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IRS law worries United Way board members

Local United Way leaders are concerned that the pay package they approved for their former president might violate IRS rules forbidding charities from giving unreasonably high compensation to CEOs.

The current and incoming board chairmen of the United Way of Central Carolinas said today that the board has discussed federal tax laws that could come into play concerning the controversy over former president Gloria Pace King's pay package.

The board agreed to pay her $1.2 million in salary and benefits last year, but reversed course last week and asked King to resign her post or face firing. Board members said controversy over her salary and retirement benefits had rendered her leadership untenable, and apologized for misjudging the community's willingness to accept that kind of compensation for a nonprofit CEO.

Board chairman Graham Denton and incoming chairman Carlos Evans said board members have been discussing IRS rules against excessive CEO pay and their implications in the King situation. The rules say charities and their boards can be fined if they award unreasonably high salaries. Evans said the United Way is not under investigation, but board members have had “in-depth discussions” about the rules, trying to figure out whether King's compensation package might have violated them.

“These matters are not crystal clear,” Evans said. “We all wish there was absolute clarity about what's reasonable and not reasonable.”

The board has said it will not pay out at least $1 million outstanding on a retirement contract it signed with King in 2006; King's attorney, Bill Diehl, has suggested she will fight for it in court.

Evans suggested the situation might well end up there.

“One outcome could be that we ask a judge to decide what's reasonable,” he said. “It's very clear that the community at large thinks it's unreasonable.”

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