This policy on the process o determining compensation o ABC Organization applies to the compensation o the ollowing personsemployed by the organization (check i applicable):_____ The organization’s chie employed executive
_____ Other ocers
or key employees
o the organization by title: ____________________The process includes all o these elements: (1) review and approval by the board o directors or compensation committee o the organi-zation; (2) use o data as to comparable compensation; and (3) contemporaneous documentation and recordkeeping.1. Review and approval. The compensation o the person is reviewed and approved by the board o directors or compensation commit- tee o the organization, provided that persons with conficts o interest with respect to the compensation arrangement at issue are notinvolved in this review and approval.2. Use o data as to comparable compensation. The compensation o the person is reviewed and approved using data as to comparablecompensation or similarly qualied persons in unctionally comparable positions at similarly situated organizations.
1 Chie employed executive – The CEO (i.e., chie executive ocer), executive director or top management ocial (i.e., a person who has ultimate responsibilityor implementing the decisions o the organization’s governing body or or supervision the management, administration or operations o the organization)2 Ocer – A person elected or appointed to manage the organization’s daily operations, such as a president, vice-president, secretary or treasurer. The ocerso the organization are determined by reerence to its organizing document, bylaws or resolutions o its governing body, or as otherwise designated consistent with statelaw, but at a minimum include those ocers required by applicable state law. Include as ocers the organization’s top management ocial and top nancial ocial (theperson who has ultimate responsibility or managing the organization’s nances).3 Key Employee – An employee o the Organization who meets all three o the ollowing tests: (a) $150,000 test: receives reportable compensation rom ehOrganization and all related organizations in excess o $150,000 or the year, (b) Responsibility Test: the employee; (i) has responsibility, powers, or infuence over the Or-ganization as a whole that is similar to those o ocers, directors, or trustees; (ii) manages a discreet segment or activity o the Organization that represents 10% or moreo the activities, or shares authority to control or determine 10% or more o the Organization’s capital expenditures, operating budget or compensation or employees;and (c) Top 20 Test: is one o the 20 employees (that satisy the $150,000 Test and Responsibility Test) with the highest reportable compensation rom the Organization andrelated organization or the year.
Sample Policy on the Process for Determining Compensation for Not-for-Profit Organizations