Lawsuit raises questions on Norton Healthcare compensation

How much money should the CEO and other top executives at a modest healthcare system in a city of 250,000 receive?

That's the question posed in a lawsuit against current Norton Healthcare CEO Stephen A. Williams by a Louisville, Kentucky charity that claims its contributions to Norton were used to line the pockets of its top executive staff. Norton collects $6 million a year from the Kosair Charities to operate the affiliated Norton Kosair Children's Hospital, according to the Louisville Courier-Journal.

Kosair filed the suit last May, the newspaper previously reported. Norton has claimed Kosair has fallen behind on its payments to the healthcare system, and has since countersued.

Williams earned an average compensation of $3.5 million a year between 2011 and 2013, based on the federal tax returns that Norton filed, the newspaper states. Chief Operating Officer Russell Cox was paid $1.5 million annually over that same time period and Chief Financial Officer Michael Gough, $1.2 million. Both were also guaranteed future annual compensation well into the six figures, the newspaper reported.

Williams' average compensation during that period was more than what the CEOs at 20 of the 25 top grossing nonprofit hospitals in the U.S. received in 2012, according to the Courier-Journal. All of those providers were bigger than Norton.

Some former Norton employees told the Courier-Journal that the compensation is "incongruous." But others say such pay is required to retain top executives, particularly at a system such as Norton, which operates five hospitals and has annual revenue approaching $2 billion.

CEO pay has been rising significantly faster than other C-suite positions in hospitals, according to data by the Hay Group.

Hank Robinson, a Norton trustee who chairs the system's finance committee, told the Courier-Journal that Williams' pay is "very fair, very competitive and appropriate." He added that Norton uses an outside firm to compare the compensation at 66 other hospitals and hospital systems, and that the pay is set at the 65th percentile of that group--a fairly common practice among hospitals for setting pay.

To learn more:
- read the compensation Louisville Courier-Journal article