Hello – we’re launching this blog to follow up on the total revamping of the Lawrence Associates website. We’ll keep you posted on important new developments in the compensation field, with particular emphasis on government regulation (IRS, Congress, state legislatures and state Attorneys General) and non-profits. From time to time, we’ll also let you know about interesting projects we’ve worked on.

As we noted on our website, in February 2009, the IRS released the Final Report on its Non-Profit Hospital Study. The study, and the bulk of the report, focused on the “community benefit” provided by the hospitals, but also addressed executive compensation, through questions on a questionnaire sent to over 500 hospitals and a more detailed examination of the executive compensation practices of 20 hospitals.

And this is where it gets interesting: The “Intermediate Sanctions” process, which imposes penalties for excess executive compensation (on both the executive and the board) is something for which the IRS sought legal authority from Congress back in the 1990s, to give it an enforcement tool less drastic than revoking an organization’s tax exemption. As many if not most of our readers know, the IRS regulations for Intermediate Sanctions enable the hospital or other non-profit to establish a “safe harbor” (called the “rebuttable presumption” in the regs) by following certain procedures: an independent governing body, use of appropriate comparability data, and proper documentation of the compensation decision.