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Turnover among nonprofit CEOs in Southeast Michigan is pushing annual salary increases to a level not seen since before the Great Recession nearly a decade ago.
Pay increases for nonprofit CEOs and executive directors at some large nonprofits topped 4 percent nationally in 2015 for the first time since before the recession, according to the report. Given that large nonprofits compete nationally for their executives, the pay practices of local nonprofits reflect the national market, experts say.
"The nonprofit labor market has heated up in the last couple of years as it has for all employers, said Ed Steinhoff," managing director at Pearl Meyer.
"We are seeing a lot more turnover in (nonprofit) executive positions than we have had in the past. It kind of goes along with a stronger economy," Steinhoff said. "There are a lot more opportunities, (so) people are more likely to jump."
"Beyond salary increases, nonprofit executives will likely see higher payouts this year for incentive pay for hitting prescribed goals," Steinhoff said.
"The use of long-term incentives, which measure performance over a set period—typically three years—and pay for performance at the end of that period, is also on the rise," Steinhoff said.
Beyond salary increases and more incentive payouts, experts point to significant increases in the compensation of new CEOs coming into organizations that had founders at the helm or other CEOs with long tenures.
"If an executive has been there a while ... you may even find they're getting behind the market," Steinhoff said.
"When it's time to replace them, nonprofits are finding they may have to pay more to entice a new CEO," Steinhoff said. "That's a shift from the past when incoming CEOs were typically paid less, unless they were more experienced."