Pay for the Top Executive at

New York-Based Non-Profit

Organizations

June 2016

Overview

The Internal Revenue Service mandates that non-profit

organizations pay reasonable compensation and imposes stiff

penalties for those who fail to comply. In its annual study of top

executive compensation at New York-based non-profits, Steven

Hall & Partners (SH&P) reviewed and analyzed pay and related

governance data among 190 organizations as disclosed in Form

990s for the 2014 fiscal year, the most recent year for which such

data is available.

- 1 - June 2016

Summary of

Findings

Similar to prior studies, this study examines pay and related governance

data by revenue and organization type for the organization’s top executive.

This study is based on the same 190 organizations that have been included

in this study since 2010. Findings for fiscal 2014 reflect the following:

• Median total compensation increased +3.9% to $342,046 for fiscal 2014

– Base salary increased +5.8% to $290,028

– Of the 40 organizations (21%) that paid bonuses in 2014, the

median amount was $40,938, up 6% from $38,486 paid in the

prior year

¨ 38 organizations reported paying bonuses in fiscal 2013

– All other compensation was largely flat in 2014, increasing just

+1%

• Perquisites were provided and disclosed by 29% of the total sample in

fiscal 2014

– Most prevalent perquisite was housing allowance (21%)

¨ More prevalent among Education & Research (44%) and

International (44%) organizations

– None of the organizations reported payments for business-use of

personal residence

• Governance measures related to executive compensation were

reported by 95% of organizations studied in fiscal 2014

– In general, organizations with higher paid executives utilized more

governance measures, suggesting that organizations are aware

of potential risks associated with higher pay levels and have

taken steps to systematically mitigate those risks.

- 2 - June 2016

Compensation

Findings

On an overall basis, total compensation increased +3.9% among top

executives for fiscal 2014. This increase is attributable primarily to a +5.8%

rise in base salaries. Payment of bonuses remained a minority practice,

with just 21% of the organizations paying a bonus, but among those paying

bonuses, the median bonus paid increased +6% from 2013 levels, to

$40,938. Use of one or more perquisites served as part of the total

compensation package at 29% of the organizations in our sample.

- 3 -

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Base Salary Bonus * All Other Comp. Total Comp.

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Compensation Elements ‒ Median ValueFiscal 2010-2014

2014

2013

2012

2011

2010

+5.8%

+6.4% +0.9%

+3.9%

Median Compensation

190 Organizations ** 2014 Growth

2014 2013 2012 2011 2010 1 Yr 3 Yr

Organization Data:

Revenues $25,431,525 $22,301,644 $20,157,979 $20,535,437 $19,367,480 +14.0% +23.8%

Total Compensation Paid 11,381,172 10,415,229 10,158,830 9,867,132 9,399,087 +9.3% +15.3%

# of Employees 244 241 234 226 224 +1.2% +8.0%

Compensation Data:

Base Salary $290,028 $274,092 $268,232 $250,995 $249,074 +5.8% +15.6%

Bonus 0 0 0 0 0 +0.0% +0.0%

All Other Compensation 37,265 36,924 37,665 34,213 33,699 +0.9% +8.9%

Total Compensation $342,046 $329,177 $320,412 $301,127 $299,457 +3.9% +13.6%

Organizations that Paid Bonuses:

Number of Organizations 40 38 33 37 27 +5.3% +8.1%

Percentage 21% 20% 17% 19% 14% +5.3% +8.1%

Amount Paid $40,938 $38,486 $47,000 $35,000 $33,500 +6.4% +17.0%

* Represents median of bonuses for organizations that paid bonuses in each respective fiscal year. In 2014, 40 organizations (21%)

paid bonuses. In 2013, 38 organizations (20%) paid bonuses.

** Represents year-over-year data for same 190 organizations that completed Form 990s from fiscal 2010 through fiscal 2014.

June 2016

Compensation

Findings

The highest total compensation was observed among Arts, Culture &

Humanities organizations, which paid a median of $498,888, approximately

$100,000 more that the next highest paid sectors, International (with median

pay of $398,212) and Education & Research (with median pay of $397,150).

The lowest pay was observed among the Human Services sector, where

median total compensation for the top executive was $257,698.

Similar to trends among for-profit companies, compensation levels were

generally correlated to revenue size. Among organizations with revenues

greater than $40 million, median total compensation for the top executive

was $458,140, compared to $291,187 paid at organizations with revenues

less than $15 million.

- 4 - June 2016

Compensation

Findings –

Perquisites

The use of perquisites was a minority practice among the total sample for

fiscal 2014, disclosed by only 29% of organizations. On a year-over-year

basis, the prevalence of perquisites has not varied materially since 2010.

Housing (21% in 2014) is consistently the most common perquisite offered,

by a significant margin.

The prevalence of perquisites differs across organization types, a reflection

of the variations in typical job responsibilities and the importance of

remaining competitive with peers. Education & Research and International

organizations, where leaders are often expected to reside on-site, had the

highest prevalence of perquisites, primarily focused in housing.

