The board is responsible for determining and reviewing the compensation package of the organization’s most senior staff person. When reviewing the most senior staff person’s total compensation package once per year, it is important that the board review all related expenses.
Definition: Total Compensation Package1
The sum total of all rewards (cash and other) that are provided to an employee, including: base salary, commission, bonus, car allowance, housing allowance, benefits, pension, etc.
The HR Council for the Nonprofit Sector identifies three forms of compensation,2 all of which should be considered when reviewing the total compensation package of your organization’s most senior staff person:
- “Direct financial compensation consisting of pay received in the form of wages, salaries, bonuses and commissions provided at regular and consistent intervals
- Indirect financial compensation including all financial rewards that are not included in direct compensation and can be understood to form part of the social contract between the employer and employee such as benefits, leaves, retirement plans, education, and employee services
- Non-financial compensation referring to topics such as career development and advancement opportunities, opportunities for recognition, as well as work environment and conditions”
From "Accreditation Preparation Workbook Section A: Board Governance," Katharine Zywert, Social Prosperity Wood Buffalo at the University of Waterloo, 2013.
Standards Reference Guide