| Schedule J, Part I PART 1-EXECUTIVE COMPENSATION COMMITTEE REPORT |
United Way Worldwide - Fiscal Year 2016 Executive Compensation Committee Report: This Compensation Committee Report was approved for inclusion in UWW's Annual Form 990. To increase transparency, this report provides information on UWW's governance and oversight of executive compensation and benefit programs, general compensation philosophy, and key features of the executive compensation program. Governance The Compensation Committee ("the Committee") of the Board of Trustees of United Way Worldwide ("UWW") is responsible for governance and oversight of compensation and benefits programs for the UWW Chief Executive Officer and other executive level staff ("Executives"), and for ensuring that the compensation policies of UWW are consistent with and in support of the organization's mission and goals. The intent of the Committee is to provide a total compensation program for the Executives that promotes the United Way's long-term strategic objectives, and is reasonable, appropriate and fair. In seeking to achieve such a program, the Committee considers many factors in determining how to set executive remuneration including: UWW's mission and goals, the performance of UWW and the United Way system, the market for executive talent, and the performance of each Executive. Given the Committee's focus on performance and the objectives of the organization, the Committee also aims to put a significant portion of each Executive's compensation at risk. On an annual basis, the Committee is responsible for evaluating the performance of the CEO and recommending to the full Board of Trustees for approval any adjustments to his compensation and benefits, including incentive awards. The Committee is responsible for reviewing and recommending to the full Board of Trustees for approval incentive awards and any adjustments to the compensation and benefits of the other Executives, with input and recommendations from the CEO. Also, the Committee is responsible for reviewing and recommending to the full Board for approval any new compensation or benefits plans or programs, or any changes to existing plans and programs that relate to the CEO or the Executives. The Committee aims to fully disclose the compensation provided to the Executives in an open and transparent manner, consistent with governance best practices and applicable regulatory requirements. General Compensation Philosophy and Market Peer Group United Way is a worldwide movement of nearly 1400 community-based United Ways in 40 countries and territories, including nearly 1200 local organizations in the United States. United Way Worldwide, the international leadership organization aims to advance the common good, creating opportunities for all by focusing on education, income and health. UWW relies on the strength of 9.8 million donors and over 2.84 million volunteers to fulfill the organization's mission and to raise in excess of $4.77 billion annually across the network. The primary objective of UWW's compensation policy is to provide competitive, motivating and reasonable total compensation, consistent with market-based compensation practices for individuals possessing the experience and skills needed to improve the overall performance of the organization and achieve the worldwide impact vision. Specifically, the organization's executive compensation program is designed to: - Encourage the attraction and retention of high caliber executives - Strike a balance between attracting and retaining a highly motivated and high performing team, yet being well aligned with UWW's charitable mission and values - Strongly support a "pay for performance" culture through the use of performance-based incentives for key employees - Be flexible to reward individual accomplishments as well as organizational success UWW's peer group for comparison purpose focuses on large national charities with a worldwide mission and strategy, which includes the largest U.S. based charities in the Leadership 18. Also included in the peer group are other U.S. based charities with a worldwide mission (not in the Leadership 18) and several large private foundations serving global missions and needs. The UWW peer group for compensation comparison purposes includes: American Red Cross Boy Scouts of America Girl Scouts of the United States of America Boys & Girls Clubs of America American Cancer Society Gordon & Betty Moore Foundation Habitat for Humanity International Opportunity International Save the Children Federation Smile Train The David & Lucile Packard Foundation The Ford Foundation The Henry J. Kaiser Family Foundation The John D. and Catherine T. MacArthur Foundation The Robert Wood Johnson Foundation The Rockefeller Foundation The William and Flora Hewlett Foundation United Jewish Communities World Wildlife Fund C.A.R.E Goodwill Industries UNICEF Given the United Way system's size, complexity and global reach, the philosophy of the Committee is to position the CEO's total compensation opportunity in the top quartile of these U.S. based national charities, reflecting his sustained long-term performance, skills, experience, and contributions to the United Way network. To help the Committee evaluate its compensation policy and related programs, the Committee retains an independent consulting firm to review annually the CEO and Executives' compensation to ensure that such compensation continues to further these principles and reflect the Committee's commitment to align compensation with organization long-term goals and objectives and performance. The independent consultant's review conducted in 2016 found that the CEO and Executives' compensation was consistent with the Committee's compensation policy, enumerated below, and that the compensation provided was reasonable when compared to that provided by organizations that are comparable to UWW in mission, scope and scale. |
