Regulating nonprofit CEO pay

<p>When the <a href="https://www.thenonprofittimes.com/npt_articles/n-y-overhauls-nonprofit-laws-regs/" rel="noopener noreferrer" target="_blank">Nonprofit Revitalization Act passed in 2013</a>, it was the first major overhaul of nonprofit regulations in New York State in 40 years. The legislation modernized rules around nonprofit boards and committees and, among other things, prohibited nonprofit officers from being present at meetings where their pay is discussed.</p> <p>In the years since, a trio of researchers has examined the effect that one regulation had on executive compensation, becoming the basis for <a href="https://media.thenonprofittimes.com/wp-content/uploads/2021/09/07160835/Regulating-CEO-pay-Evidence-from-Nonprofit-Revitalization-Act.pdf" rel="noopener noreferrer" target="_blank"><em>Regulating CEO Pay: Evidence from the Nonprofit Revitalization Act</em></a>. The 67-page paper was written by <a href="https://wpcarey.asu.edu/people/profile/1450254">Ilona Babenka, associate professor</a> in the Department of Finance in the W.P. Carey School of Business at Arizona State University;&nbsp;<a href="https://www.unsw.edu.au/business/our-people/rik-sen">Rik Sen, associate professor in the School of Banking and Finance at the University of New South Wales</a>, and <a href="https://freeman.tulane.edu/faculty-research/finance/benjamin-bennett" rel="noopener noreferrer" target="_blank">Benjamin Bennett</a> of Tulane University’s A.B. Freeman School of Business.</p> <p>They examined tax data for almost 1,700 nonprofits in New York State and found that from 2009 to 2017, average compensation for the chief executive officer (CEO) pay dropped by 2% to 3% after the act went into effect. Despite earning less than they might have expected, CEOs spent 2% more time working without additional turnover, according to the research.</p> <p>At the same time, nonprofit performance improved in terms of larger contributions, more volunteers and bigger revenues. Nonprofits also were more likely to set up a compensation committe