Policy #11


(Adopted by the Council 7/20/12)


In compliance with Internal Revenue Service guidelines for approval of senior management compensation, the MSBA Council will follow the following review and approval guidelines.  This policy covers the Executive Director, the Officers, and employees meeting the IRS definition of key employees. 


In reviewing and approving the compensation of any covered individual, the MSBA Council or a delegated committee of the Council will utilize the following process:


1.     Impartial Decision Makers. The compensation arrangement must be approved in advance (before any payment is made) by the Council by individuals who do not have a conflict of interest with respect to the compensation arrangement.


2. Comparability Data. When the Approval Body is considering compensation to covered individuals, it must rely on comparability data that demonstrate the fair market value of the compensation in question. For example, when crafting compensation packages, the Council or delegated committee must secure data that documents compensation levels for similarly qualified individuals in like positions at like organizations. This data may include the following:

a) expert compensation studies by independent firms;

b) written job offers for positions at similar organizations;

c) documented telephone calls about similar positions at both nonprofit and for-profit

organizations; and

d) information obtained from the IRS Form 990 filings of similar organizations.


3. Concurrent Documentation. The Council or delegated committee must document how it reached its decisions, including the data on which it relied. To qualify as concurrent documentation, written or electronic records of the Council (such as meeting minutes) must note:

a) the terms of the compensation and the date it was approved;

b) the members of the Approval Body who were present during the debate on the compensation that was approved and those who voted on it;

c) the comparability data obtained and relied upon and how the data were obtained; and

d) any actions taken with respect to consideration of the compensation by anyone who is otherwise a member of the Approval Body but who had a conflict of interest with respect to the decision on the compensation.