1215 Superior Ave., Suite 410 Cleveland, Ohio 44114-3289 Tel: (216) 621-4391 Fax: (216) 621-4392 www.calfeefinancial.

1. Peter H. Calfee, CFP, CPA, CLU, AEP, MBA President 1215 Superior Ave., Suite 410 Cleveland, Ohio 44114-3289 Tel: (216) 621-4391 Fax: (216) 621-4392 www.calfeefinancial.com pcalfee@calfeefinancial.com Financial expertise for successful people sm

2. MOTIVATION • Pursuit of excellence • Passion for learning • Challenge • Proactive • Desire to help children • Love of people

3. RESPONSIBILITIES • CEO of a multi million-dollar operation • Balance sheet and “profit and loss” responsibilities • Responsible for personnel • Government-mandated responsibility for benefits and retirement • Focus on source of “raw material” (students) • Responsible for delivery of quality goods to market place (matriculation to college or other educational pursuit of choice) • Deal with work place violence and associated personnel disputes and employee complaints • Required to raise equity and handle financing issues including Bond issuance and debt service

4. RESPONSIBILITIES • Responsible for long-range strategic planning • Responsible for school vision & development, maintenance or revitalization of school vision/mission/and motto • Responsible for training and guidance of all support personnel • Accessible to all shareholders, stakeholders, and interested parties including federal, regional, state and local government employees in the educational arena • Available to the student body for whom you exist & why you sought the job in the first place • Available to your Board at all times

5. FAIRCOMPENSATION • A “Bridge” between you and the School

6. COMPENSATION • Salary • Bonus\Other • Deferred compensation

7. SALARY • Market driven • Negotiated • Comparability issue Experience School issues Geographic location

8. BONUS- OTHER GUARANTEED OR DISCRETIONARY FOR PURPOSE OF DISCUSSION & INCLUSION Insurance coverage Cars Financial planning Tuition remission Sabbaticals Clubs Other

9. DEFFERED COMPENSATION • QUALIFIED • 403 B • 457 Plans • 401 K for Non-profits • NON-QUALIFIED • Ineligible 457 Plans • Other plans designed for unique application

10. POTENTIAL PURPOSE OF NON-QUALIFIED PLANS Retention of employees Performance based or incentive Orboth

11. FAIR COMPENSATION • Eye of the beholder • Depends on working relationship • Board views as to compensation • Self analysis

12. FAIR COMPENSATION • First pillar = Salary • Second pillar = Bonus/other • Third pillar = Deferred Compensation

13. DEFERRED COMPENSATION • Retention driven • Performance driven • Or • Both

14. ORIGINS OF DEFERRAL • For-profit world • Change in retirement laws • Desire of board to reward • Competition for talent • Retention based pay • Incentive based pay

15. FOR WHOM?ExclusiveDiscriminatoryCan be complicatedTax issues drive design

16. CRITICAL TAX ISSUES • Constructive receipt of funds • Substantial risk of forfeiture

17. TYPES OF FUNDINGSimilar to government approved retirement plans Defined “Benefit”Defined “Contribution”

18. METRICS • Benchmarks • Goals • Quantitative • Qualitative

19. METRICSAchieve capital goalsIncrease endowmentsMaintain operationsImprove administrationElevate school reputationAnnual fundExpand campusRenovate buildingsMaintain culture

20. DEFINE & DESIGN • Risks ----- Problems: • Encumber future Boards • Clarify actual cash commitment • School wants to keep Head? • Head wants to commit to school?

21. Other Considerations School Culture Financial Resources Goals and Missions Purpose of Program

22. SUMMARYUNDERSTAND • Compensation Program • School’s Mission & Vision • Inner concepts, desires, goals & beliefs of Head • What performance means/metrics • Longevity of program

23. UNDERSTAND • Financial Accumulation of Funds • The Board and its inner workings • That all knowledge learned in this process is good – you will know where you “Stand”

24. FINALLY • The entire discussion responds to the natural human desire to be treated fairly in a competitive world.