Sanford Health paid its former CEO $49 million, explaining
Former Sanford Health CEO Kelby Krabbenhoft’s $49 million bonus this week has attracted attention, but it is mainly the product of a retirement plan in the 1990s, which was common when he started.
Most of the funding-nearly $30 million-came from a rarely used but typical retirement plan in 1996, when Krabbenhoft first took the helm of the health system in Sioux Falls, South Dakota. Most CEOs of that era have long since retired.
Another 15 million US dollars came in the form of severance pay. If Krabbenhoft were fired, he would not receive this money.Krabenhoft Step down a year ago After saying that he will not wear a mask at the height of the global pandemic. As Sanford explored the merger with Intermountain Healthcare, the chaos that followed followed. Sanford cancelled the deal About a week later.
Theo Sharp, senior client partner of Korn Ferry, said: “To be honest, this does involve the issue of whether he should be fired for any reason, which means he won’t get the $15 million.”
If so, Krabbenhoft can still receive a pension. Sharp said that severance pay is usually three times the salary and bonus of executives, which is consistent with Krabbenhoft’s statement. His 2020 salary is 3 million U.S. dollars, plus 2 million U.S. dollars in bonuses and incentives.
Most of Krabbenhoft’s windfall came from supplementary executive retirement plans. Sharp said they are no longer common in for-profit or non-profit health systems. The purpose of the SERP is to allow companies to contribute to executive retirement plans that exceed the federal ceiling. It is usually regarded as a retention strategy.
Sharp said: “For a long time, if your basic salary is high, these people will become a lot.” “So I’m not surprised at all actually. This is just the nature of this SERP.”
Few health system CEOs can match Krabbenhoft’s tenure. One close is Wayne Smith, who has been the CEO of the investor-owned community health system since 1997 until the end of 2020.
Like Krabbenhoft, Smith is also preparing to receive a huge bonus after retirement.His SERP is Worth nearly 50 million U.S. dollars At the end of 2019, Smith did not retire Resign as CEO; He became the executive chairman of CHS.
In other words, it is difficult to find outgoing non-profit healthcare system CEOs whose salary matches Krabbenhoft.
Dr. David Feinberg, who Leaving Geisinger Health System in early 2019 After serving as CEO in 2015, his total compensation for the year ended June 30, 2019 was US$4.8 million, of which US$3.3 million was his basic salary.
Geisinger’s revenue in 2020 is more than 7 billion U.S. dollars, while Sanford’s revenue is 6.7 billion U.S. dollars. However, Feinberg’s term at the helm of Geisinger was much shorter than Krabenhoft.
Kevin Lofton, the former CEO of CommonSpirit, Who will retire on June 30, 2020, Earned $5.6 million in the year ended June 30, 2020. Although Loveton has only served as the co-CEO of CommonSpirit since its establishment in early 2019, he has been the CEO of the Traditional Catholic Health Initiative since 2003. CommonSpirit’s annual revenue exceeds 30 billion U.S. dollars in revenue.
Anthony Tersigni has been CEO of Ascension for more than 15 years, a non-profit Catholic system with 140 hospitals in the north.he Resigned in June 2019 He became the chairman of Ascension’s investment department in the following month. In the year ending June 30, 2020, Tersini earned $10.6 million, surpassing his successor at the helm of Ascension. Ascension’s annual revenue exceeds 24 billion U.S. dollars.
Sanford emphasized in a statement that most of Krabbenhoft’s compensation is contractually stipulated as part of a retirement plan. The system stated that the payment ended its financial obligations to Krabbenhoft.
The system said: “We look forward to continuing our journey in the next chapter of Sanford Health, with a focus on our employees and their commitment to bringing life-changing care to the communities we serve.”