The Wounded Warrior Project – Spending Too Much on CEO Compensation?

by Linda M. Lampkin, Senior Nonprofit Compensation Specialist 24. February 2016 13:00

 

The Wounded Warrior Project (WWP), a fast growing and media-savvy charity serving veterans, has recently been in the news and not in a good way.  See a recent article in the New York Times and a blog post from GuideStar CEO Jacob Herald.  There were charges of spending too much on expenses (e.g., fund-raising, travel, and executive compensation) that were not directly related to its mission of direct services to veterans. 

While there appears to be justification for some of the criticism (perhaps the extravagant staff retreat), there is also the usual failure to acknowledge that spending on overhead and management is necessary in a complex organization – WWP collected over $340,000,000 in annual revenues and is growing rapidly, provides multiple services and programs across the US, and has 500 employees. All organizations, both for-profit and nonprofit, have to invest in themselves to be successful, whether that success is defined as making profits or achieving their charitable missions.  

The salaries paid to WWP’s executives have also come under scrutiny.  Nonprofit executive pay always seems to bring out strong opinions – although it may be considered a privilege by some to work at a nonprofit organization, nonprofit executives typically also have complicated and difficult jobs. There should be justification and accountability for determining what executive compensation should be paid, but organizations also need to attract and retain the talented, capable people required to do these jobs.

So how does compensation stack up at WWP?  ERI’s Nonprofit Comparables Assessor (CA) can give us some indication of whether the CEO is making a similar amount to CEOs in similar organizations – the criteria that the IRS uses to assess whether or not compensation is reasonable.  WWP reported that the CEO was paid about $473,000 in taxable compensation in 2013 on a Form 990 filed on time in May 2015, the most recent form available for analysis. Revenues were listed as $342 million annually. 

Using the Nonprofit Comparables Assessor and selecting all human services organizations with annual revenues of $350 million, the average CEO compensation is shown on the first line of the table below.  The next line shows the averages for CEOs of all types of nonprofits, not just those providing human services with the same revenue size of $350 million.  Finally, to add perspective, ERI’s Salary Assessor was used to estimate what the CEO of a similar-sized for-profit company would make.  While WWP is based in Florida, the US average was used, because the search for a new executive for this size organization would be nationwide.

So, while perhaps there may be criticism for some WWP expenses and fund-raising practices, its level of CEO compensation appears to be in line with other similar organizations in the nonprofit sector.  What's more, it is clearly less than the CEO salaries in the for-profit world.