The compensation of Tenet Healthcare Corp.'s top executives took a dive in fiscal 1999 partly because of the company's poor financial performance.
Jeffrey Barbakow, 55, chairman and chief executive officer of the Santa Barbara, Calif.-based company, saw his compensation package decline about 35%. The drop was primarily caused by his bonus being less than half that of the previous year, according to the company's annual proxy statement.
The company reported a net loss of $137 million for the fourth quarter ended May 31 and a profit of $249 million for the year, down from $261 million in 1998.
"As a result of the company's below-target financial performance in fiscal year 1999, Mr. Barbakow's (annual incentive plan) award was below his target level," the filing states.
When his salary, bonus and other annual compensation were combined, Barbakow's compensation totaled roughly $1.8 million in fiscal 1999, compared with $2.8 million in fiscal 1998. His annual salary remained fixed at $1.09 million for each year, but his annual bonus dropped to $671,257, compared with $1.6 million the year before.
"The year was not a good year financially. As a result of that, bonuses are smaller," Tenet spokesman Harry Anderson said. "You can look at those numbers, you can look at what our financial performance was in 1999, and you can draw your own conclusions from it."
The committee of Tenet's board of directors that sets compensation levels decided in July 1998 to freeze the salaries of any employee whose salary was $100,000 or more that year, except in cases of promotions. The decision was part of an overall cost-cutting initiative.
Michael Focht Sr., who retired as president and chief operating officer of Tenet effective May 31, the end of the company's fiscal year, received total compensation of about $1.2 million, a decline of more than 37% from $1.9 million in fiscal 1998. His salary for 1998 and 1999 was $700,000 each year, but his bonus plunged to $373,100 in fiscal 1999 from more than $1 million in fiscal 1998.
Under a three-year noncompete and consulting agreement with Tenet, Focht will remain a Tenet employee until year-end, at which point he has agreed to serve as a consultant to the company for three years. His compensation during that period is set at $43,666 per month, plus expenses.
Trevor Fetter, who with Thomas Mackey was named to the office of the president after Focht retired, saw his salary jump to $493,750 in 1999 from $460,000 in 1998, although his bonus dropped to $325,000 from $809,140.