| Schedule J, Part I PART 2-EXECUTIVE COMPENSATION MEMO |
Chief Executive Officer Compensation - Compensation Program: The compensation program consists of four key elements: (i) Annual Compensation, which includes base salary and an annual performance incentive opportunity, (ii) Health and Welfare Benefits, (iii) Retirement Benefits, and (iv) Other Benefits and Allowances. Each element is described more fully below. Annual Compensation: The Committee strives to provide market competitive base salaries for comparable positions, and to align pay with performance and system-wide objectives through the use of performance-based incentives. UWW's incentive program provides the CEO the opportunity to earn a performance-based incentive. The incentive opportunity is 30% of base salary for target performance and up to 45% of base salary for achievement of outstanding performance including significant stretch goals. The incentive opportunity is intended to reinforce UWW's mission of improving lives by mobilizing communities. Specifically, the Committee annually evaluates the CEO's performance against several key objectives, including: Maximize impact of the United Way network Increase growth and revenue through donor centered engagement. Increase the capacity of the U.S. and worldwide United Way network. In addition to measuring the CEO's performance against these objectives, the Committee also evaluates the level at which the CEO demonstrates leadership competencies, including: Collaboration Stewardship Strategic Thinking Accountability Innovation In March 2016, the UWW's Board of Trustees completed its annual evaluation the CEO's performance for the prior year against his objectives and his general management and leadership competencies. The Board awarded an increase in base pay from $540, 000 to $556,000, which has been unchanged since 2014. The Board of Trustees also awarded incentive pay of $162,000. This amount was for 2015 performance (payable in 2016) and reflects an award of 30% of base pay, which was the target opportunity (based on 2016 annual salary of $540,000), slightly less than the amount paid the previous year. Factors taken into account in awarding incentive pay were attention on donor engagement, adoption of text to mobile engagement, Canada partnership and realignment to increase network impact and revenue Health and Welfare Benefits: UWW offers standard health and welfare benefits to all Executives that are also available to all full-time UWW employees including: comprehensive medical, short-term disability, long-term disability, vacation and paid time-off, accidental death and dismemberment, and a dental plan. Retirement Benefits: UWW offers a comprehensive retirement program that includes both qualified and nonqualified retirement plan benefits. The primary retirement program is a Code section 403(b) "tax deferred annuity" plan with a matching contribution, which is a plan in which contributions are made pre-tax and can grow tax-deferred until withdrawal. The annual employee contribution limit was $24,000 in 2016 (including the catch up benefit for individuals over the age of 50). UWW provides a match of up to 8% of base salary (up to the IRS annual limit of $265,000) depending on years of United Way service. Also available to employees who were eligible prior to July 1, 2005 is a defined benefit pension plan that provides employees with a funded and trusteed retirement benefit. Participants are provided a specified benefit based on final average compensation and years of service, payable at normal retirement age, with reduced benefits payable at an earlier retirement date. This plan was frozen in July 2005 to new participants. Vested participants receive no credit for years of service after July 1, 2005, (for purposes of benefit calculations) but were credited for one-half of pay increases through the full plan freeze effective December 31, 2013. For employees with compensation above the IRS annual limit for qualified plans, which includes the Executives, UWW provides a nonqualified "benefit restoration" plan (SERP) which contributes a benefit equal to the amount that would otherwise be provided under the defined benefit plan if it were not subject to certain limits on compensation or annual benefit, determined annually by the Internal Revenue Service. Also provided is a Code section 457(b) deferred compensation plan (for employees with compensation above the IRS limit for qualified plans), which is a benefit restoration plan that provides those employer contributions that would have been provided under the 403(b) plan if they were not subject to the IRS limitations on compensation. The 457(b) plan is for employer contributions only and does not permit employee contributions. There are two additional non-qualified benefit plans in place for the CEO only. These include: 1) 10% plan - provides 10% of cash compensation annually on a deferred basis with an initial vesting period of 3 years, and annually thereafter. 