Sunday, September 05, 2010
Carilion leaders see pay take dip
Three of the top officers of the health care giant saw some decrease in their 2008 compensation.
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As the financial realities of a recession hit, Carilion Clinic's top executives saw their salaries dip from the previous year.
The latest compensation information is in Carilion's federal tax forms for the fiscal year ended Sept. 30, 2009, which were filed in August. The Internal Revenue Service requires nonprofit health systems to include the most recent W-2 wage information for the highest-paid employees. In Carilion's case the information dates to 2008.
CEO Dr. Ed Murphy earned the most at $2.1 million, which included a base salary of $890,000 and $513,000 in incentives and bonuses, along with deferred compensation and other benefits. In 2007 he earned $2.3 million.
Murphy also earns a retention bonus to keep him from leaving Carilion for another job. Murphy said during a recent interview that while he serves at the discretion of the board, he has no plans to leave or seek another position.
While Murphy's overall compensation tops the average for chief executives at similar sized health care systems, his base salary is on par with the industry. The comparison comes from an annual compensation survey done by Sullivan, Cotter and Associates for the magazine Modern Healthcare.
In the August 2009 issue, Modern Healthcare reported the median base salary for CEOs of health systems with net revenues more than $1 billion in 2008 was $884,300. The magazine said the average total compensation for the year, excluding deferred payments, was $1.2 million. Omitting Murphy's $451,152 in deferred compensation, he earned about $1.6 million. He also earned $142,592 that was tied to a pension and $85,648 in nontaxable benefits such as his health insurance.
"You have to remember Carilion is a very complex organization with a lot of different working parts that require a certain level of expertise," said Carilion spokesman Eric Earnhart. "And that makes having a stable leadership all the more important."
Those in leadership positions at the clinic, including doctors, typically earn a base salary and then are eligible for bonuses based on a scorecard that includes how well the collective organization has achieved its goals. It includes such criteria as meeting certain objectives in finances and in health care quality.
"There is an incentive to improve the system across the board," Earnhart said.
Carilion has a compensation committee that reviews the packages annually, typically in October. For 2008, the committee relied in part on a report from an outside consultant who specializes in compensation at health care organizations, Carilion told the IRS. This report included a comparison of total compensation, base salary, bonuses and benefits at peer health organizations.
Like Murphy, both Carilion's chief financial officer and chief operating officer also saw their salaries lag behind what they had previously earned. The clinic's chief medical officer, however, saw his income rise.
For 2008, CFO Don Lorton's earnings dropped nearly 13 percent to $750,930. COO Nancy Agee's total compensation fell 21.7 percent to $623,514. Chief Medical Officer Dr. Mark Werner saw his compensation package grow almost 12 percent to $646,519.
All three, however, had the identical base salary of $424,200 and bonus of $54,600 in 2008. The IRS changed the way compensation is reported, and the breakdown of base salary and bonus incentives is not available prior to this latest report.
For 2008, Modern Healthcare reported the median base salary at a system with net revenues of $1 billion or more was $572,400 for the COO, $410,000 for the CFO and $452,100 for the chief medical officer.
The Carilion tax filing also includes salary information on one of the area's newest health care leaders, Dr. Cynda Johnson. Hired in November 2007 as the founding dean of the Virginia Tech Carilion School of Medicine, Johnson earned $488,000 during her first full year on the job. This is the first time her salary information has been made public, as she has previously declined to share it.
Her compensation package included a base salary of $401,135 and bonus and incentives of $75,763.
The medical school, which opened for its first class in August, is a joint venture of the clinic and the Virginia Tech Foundation. Johnson and others at the medical school are employees of Carilion for the time being; however, the foundation does reimburse Carilion for part of her salary, Earnhart said. He did not know how much of her salary is covered by the foundation.
Earnhart said the employment arrangement will likely change in the future as the medical school becomes more established.
