COMPENSATION UPDATE BY LAWRENCE ASSOCIATES

Dodd-Frank Finance Reform Bill Affects Nonprofit Compensation

Rick Lucash - Lindalee Lawrence — Tue, 31 Aug 2010 15:28:38 +0000

A recent article about the Dodd-Frank law on financial industry reform notes the potential for a significant “spillover” effect on the nonprofit healthcare sector, including executive compensation. The article notes particularly the possible effects on the ratio of total CEO compensation to median employee total compensation, the relationship of executive compensaton to financial performance, compensation committee and adviser independence, disclosure, and “clawback” policies for incentive payments. While the new law does not apply to nonprofits, it may, as with Sarbanes-Oxley, set new expectations for “best practices.”

Charity Navigator Releases 2010 CEO Compensation Study

Rick Lucash - Lindalee Lawrence — Thu, 26 Aug 2010 15:19:13 +0000

The new survey is available here. Much improved, with better regional comparisons and size breakouts.

Corporate Social Responsibility and Sustainability

Rick Lucash - Lindalee Lawrence — Tue, 24 Aug 2010 15:46:23 +0000

Across many fronts, but particularly in executive compensation, nonprofit healthcare can be expected to feel the impact of a changing perspective on corporate social responsibility and sustainability (CSR). A good discussion of this was developed by the Society for Human Resource Management’s Future Insights, Top Trends by Special Expertise Panel in its release for 2010. External pressures have been documented in the media and regulation, but the Panel believes that internal pressure to embrace CSR will increase as an increasing number of Generation Y employees weigh an organization’s CSR commitment as a factor in accepting employment and remaining employed in an organization.

Trends across for-profit and across healthcare, higher ed and other nonprofit sectors seem to be mirroring each other. For example, when Lawrence Associates was quoted in the BNA Daily Tax Report, IRS Audits Harvard, Other Universities in Probe of Exempt Purpose Rules by Diane Freda, March 26, 2010, the former IRS Exempt Organizations Director Marcus Owens, now an attorney with Caplin & Drysdale, said that a review of compensation has now become a staple of every audit of an exempt organization.

Most recently, Dodd-Frank, legislation enacted July 21, 2010, in response to market excesses and regulatory inadequacy, is expected to have a spillover effect on nonprofits much like the spillover effects of Sarbanes-Oxley. This is described in an interesting article by Michael W. Peregrine, McDermott Will & Emery, LLP and Timothy J. Cotter, Sullivan, Cotter and Associates, Inc.: Dodd-Frank: The Spillover Impact on Nonprofit Healthcare. These legislative initiatives, enhancing board independence, reducing potential conflicts of interest, increasing “say-on-pay,” requiring disclosure of the ratios of CEO to median employee total compensation and CEO to executive pay, along with clawback provisions on incentive pay; attention to conflicted advisors; and documentation of pay for performance all reflect a sea change in governance of both for-profit and nonprofit organizations.

Webinar on Nonprofit Exec Comp and More!

Rick Lucash - Lindalee Lawrence — Wed, 11 Aug 2010 13:14:18 +0000

Please join us for Lawrence Associates’ free webinar on 8/25/2010, 1pm EST on Nonprofit Executive Compensation, Wage & Incentive Design in the New Economy http://bit.ly/ccm50m

Feds Investigate Overtime Pay in Health Care Industry

Rick Lucash - Lindalee Lawrence — Wed, 11 Aug 2010 11:28:25 +0000

The New York Times reports (link to article is here) that the Labor Department is investigating overtime pay practices throughout the health care industry. The cases have involved mis-classification of nurses and other workers as “exempt employees” not entitled to overtime pay, or issues such as failing to pay overtime when employees were required to work through meal breaks. The article reports large payments by various major organizations to settle claims on this issue, along with class actions brought directly by employees.

Housing for Museum Chiefs Attracts Notice

Rick Lucash - Lindalee Lawrence — Wed, 11 Aug 2010 11:21:08 +0000

The front page of the New York Times for August 10 carries a story about what it describes as tax-free “luxury” housing for museum chiefs. The article focuses on the question of whether the housing properly meets the tests that the housing be on the “business premises” and the employee is required to live there. According to the article, the museums say their CEO’s situations are similar to those of university presidents. The article notes that housing for the museum chiefs is generally not on the premises of the museum itself, but in separate apartment buildings, though one, the Museum of Modern Art, has a residential tower on top of the building so the CEO’s apartment is literally an elevator ride away from his office. The article further notes the wide range of practices among nonprofits – at one extreme, the Morgan Library charges its director rent on his apartment and reports the difference between market rent and what he is charged as income on his W-2. As of the time of this posting, a link to the article was not yet available at the Times’ web site but we’d expect it can be found soon at nytimes.com.

IRS EO Update Features

Rick Lucash - Lindalee Lawrence — Fri, 30 Jul 2010 22:00:08 +0000

This month’s IRS Exempt Organzations update has two important features – news of an extension of time for small nonprofits at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008, and 2009 , and a series of Fall workshops. If you aren’t on the email list for the IRS EO Update, you can register here.

Lindalee Lawrence to Speak at HR New Jersey Conference June 29

Rick Lucash - Lindalee Lawrence — Thu, 24 Jun 2010 20:54:18 +0000

Almost sold out! Register at http://humanresourcesnj52925.eventbrite.com. The event topic will pertain to Compensation, Benefits and Work/Life Balance. The Speakers come from various functional areas in HR. They will discuss how Compensation, Benefits and Work/Life Balance affect their functional part of HR. It will allow for a colorful conversation. Held at The Olde Mill Inn 225 Route 202 Basking Ridge, NJ 07920

The format will be: 6-7 Networking, 7-8 Q&A with the panel of Speakers and 8-9 NetworkingThe event topic will pertain to Compensation, Benefits and Work/Life Balance. The speakers come from various functional areas in HR. They will discuss how Compensation, Benefits and Work/Life Balance affect their functional part of HR. It will allow for a colorful conversation.

Online Guide for Executive Compensation for Charities in the Works

Rick Lucash - Lindalee Lawrence — Tue, 22 Jun 2010 22:12:28 +0000

The Advisory Committee on Tax Exempt and Government Entities reports that it has developed “an on-line tutorial . . . to help managers and board member of charities better understand the tax rules that govern executive compensation . . . .” The tutorial covers, among other things, intermediate sanctions, taxation of fringe benefits, and disclosures required by the Form 990. The Committee’s goal is to have the program reviewed by the IRS and made available at the IRS web site. The Committee’s report is here.

University Presidents’ Housing Highlighted by New Form 990

Rick Lucash - Lindalee Lawrence — Sun, 13 Jun 2010 16:27:25 +0000

In a city where higher education is a major part of the economy, it’s not surprising that today’s Boston Globe features an article about the value of university presidents’ housing as reported on the most recent Forms 990 for a group of Boston-area institutions. The article notes that the new form (specifically, Schedule J, although the article is not that specific) requires separate reporting of the value of employer-provided housing. The article goes on to quote various realtors who question the market value of the housing reported by some of the universities, and at the end, delves into some of the other perqs and benefits listed in Schedule J, such as maid service, first class travel and club dues.