On Employees´ Attitudes Towards CEO Compensation: Evidence from the U.S. Nonprofit Sector

Maria Oana Rosu

Student thesis: Master thesis

Abstract

Recent scandals and disclosures of six figures salaries of nonprofit Chief Executive Officers (e.g. Kansas City University of Medicine and Biosciences, Smithsonian Institutions, Texas Southern University, United Way of America, New Era, Feed the Children) have generated significant interest in corporate governance. Hence, in the wake of these nonprofit scandals, state legislatures from several U.S. states imposed caps on nonprofit management compensation, arguing that “nonprofit executives should <<volunteer>> a portion of their compensation via discounted salaries” (Allender, Burns, Miller, 2012). Therefore reactions come from regulators and the media at the practices of lavish expenses and excessive CEO compensation in the nonprofit sector. What about the employees? How do they interpret, perceive and judge these scandals? Nonprofit organizations are known to rely disproportionally on intrinsically motivated employees, providing thus a particularly interesting context for examining the relationship between employees’ attitudes and nonprofit management compensation. Based on equity / reciprocity theories and the CEO compensation literature hypotheses are developed and tested by linking the latest survey of employees’ attitudes to CEO compensation and financial charity data for the largest nonprofit companies based in the U.S. Employing data from Glassdoor.com, specialized in collecting employees reviews, and Forbes.com annual reports regarding the 200 largest U.S. charities I find overall positive attitudes and appreciations, no protests or signs of critics coming from employees’ side in the context of the recent events. Secondly my findings with respect to the determinants of CEO compensation relate to the previous literature.

EducationsMSc in Advanced Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2013
Number of pages63