NYSAE's Nonprofit CEO Forum, in collaboration with the BBB Foundation of Metropolitan New York, conducted a Nonprofit Executive Compensation Workshop. Pictured (left to right): Robert O. Lehrman, JD, Counsel, The Hundred Year Association, and Workshop Co-Moderator; Barry Koslov, JD, MKA Executive Planners, who spoke on supplemental retirement plans; James E. Rocco and Lindsay McHugh, JER HR Consulting, who spoke on executive compensation; Jerald A. Jacobs, Esq., Pillsbury Winthrop Shaw Pitman, LLP, who spoke on executive employment agreements; Claire Rosenzweig, CAE, President, Better Business Bureau of Metropolitan New York, and Workshop Co-Moderator; and Joel A. Dolci, CAE, NYSAE President & CEO. A special thank you to our sponsor, Visit Rochester!Providing attractive and competitive compensation for association and nonprofit executives helps organizations attract executives with the necessary skills and experience and retain executives who successfully lead organizations. To address the issue, NYSAE's Non Profit CEO Forum, in collaboration with the BBB Foundation of Metropolitan New York, held a Nonprofit Executive Compensation Workshop. The program was sponsored by Visit Rochester.
Robert O. Lehrman, JD, Special Counsel, The Hundred Year Association of New York, and Claire Rosenzweig, CAE, President & CEO, Better Business Bureau of Metropolitan New York, moderated the program. Jim Rocco, CCP, Principal Consultant, JER HR, and Lindsay McHugh, Senior Consultant with JER HR, spoke on executive compensation; Barry Koslow, JD, President & CEO, MKA Executive Planners Consulting, addressed supplemental retirement plans; and Jerald Jacobs, Partner, Esq., Pillsbury Winthrop Shaw Pittman LLP, covered executive employment agreements.
There is an increasing scrutiny of nonprofit compensation packages, noted Rocco, both by consumers and donors, who are looking for more transparency and greater accountability, and by the government. In addition to covering the regulatory environment regarding compensation, Rocco and McHugh further discussed external factors affecting compensation, components of an executive compensation package, steps that organizations can follow in the design of an executive compensation package, the applicability of incentive plans, and the role of the board in overseeing executive compensation.
Why offer pay incentives? "National surveys report that incentive pay frequency is ranging from 45 to 58%, with more prevalence for chief staff executives," said Rocco. Among the reasons pay incentives are becoming more common are they:
- Strongly link pay to performance;
- Encourage continuous improvement in results or behaviors that support strategic goals and directions;
- Recognize special achievements that advance organizational priorities;
- Enhance recruitment and retention of high-quality staff in increasingly competitive environment; and
- Minimize impact on salary line budget and associated benefit expenses.
"Supplemental retirement plans offer a new way to the five Rs: Recruiting, Retaining, Refocusing, Rewarding and Retirement," said Koslow. He discussed new approaches to supplemental retirement plans for key executives that differ from traditional IRC 409A, 457(b) and 457(f) plans. These plans require less disclosure and balance sheet impact. In addition, he covered traditional deferred compensation approaches and their advantages and disadvantages.
Among the benefits of CEO employment agreements, said Jacobs, are they: offset a systemically volatile structure with some continuity; help avoid misunderstandings; impose discipline, drain emotion in the board–CEO relationship; outline benefits; and protect the nonprofit regarding releases, IP, confidentiality, non-compete and non-poaching. Jacobs also addressed the most important agreement features, including: termination without cause; term of the contract; title (President/CEO/EVP/ED); authority over other staff and money issues; review process; salary and bonus; and benefits. He focuses on best practices from the nonprofit's point of view, what happens when the relationship with the CEO is over.
NYSAE's Non Profit CEO Forum is comprised of CEOs/COOs of New York's top not-for-profit organizations. These include the national trade and professional associations currently located here, plus New York's health, cultural and social service organizations. This sector employs over half a million people and adds more than a billion dollars to New York's economy from conventions and meetings each year.