|[ Intermediate Sanctions & Rebuttable Presumption of Reasonableness ]
|On August 10, 2004, the IRS announced an enforcement effort, entitled the Tax Exempt Compensation Enforcement Project, in order to identify and halt abuses by tax-exempt organizations that pay excessive compensation and benefits to their officers and other insiders. State Attorneys General are also stepping up audits of tax-exempt organizations in the post-9/11 environment. New penalties apply to individuals, rather than organizations, under IRC Section 4958, also known as "Intermediate Sanctions."
Who and How Much
Organization managers, which include officers and board members, can be held personably liable for excessive compensation. The board members or other executives in a position to authorize compensation decisions are also held liable for 10% of the excise amount up to $10,000 for each occurrence. The individual with excessive compensation, the Disqualified Person, is required to:
- Pay back the excess benefit
- Pay interest on the excess benefit
- Pay an excise tax equal to 25% of the excess for each occurrence
- Pay a 200% excise tax on the excess if not paid within 90 days of notice
In order to defend against personal or organizational penalty, the Department of the Treasury suggests proper due diligence in making compensation decisions. This due diligence includes:
Rebuttable Presumption of Reasonableness
- Define a compensation philosophy and/or strategy
- Hire an independent compensation expert to advise the organization
- Record the decision-making, dissent, and vote regarding executive compensation decisions
- Record the data and process used to reach the compensation decision
The Department of the Treasury has provided guidelines for a Rebuttable Presumption of Reasonableness regarding Excessive Compensation and Corporate Governance in setting compensation levels. Specifically, for organizations with more than $1 million in revenues, there are safe harbor guidelines that shift the burden of proof to the IRS. The following guidance is summarized from section 4958(a):
An organization manger is not considered "knowing" if the organization manager relies on a reasoned written opinion of an Independent Expert who: hold themselves out to the public as compensation consultants; perform valuations on a regular basis; are qualified to make valuations; and include a written opinion.
The Organization must take reasonable care in determining executive compensation and document: compensation terms; comparability data and how it was obtained; and who debated and voted to approve compensation.
Current comparability data must be used to determine executive compensation. This data should include similarly situated organizations (both taxable and tax-exempt) for functionally comparable positions. Data sources should include: current compensation surveys compiled by an independent firm and consist of similar services in geographic area.
In summary, an organization and its board members should:
- Hire an independent compensation expert who uses appropriate and professional guidelines for determining competitive compensation levels
- Document the data and process utilized by the compensation expert (usually provided by the consultant in the form of a report)
- Follow the advice provided by the expert
- Record the discussion and dissent of the vote on compensation
- Retain the board minutes and the compensation report
About the Author
Rodney A. Cottrell is the current President of Corporate Compensation Partners, LLC and EHResearch Data Services, LLC. Concentrating only in compensation issues, Rodney is considered an expert in the areas of executive pay, sales compensation, incentive plans, employee compensation, FLSA, compensation and benefit surveys, and compensation technology. He provides international compensation consulting to clients in multiple industries across the United States and is a frequent lecturer and guest speaker at colleges and corporate events.
Rodney A. Cottrell, CEBS, CCP, CMS, MSHRM, SPHR
Corporate Compensation Partners, LLC
|[ 2014 Annual Survey of Executive and Administrative Assistants ]
By Rodney Cottrell
Sewickley, PA, December 5, 2014 - According to the 2014 edition of the Survey of Executive and Administrative Assistants the median total cash compensation for assistants to CEO's nationwide is currently $107,000. This is the seventh consecutive year we have been able to report total cash compensation over $100,000 for the nation's top administrative support. The prevalence of bonuses paid for all assistants reported in the survey is 53%.
Assistants average 16 years of service with their company and senior-most CEO assistants' tenure average slightly higher with 21 years. Of those reporting education levels, 28% of the assistants have received a 4-year degree or higher.
The median revenue for companies participating in the 2014 survey is $12.2 billion. Size is an important factor in relation to pay as there continues to be a substantial difference in CEO assistants' pay between the larger half of the survey population (companies with revenue of $12 billion and up) vs. the lower half. This separation is a trend identified in 2008 and continues today.
For the past 23 years, this research report has focused on the pay of executive assistants serving senior executives at the Fortune 1000 and other companies in the billion-dollar-plus category. The senior executives they support are paid at the $200,000-and-up salary level and are typically within three reporting levels below the CEO. The assistants to these executives - and especially, Assistants to the CEO - stand apart from their counterparts typically found in support staff or nonexempt surveys.
This year's survey covers over 900 job incumbents at 66 major U.S. corporate headquarters. Data is reported on 27 of the 28 surveyed assistant positions as well as all assistants by level from the CEO (up to 3 levels).
"This report is unique, not only in the jobs studied, but the pay prediction model we provide to our readers." According to EHResearch president Rodney Cottrell, "this report differentiates from others in knowing that the difference in pay can be measured and explained with some degree of accuracy based upon a set number of factors."
In addition to the general facts found above, the survey contains detailed information and analysis on policies and practices, prevalence of dedicated assistants, FLSA exemption practice, Long-term Incentive compensation practice, and pay prediction models. In 2013 performance rating data and performance management programs applicable to Executive and Administrative Assistants was introduced. New this year, we have expanded the analysis on performance ratings to include correlation to pay and job title.
EHResearch Data Services, LLC conducts research for corporations and associations and administers custom pay surveys, as well as advising select compensation consulting firms in various aspects of compensation and benefits data. EHResearch Data Services, LLC is located in Pittsburgh, Pennsylvania.
If you have any questions regarding this information or would like to purchase a copy of the 2014 Survey of Executive and Administrative Assistants, please contact us at 800.330.4154 or by email at email@example.com.
|"CCP has done very well in meeting our needs and I look forward to working with them in the future."