Executive compensation

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I work for a large NON PROFIT healthcare system. In 2004, the CEO of the system received some $1.4 million in salary, which is the most recent figure I can document. Taking inflation into account, his 2009 salary would be somewhere in the neighborhood of $1.7 million, which doesn't take into account any bonuses or raises he may have received in the last 5 years.

My question is this...How can such a compensation package for the CEO of a non-profit be justified? If the salary was an even $1,000,000, how many new monitors could have been acquired for the critical care units? How much more robust could the dare-care program for the children of employees have been? How many more techs and unit clerks could have been employed?

Just askin'.

for the record, c-officers (ceo, coo, cfo, cno) and md's (most notably cardiologists and surgeons) working for not-for-profit hospitals, on average, are paid more than their counterparts working for for-profit hospitals.

another interesting point - from my own experience. a friend of mine and i got together and discussed a recent opportunity. a hospital was looking for a new ceo and cfo, after having lost a great deal of money when the previous duet embezzled several million dollars and allowed the hospital to get two years behind on submitting complete and accurate billing statements to the center for medicare and medicaid services (cms). the hospital was operating in the red, capital improvements had been neglected for years, the medical staff had taken a 10% pay cut to prevent the hospital from closing, payments to suppliers were greater than 90 days past due, etc.

we decided we would take up the cause and turn this hospital around. what we brought to the table was this: i have a jd in health law, two related masters degrees, two bachelor degrees, years of health care experience, i'm an experience critical care nurse, over ten years management experience (you get the picture). my colleague has a phd in ergonomics and a masters in finance, also with all the requisite experience. we met with the board of directors and offered them a two year contract, at the bargain price of $200,000 per year (total, not each). we stipulated that at the two year point, they could either renew our contract and increase our pay to the "going rate" or let the contract end, no golden parachute. our thinking was that our sacrifice would enable the survival of the hospital and give us a "warm and fuzzy" for helping the patients and employees of the community.

a week after our proposal to the board, we were turned down and they announced a contract with a temp management service for a three month contract at $60,000 per month to provide two people (ceo & cfo), with an option to renew for one month.

during a later conversation with one of the members of the board who was very much in favor of accepting our offer, we were told that three member of the five-member board voted against us because we had offered our services too cheap.

lesson learned, demand high pay! it's expected.

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I guess I just have trouble believing that the executive skill set is that rare.

THe executive skillset is rare. Most people like you and I are kindand compassionate and would give the shirt off our back to help someone.

Executives must be ruthless, cunning and completely lacking any semblance of moral fiber.

Yes, they are rare thank god.

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CEO/s are running a BUSINESS...the fact that it is a hospital, where peoples' lives matter very much-just seems so low down on the list of priorities. Seems some of them have never having gotten over that "I'm king of the hill" game that kids play...

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Obscene Profits??? You can't relate becuase you are not in that position. Nurses on here constantly complain that management has no clue what they do. I say most nurses on here have no clue what a CEO does, What they are accountable for and the ladder they completed to get to that current compensation. It is nobody business what somebody else makes. The fact is if you took $1000/year from every nurse in the hospital just think about how many supplies and monitors you could provide for the hospital.

There is no comparison between the salary of a CEO versus the salary of a nurse. As I stated in a previous post, I will never be convinced that any one person should be sucking that amount of money out of the health care system.

The comparison between the salaries of for profit and not for profit executives is not valid either, in my opinion. None of them should be able to make such obscene amounts of money in comparison to the other people who work for the organization.

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oh, puh-leeze! you could put a monkey in some of those offices and nobody would ever know the difference. okay, that may be an oversimplification; however, i will never be convinced that a ceo (or any executive, for that matter) is justified in sucking that obscene amount of money out of the health care system.

just out of curiosity, what exactly is the dollar amount that it becomes obscene? $100,000? $500,000? one million? they don't work for their money? joe blow on the street probably thinks that nurses making over 50k a year are obscenely over paid, after all, the only thing a nurse knows how to do is "change a bedpan and follow doctors orders".

you have absolutely no idea what the officers do as far as running a facility, just like joe public has no idea what nurses go through on a daily basis.

i'm sorry, i must stop here because i am starting to get annoyed, no matter what anybody says, you have already made up your mind and now have blinders on. "however, i will never be convinced that a ceo (or any executive, for that matter) is justified in sucking that obscene amount of money"

i shouldn't even post this, but oh well, let the flames begin...:flamesonb

w

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I think this is a touchy subject because no one think they get paid what they deserve. CEO's and CFO's definitely have a hard job and deserve to get paid well for the tough job they do have (providing they are not lying, cheating, stealing, etc.), but their salaries may be a bit easier to stomach if we all thought we were being paid in proportion to what we actually do at work. I am sure most of us at one point have literally saved a life--I mean literally brought them back from the brink of death. You can't even begin to put a price on that. But to be fair CEOs and CFOs keep the hospitals running that we work at so that we can do what we do. At least its not as bad as some NFL players getting 20 million dollar contracts to play a sport that I used to play in gym class.

My opinion: nurses, firefighters, police officers, EMT's, etc. don't get paid enough for the honest, genuine work that they do. If I was making a million dollars I definitely wouldn't care what my CEO was making.

