The Office of Federal Procurement Policy (OFPP) has announced the maximum executive compensation allowable under government contracts during fiscal year 2009, $684,181. This is an 11.75% increase from the FY2008 maximum amount of $612,196. This dollar limit is the maximum amount of executive compensation that can be charged to the Government. The limit does not dictate the total compensation that can be paid to an executive, just the amount charged to the Government.
OFPP determines this limit based on surveys of executive compensation of large publicly-traded companies. This limit may not reflect reasonable compensation for small contractors. The Defense Contract Audit Agency (DCAA) conducts its own executive compensation reviews and considers such factors as size, industry, geographical region, and compensation of those engaged in similar non-government work. DCAA can challenge executive compensation amounts under the maximum for reasonableness.
Aronson & Company can answer your executive compensation questions and can help defend DCAA executive compensation challenges, contact Nicole Mitchell at firstname.lastname@example.org
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