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Top Corporate Officers as Board Members: The Impact on Nonprofit Executive Compensation

Andrea Alston Roberts, University of Virginia (UVA) - McIntire School of Commerce
Valentina L. Zamora, Seattle University - Albers School of Business and Economics


NONPROFIT & PHILANTHROPY LAW eJOURNAL

"Top Corporate Officers as Board Members: The Impact on Nonprofit Executive Compensation" Free Download

ANDREA ALSTON ROBERTS, University of Virginia (UVA) - McIntire School of Commerce
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VALENTINA L. ZAMORA, Seattle University - Albers School of Business and Economics
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The apparent weakness in nonprofit executive pay-for-performance links and perceived excessiveness of pay are two key reasons cited by critics demanding greater board action. Agency theorists assert that boards address potentially misaligned managerial incentives by strengthening pay-for-performance links. Hence, if board members are experienced with financial monitoring, then the link between financials-based metrics and executive pay will be stronger. Further, resource dependency theorists purport that nonprofits rely on board members in part to provide scarce and/or specific human capital. Hence, if board members provide expertise in organizational management, then executive pay raises will be smaller. To test these predictions, we identify ‘top corporate officers as board members’ as nonprofit board members who are also named top executives in the S&P1500. We find that the presence (versus absence) of top corporate officers as board members is associated with stronger links between financials-based metrics and executive pay; and smaller changes in pay. These results are economically significant, and robust to possible correlated omitted variables, potential self-selection bias, and two alternative explanations: top corporate officers as board members in small boards or who may be major donors. Our findings highlight how board members playing both oversight and operational roles impact executive pay practices.

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This eJournal distributes working and accepted paper abstracts in the fields of nonprofit law and policy, philanthropy law and policy and related areas of scholarship. Thus, drafts and articles that concern nonprofit corporations, charities, charitable corporations, charitable organizations, charitable donations, charitable foundations, charitable fundraising, charitable solicitation, charitable trusts, philanthropy, private foundations, nongovernmental organizations, tax-exempt organizations, tax-exempt corporations, private clubs, membership clubs and similar topics are appropriate for this journal.

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LSN SUBJECT MATTER EJOURNALS

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Northwestern University - School of Law, Northwestern University - Kellogg School of Management, European Corporate Governance Institute (ECGI)
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RONALD J. GILSON
Stanford Law School, Columbia Law School, European Corporate Governance Institute (ECGI)
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Advisory Board

Nonprofit & Philanthropy Law eJournal

ELLEN P. APRILL
John E. Anderson Professor of Tax Law, Associate Dean for Academic Programs, Loyola Law School Los Angeles

EVELYN BRODY
Professor of Law, Chicago-Kent College of Law

JOHN DAVID COLOMBO
Albert E. Jenner, Jr. Professor of Law, University of Illinois College of Law

HARVEY P. DALE
University Professor of Philanthropy and the Law, Director - National Center on Philanthropy and the Law, New York University School of Law

DARRYLL K. JONES
Professor of Law, Stetson University College of Law

BEVERLY I. MORAN
Professor of Law and Sociology, Vanderbilt University - Law School

STEPHEN SCHWARZ
Professor of Law Emeritus, University of California, Hastings College of the Law

STEVEN J. WILLIS
Professor of Law, University of Florida - Fredric G. Levin College of Law