Legislature Hears Testimony on Legislation Limiting the Right of Public Charities to Compensate Independent Directors

Foley Hoag LLP

On Tuesday, September 27, 2011, the Massachusetts Joint Committee on the Judiciary heard testimony on H.3516 – a bill that would regulate compensation of board members for public charities.

The bill, introduced by Representative Martha Walz, would prohibit Massachusetts-based public charities from compensating independent (non-employee) officers, directors and trustees, except in instances where the charity can make a clear and convincing showing, by means of an application to the Non-Profit Organizations/Public Charities Division of the Attorney General’s Office (AGO), that compensation is necessary to enable the public charity to attract and retain the services of experienced and competent individuals. The bill allows the AGO to prescribe criteria for approval of such applications, and also allows the AGO to rescind its approval if it determines that the level of compensation paid by the public charity exceeds what is reasonably necessary.

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