Are Non-Profit CEO Salaries Too High?

Lawmakers move to cut pay, bloggers question their motives

In an article bound to irk both sides of the political aisle (for different reasons), Stephanie Strom at The New York Times reports that "state and federal officials are starting to take their knives to the pay of leaders of nonprofit groups" who are perceived to be earning too much off of their lucrative government contracts. In the piece Strom quotes Republican Senator Tom Coburn who stated that "A nearly $1 million salary and benefit package for a nonprofit executive is not only questionable on its face but also raises questions about how the organization manages its finances in other areas."

That sentiment didn't fly well with bloggers and pundits who ironically note that many of those who support slashing salaries for non-profit CEOs would be aghast at the notion of doing so for their private sector counterparts. (One blogger at Balloon Juice wrote, "Perhaps [non-profits] need to pay a bit more than you might expect because corporations have been...cherry-picking comparable peers"). Others weigh in:

• This Story Conflates Two Issues counters James Joyner at Outside the Beltway. It shouldn't matter whether non-profits pay their CEOs a "princely salary", they should be judged on the basis [of] their work product." He notes: "We need to distinguish cases of fraud, of course. If a few people get together to start a 'nonprofit' whose main purpose is to funnel money into the pockets of the founders, it obviously shouldn’t enjoy tax-exempt status. But the law presumably handles that sort of thing well enough."

• Oh, Here We Go writes watertiger at the progressive blog Firedoglake. Why is a one million dollar salary being questioned just because a non-profit CEO is earning it? The livid writer answers: "For the record, I’m not condoning these exorbitant salaries on either side of the bottom line. Being a hippie socialist type, I think that CEOs should be paid in direct proportion to their lowest paid employees, and those employees should be guaranteed a living wage. All I’m asking for is a little consistency in the approach, please."

• Meanwhile, Private CEOs Are Manipulating Boards to Inflate Salary according to a new study cited by Cyrus Sanati in an article for The New York Times' DealBook. Sanati writes: "Corporate boards appear to routinely use compensation peer groups to artificially inflate pay for their chief executives, helping to contribute to the cascading increases in executive compensation over the last several years, according to an academic study on corporate governance."