Executive Compensation, Charities, and the Curse of Proximity

Posted by Dan Palotta in the Harvard Business Review

The music director of the nonprofit New York Philharmonic had a $2.2 million compensation package for the 2006-2007 season. The nonprofit Chicago Symphony Orchestra paid their man $1.9 million, and the nonprofit Boston Symphony Orchestra shelled out $1.5 million. A Chicago Tribune article on the subject quotes a consultant saying that “a music director is worth what he or she is able to bring into the organization.”

In 2009, the nonprofit University of Southern California paid the head football coach $4.4 million and the 20 highest-paid college football coaches (all working for either government- sponsored or nonprofit schools) each earned $2 million or more. A 2004 New York Times article flat-out stated that, “it’s not a question of whether a baseball player or coach is worth that much. The issue is what is market value.”

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