Executive Salary/Budget

[Pastor Tim]

Our organization's annual meeting is this weekend. One item of business will be to approve the 2023 Budget.

Included in that budget is the salary/benefits package for our Executive Director.  From time to time, someone wants to amend the budget line item for the Executive's salary.  The difficulty is that the benefits are calculated as a percentage of the salary, so amending the salary line item has a ripple effect into other line items. Those would need to be recalculated before the entire budget could be approved--never minding the fact that the Executive and Board have negotiated the contract in the first place.

Some would like to say that because the Executive's salary/benefits package is negotiated with the Board of Directors, that it should be unamendable--basically let the Board negotiate the contract, then have our meeting approve it as a single item.

Short of amending the bylaws to say this officially, is there a way to accomplish this?

[Josh Martin]

On 11/8/2022 at 7:49 AM, Pastor Tim said:

Our organization's annual meeting is this weekend. One item of business will be to approve the 2023 Budget.

Included in that budget is the salary/benefits package for our Executive Director.  From time to time, someone wants to amend the budget line item for the Executive's salary.  The difficulty is that the benefits are calculated as a percentage of the salary, so amending the salary line item has a ripple effect into other line items. Those would need to be recalculated before the entire budget could be approved--never minding the fact that the Executive and Board have negotiated the contract in the first place.

Some would like to say that because the Executive's salary/benefits package is negotiated with the Board of Directors, that it should be unamendable--basically let the Board negotiate the contract, then have our meeting approve it as a single item.

Short of amending the bylaws to say this officially, is there a way to accomplish this?

I suppose other methods to accomplish this would be to adopt a special rule of order (which would require a 2/3 vote with previous notice or a vote of a majority of the entire membership) or a rule of order for just this one meeting (which would require a 2/3 vote).

[Alicia Percell, PRP]

What do your bylaws say about the powers of the board relative to employees?  If the bylaws give the board exclusive control, then it limits what the membership can do in that realm.  Also, is there an executed and in-force contract with this employee?

Could the budget be put into a spreadsheet using formulas to calculate the ripple effects into the other portions of the budget?  Then making the change in the salary line will auto-calculate the other changes for the membership to see as they're voting on the proposed amendment.  If the amendment fails, it can be quickly reverted to the original.

If for some reason the spreadsheet auto-calculate isn't an option, and if (depending on answers to the above questions) the membership is not precluded from amending this portion of the budget, it might be possible to adopt an amendment to the salary portion with authorization for the treasurer to make the required conforming amendments to the other affected lines.  Or I suppose since the budget just sets a maximum, if you only amended the salary line and couldn't on-the-spot recalculate what the benefits budget would be, would it be harmful to just leave the benefits budget at the higher amount knowing that it the actual expenses will actually be less than that?

[George Mervosh]

On 11/10/2022 at 12:52 AM, Alicia Percell, PRP said:

What do your bylaws say about the powers of the board relative to employees?  If the bylaws give the board exclusive control, then it limits what the membership can do in that realm.  Also, is there an executed and in-force contract with this employee?

This is interesting.  If the bylaws allow the board to have exclusive control over negotiating and approving such a contract (I'm not sure the latter is the case based on the initial post), what would prohibit the membership, who has full control over the budget, it seems, from not fully funding that line item?  It would cause chaos I'm sure, but I'm not sure the board having exclusive control over the contract issue itself is enough to prohibit amendments to the budget on the line item in question.

I endorse Mr. Martin's suggestion because it seems the cleanest way to at least try to prevent amendments.

[Alicia Percell, PRP]

On 11/10/2022 at 8:15 AM, George Mervosh said:

what would prohibit the membership, who has full control over the budget, it seems, from not fully funding that line item?

I don't think we know yet whether the membership has "full control over the budget."  All we know is that for the membership meeting, "One item of business will be to approve the 2023 Budget."

On 11/10/2022 at 8:15 AM, George Mervosh said:

I'm not sure the board having exclusive control over the contract issue itself is enough to prohibit amendments to the budget on the line item in question.

I'm thinking of RONR 49:7, which says (underline added), "In any event, no action of the board can alter or conflict with any decision made by the assembly of the society, and any such action of the board is null and void (see 56:41 and 23:9). Except in matters placed by the bylaws exclusively under the control of the board, the society’s assembly can give the board instructions which it must carry out, and can rescind or amend any action of the board if it is not too late (see 35)."

Adoption of a budget is one method of giving the board instructions.  They must adhere to the budget.  But if the employee contract terms are under the exclusive control of the board, and they've executed a legally binding contract with an employee, wouldn't it limit what the membership can do with that portion of the annual budget?  And would 35:6(b) apply to an executed contract to make it something that cannot just be rescinded/amended?