.

On June 13, 2005, its board of directors rewarded Haimes, now 52, for his service.

The Roundabout guaranteed him $3.2 million if he stays with the New York company until May 7, 2018, in addition to annual pay that has averaged about $480,000 since 2000.

``It seems appropriate for someone who has contributed as much as he has contributed,'' said Roundabout treasurer Robert Donnalley Jr., who serves without compensation. ``He's the reason I'm on the board. All the board members feel that way.''

Even as Broadway braces for the impact of the biggest U.S. financial crisis in decades, New York's largest nonprofit theaters are hewing to ambitious expansion plans. As they've grown, so too has the pay of their leaders.

Lump Sum Plus Annuity

Donnalley said the $3.2 million will become $1.7 million after taxes and buy an annuity that would pay Haimes about $144,000 a year. The board approved the arrangement to supplement a lump sum of about $346,000 to be made at retirement.

Haimes's 2007 compensation was $487,439. He's unusual among top New York theaters in being the Roundabout's chief financial as well as artistic executive, a dual role he has played since 1990. The Public Theater, Lincoln Center Theater and Manhattan Theatre Club all divide authority between two people.

The Manhattan Theatre Club, with an annual budget of $23.7 million and one theater on Broadway and two off-Broadway, paid longtime leaders Lynne Meadow, 61, and Barry Grove, 56, about $485,000 each in salary and benefits in the year ended June 2007. That's up 5 percent from a year earlier and up 84 percent since 1998, according to tax returns. MTC's budget more than doubled in the past decade as it acquired a permanent home on Broadway, the Samuel J. Friedman (formerly Biltmore) Theatre.

Complex Businesses

As artistic director of Lincoln Center Theater, which has an annual budget of $35 million, Andre Bishop, 59, earned $428,183, up 4 percent from a year earlier and up 58 percent since 1998. Bernard Gersten, 85, the theater's executive producer, earned $442,284.

LCT also operates its own Broadway theater, the Vivian Beaumont, and frequently produces in other Broadway houses, as it's doing this season with Horton Foote's ``Dividing the Estate,'' at the Booth Theatre.

Paying competitively helps theaters attract and retain administrators capable of managing complex businesses, fundraising, and, as they outgrow their facilities, empire building.

Some public companies with comparable revenue pay their chief executives more than $1 million a year. Yet compensation that's modest by comparison can still rankle donors.

``Contributors are clear that when they see salaries over $200,000, they freak out,'' said Ken Berger, president of Mahwah, New Jersey-based Charity Navigator, which rates nonprofits on growth and efficiency. ``They associate charity with a vow of poverty.''

(All pay figures in this story are from the theaters' federal tax returns and include salary and benefits. They were made available by the companies themselves, as required by law, or posted on the nonprofit web site guidestar.org.)

`Handsome Salary'

``I receive a very handsome salary and worked 35 years to get it,'' said Bishop of Lincoln Center Theater, who drew no salary when he began working at tiny nonprofits in the 1970s. ``The idea that because we're nonprofit we shouldn't earn a decent living is ludicrous. We're the CEOs of a company with a budget of about $35 million.''

Charity Navigator awarded each of the three biggest New York nonprofit theaters three stars (out of a possible four) for ``organizational efficiency.'' They spend a relatively high proportion of expenses on programs and services (90 percent for the Roundabout) and a small share on administration (4.9 percent again for the Roundabout, according to Charity Navigator).

New Building

The Public Theater, which has a budget of about $17 million and plans to present ``Hair'' on Broadway this season, paid artistic director Oskar Eustis $277,568, down 2 percent from a year earlier.

Joe Dowling, director of Minneapolis's Guthrie Theater, with a $25.9 million budget, made more than his New York colleagues. He earned $682,229, for a 30 percent raise. The jump included a one-time $100,000 bonus tied to his role in financing and building its breathtaking, new $125 million theater complex overlooking the Mississippi river, spokeswoman Melodie Bahan said.

Pay over $400,000 is reasonable for a big cultural institution, said James Steinberg, a director of the Harold and Mimi Steinberg Charitable Trust, the second-largest philanthropy devoted to theater (after the Shubert Foundation).

