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In an increasingly competitive executive job market, many electric cooperative boards are concerned about attracting and retaining quality leaders. This competitive situation, coupled with tight compensation budgets and more IRS oversight on fair pay for not-for-profit executives, is forcing co-op boards to focus more time and attention on compensation issues. NRECA works closely with boards to develop plans that not only compensate executives appropriately, but also are appropriate and justifiable to the membership.

Setting an appropriate salary for the leadership of your co-op will help you recruit the right CEO and retain strong leadership. As a board, it is important for you to set the pay philosophy for all employees—from the CEO and throughout the organization.

While many types of salary surveys can guide you in choosing the right compensation, we can help you focus on how to determine pay strategies. The cost of living has increased exponentially—due to energy and housing costs—complicating recruitment of leadership positions.

Here are some questions to consider:

• Are you paying market rate for your CEO? While pay scales at not-for-profit organizations do lag behind the public sector, many organizations combat this issue by focusing on benefits, culture and the positives of working with a community-focused cooperative.

• Do you have a documented rationale for your CEO pay? Directors approving compensation of executives can face personal liability if found to have negligently determined excessive compensation packages. The IRS defines reasonable compensation as average compensation.

Our experienced consultants can help you navigate your CEO compensation issues, helping you attract and retain the best executives.

Our Methodology:

In cases where the co-op has no formal executive pay philosophy, our consultants work with the board to help define a policy and identify the appropriate external comparables.

Our team gathers and develops external salary data. National, regional, and state data, along with a weighted average for lower, mid, and upper markets, are calculated using the operating data from systems of similar size and operating characteristics. Where appropriate, cost-of-salary percentages are also applied to a number of outside salary surveys.

We provide a recommendation and supporting documentation directly to the co-op board representative.

For more information, contact Delaine Orendorff, delaine.orendorff@nreca.coop, 571- 289-9023.