Human Resources: Compensation
See Also: Conflict of Interest Policy in Sarbanes-Oxley Act of 2002
The IRS Form 990 asks 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.
The phrase "intermediate sanctions" refers to the penalty excise taxes imposed by the Internal Revenue Service when individuals associated with a tax-exempt organization receive excess benefits. Employee compensation is one area that can be subject to intermediate sanctions.
National Council of Nonprofits: Executive Compensation Policies
National Council of Nonprofits: Sample Policy for Board Approval of Compensation
Guidestar.org: Best Practices in Nonprofit Compensation
Nonprofit Association of the Midlands: Annual Salary & Benefit Survey
SHallPartners.com: What is Reasonable Compensation for a Nonprofit Executive?
NonprofitQuarterly.com: What is Reasonable Nonprofit Compensation? A Guide to Avoid IRS Penalties June 5, 2011