- 5 - June 2016

Compensation

Findings –

Perquisites

Housing benefits were also the most commonly used perquisite across each

of the four revenue ranges studied. The greatest use of perquisites was

observed among organizations that reported between $25 and $40 million in

revenues. This is likely more attributable to the prevalence of Education &

Research organizations in this group (16 of 39 organizations or 41%), than a

broader size-specific trend.

- 6 - June 2016

Governance

Findings

Governance measures are often used to help organizations develop

reasonable compensation programs and establish rebuttable presumption

which provides important legal protections for directors and organizations.

SH&P has tracked and analyzed each of the six governance measures

outlined in Schedule J of Form 990.

In fiscal 2014, 95% of organizations disclosed the use of at least one

governance measure. Similar to prior years, the most common governance

measure (employed by 89% of the total sample), was the requirement that

the Board or Compensation Committee determine/approve top executive

compensation. A significant number of organizations also used a survey or

other study to assist in the determination of pay (67% of organizations) and

had an established Compensation Committee to oversee compensation-

related matters (61% of organizations). The review of Form 990s of similar

organizations to determine compensation is becoming majority practice

(48% of organizations), while the use of a compensation consultant remains

a minority practice (only 30% of organizations).

Notably, the use of employment contracts has decreased in prevalence from

fiscal 2010, a trend we have also observed among for-profit companies.

Such a move enhances the flexibility of the Board or Compensation

Committee to make changes to pay structures, levels or incumbents as

needed to better serve the mission of the organization.

- 7 - June 2016

Governance

Findings

Utilization of governance measures was relatively consistent across

organization type, although their usage was notably lower among Human

Services organizations due in part to low pay levels at these organizations.

Usage generally increases with organization size. Board or Committee

approvals, as well as the use of surveys and studies, were majority

practices regardless of size, as was the likelihood of having an established

Compensation Committee. Larger organizations were more likely to utilize

a compensation consultant compared to smaller organizations.

- 8 - June 2016

Governance

Findings

The Internal Revenue Service may impose intermediate sanctions if pay is

deemed excessive and unreasonable. For this reason, higher

compensation levels were correlated with a greater usage of governance

measures. Among organizations with higher levels of pay, these measures

demonstrate an acknowledgement and acceptance of “best practices” with

regard to establishing executive pay levels and provide a critical measure of

protection against potential penalties. As might be expected, the

prevalence of all six governance measures was lowest for organizations in

the bottom total compensation quartile.

- 9 - June 2016

Methodology

Steven Hall & Partners analyzed top executive compensation data and

governance practices for 190 non-profit organizations that filed complete

Form 990s with the Internal Revenue Service from fiscal 2010 through 2014.

Executive compensation analyses reflect the components of total

compensation (base salary, bonus, and all other compensation). Base

salaries for new hires have been annualized. All other compensation

includes contributions to benefit and deferred compensation plans,

nontaxable benefits, and all other compensation as reported. The study

looks at each organization’s top executive who may be the Executive

Director or Chief Executive Officer, and who is not necessarily the highest

paid. Perquisites and executive compensation-related governance

practices are as reported in each organization’s Form 990, Schedule J.

Data has been analyzed in aggregate, as well as by organization type and

revenue, as appropriate.

- 10 - June 2016

About Us

About the Study’s Authors

Sandra Pace is the leader of the firm’s non-profit practice and is a frequent

author and speaker on executive compensation and corporate governance

topics. Ms. Pace assists non-profit organizations on executive

compensation matters and related governance issues. Clients include

social/human services organizations and private foundations, among

others.

William Hui is an Associate in SH&P’s New York office. He assists various

non-profit and for-profit clients in the analysis of their respective

compensation marketplaces.

Contacting Steven Hall & Partners

This publication is provided by SH&P as a service to clients and colleagues.

The information contained in this publication should not be construed as

legal, tax or accounting advice. Please call any of our consulting staff, or

any member of our staff with whom you have consulted in the past. If you

have not received this publication directly from us, you may obtain a copy of

any past or future related publications by contacting us at 212-488-5400 or

shp@shallpartners.com.

- 11 - June 2016

About Us

About Steven Hall & Partners

Steven Hall & Partners (“SH&P”) is an independent compensation

consulting firm, specializing exclusively in the areas of executive

compensation, board remuneration, non-profit compensation and related

governance issues. By focusing solely on this critical and complex segment

of the human resources arena, we are able to provide our clients with the

highest quality expertise and best counsel available on a practical basis.

SH&P has established a practice dedicated to non-profit compensation

because we recognize the unique and particular importance of providing

executive compensation consulting to those organizations. Our clients seek

to balance the need to pay competitively to retain talented executives with

the desire to honor the organization’s mission and use donor resources

responsibly while navigating the waters of public scrutiny and regulatory

reforms. Unlike their peers at public companies, when assessing the

reasonableness of compensation, non-profit Boards are faced with a deficit

of timely, publicly available compensation data for non-profit organizations.

We strive to partner with our non-profit clients to ensure that they have the

tools and information needed to successfully navigate the questions

surrounding non-profit executive compensation.

For more information on our non-profit practice, please see “Non-Profit

Compensation” on our website at www.shallpartners.com/services/, or

contact our practice leader, Sandra Pace, at 212-488-5400 or

space@shallpartners.com.

- 12 - June 2016