Here are the seven main risks associated with overcompensating non-profit hospital executives.
1. Overcompensation of executives could lead to the revocation of tax-exempt status from the Internal Revenue Service.
2. There could be a loss of goodwill, as well as consumer fraud issues, with other federal and state regulators.
3. Competitors that pay executives less will use this information to attract donors and members.
4. High compensation amounts will dominate media coverage, particularly local media.
5. Incongruent pay may lead to employee discontent and turnover.
6. Executives who receive excessively high pay, as well as board members who approved the excessive benefits, could be individually liable for IRS penalties.
7. The organization may attract the wrong type of executive.
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