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It was an unscripted question about transparency that drove the discussion at this week’s TRENDS Live: Issues in Executive Compensation breakfast.
Disclosure, while not initially in the panelists’ notes, became a huge focus for panelists (below, from left) United Way of the National Capital Area CEO Bill Hanbury, Smith Compensation Consulting president Pete Smith, Associated Builders and Contractors CFO Jason Daisey, , and Venable attorneys Matt Journy and Jeff Tenenbaum.
“It’s out there on the 990s anyway, and your employees are looking at it,” Daisey said of executive compensation levels, noting that avoiding the discussion internally is “bad for morale.” He advised strongly to discuss raises with employees in the context of industry trends as well as individual factors, such as merit and tenure.
Smith recommended associations that give high compensation to their executives explain why on their websites, to avoid public backlash when salary information is made public. Tenenbaum and Journy noted that while transparency is essential to employee morale and managing public opinion, more solid justification - including complete peer-level analysis - should be in place to avoid IRS scrutiny. They also warned that the IRS, which is looking to generate revenue from excessive compensation infractions, would not look kindly upon excessive “fringe” benefits. Details: www.AssociationTRENDS.com.