Propose a charter for the compensation committee
Per the board meeting of August 21, we would like to investigate having a compensation committee which sets the ED's compensation every year. This issue is about proposing a charter for the committee that we can discuss in the September 4 meeting.
Committee description: The Compensation Committee is an independent committee responsible for reviewing the salary of the Executive Director considering their performance, and comparison data to the similar roles in other organisations, and making a recommendation to the board of what this salary should be. They must set annual high-level goals which the ED's performance can be assessed against, keep detailed minutes and records of the process. The Foundation has a legal requirement to explain to the IRS how this salary was arrived at and by whom, including a requirement to present several comparisons to similar roles in other organizations.
The committee will also do this for other highly-paid roles as required by the board, including the Financial Director should the Foundation employ one as they would normally be part of this committee. Committee members must not take part in decisions pertaining to their own salary or where they have any conflict of interest with the individual whose salary is being considered.
- No less than annually, agree the Executive Director's high-level goals with them and their line manager
- Assess the ED's performance against these goals, in line with the Foundation's normal employee processes wherever possible
- Obtain annual comparison data figures to benchmarks the ED's salary with those in comparable roles (particularly non-profits)
- Based on the above assessments, recommend any salary adjustments for the ED to the board as needed
- Maintain detailed records of what data was used to arrive at these decisions and the people involved
- Carry out the above for the Financial Director (with the ED as their line manager) if they are appointed as an employee, and any other highly-paid staff as required by the board
Powers that the board is devolving to the committee:
- Set the high-level annual goals for the Executive Director and assess their performance
- Assume responsibility for the record-keeping of comparisons used to make salary decisions, and the individuals involved
- Maintain private records regarding performance and salary levels
- Board Chairperson
- Board Treasurer
- The Board's delegated ED Line Manager (if they are not the Chairperson)
- Executive Director
- Financial Director (if employed)
For more details about the process, see https://www.councilofnonprofits.org/tools-resources/executive-compensation.