John C. Wright explains how they pick the Nebula Award winners:

The selection process is relatively simple: the survivors of a Deathball tournament are examined by the Colossus-Skynet system for irregulationary defects, and if found acceptable, are sent to the haunted planet Arisia for mind-to-mind examination by the alien superbeing known as Mentor, and those who return sane are conducted to Wallach IV where the Bene Gesserit Witches test the candidate with a “gom jabbar” and the Box of Pain to distinguish the true humans from the mere human animals. Survivors are taught the Martian Language in order to achieve fourth level consciousness and exposed to the mind-altering rays of the Evolutionary Granolith, and expected to make at least one “drop” in full kit onto a planet controlled by the Klendathu. Then any remaining candidates are sent to Trantor, or maybe some other world covered entirely with buildings, and examined by the Jedi Council and the Psychohistorians to see whether passing the candidate will cause a disturbance in the force or throw off the predictive plan of history. The remaining candidates then cover themselves with walrus grease and wrestle nude with Harlan Ellison, or his evil twin Zebulon Ellison, in the Arena of Death, on a tightrope above a field of radio-active radium-knives. The winner is granted by the Padishah Emperor any space-kingdom on any of the garden-planets accidentally created by the Genesis Machine in the Multiple Green Sun system at the core of the galaxy, and any space princess for his bride, with the one exception (obviously) of the voluptuous yet deadly Princess Venomia, the Black Widow of Outer Space. The year Leigh Brackett won, instead of a space princess, she demanded her beloved World-Wrecker Hamilton be released from his disembodied confinement within the death-asteroid of the limbo dimension. The Padishah Emperor was loathe to set free so dangerous a planet-killer, but he had no choice.

I always thought SFWA was up to something fishier than meets the fishy eye.