An amendment to the state budget under consideration by the
Massachusetts Senate would cap the compensation of officers and
senior managers and would prohibit the compensation of members of
the board of directors of public charities.
The amendment, filed by Senator Mark Montigny (D-New Bedford),
has several components that may be of interest to Massachusetts
public charities:
Public charities with annual gross revenues over $1,000,000
would be prohibited from compensating any officer, senior manager,
or any director acting in an executive capacity, in excess of
$500,000 per year.
All public charities would be prohibited from providing
compensation (other than reimbursement for direct expenses
incurred) to any member of its board of directors or trustees.
The amendment would establish a commission – comprised
of the secretary of the Commonwealth, inspector general and
attorney general – to which public charities could apply
for an exemption to these prohibitions. Public charities seeking
such an exemption would be required to provide good cause in
writing for the exemption and would be responsible for hiring an
independent auditor to provide the commission with a written report
on the matter. Both the written explanation of good cause and the
auditor's report would be made publicly available.
Under the amendment, a public charity that is found to have
violated these prohibitions without having previously obtained a
waiver from the commission could be stripped of its status as a
public charity.
The Senate will begin addressing the budget this Wednesday, May
23.
We have previously
reported on legislative efforts to regulate compensation of
directors and officers of public charities. Foley Hoag will
continue to track this legislation and is available to advise
public charities on its potential implications.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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