Executive Director Compensation
U.S. federal law notes that nonprofits should pay "reasonable compensation," for executive positions defined as "an amount as would ordinarily be paid for like services by like enterprises under like circumstances."
Recruitment and Initial Salary Package
The Alliance”s goal is to recruit a high-level of leadership within the limits of available resources. The executive director is responsible for the administrative/operations decisions regarding the executive office, but also plays a strategic and visible role within the academic library community. The requirements of the position are expansive, and the market competition for these leadership positions is often intense.
The Board will negotiate and determine the initial compensation package which will include annual salary, retirement and health care contributions, and relocation expenses if appropriate. Any significant benefits with long-term financial implications—beyond the standard health and retirement agreements, will be discussed and approved by the board first.
Salary increases are determined by the Board on an annual basis. Contributing factors include:
- COLA based on industry standards and informed by the practices of member libraries.
- Merit based on exceeding expectations set forth in goals. The amount of merit increase is informed by industry standards and the practices of member libraries.
- Equity based on data for similar positions as gathered by the International Coalition of Library Consortia, Association for Collaborative Leadership, or similar groups.
The Board will negotiate and determine the initial compensation package for the Executive Director which includes annual salary, retirement, and health care contributions. The Executive Director determines the compensation package for each employee, within the range approved by the Finance Team during the compensation review process every three years.
Frequency: at least every 5 years.
The IRS Form 990 requires nonprofit boards to engage in an executive director compensation comparison process. This process should include "a review of and approval by independent persons, comparability data, and contemporaneous substantiation of the deliberation and decision.’ Regular compensation reviews can be conducted by the Finance Committee or Board. Comparable data is compensation data from "similarly qualified," "functionally comparable," and similarly situated nonprofits (in the same or a nearby geographic area, of similar budget size, and in a similar or the same sub-sector). Periodically, the Board should obtain compensation surveys or studies from outside compensation consultants.