Executive Compensation Proposal
Prepared by Denise Denton, June 11, 2014
Background
When Mariana offered me the AHA position, AHA's starting offer was $70,000; she had been authorized to go
up to $80,000. I agreed to take the position starting at $70,000, if we could renegotiate that amount in three
months once I learned more about the position, and AHA's budget status.
Not-For-Profit Salaries in Metro Area
I've researched salaries and benefits from the most recent Colorado Nonprofit Salary and Benefits Survey
(2012) (Let me know if you'd like a copy. I have an electronic version.), which is a compilation of information
from 400 Colorado NFP agencies (73% of these in the Front Range). These are the 50% percentile salaries for
Executive Directors according to various factors that match my qualifications and AHA's status:
Master's or Advanced Degree
$85,000
11-20 Years of Experience as ED
$86,112
Org has less than $250,000 annual budget $53,000
Org focus Health/Mental Health Services
$90,000
Org in Front Range Region
$87,125
If you add those up, you get $401,237. So that's what I think you should pay me.
Kidding.
Not that it's scientific, but dividing the total by the five factors you get $80,247. The upper range of $80,000
which AHA offered was right on target. Note: The survey does not examine the impact of the number of
employees on ED salary, which would pull down the average amount AHA would pay as there is only one parttime contract to manage. I assume they intend the annual budget to be a more consistent factor than number
of employees.
Fringe Benefits
These amounts reflect only the ED's base salary; they do not include the value/cost of fringe benefits. Because
we have a contractual arrangement, AHA does not pay the additional amount for taxes and benefits; I pay
those. Fringe benefit packages usually include federal withholding (SS - 6.2%, Medicare - 1.4%), insurance and
other benefits, retirement, vacation and holidays on top of the base salary. Benefit packages average 25 - 30%
of the salary.
I think would be fair to say that AHA could expect to have to offer $80,000 + 28% benefits or $102,400 to be
competitive in the metro area. With my level of experience and reputation, I can, and have been able to
command a salary this high.
I don't believe AHA can afford this amount. I don't think this would be a sustainable salary structure for AHA.
And I don't believe, given AHA's mission, you should devote this proportion of revenues to an ED. (Even if it is
me.)
I like this job and the challenges, learning opportunities, and flexibility it offers so I'm willing to do this job for
less.
So, here's what I'm thinking would be fair. Let's begin with my starting salary at $70,000.
Proposed Salary
I realize that as a contractor, AHA is not responsible for paying my benefits. Because Denny just reached 65
and had to go on Medicare, I lost my health insurance in March and had to shop on the Exchange. (Other than
the sticker shock, it was very easy.) My new health insurance through Kaiser with a $6,500 annual deductible
is $519.73/month, or about $6,240/year. I'd like AHA to increase my salary enough to cover this amount.
That would bring my salary to $76,240/year; let's just say $76,200/year, which would be $6,350/month.
I'd like this salary to be effective retroactive to my starting date of March 1, 2014. This would mean an
additional $1,500 expense to AHA.
Note: Under our grant contract with TCHF, AHA can spend up to 25% over any line item without seeking
approval. In the approved grant budget, the Executive Director's expense is $68,000, so AHA could spend up to
$85,000 without requesting a budget revision.
Annual Incentive Plan
I'd like you to consider creating an incentive plan tied to my performance.
According to the Salary Survey, 23% of NFPs do this with their EDs. The average rate is 8% of the salary. At the
new salary I proposed, that would be a potential incentive payment next March of $6,096.. Let's call it $6,000.
Here's how I propose this incentive plan would work.
Early next year, the Executive Committee (EC) would determine what percent of my salary AHA could afford to
pay out in an incentive payment - up to 8%. So it might be the full $7,000, it might be less.
The EC would conduct my evaluation, based on pre-determined factors (based on the job description, current
grant expectations, etc.). The EC -and the other board members - would be asked to rate my performance in
each category along a scale. My scores would be translated into a percentage of the incentive payment that I
would be entitled to. For example, if overall I performed at 75%, and the EC had determined AHA could afford
5% of my salary as an incentive in 2014/15, I would receive an incentive payment for the year of $5,250.
It sounds complicated, but I've developed such performance assessment tools before. My job description
already has categories of performance we could use like governance, management, and operations. I would
suggest adding an outreach component.
Understanding Regarding Outside Projects
And finally, when we're considering the sustainability of AHA, I think we should discuss whether - in the long
run - AHA needs an ED of my level. I take up a lot of AHA resources, and it will take a great deal of new
funding to sustain my salary. I think I am absolutely the right person for this job now (I think we're lucky to
have found each other.), but in the long run, once things are better organized and running smoothly, perhaps
AHA can be supported and sustained with someone who isn't so experienced (and expensive), or at least not
need them on a full-time basis. I'm talking 18 month to 2 years down the road, not next week. One of the
good things about working with me is that I won't fight tooth and nail to keep this job. I know there are other
opportunities out there for me, and it's not like I'm still trying to build my career. Done that already. I really
do see myself as a partner in exploring an infrastructure, staffing plan, and budget that best allows AHA to
further its mission.
That being said, and to help me stay in touch somewhat with opportunities and connections in the "outside
world," I'd like to take on an occasional project if offered, but want to be transparent about this. Technically,
as a contracted ED, AHA doesn't control the number of hours I spend on AHA, but you certainly do oversee my
performance. You have the authority to sanction me if you believe any outside work limiting my availability to
AHA or my ability to perform AHA duties. You've seen from my work habits, I work long hours, and a lot of
early mornings and weekends. I likely won't seek out additional projects - AHA is taking wayyyyy too much of
my time for that - but I'm occasionally contacted to help when an organization, project, or community is in
trouble. I'd like to consider accepting these offers. I would agree to keep this to a minimum, and discuss them
with the Executive Committee if they entailed more than a few hours of my time. AHA will still have a fulltime ED. Taking on a few projects - if they arise - would allow me to supplement my income to what it has
been in the past couple of years (about $120,000), keep me engaged in the larger state and national health
community, and give me additional opportunity to hone my professional skills.
Summary of Proposal
So, in summary, here's what t I'm asking:
 Increase my salary to $76,200/year. Make this retroactive to March 1, 2014.