Executive compensation.

The board of directors is responsible for hiring, and establishing the compensation (salary and benefits) of the executive director/CEO by identifying compensation that is "reasonable and not excessive," but that also is attractive enough to retain the best possible talent to lead the organization. The recommended process for determining the appropriate compensation is to conduct a review of what similarly-sized peer organizations, in the same geographic location, offer their senior leaders. This three-step process is referred to as the "rebuttable presumption [1]" used to establish reasonableness (and also used by boards to reduce the risk of penalties). Nonprofits filing IRS Form 990 must describe the process they use to approve executive compensation as part of the nonprofit’s responses on the annual return, IRS Form 990 [2], Section VI, Part B, line 15.