Published May 9, 2016
By George Bosworth, M.D.
Chairman, Floyd Healthcare Management Inc.
In light of recent public criticism about Floyd CEO and other executive compensation, as Chairman of Floyd Healthcare Management Board and as Chairman of the Compensation Committee, I want to make clear how and why we set compensation at the levels we do.
The changes at Floyd Medical Center in recent years have been nothing short of amazing. President and Chief Executive Officer, Kurt Stuenkel, has led the vision of a very talented team that has been responsible for the many positive changes that have occurred with our organization. These improvements include the implementation of much-needed clinical programs and services, outstanding results in quality performance and patient safety, employee engagement and patient satisfaction.
In light of Floyd’s achievements under Mr. Stuenkel’s leadership, the Compensation Committee and the Board of Floyd Healthcare Management Inc., want to do all we reasonably should do to maintain the leadership and momentum we have experienced with our CEO. As a board, we are well aware that recruiters are aggressively seeking outstanding CEO talent.
As you look at what has been accomplished in recent years at Floyd, it has truly been a transformation. The facility improvements, the quality awards, the customer satisfaction awards and the recognition of Floyd as one of the top places to work in the nation all demonstrate that our leadership has done a tremendous job in managing this organization.
In addition, Floyd has an unusual financial burden, being one of the top safety-net hospitals in the state. Finances are being managed well in spite of the fact that Floyd has such a high uncompensated care burden. Financial results in the last several years have continued to show positive growth and Floyd experienced record performance in 2015.
All of these strides in customer service, employee satisfaction, finances, quality and strategy have come because of leadership. As a board, we recognize that we want to retain the leadership that we have, and this necessitates the compensation philosophy that we have implemented.
With the expert advice of nationally recognized healthcare compensation experts, Willis Towers Watson, the Compensation Committee and the FHMI Board established a base pay policy for Floyd’s CEO as compared to similar organizations. In addition, an annual incentive plan was implemented, which can award a bonus if predetermined goals are met. The total bonus that can be earned is capped so that total base and bonus cannot exceed the 90th percentile. We review the base salary annually and update it to ensure competitiveness. We think this is important. The ability to earn a bonus is also important. Comparable organizations throughout Georgia and the nation have this feature. If performance meets and exceeds goals, an award is made.
One of our goals in our compensation approach is that if another organization were to approach our CEO with an offer, we want our existing compensation package to be attractive so that another offer is not so enticing. In addition, retirement programs have been established to encourage retention to retirement. Annually, actuaries with Willis Towers Watson update retirement projections, and a contribution is made on Mr. Stuenkel’s behalf into a fund that will ensure that he receives a retirement package that is consistent with market practice. In the last few years he has vested in this benefit and is receiving this annually in cash. It is counted as income and is subject to taxes. This benefit is reported as income to him and on federal tax form 990.
With this CEO compensation package of base salary, incentive opportunity, a supplemental retirement program, and the perquisites that are normal and customary for a CEO, as a Board, we feel that we have done all that we should to maintain the leadership that has made Floyd one of the finest community hospitals in the region, and move us towards our goal of being among the top community hospitals in the nation.
|Floyd President and CEO 2015 Compensation Package|
|TOTAL CASH COMPENSATION||$972,998.00|
|Supplemental Executive Retirement Plan Benefit**||$677,830.00|
|401k Retirement Benefit||$15,900.00|
|Taxable Benefits (Perquisites)***||$8,505.49|
|TOTAL CASH AND BENEFIT COMPENSATION||$1,675,233.49|
*Contingent on the organization meeting goals for each of the five points of the Value Compass: Patient Satisfaction, Quality, Finance, Strategy and Employee Satisfaction
**The Supplemental Executive Retirement Plan is a deferred compensation agreement whereby Floyd agrees to provide supplemental retirement income to the CEO. The amount of the SERP is equal to 60% of the three-year average of the CEO’s total compensation. When paid, the benefits become taxable as income and tax deductible to Floyd.
***Perquisites are benefits provided in addition to traditional benefits such as retirement and bonus pay. These taxable benefits include personal use of country club and personal use of auto allowance.