Monday, September 26, 2011

Top 25 North Texas Non-Profits Executive Compensation

This week, the Dallas Business Journal (September 16-22, 2011) posted a list of the top 25 executive salaries in non-profit businesses in North Texas. The numbers are shocking!

The figures on total compensation come from the most recent fiscal year reported, and they include salary, bonus, benefits, and the ambiguous “other.” Of the top 25, there are thirteen health care organizations, primarily the hospitals and facility networks that fall under the auspices of non-profit status.

The top compensation package belongs to the CEO of Texas Health Resources, a large and growing network of medical facilities, currently owning 24 hospitals in the area. The compensation for the CEO with Texas Health Resources is reported to be $5,716,724, which includes a salary alone of over $5 million, and over one-half million in the category of “other.”

The total revenue for THR in the same time period was $334,944,000. In other words the CEO’s compensation equals about 1.7% of the organization’s total revenue. If you went to a THR hospital last year, and you and your insurance company were billed $10,000 for a short stay, Mr. CEO himself was paid $170 of it. This is a new definition of “obscene.” It also represents one decent paying 8-hour day of wages ($21.25/hr). And, this is just one example of one short-stay billing for one patient.

Texas Health Resources can also tout, if they want to show off their numbers, having positions five and fourteen on the DBJ top 25 list. Together, just among the top 25 executive salaries, THR paid out in total compensation of almost $7.5 million. This is roughly equivalent to the salaries of 43 U.S. Senators or 300 regular jobs at $25,000 annual salary. Swallow hard, and look at this next example!

Baylor Health Care System is one of the area’s most highly regarded medical operations. It is heard often, “If you ever get really sick, go to Baylor.” The DBJ top 25 list includes six executives within the Baylor system. The total compensation of these six executives is reportedly $4.85 million, roughly equivalent to the salaries of 28 more U.S. Senators.

Other Medical Facilities and Systems

Other top 25 executive salaries within the general category of health care are employed by Children’s Medical Center, Cook Children’s, and Methodist Hospitals of Dallas. Through the organizations of these five entities, including the aforementioned two, one would suppose, is the majority of health care distributed to citizens of North Texas. It is safe to assume, based on the THR statistic cited above, that one dollar out of every one hundred dollars the citizens of North Texas pay in health care goes directly into the wallets of a relative handful of executives.

It should also be mentioned, since we’re focusing on health care, that number 21 on the top 25 list is the President and CEO of the Dallas-Fort Worth Hospital Council whose total compensation is listed as $451,156. Sitting on the ledger beside revenue of $2.99 million, this chief executive receives about 15% of the fees and services they receive from member organizations, such as hospitals and other medical facilities.

The Dallas-Fort Worth Hospital Council describes their mission as (from their website):
• Creating innovative solutions through collaboration and coordination of efforts;
• Serving as advocates for day-to-day issues that affect hospitals, while balancing the demands of the region with state and national issues;
• Providing the most accurate, timely and comprehensive information to our members and other constituents; and,
• Improving the workforce numbers in our region.
Advocacy sounds a lot like lobbying. Guess who sits on their governing board? There are thirteen regional hospital executives who make up this board of trustees. Ten of the thirteen are in positions as CEO or president of their hospitals.

It’s Not Just Health Care

While health care executives dominate the DBJ’s top 25 list, there are some notable surprises: the Boy Scouts of America (#4 at over $1.2 million), Carter Blood Care (#6, the only woman in the top 10, $1.05 million), three institutions of higher education, the American Heart Association, the United Way, the YMCA of Metropolitan Dallas, The State Fair of Texas, two performing arts organizations, and the Dallas Convention and Visitors Bureau.

Altogether, the top 25 executive compensation packages amount to $26.5 million per year. This would roughly fund the entire salaries of the President of the United States, all 100 U.S. senators, and about 10% of the U.S. House of Representatives.

An Idea

It does not make sense that non-profits can pay this kind of money to top executives without being subject to the corporate taxation that for-profit companies must pay. It is a poor reflection on what it means to be charitable. It is UN-charitable and greedy. No, beyond that, it is shameful.

Many people believe that it is not the top executives who really get things done. Many of them are said to be the visionaries of the organization, the spiritual leaders, but how much should be paid for vision?

It is commonly believed that it is the number two’s and three’s, and the executive secretaries, who manage to make their organizations run effectively, that is, when they get out of the way of the mid-managers and lower-tiered employees who actually meet their customers.

So, what about this? Dismiss the top 25 executives in North Texas, let the two’s and three’s and the people who really get things done run these non-profit organizations, and use all that saved money to fund the Washington politicians’ salaries.

And, if some of the other regions in Texas, and maybe even other states, would pitch in on the same basis, maybe we could throw in the Cabinet and the salaries of the top bureaucrats in Washington who in spite of their alleged regulations are not really regulating much of anything in non-profit organizations.

Article first published as Executive Compensation in Non-Profit Organizations on Blogcritics.

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