2) Deferred Compensation Plan - provides $180,000 annually on a deferred basis, vesting after 3 years, and two years thereafter. Other Benefits and Allowances: UWW offers minimal perquisites and supplemental benefits except where necessary to attract and retain the management team it requires to achieve the goals of the organization. This would include such items as: automobile allowances and temporary housing allowances, where applicable, for executives that relocate to join United Way Worldwide. Detail of the CEO's compensation for 2016 is attached hereto as Exhibit I. Other Executives Compensation Executive compensation levels for the executive team (below the CEO) are set by the CEO and Board of Trustees with Executive Compensation Committee review and recommendation to align with comparable organizations. Normally adjustments are made to ensure pay levels are both competitive and reasonable. On an overall basis, UWW strives to position total compensation, including benefits, at market competitive level for each position. This may be the middle or median of the comparable market, with variations based on each executive's performance and contribution. The Committee's policy allows it to provide compensation above the median where appropriate based on the Executive's skills, overall experience, scope of responsibilities, and contributions or below the median for executives who may be new to the their role and growing. The compensation program for Executives consists of the same four key elements as described above: (i) Annual Compensation, which includes base salary and an annual cash bonus, (ii) Health and Welfare Benefits, (iii) Retirement Benefits, and (iv) Other Benefits and Allowances. Annual Compensation: The Committee strives to provide market competitive base salaries for the Executives and aims to align pay with performance and organization objectives through the use of performance-based incentives. Accordingly, UWW's 2016 incentive program provides Executives the opportunity to earn a performance-based incentive. The United Way U.S. President and the Chief Operating Officer are eligible for an incentive award of up to 20% of base salary. Executive Vice Presidents are eligible to receive up to 15% and Senior Vice Presidents are eligible to receive up to 12%. The incentive opportunity is intended to reinforce teamwork, collaboration, and the achievement of specific overall organization goals. Health and Welfare Benefits: UWW offers standard heath and welfare benefits to all Executives that are available to all full-time UWW employees, as described above. Retirement Benefits: See "Chief Executive Officer Compensation" above with respect to qualified 403(b) annuity plan, matching contributions, and the nonqualified "benefit restoration" plan. Other Benefits and Allowances: UWW offers minimal perquisites and supplemental benefits except where necessary to attract and retain the management team it requires to achieve the goals of the organization, as described above. Summary In summary, the Committee believes that the above described compensation program for Executives is consistent with the compensation policy it has established, is aligned with UWW's mission, goals and objectives, and provides a competitive and motivating program to attract and retain the outstanding leadership team it needs to meet the goals of the organization and make a measurable impact in communities it serves. |
| Schedule J, Part I PART 3-CEO SUMMARY COMPENSATION TABLE |
United Way Worldwide - CEO Summary Compensation Table (2016): Cash Compensation Base Compensation $547,855 Incentive compensation $162,000 Total Cash Compensation $709,855 Other Reportable Compensation (Other Benefits and Allowances) UWW contribution to employee benefit plan (flex credit) $11,095 Non-qualified supplemental retirement plan (amount paid) $71,931 Imputed SERP income $10,554 Supplemental long term disability $3,917 Auto Allowance $7,200 Service recognition award $638 Total Other Reportable Compensation $105,336 Retirement and Other Deferred Compensation (Retirement Benefits) 403(b) employer contribution $30,475 457(b) employer contributions $18,000 Other Deferred Compensation Plan (Accrual) $180,000 Non-qualified supplemental retirement plan (Accrual) $35,900 SERP valuation changes (Accrual) $92,261 Qualified plan valuation changes (Accrual) $33,640 Total Retirement and Deferred Compensation $390,276 Nontaxable Benefits (Health and Welfare Benefits) Employer contributions to medical plan $17,508 Group life insurance $14 Long-term disability $834 Total Nontaxable Benefits $18,356 Total Compensation and Benefits to be reported $1,223,823 1Salary is $556,000 which includes $7,921 of employee contributions toward medical benefits and $224 of contributions to other employee benefit plans. The employer contributions are listed above as benefits. 2The payments of the non-qualified supplemental retirement plan benefits were reported when accrued in prior years. The requirement to report the actual payment in 2016 constitutes a double reporting requirement. |
| Schedule J, Part I, Line 1a First-class or charter travel |
The President & Chief Executive Officer, Brian Gallagher, may be reimbursed for business class air travel (first class if there are only two classes) when traveling for business purposes on flights longer than four hours. Because frequent/extensive world travel is a requirement for the position, this benefit is not considered compensation and is therefore treated as non-taxable. |
| Schedule J, Part I, Line 4b Supplemental nonqualified retirement plan |
NON-QUALIFIED RETIREMENT PLAN INFORMATION: 1) BRIAN GALLAGHER - $71,931 NON-QUALIFIED SUPPLEMENTAL RETIREMENT PLAN 2) Joseph Haggerty - $115,966 NON-QUALIFIED SUPPLEMENTAL RETIREMENT PLAN |
| Schedule J, Part I, Line 7 Non-fixed payments |
The Executive Management Team is paid a bonus based upon a combination of individual performance, Executive Management Team performance and performance of the organization. The metrics considered are not revenue based. The Board considers the metrics and arrives at the bonus amount - it is not a matrix based on a score but somewhat discretionary. |