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Specializes in Critical Care, Patient Safety.
If I may play the devil's advocate... nurses here often gripe about outsiders discussing what a nurse "should" and "shouldn't make"...Is it fair to say that we aren't in the position to determine what an exec should or shouldn't make? When it comes down to the nitty gritty we don't know the whole story or what kind of benefit/asset/financial gain they bring to the business...Some don't add value, but many do. To rise to the executive level, you must be doing something right...whether that's legitimate or nepotism/networking, it varies. Like a previous poster mentioned, non-profit and health sector has to pay a lot because, at the end of the day, they still pay WAY less than the for profit sector...those execs can and do make 10 mill, 20 mill, stock options, you know the deal..So yes, attracting business savy star MBAs comes at a price..

I actually think that we SHOULD be questioning what top level executives make - especially in this day and age when money is tight all around, and we hear stories about those being cut at the bottom or being asked to make sacrifices while those at the top are not as hard hit. Let's face it, when it comes to something like a 3% salary increase, the actual dollar amount is A LOT more for someone making $1 million versus someone making $40K or $50K, not to mention bonuses.

Also, we keep seeing executives being paid large sums of money and getting steady salary increases when hospitals are on hiring freezes and nurses are being asked to do take on more and more work. The disparity is completely ridiculous. Yes, executives are trained to do a certain job, and not everyone can do it. But I'm not sure that most executives could do a nurse's job, either.

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Obscene Profits??? You can't relate becuase you are not in that position. Nurses on here constantly complain that management has no clue what they do. I say most nurses on here have no clue what a CEO does, What they are accountable for and the ladder they completed to get to that current compensation. It is nobody business what somebody else makes. The fact is if you took $1000/year from every nurse in the hospital just think about how many supplies and monitors you could provide for the hospital.

I never said "obscene profits". I was referring to the obscene amount of money that hospital executives are paid, particularly in comparison to the amount of money others in the organization are paid. And yes, IN MY OPINION, it is obscene.

And, may I ask, how do you know that I "have no clue what they do"? Believe me, I know exactly what "they" do, and it is not worth the amount of money that is being diverted to their pocket at the expense of basic needs in the health care system.

If we are going to take money out of everyone's pocket to buy supplies, we can start with the $1,000 figure you proposed to take from a nurse's salary. Proportionately, then, how much should be taken from the person who is being paid over a million dollars per year?

It is most definitely my business what the CEO earns. In light of hiring freezes, staff ratios being increased, and cuts at all levels for other staff, it is everyone's business.

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Specializes in Critical Care, Patient Safety.
Obscene Profits??? You can't relate becuase you are not in that position. Nurses on here constantly complain that management has no clue what they do. I say most nurses on here have no clue what a CEO does, What they are accountable for and the ladder they completed to get to that current compensation. It is nobody business what somebody else makes. The fact is if you took $1000/year from every nurse in the hospital just think about how many supplies and monitors you could provide for the hospital.

You are insulting the intelligence of nurses by saying we have no idea what a CEO does and what they are accountable for.

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Thankfully your opinion doesn't matter. And I can guarantee you have no clue what the CEO does or what their job entails. Lets talk proportions. How about we take from you the same percentage of income taxes the CEO pays after all that is fair. An no it is not your business what someone else makes. Just be thankful you have a job because of the CEO running the hospital. If you don't like the money the CEO makes I suggest you quit your job and find a hospital more to your liking.

I never said "obscene profits". I was referring to the obscene amount of money that hospital executives are paid, particularly in comparison to the amount of money others in the organization are paid. And yes, IN MY OPINION, it is obscene.

And, may I ask, how do you know that I "have no clue what they do"? Believe me, I know exactly what "they" do, and it is not worth the amount of money that is being diverted to their pocket at the expense of basic needs in the health care system.

If we are going to take money out of everyone's pocket to buy supplies, we can start with the $1,000 figure you proposed to take from a nurse's salary. Proportionately, then, how much should be taken from the person who is being paid over a million dollars per year?

It is most definitely my business what the CEO earns. In light of hiring freezes, staff ratios being increased, and cuts at all levels for other staff, it is everyone's business.

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Specializes in Addiction / Pain Management.

CEO compensation is determined by a BofD unfortunately most BofD position are filled with the incoming CEO friends or business partners.

One of the reason I left the IT world and moving into nursing the rampart croniyism in the IT/Financial services section of the economy.

In short it's not skills, it's who you know.

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Specializes in Dialysis, Hospice, Critical care.
Thankfully your opinion doesn't matter. And I can guarantee you have no clue what the CEO does or what their job entails. Lets talk proportions. How about we take from you the same percentage of income taxes the CEO pays after all that is fair. An no it is not your business what someone else makes. Just be thankful you have a job because of the CEO running the hospital. If you don't like the money the CEO makes I suggest you quit your job and find a hospital more to your liking.

Now that the veil of ignorance you assume we are all blinded with has been lifted, do the responsibilities outlined in the above link justify a seven figure salary? In a word, no. Until recently, it was common practice for overseas corporations, and some socially conscious corporations here in the states, to limit the the pay of CEO's to the equivalent of 7 to 10 time the pay of the lowest paid member of a company. That that may be insufficient says more about how poorly the lowest paid staff members are than about the demands placed on a CEO.

Secondly, your argument regarding the taxes paid by these highly compensated individuals is a canard. These individuals pay a lower marginal tax rate that they have at any time since the Clinton administration. Unless, of course, they want to go back to the 30%, 40% or 50% tax rates paid by the wealthy during the Eisenhower administration. These individuals also, because of their wealth, have access to tax shelters and methods of hiding income unavailable to the average wage earner. In short, your point is meaningless.

In closing, your attitude is condescending and an insult to the intelligence of those who read and post here.

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