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An Extra Year Before He's the Retirees' Retiree

William Novelli, chief executive of AARP, spoke out against private Social Security accounts in 2005. He plans to leave the position in January 2010, once the organization's agenda is firmly established with the new president.
William Novelli, chief executive of AARP, spoke out against private Social Security accounts in 2005. He plans to leave the position in January 2010, once the organization's agenda is firmly established with the new president. (By David Duprey -- Associated Press)
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By Jeffrey H. Birnbaum
Tuesday, May 6, 2008

The chief executive of AARP, William D. Novelli, has decided to step down as head of the nearly 40 million-member organization. But not right away.

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In an exclusive interview, Novelli, 66, said that he has agreed to extend his contract an additional year -- into January 2010 -- but then will leave the position he has held since June 2001. The extra 12 months will give him time to tee up AARP's positions on health care and Social Security for the new occupant of the White House, he said, and also will permit a smooth transition at the helm of the nation's largest lobby.

"I have been trying to make sense of what would be best for the organization and for me; this is what makes sense," Novelli said about his decision to stay an extra year. "The board definitely wanted me, and it's always nice to be wanted."

AARP's board has formed a search committee and plans to retain an executive search firm to find Novelli's successor. It will look both inside and outside the organization, which has $1 billion a year in revenue.

AARP is one of the nation's most powerful lobbies, thanks to a combination of factors that are the envy of -- and increasingly a model for -- other interest groups. It has a huge, fast-growing membership and business ventures that generate millions of dollars.

The organization offers a range of products and services, including health insurance and mutual funds. Its revenue fuels an influence machine that includes activists and offices in all 50 states, as well as publications that are among the most widely read in the world.

Novelli has aggressively leveraged these assets to win major victories in Washington. Under him, AARP helped President Bush add a prescription drug benefit to Medicare and helped defeat Bush when he wanted to add private accounts to Social Security.

Last year, AARP tried and failed to expand the State Children's Health Insurance Program. But such setbacks are rare for the lobby. Its critics expect AARP to be hard to beat when it comes time to rein in Medicare and Social Security, the financially threatened federal programs that its members rely on most.

Novelli, who co-founded the public relations firm Porter Novelli, has worked hard to position AARP, whose members are 50 and older, as a pragmatic, middle-of-the-road player in policy debates. He has even suggested that he would consider raising the retirement age for Social Security and indexing its benefits to inflation -- two painful solutions to the program's looming woes.

That remains to be seen. In the meantime, he has kept his organization from splitting under the natural tensions that exist between its baby-boomer members, who are only now beginning to retire, and older seniors, who have been the group's bedrock until recently. That may be Novelli's chief legacy at AARP.

Novelli's base annual salary is $672,266. In 2006, the latest year that has been disclosed, he took home $2.04 million because of a five-year retirement plan in which he became vested. But truth be told, not even the higher number is remarkable for a person in charge of so large an organization.

Novelli thinks of himself -- and AARP -- as a crusader for public good. Before joining AARP, he was president of the Campaign for Tobacco-Free Kids. He is a health and fitness nut who works out regularly in the office gym that he proudly filled with state-of-the-art equipment.


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