Raising Questions About Compensation

To the Editor:

With his opening paragraphs on apparent shenanigans by the board of the New York Public Library in setting the compensation of its president and his cohort (“Skyrocketing CEO Pay Raises Questions for Charities,” Opinion, February 8), Pablo Eisenberg almost had me in his thrall.

Almost, that is, until he based the nefarious deeds “in large part” upon the acts of a “paid consultant.” In one fell swoop, he resorted to the Jurassic chestnut that runs roughly as follows: “paid” + [insert job title] = pejorative.

Here, the term is applied to a compensation consultant, but I think consistency demands Mr. Eisenberg extend the swipe to consultants to nonprofit groups in other areas, such as recruiting, fund raising, IT, program development, et al.

Apparently, one who assists nonprofits must surrender any hope of feeding or clothing his or her family, providing a roof over their heads (and a floor under their feet), or planning for education beyond the public schools before entering the service of tax-exempt organizations.

Our firm is one of these paid consultants.

In our case, we design compensation plans to serve not only the nonprofit world but also commercial enterprises ranging from small, closely held businesses to publicly traded companies.

These are not created within a vacuum; any compensation system must be appropriate and affordable. So we enjoy a broad perspective of the forces underlying compensation from the vantages of both the organizations and the individual executives.

Mr. Eisenberg suggests that people who want to make a comfortable living need not apply for the top job.

Worse yet, Mr. Eisenberg would treat executives of nonprofit groups as fungible, easily interchanged according to the demands of any nonprofit group seeking their services.

A few of the situations we have encountered provide the lie to any notion of overall executive conformity:

• A world-renowned cultural museum suffered an annual dismissal of CEO’s who were generalists and failed to grow the institution. Turns out one man in the corporate realm was a rare specialist and saved the fortunes of the organization.
• A founding executive director for 20 years kept his compensation low in a spirit of sacrifice to his organization, only to be confronted with looming retirement and few accumulated retirement assets.
• A CEO’s compensation had remained comparatively static over 12 years, while he established and simultaneously ran seven nonprofits whose revenues grew 150 percent to 200 percent over the same period.
• A former corporate executive, keeping his compensation low, headed and turned around a failing nonprofit health system, yet it became difficult, if not impossible, to recruit talented executive staff to his economically blighted region.

Each had two elements in common: success demanded uncommon people, and compensation appropriate to the circumstances was critical to the solution.

Nowhere in his column does Mr. Eisenberg acknowledge that the performance of any highly paid nonprofit executive has benefited his or her organization.

Yet how to account for the fact of increasing organizational incomes?

And how to deal with the messy reality of increasing executive retirements?

Mr. Eisenberg would have us believe that the antidote to the ills besetting charities lies in the establishment of two cultures — one nonprofit, one corporate — separated by an economic barrier.

This, I submit, is little more than a professional Maginot Line. Unlike the original, this one would exclude entrants from either side of the barricade. But like the original, this one would be bypassed: here, by talented corporate executives recruited by nonprofits, whether in response to spells of altruism or compensation.

Mr. Eisenberg appears to confuse ambition with greed and to detect avarice whenever financial reward is expected.

His prescriptions would be merely infuriating were his ultimate vision not so dreary. He would have us economicallycleanse the ranks of nonprofit executives and march the survivors toward a dystopia — a permanent professional underclass of penurious nonprofit executives.

Paul W. Creasy
Partner
Organizational Consulting Group
Avon, Ohio

To the Editor:

In his article, Mr. Eisenberg claims that the board of the New York Public Library “provided little information to donors” about executive compensation.

What Mr. Eisenberg fails to note is that the board is itself comprised, to a great extent, of the library’s top donors.

As your readers well know, philanthropists today are very careful about watching how their money is spent, and the library’s board is no different: We recognize that to attract top executives and retain successful leaders like Paul LeClerc, we must be willing to support market salaries.

Catherine C. Marron
Chairman
New York Public Library
New York