Senator McCaskill's "Cap Executive Officer Pay Act" would limit at around $400,000 (the salary of the President) the compensation paid to those executives who lead corporations that receive "substantial taxpayer assistance." Pres. Obama's suggestion is less radical and applies only to those who receive assistance under the bailout program.
These ideas, together with the cultural revolt against rewarding poor management, provoke consideration of whether nonprofit CEOs should be similarly capped and/or docked in comparable circumstances, given that their organizations receive "substantial taxpayer assistance." When benefits are included, of course, many nfps pay CEOs above $1m., and many of these are in financial distress.
One reason to reject this idea is that ordinary "tax exemption" is not the same as extraordinary "taxpayer assistance." I am not sure how far this argument can carry those who would assert it. Most NFPs essentially live their entire corporate lives with massive taxpayer support.
Perhaps those executives of nonprofits that endorsed crushing debt obligations and leveraged invested endowments improvidently should be required to return part of their salaries, regardless of whether their actions would survive scrutiny under the business judgment rule.
A proposal in the for-profit world that has not gone far is to restrict the salary of the highest paid tier of personnel to a multiple of the lowest tier. Why wouldn't this be suitable in the nonprofit sector?
Query too whether in bankruptcy the law wouldn't/shouldn't subordinate compensation of nonprofit CEOs to creditors, especially when the creditors are also service recipients.
The Chronicle of Philanthropy recently published a related article by Ralph De Jong and Michael Peregrine:
Can anyone help with a guide to the best literature on this subject?