valley medical center executive compensation study november 23, 2009 presented by: john hankerson...
TRANSCRIPT
Valley Medical Center
Executive Compensation Study
November 23, 2009
Presented by:John Hankerson1301 Fifth Avenue, Suite 3800Seattle, Washington 98101-2605206/504.5965 or 206/504.5545
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Scope of Analysis
Milliman evaluated the total compensation of the Chief Executive Officer:
Milliman’s assessment included a comprehensive analysis of total compensation and its components (base salary, annual incentives, long-term incentives and major benefits) for this position.
Name Position
CurrentBase
Salary
LastAnnual
Incentive
Actual Total Cash
Rich Roodman CEO $587,800 $0 $587,800
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SAO Summary Data
75.9%86.4%98.3%$774.8$680.0$597.7$587.8Total Cash Compensation
$182.9$161.9$143.5$0.0Actual Annual Incentive
30.9%31.2%31.6%0.0%Actual Annual Incentive as a % of base
99.3%113.5%129.4%$591.9$518.1$454.2$587.8Base Salary
75th %50th %25th %Mkt 75th
%Mkt 50th
%Mkt
25th %2009
CompCEO - Valley ($309.3M) Systems
Overall CompetitivenessBase Salary
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Data Sources Milliman used the following published surveys to evaluate CEO compensation: Mercer Executive
MSA Healthcare Executive
Hay Hospital Report
Mercer Integrated Health Networks
Sullivan Cotter Healthcare Management
Clark Consulting Healthcare Executive
In addition Milliman collected information on CEO compensation from the following
“regional” organizations:
Evergreen Medical Center Southwest Washington Medical Center Multicare Health System Virginia Mason Medical Center University of Washington Medical Center Legacy Health System
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Base Salary Comparisons
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
Ba
se
Sa
lary
VMC Base Mkt 50thBase
Reg Hosp50th Base
VMC Base Mkt 75thBase
Reg Hosp75th Base
VMC Base Salary vs. Market
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Total Cash Comparisons
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Ba
se
Sa
lary
+ In
ce
nti
ve
VMC TCC Mkt 50thTCC
Reg Hosp50th TCC
VMC TCC Mkt 75thTCC
Reg Hosp75th TCC
VMC Base + Incentive vs. Market
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Cash Comparison Table
Base pay among the regional organizations ranges from a low of $477,372 to a high of $895,000. Total cash (base plus annual incentive only) ranges from a low of $477,372 to a high of $1,326,061.
VMC
Market
Median Market 75th
VMC vs.
Market
Median
VMC vs.
Market
75th VMC
Market
Median Market 75th
VMC vs.
Market
Median
VMC vs.
Market
75th
$587,000 $502,768 $596,330 117% 98% $587,000 $619,484 $762,188 95% 77%
Regional Organizations: $662,500 $771,098 89% 76% $807,700 $1,139,028 73% 52%
CEO Valley Medical Center vs. Published Market Data
Total Cash CompensationBase Salary
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Annual Incentive Comparisons
Annual Incentive as a % of Base Salary
23%
27%
32%
40%
0%
10%
20%
30%
40%
50%
60%
CEO
Per
cent
of B
ase
Sal
ary
VMC Target Market Median Target Market Median Actual Regional Avg Actual
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Annual Incentives
VMC establishes a target bonus of ~32% (of base salary) for the CEO and all other executives. The table below contains typical market incentive levels in the industry for the CEO:
– Annual incentive opportunity should always be calibrated with base salary to produce competitive total cash compensation, appropriate for the individual’s and the organization’s performance.
– In addition, total cash compensation should be aligned with the board’s pay philosophy and the magnitude of any long-term compensation.
Position Target Maximum
CEO 40% 80%
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Other Compensation It is our experience that several factors should play a prominent role in the
process used to develop appropriate compensation and benefit plans for
executives. Market practice information can provide a useful frame of reference but
prevalence of a particular practice does not determine appropriateness. In other
words, doing what everyone else is doing is not necessarily the best approach for a
particular organization or situation. We believe that: Specific plans should be adopted because they meet a critical business need
Plans should always work to further the short and long-term objectives of the organization
Plans should reflect good business judgment of the situation and integration with market practices
Plans together should create a total compensation package that:
– Improves performance
– Improves retention
– Aligns with short and long-term business strategies
– Assists with attracting executive talent
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Total Compensation Comparison
VMC Mkt 75th*
Base salary $587,000 $596,330
Last bonus $0 $259,420
Car allowance $7,212 $9,000
Retention $239,717 N/A
SERP $157,342 $89,449
Life insurance $7,835 $8,500
Disability $4,603 $5,000
Long-term incentive $0 $238,532
Financial assistance $17,315 $20,000
Total $1,021,024 $1,226,231
*The numbers reflected here are individual values for each element and do not reflect the actual aggregate practice of specific organizations or executives
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Detailed Market Data
Chief Executive Officer
Survey Name Survey Job Title Scope Base 25th Base 50th Base Avg Base 75th TCC 50th TCC 75th TCC 90th
17. Mercer Executive CEO Healthcare; <5000 ees $402,302 $413,912 $465,292 --- $483,223 $556,097 ---
18. MSA Healthcare Executive CEO System Net Rev: $300-$500M $488,510 $507,016 $517,361 --- $600,580 $699,776 ---
19. Hay Hospital Report CEO Net Rev: $250-$500M $546,236 $541,295 $581,920 $632,426 $541,295 $765,938 $892,313
20. Mercer Integrated Health Networks CEO Net Rev: <$400M $551,729 $717,823 $852,421 --- $878,399 $1,162,424 ---
21. Sullivan Cotter Healthcare Mgmt CEO Net Rev: <$500M $460,085 $463,085 $515,936 --- $535,438 $602,945 ---
25. Clark Consulting Healthcare Exec CEO Net Rev: $250-$750M $567,747 $577,522 $645,049 --- $677,970 $785,947 ---
Average: $502,768 $536,775 $596,330 $632,426 $619,484 $762,188 $892,313