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An Extra Year Before He's the Retirees' Retiree

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.

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.

Speculation already has begun about who will replace Novelli as chief executive. The leading inside candidate is said to be AARP's well-regarded chief operating officer, Tom Nelson. Also in the running is Emilio Pardo, AARP's chief brand officer, and Executive Vice President Nancy LeaMond, who just took over AARP's government relations and advocacy portfolio.

Whoever takes over will have a lot of raw power to wield. A quarter of the people who voted in the United States in 2006 were AARP members. "That does give you a certain sense of clout," Novelli said.

Hire of the Week

Speaking of AARP, one of the organization's top officials, Larry Renfro, is leaving and will be replaced by three people.

Renfro, who leads AARP's burgeoning business ventures, is returning to his old stomping grounds at Fidelity Investments, as president of Fidelity Developing Businesses. He joined AARP in 2005.

Renfro will be replaced temporarily as the head of AARP Services by two people: Jean Alexander, the chief marketing officer of the same division, and John J. Wider Jr., vice president of health products and services.

A third person, Richard "Mac" Hisey, will succeed Renfro as president of AARP Financial, the AARP Services subsidiary that oversees AARP's banking, insurance and investment products. Hisey has been the chief investment officer of AARP Financial.

Novelli said Renfro's departure had nothing to do with his own decision to stick around for a while.

Earmark Mystery Solved

The unnamed author of the red-hot white paper that defends home-state projects called earmarks is no longer anonymous.

The six-page document, which has been creating controversy on Capitol Hill, was authored by -- drum roll, please -- the Ferguson Group, which says it's the largest lobbyist for localities in Washington.

In other words -- shock of shocks -- the most active (and secretive) promoter of earmarks turns out to be a firm that specializes in obtaining them for cities, counties and public agencies.

Soon after my column on the paper ran last week, the company's president, W. Roger Gwinn, phoned to admit that his firm's seven-person budget and appropriations policy team wrote it -- initially to explain to clients why they tended to get more money from congressional earmarks than from federal agencies left to their own devices. It was later distributed to lobbyists and congressional staffers.

That's when it became famous as a bold defense for the much-maligned earmarking process.

The document's facts were used in an op-ed piece praising earmarks that appeared under the names of mayors of three cities represented by the Ferguson Group. The firm had a hand in placing that op-ed in the Washington Post, though it initially denied any involvement.

Now the white paper can be yours as well. The original document, scintillatingly titled "The Fairness of Congressional Earmarking in American Democracy," is at http://www.fergusongroup.us/earmarkcomparison.htm.

Enjoy.

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