Timely and comprehensive public information on executive pay and perks remains hard to come by, though the public may soon get a more extensive look at the types of compensation not-for-profit executives receive. In June, the IRS issued proposed changes to its Form 990, which is required to be filed annually by all sectors in the $3 trillion tax-exempt category to report organizations yearly revenue and spending. The redesign singled out hospitals for greater disclosure of operations, and requires more thorough reporting of executive pay at all not-for-profits. Public comment on the proposal is open until Sept. 14.
Where the form once asked for executives pay, benefits and expense allowance, tax officials have proposed a more detailed disclosure for highly compensated individuals, including base, bonus and severance payouts, benefits, expenses and deferred pay (June 18, p. 8).
Theyll provide more light than they have in the past, says Warren Kerper, a managing principal with Sullivan Cotter in Boston.
All that activity will likely keep public attention focused on CEO pay, consultants contend. Once considered backroom and arcane, executive pay has now become a social and political issue, and its front-page news every day, Graskamp says.
For directors and trustees, Pagoaga says, heightened oversight and transparency will mean greater scrutiny of governing boards policies and practices for setting compensation, he says. Boards risk public backlash or regulatory probes as compensation continues to climb, he says. But reducing that risk by restraining increases in pay and perks could jeopardize tax-exempt healthcares ability to recruit and retain talented executives. Finding that balanceits an art form; its what people are trying to do, he says. Right now, a lot of focus is on managing risk.
Despite the stepped-up scrutiny, compensation consultants say executives generally enjoyed solid wage hikes in 2007although the survey shows some exceptions.
Executives across hospital C-suites saw more modest gains in cash compensation in 2007 compared with the 6%-to-10% growth reported in 2006.
Hospital chief medical officers enjoyed the largest increase among senior hospital executives, 4.7%, for median total cash compensation of $287,800. Chief information officers earned $198,300, up 4.6% from a year earlier, while chief financial officers reported median cash compensation of $217,600, a one-year increase of 3.7%. Hospitals No. 2 executives, chief operating officers, saw a meager increase of 0.7% to $217,800.
The biggest winners, based on the annual increase, among hospital executives fell outside of the C-suite, according to the survey. However, a note of caution: The limited number of replies for some job titles can leave the results vulnerable to large fluctuations (See charts). At hospitals, professional services and legal executives reported the largest one-year increases in median compensation: 9.6% and 7.1%, respectively. The median cash compensation for the top manager of professional services totaled $175,300 in 2007, while top legal executives reported median total cash compensation of $251,500.
In the C-suites at healthcare systems, chief medical officers also claimed the biggest one-year gain in total cash compensation. CMOs surveyed reported an 8.3% increase to $408,600. Aside from the CEOs 4.9% increase, no other top executive came close to those annual gains. The chief network/system development officers and chief privacy officers reported 2.1% and 2% increases, respectively. That put the median cash compensation of top network or system development executives at $344,000, while privacy chiefs median cash compensation totaled $109,700. COOs reported a 2007 median cash compensation of $505,600, a 1.3% increase compared with the previous year. CFOs median compensation totaled $403,000, an increase of 1%, while chief information officers reported the smallest percentage gain, a 0.4% increase to $269,000.