Executive Pay Increased by Median of 3.8% in 2011, Chronicle Survey Finds

The median pay for executives of the nation’s largest nonprofit organizations kept up with inflation in 2011—and some experts say that might be the best that charity leaders can hope for in the near future.

Chief executives at the nation’s biggest charities and foundations received a median pay increase of 3.8 percent in 2011, according to The Chronicle’s annual survey of executive compensation and benefits. That’s slightly better than the 3-percent inflation rate for the year.

The median total compensation for top executives at the 132 charities and foundations that shared 2011 figures for the survey was $429,512.

Far more nonprofits provided their 2010 figures, the most recent year for which most organizations have filed their annual tax returns. That year, chief executives at 282 large organizations received a median increase in total pay, including retirement and benefits, of 2.7 percent, the survey found. Those leaders had a median total compensation of $475,192. (See a database showing compensation for leaders and the second-highest-paid official at each organization.)

But while salary growth for many executives has been modest, the highest earners in The Chronicle’s survey now routinely make more than $1-million.

In 2010, 20 chief executives passed that threshold, compared with 15 the previous year. At least three executives made that much in 2011. They were:

• Roxanne Spillett, head of Boys & Girls Clubs of America, who made more than $1.8-million.
• Glenn Lowry, chief executive of the Museum of Modern Art, who earned $1.2-million.
• Edwin Feulner Jr., leader of the Heritage Foundation, who was paid nearly $1.1-million.

The Chronicle’s survey shows compensation of the leaders of the nation’s biggest foundations and charities, not necessarily the highest paid people in the nonprofit world.

As in past years, heads of hospitals and museums commanded the most lucrative pay deals. In 2010, the highest-paid nonprofit leaders were:

• Herbert Pardes, who retired as chief executive of NewYork-Presbyterian Hospital in 2011. Mr. Pardes earned $4,304,346 during 2010
• Peter Marzio, the late chief executive of the Museum of Fine Arts, Houston, with $3,943,145 in total compensation.
• Gary Gottlieb, chief executive of Partners HealthCare System, with total compensation of $3,062,505.

One-third of the nonprofits in the survey provided bonuses to executives in 2010; the median bonus was slightly over $50,000.

Less Than For-Profits

Even the highest-paid nonprofit executives earn significantly less than those at America’s largest for-profit corporations.

Median total compensation for chief executives of companies in the Standard & Poor’s 500 was $9.6-million in 2011, according to Equilar, a Redwood City, Calif., company that studies executive pay. Their pay is also rising more quickly than that of nonprofit executives—28 percent in 2010 and 6.2 percent more in 2011. 

 Compensation consultants and executive recruiters say they expect nonprofit top executives to continue to receive modest increases—probably 2.5 to 3.5 percent—this year and in 2013, although especially prized executives might fare better.

Ken Berger, president of the nonprofit watchdog Charity Navigator, says expected cuts in spending by the federal government and many state governments will have a direct impact on what top executives earn. Many charities receive a larger proportion of their budgets from government contracts and grants than from private donations or payments for services.

“The way the game is played, salaries are based on growth,” Mr. Berger says. “If there’s anemic growth or a decline, well, there go the salaries.”

That was especially true in the years after the onset of the 2008-9 recession, when many chief executives willingly took a pay cut or accepted a salary freeze to demonstrate to employees that they were willing to share in the pain. But the all-together-now ethos may be starting to fray.

CEO vs. Staff

Brian Vogel, a compensation consultant in Washington, says he has seen some charities continue to give raises to top executives, even as they phase out the idea that staff members should receive a raise each year.

“It’s a competitive marketplace, and the chief executive is in the board’s direct line of sight,” Mr. Vogel says. “If the board is going to give an increase to anyone, they’re going to give it to the CEO.”

Yet the experience of CARE’s chief executive, Helene Gayle, illustrates that during a time of declining revenue, not even the top executive will be spared. The international relief organization had total revenue of nearly $708-million in the year ending June 2008, but by June 2011, that total had dropped to just under $590-million.

Ms. Gayle and other top executives took 10-percent pay cuts in 2009—higher than the 8-percent cuts endured by other staff members—and those cuts have only gradually been restored for both executives and lower-level staff. Ms. Gayle’s base salary today, $419,284, is no higher than it was in 2008.