Steps to Form a Compensation Committee
Forming a Compensation Committee may not sound like the most thrilling endeavor, but if you’ve ever sat through a contentious contract negotiation, you know that having the right people in place can make all the difference. This committee ensures that the Head of School’s compensation package is fair, competitive, and compliant with legal requirements—while also trying to prevent awkward, drawn-out debates at full Board meetings.
Here’s how to form an effective Compensation Committee without unnecessary drama:
1. Pass a Resolution
The Board of Trustees should pass a formal resolution delegating authority to a Compensation Committee. This resolution should reference any relevant authority under the school’s bylaws and clearly define the committee’s role. In other words, make sure everyone knows who’s responsible for what—so no one later tries to pass the buck when things get complicated.
2. Select Committee Members
The ideal committee consists of two to five Board members with a level-headed, pragmatic approach to contract negotiations. Typically, this includes the Board President, the incoming President (if there’s a succession plan), and one to three other well-respected members.
Who not to include? Employees of the school, family members of the Head of School, or anyone with an obvious conflict of interest (like the Head’s friend or a vocal critic). The goal is a professional, constructive process, not a showdown.
3. Determine Committee Leadership
At the first meeting, appoint a secretary to document discussions and decisions. Keeping clear records is critical for legal compliance and transparency. Plus, it prevents those “I don’t remember agreeing to that” moments down the line.
4. Establish Confidentiality Protocols
Compensation discussions can be sensitive, so all committee members should commit to confidentiality. No side conversations, no casual hallway chats, and certainly no “accidental” leaks to faculty, staff, or parents. Reports should be communicated only through the Board President or Committee Chair to ensure accuracy and control over the messaging.
5. Review Compensation Data
Before jumping into numbers, the committee should gather third-party compensation data to benchmark the Head of School’s salary. This data should be well-documented and vetted for accuracy. Disagreements about questionable or outdated figures can cost time, money, and trust. Consulting with school counsel or a compensation consultant can help ensure compliance and fairness.
6. Set a Timeline
Establishing a clear timeline keeps the process organized and prevents last-minute scrambling. Set target dates for key milestones, including:
• Reviewing compensation data
• Initial discussions with the Head of School
• Finalizing proposed terms
• Approval by the full Board of Trustees
A well-planned timeline helps ensure negotiations don’t stretch on indefinitely.
7. Engage in Initial Discussions
The Committee Chair and Board President should meet with the Head of School to discuss the current Employment Agreement and gather input on any desired changes. This conversation sets the tone for a professional and transparent process—ideally one where both sides leave the meeting feeling heard, not defensive.
8. Reconvene for Decision-Making
After gathering input from the Head of School and reviewing the latest compensation data, the committee should reconvene to discuss and finalize the compensation package and major terms of the agreement. This step requires balancing fairness with fiscal responsibility—because while no one wants to underpay a great leader, a school budget isn’t unlimited.
9. Prepare Documentation
Once the committee reaches consensus, school counsel should prepare a draft Term Sheet or Employment Agreement outlining the agreed-upon terms. This document should be shared with the Head of School for review and feedback. If done well, this step prevents unnecessary back-and-forth and keeps the process moving smoothly.
10. Finalize and Ratify the Agreement
Once all parties agree on the terms, the full Board of Trustees should approve the key terms of the final Employment Agreement. A formal resolution should be passed to ratify the agreement, ensuring all actions are properly documented and legally sound. At this point, everyone can breathe a sigh of relief—until the next contract cycle rolls around.
Conclusion
Creating a Compensation Committee doesn’t have to be a bureaucratic headache. By carefully selecting the right members, setting clear expectations, communicating with the head of school, and following a structured process, the Board of Trustees can ensure a smooth, fair, and transparent negotiation. The result should be a mutually satisfactory Employment Agreement that supports both the Head of School and the long-term success of the institution.
