GMAC Reports Its CEO Was Paid Nearly $1.9 Million

GMAC President and CEO Sangeet Chowfla

In a year when revenue is flat and you’re losing market share to your top competitor, you might not expect the Chief Executive Officer to get a sizable raise. But Sangeet Chowfla, president and CEO of the non-profit Graduate Management Admission Council, which administers the GMAT test, saw his total compensation rise by a whopping 81% to nearly $1.9 million.

According to documents filed with the Internal Revenue Service, GMAT reported that Chowfla was paid $1,862,158 in salary, bonus and benefits in 2017, the latest year for which data is available, up from $1,028,783 a year earlier. Most of the increase was the result of a mammoth $1,150,000 bonus. But the former tech executive, who took over the reins of GMAC as CEO in early 2014, also saw a handsome increase in his base salary. Chowfla’s base rose to $539,950 in 2017, a hefty 22% jump from the $441,734 he was paid a year earlier.

In comparison, the CEO and president of the Educational Testing Service, a nonprofit that is more than 14 times the size of GMAC, made just under $1.2 million in fiscal 2017, less than $700,000 Chowfla’s total comp. ETS, which administers the rival GRE test among others, paid CEO Walter D. MacDonald $1,158,464 in pay and benefits when the organization’s total revenues were $1.4 billion.


A spokesperson for GMAC, Geoffrey Basye, says the compensation reported for CEO Chowfla by GMAC includes “double counting” of pay that had been previously reported in earlier form 990 filings. “In the tax period reported on our most recent 990, GMAC’s Board of Directors implemented changes in the compensation structure for the CEO, transitioning to a more variable, performance-linked system,” says Basye. “Because of IRS rules and regulations, this change created a double reporting of compensation.  The result was Sangeet’s long-term bonus (2014-2016) being reported twice, once in the year that it was accrued and again the year that it was paid.”

Basye explains that Chowfla’s reported compensation in 2017 includes $880,000 of compensation that had already been reported in previous years as well as $125,000 of an accrual that will “only be paid out upon the achievement of specified long term objectives set by the board for the 2017-2019 evaluation period.”

The reported pay, moreover, occurred in a year in which GMAC’s total revenues were flat and the organization’s surplus (or profit) fell to $3.6 million from $4.9 million in 2016. If not for the income of $2.7 million from its investments and another $3.5 million in revenue booked from the sale of securities, GMAC would have had operating loses of more than $2.7 million. Basye, however, maintains that the IRS’ reporting requirements are “not an accurate reflection of operating income or loss. GMAC’s audited financials, prepared according to US GAAP, show a positive EBITDA of $4.8M for 2017.”


Total GMAC revenues came to $97,364,259 in 2017, just a tad above $97,292,315 in 2016. It is also during a time when GMAT continues to lose market share to GRE which has become more popular among business school aspirants.

The deterioration in the organization’s financials, as they are reported in IRS filing, has been felt particularly in the past two years In 2015, GMAC reported a surplus of $13.6 million on total revenue of $101.2 million. But the number of $250 GMAT tests taken has fallen by 4.4% to 279,947 in 2017 from 292,753 a year earlier as fewer people apply to two-year, full-time MBA programs, more graduate business programs waive standardized tests, and more applicants are taking the rival GRE to get into business school.

Chowfla’s reported total compensation was so large in 2017 that it would have taken nearly 15,000 GMAT test takers, paying the customary $250 a piece, just to equal his pay and benefits for one year. In 2017, GMAC’s profit margins on its test operations were 49.7%.


Since the former Hewlett-Packard executive’s arrival as president in September of 2013 and his taking over as CEO in January of 2014, Chowfla has pursued a diversification strategy that has led to several acquisitions. In January, GMAC acquired The MBA Tour, which conducts more than 60 MBA admissions events per year in over 30 countries (see GMAC Buys The MBA Tour). He also acquired the NMAT test in India in 2015 (see GMAC Acquires An Indian Entrance Exam) and BusinessBecause, a business school website in the U.K., last year (see GMAC Buys A Business School Website). All the acquisitions were made for undisclosed sums.

Basye says the strategy shift has been endorsed by GMAC’s board. “The GMAC Board of Directors has charged Sangeet with ensuring GMAC’s long-term sustainability by reducing its reliance on the GMAT test alone and entering new lines of service consistent with our mission to provide solutions for business schools and candidates to discover and evaluate each other,” says Basye. “During this period, revenues from non-GMAT sources grew and have continued to accelerate in subsequent years.”


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