ASAE Study Reveals De Facto Minimum Wage for Association CEOs Linked to Annual Revenue

New data from the ASAE‘s Executive Compensation Study (ECS) team indicates the existence of a de facto minimum wage for CEOs across organizations of various sizes, with a strong correlation between annual revenue and CEO compensation up to a revenue threshold of $2 million. The study reveals that the 10th percentile of CEO salaries, where 90% of CEOs are paid more, serves as a point of clustering, earning the term “de facto minimum wage.”

For CEOs leading organizations with annual revenue between $3.5 million and $5 million, the de facto minimum wage is $177,035, while for those overseeing larger groups with $7.5 million to $10 million in revenue, it rises to $237,814. The clustering is particularly tight in organizations with revenue between $5 million and $7.5 million, where half of CEO salaries below the 10th percentile are within $20,000.

The ECS team analyzed 2021 data from over 2,600 national associations, considering full-time chief executive salaries as reported in IRS form 990. The study emphasizes the significance of annual revenue in influencing CEO compensation, with larger revenues correlating to higher salaries. Notably, the sector or industry represented by the association also plays a substantial role in CEO pay, with executives representing smaller industries earning less than those in sectors like finance and insurance.

While the correlation between annual revenue and the de facto minimum wage weakens in lower revenue categories, suggesting the existence of a true minimum wage, the study provides insights into the intricate dynamics of CEO compensation within associations. The ECS team’s ongoing analysis aims to inform the marketplace and guide organizations in understanding and benchmarking executive compensation trends. The study excludes lower-revenue categories due to data abnormalities and challenges in establishing full-time CEO salaries in those cases.