The recent "request" by Elon Musk for a $44.9 Billion (yup) pay package should remind all that a CEO does not determine what there pay package will be - the board does.
Yes, in the case of Mr. Musk it was the shareholders (the owners) who determined that this was the appropriate package for "the" man who definitely made their income happen. But it was a Delaware judge who said six months ago that the initial process for approving this package "was deeply flawed". The court ruled that "Musk controlled the company's board, and shareholders weren't fully informed."
So, presumably the shareholders approved the package now having been fully informed. But a deeper question lays at the feet of this drama. Musk's package places him at 275 time greater than the median U.S. CEO pay package of $16.3 million. There are likely a number of so-what's to this point but for nonprofits there are indeed a few.
One of the most important is that nonprofit boards, like their corporate counterparts must be fully informed when considering pay packages. It is NOT ok to sign-off on what the CEO recommends.
Two, for nonprofits and the IRS, the general rule of thumb is that CEO's should be paid at rates roughly comparable to other CEO's, that is, CEOs who manage similarly sized and complex nonprofits. For example, Hospital execs can be paid amounts far greater than say soup kitchen execs because these institutions are not similar in their demands. But, nonprofit boards have the responsibility to conduct the comp analysis. Failure to do so can actually bring the IRS to their door for the topic of inurement with fines possible for the individual board members.
Three, in the world of equity, boards should be clear they are not paying BIPOC people differently than they would non-BIPOC people at least not singularly based on this criteria. Again, comparatives help. But beyond another factor should also, in my opinion, be considered, and that is how the exec salary compares to the remainder of employees. Usually this is calculated based on the % difference between staff and the exec. Fair is not paying 100 or 200x the worker bee.
And these are some thoughts about board responsibilities and fairness to consider.