Sunday, August 3, 2014


We have noted with a certain degree of frequency that JFNA and maybe some other Jewish organizations appear to reward failure as is if failure were success. And, it appears that the larger the failure -- say the continued failure to meet the institutional goals set for it by the most highly compensated -- the greater the compensation.

Yes, you are probably not paying your CEO enough. How can that be? Well, if Jerry I-Wouldn't-Be-Making-This-Selling-Dockers can be paid in excess of $750,000 annually for this mess, then, my G-d, my CEO who is actually doing something/anything should be making more...much more. Here's how it's supposed to be done.

The Council of Non-Profits lays it out:

Why Have a Written Policy to Review the Compensation of Nonprofit Executives?

One answer is because charitable nonprofits always should be able to justify that the compensation received by the executive director/CEO and other staff is reasonable, and not excessive. The practice of having a written policy and following it to review compensation levels helps ensure that the nonprofit is meeting not only the expectations of the IRS, but also the expectations of donors and the public, who expect that their donations are being put to prudent use by the charitable organization. A related goal of a compensation policy is to ensure that your nonprofit is paying ENOUGH to attract and retain the most highly qualified and talented employees.
Legal Background: The IRS Form 990 asks charitable nonprofits about the process used to approve the compensation of the executive director/CEO (and certain other key employees): "Did the process for determining compensation of the following persons include a review and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision?" (Form 990, Section VI, Part B, line 15) Nonprofits filing the Form 990 must describe the process on Schedule O.
Ensuring that the board has approved "reasonable and not excessive" compensation for the executive director/CEO is one of the fiduciary responsibilities of every nonprofit board. Boards that engage in an annual process of reviewing and approving the compensation of the executive director/CEO (and certain highly paid "key" employees as defined by the IRS) and that document this process in the minutes of board meeting(s), will be protecting their nonprofit (and themselves). An annual review also ensures that the nonprofit is acting in a transparent manner because through the process the full board will be aware how much the executive director/CEO is being paid by the nonprofit.
- See more at:
Do not worry if you don't have a "compensation consultant" reference handy, your CEO or CEO candidate can surely provide one. Be assured that that consultant will provide you with the comparative data that will disclose, e.g., what CEO Jerry or Steve or Steve or John (or his successor) makes. But probably not what some lower-compensated but equally or more successful CEO made. Yes, you may have accomplished absolutely nothing before you took the job but somehow you can compare yourself to those whose accomplishments are undeniable. And, mirabile dictu, you get away with it.

We speak of wanting our organizations to "run like a business;" yet, when it comes to compensating, e.g., the CEO of JFNA, we operate our non-profit like a gift shop, bestowing reward after reward without regard to performance. In fact, compensation appears to be rewarded in the absolute reverse -- fail and we will pay you more because G-d forbid we might otherwise lose you!! Why do business leaders behave in this way? There ain't no explaining it; perhaps, it's because it isn't their money. Perhaps it's because they have forgotten it's their fiduciary duty to protect those assets. Many of us heard the incredible recitation of JFNA's so-called "achievements" when Chair Siegal described them at the last JFNA Board meeting; I was not present, someone tell me if his nose grew longer with each or if he maintained a straight face.

Oh, and after you make the compensation decision, you will hide it in the 990 which becomes public two years after the fact -- this appears in most instances to be "..the process (pursuant to which) the full board will be aware how much the executive director/CEO is being paid..." That's what passes for compensation "transparency."

And, why is that? Because of shyness? No, me thinks it is mutual embarrassment with how our donors' dollars are being spewed (some would say "wasted"). I and you are all for our professional leaders being well compensated for their achievements; I and you are dead set against CEOs who have not earned it being compensated at levels that are beyond comprehension. Unfortunately, too many lay leaders appear not to be able to tell the difference.



Anonymous said...

What a novel idea for compensation -- the greater the failure or the less the experience the higher the pay and benefits. At the shrine to CEO compensation they should erect a statue to Silverman as a symbol of the excesses of what was once a proud calling -- now it's no more than a feeding trough.

Anonymous said...

I sit on just such a compensation committee and it "worked" just the way you described it. Wonder if the CEOs have a "How to Manipulate your Compensation Committee" session at their annual retreats??

Anonymous said...

As a former exec I can tell you that not only do they have sessions on this issue they actually do a survey of each other's package so that they are better equipped to negotiate compared to each other. Also several years ago when I was an exec CJF and then UJC would circulate annually salary averages and ranges for various positions within a federation for all staff except the largest cities. Execs always used this information to get their package at just above the middle range which invariably raised the level for everyone since nobody and no federation wanted their professionals to be below "average".

RWEX said...

Thanks to all of you who have written. It would seem to me that the most compelling compensation case a sitting or prospective CEO could make to her/his Compensation Committee would be to bring the following to the Committee: simply a picture of Mr. Silverman and the amount of his pay and benefits in the largest font available. That should do it.

Anonymous said...

Let's not have open season on our professionals. Their is Piggishness at the top of the food chain and one percentish stupidity on the part of many boards who only see their top exec as a real person (and thus reward usually a him with an inflated package.)However the other 99% of our pro's earn the dollars they are paid numerous times over.

RWEX said...

Excellent point.

Anonymous said...

What would happen if Silverman were fairly and completely evaluated? First, his contract would be allowed to expire...but, if not, his compensation would be no more than 1/3 of its current level based upon 5 years of negative results. JFNA has never been more in love with itself while accomplishing less for us, the federations which own it.

Anonymous said...

I am new to this. From all I have heard at JFNA Board meetings and at NYLC meetings after he speaks, everyone (and I mean with complete unanimity) agrees that Mr. Silverman should never have been hired let alone retained and extended. So, why does this happen, how could it happen? Is there anyone out there who believes he should continue in office?