Do we need a salary comparison?
The IRS Code § 4958 prohibits the payment of excessive compensation or other benefits to nonprofit CEOs or Executive Directors. As a result, any board members, who knowingly participates in an excess benefit transaction may be subject to a 10% tax on the excess benefit, up to $20,000. Board members who "go along" with a proposed CEO salary that turns out to be excessive are putting their own savings on the line. There is, however, a SAFE HARBOR that creates a "rebuttable presumption" of reasonableness if: 1) the salary is approved before it is paid by a board or committee comprised of those who have no conflict of interest with respect to the transaction; 2) the board or committee obtains and relies on “appropriate data” about comparability of the compensation prior to making its determination; and 3) the board or committee documents the basis for its determination “concurrently” with the making of that determination.
Why do a board survey about the CEO/Executive Director's performance?
Each board member should have some interaction with the CEO/Executive Director, and should offer some input into the performance review. A survey is an efficient method of gaining that input, and it allows the focus to be on relevant aspects of the leader's performance.
Board members vary widely in their contact with the CEO/Executive Director. Should all opinions be rated equally?
Frankly, probably not. A first year member of the board who has attended two meetings probably has less knowledge and fewer insights than a member of the executive committee who has served for 5 years. Many questions in our survey include a related scale to attempt to quantify the confidence of the respondent, and the scoring reflects that confidence level.
Why should we prefer an independent administrator of a survey rather than doing one ourselves?
Self-administered evaluation surveys can be tricky. Human beings are sensitive to relationships, and a new member might be overly deferential to the views of the administrator. It is common for those who move into Executive Committee positions on a board to have warm relationships with the CEO, and that may cause other members to doubt that their voices will be fully heard unless they agree. Also, because NPCEOEvaluation.com will compile a body of data in response to the standardized portions of the survey, the NPCEOEvaluation.com report will place responses into a more helpful context. By seeing whether a given score is above or below the mean and median for other organizations, board members and CEOs can assess whether change in that area deserves attention in the coming year.
Can't we do this ourselves?
Of course you can. Organizations have been self-administering evaluation surveys and setting salaries for CEOs for generations without the help of NPCEOEvaluation.com. NPCEOEvaluation.com offers a new, easier and vastly improved method of accomplishing this task, but the old way remains an option.
We want to use your services, but our organization cannot afford the fee, and our board members cannot afford it themselves. Can we use your services for free? Or at least copy your survey?
No. Copying our survey is a violation of copyright law, and one of the principles of copyright law is that we need to protect our copyright for it to remain valid. BUT, if you sincerely need help with your evaluation process, please reach out to us and let's discuss what we can do. We are nonprofit professionals with a deep love of the nonprofit sector, and we would much rather help you somehow than have to sue you!