``It's a lot of money but they all bring in a lot of money,'' he said. ``And relative to the CEOs of for-profit corporations, it's nothing.''

Metropolitan Opera Tops

No theater matched the Metropolitan Opera, which paid Peter Gelb just over $1 million in his first year as general manager. The median salary of chief executives of 249 nonprofits that provided data to the Chronicle of Philanthropy was $326,500, according to a recent survey.

Robert Brustein, a critic and founding director of the Yale Repertory Theatre and American Repertory Theatre at Harvard University, said that the pay is symptomatic of theater that has strayed from its mission.

``There was a time when these institutions were supposed to be relatively monastic,'' Brustein said. ``You gave up material comforts for creative and spiritual fulfillment.''

That's silly, said Bishop, who has been Lincoln Center Theater's artistic head since 1992 and did the same at Playwrights Horizons before that.

``The fact that these theaters have flourished and grown against all odds should be celebrated and the people should be celebrated,'' he said. ``It's the work that has gotten these theaters to where they are.''

No Nonprofits, No Broadway

``Doubt,'' ``The Coast of Utopia,'' ``Spring Awakening,'' ``Cabaret'' and ``Avenue Q'' are among the acclaimed fare presented by New York nonprofits. Tracy Letts's ``August: Osage County,'' winner of the 2008 Tony Award and Pulitzer Prize for best new drama, originated at Chicago's nonprofit Steppenwolf Theatre Company.

``If you took away the Broadway shows that originated from nonprofit theaters,'' Bishop said, ``there would be much, much less going on.''

In addition to developing and staging plays and musicals, the companies create educational programs and offer professional training.

Lincoln Center Theater presented last season's biggest hit, a $5 million revival of Rodgers and Hammerstein's ``South Pacific'' that's earned a profit every week after paying a cast of 41 actors and 35 musicians.

Hip-Hop Musical

In addition to its off-Broadway space, the Mitzi E. Newhouse, Lincoln Center rents a fourth space, near Times Square, for ``Clay,'' a one-man hip-hop musical produced under a new program, LCT3. The company plans to relocate LCT3 to a theater it's building on the roof of the Vivian Beaumont.

Under contracts negotiated with theatrical unions, nonprofits can pay actors and other workers lower rates than commercial producers for a show's initial run. Because of an agreement Lincoln Center Theater made with Actors' Equity to hire Brazilian opera star Paulo Szot, LCT paid actors Broadway commercial minimums from the start on ``South Pacific.''

The Roundabout was founded in the basement of a supermarket, in 1965. It specializes in revivals but increasingly presents new work. Last month, it signed a 20-year lease to occupy the Henry Miller Theater in the new Bank of America tower. Scheduled to open in early 2009, it will be the Roundabout's third house on Broadway (after the American Airlines Theatre on 42nd Street and Studio 54 on West 54th Street) and fifth overall in New York City.

`Nervous Every Day'

The Roundabout said it couldn't afford to contribute to Haimes' pension for his first 15 years at the company. A survivor of cancer of the jaw, he is due to receive one-third of the $3.2 million lump sum if he is dismissed without cause before June 25, 2009. He collects two-thirds if either occurs between June 25, 2009 and June 25, 2013.

The Roundabout said it is setting aside $142,000 a year toward the $3.2 million. As of Aug. 2007, it had collected $488,000.

Haimes declined to comment on his compensation package for this story, but has spoken often about the stress associated with running the theater.

``He's nervous every day,'' said Second Stage Executive Director Ellen Richard, who previously served as his longtime No. 2 at the Roundabout. ``He rescued it from bankruptcy, and he's probably more nervous now than he was then.''

The Second Stage paid Richard $190,139 in the year ended August 2007. In 2004, the Roundabout awarded her $476,698 in deferred pay, which she collected after she left in June 2005. She said it was for retirement that didn't accrue when she joined in 1983.

``I made $18,000 a year when I started,'' she said.

As for the current financial crisis: ``Everything is so recent we don't know the impact,'' Richard, 50, said. ``It's another reason not to sleep at night. At the end of the day you have to make it work.''

To contact the writer on this story: Philip Boroff in New York at pboroff@bloomberg.net.

Last Updated: October 28, 2008 00:01 EDT