Looking Ahead: Top 10 Compensation Issues for Tax-Exempts

The intense scrutiny of executive compensation at public companies has spilled over to the tax-exempt world, with non-profit pay practices now similarly regarded as a litmus test of good governance and director independence. Many tax-exempts to date have made incremental program changes to address challenging economic conditions, new regulatory needs, and increased governance expectations.

Looking ahead, however, Compensation Committees will need to consider more robust, proactive changes to better ground compensation practices in the strategies and needs of non-profits.

This report discusses what we believe should be the Top 10 compensation priorities for non-profit Compensation Committees for 2011:

• Revisit Your Executive Compensation Strategy and Philosophy
• Take Advantage of Improved Form 990 Reporting
• Validate and, Where Needed, Clarify the Role of Variable Pay
• Validate Compliance with Section 4958 of the Internal Revenue Code
• Strengthen Governance
• Create a More Rigorous CEO Evaluation Process
• Assess Executive Benefits
• Evaluate the Adequacy and Independence of Compensation Advice
• Prepare for the Recovery