Global Issues - Local Solutions

Why Retain Professional Assistance Regarding Head Compensation?


By retaining professional assistance in the setting and design of head/CEO compensation packages, independent schools and nonprofits can: save significant dollars; avoid the risk of noncompliance with "Intermediate Sanctions" (or "Safe Harbors" Act); and renew or strengthen the relationship between the head or CEO and the board.

A total compensation package, designed for the head or the CEO and facilitated by Senior Partner, John Littleford of Littleford & Associates, achieves the following desirable outcomes:

  1. Provides documented proof of "Safe Harbors" compliance (for US based) schools and other nonprofits. Our Firm maintains the most accurate and current proprietary database for compensation of heads of independent schools worldwide and of certain other nonprofit agencies, including some foundations and colleges. We research and analyze data in the public domain and augment it with confidential information gathered through:

    • Confidential telephone interviews annually with the heads of schools and CEO's of other tax-exempt organizations

    • Individual meetings with heads and CEO's

    • The facilitation of head and/or CEO compensation packages with the boards of these instituitions

    Our clients can be assured that through reliance on our data, they are taking one of the critical steps in establishing a "rebuttable presumption of reasonableness" as suggested by IRC 4958. (See the section, "The Intermediate Sanctions Act", on this site for more information.)

  2. Benchmarks the TOTAL package to the competition as required by IRC 4958. This includes providing to the Compensation Committee, 24-48 hours prior to the compensation review, "blind" data on the group of "peer" schools or institutions that will be considered.

  3. Quantifies head replacement costs for the level of experience the board is seeking.

  4. Designs a compensation plan that fits the needs of the individual head and family that may include tuition assistance for children, housing and retirement planning.

  5. Establishes a fair retirement program and assets for a founder or long term head including: long-term, permanent housing needs; long-term medical issues; and payout of sabbatical, severance or consulting agreements taking into account tax and public relations considerations.

  6. Motivates, retains or rewards a new or current head of school.

  7. Designs an effective, appropriate head evaluation process that assists the board in achieving its objectives through an ability to influence the head's behavior.
In addition, Littleford & Associates offers the following distinct advantages in the contract review process:
  1. Our clients can be assured that there is no conflict of interest underlying our approach. Our firm takes a strong position in working for boards only, not heads, and warns of any potential conflict of interest between the "disqualified person" and compensation committee member(s) before engaging in the process.

  2. We provide documentation that more than satisfies IRS requirements

  3. Our extensive, proprietary database contains information on the competition's compensation packages and designs for almost ANY national and international market.

  4. We provide an informal review of the compensation of up to three additional administrators at no additional cost.

  5. We will meet with the business manager (and/or a few key board members) to discuss the management of staff benefits at no additional fee. We have nearly always found that we can save organizations substantially more in this area alone than they have paid for our services.
Within twenty-four hours of the meeting, we will outline the terms of the agreed upon proposed agreement to the chairman of the board or compensation committee However, we always suggest that the CEO and non profit entity seek legal counsel on any compensation or contract arrangement. We provide the required safe harbors opinion on the final package within one month of receiving the term sheet.

Littleford & Associates is not a law or accounting firm and does not provide legal or tax reporting counsel for US based schools. If necessary, we will provide support, data and guidance to defend a client's compensation decisions and have done so successfully. This assumes, however, the Board's full disclosure to us of the package details. We do not defend what we did not know or may have cautioned against. The involvement of a Compensation COMMITTEE is important to protect all parties.

Through our many years of experience and work with over 2000 clients on this topic, Littleford & Associates has enabled the boards and heads/CEOS of independent schools and nonprofits to achieve mutually desired outcomes.

Furthermore, with our expert counsel, nonprofit organizations can retain highly effective leaders, a critical benefit since turnover at the highest level is very costly in terms of dollars, loss of good will and institutional stability. For a partial list of references on our firm's head compensation services, please visit the Testimonials page on this site.

For a partial list of references on our firm's head compensation services, please visit our Testimonials page.

John C. Littleford
Senior Partner