High CEO pay based on performance, not greed, say defenders

Despite the mounting backlash against increasing healthcare CEO pay, attributing it merely to greed is an oversimplification, according to Becker's Hospital Review.

Defenders of high CEO pay levels claim the increases are due to a healthy stock market, and that the big raises correlated with U.S. stocks reaching all-time highs, according to the article.

"As the public cried for executives' pay to be tied to performance, that trend has very much happened," Kevin Scott, co-founder and CEO of Atlanta-based ADDO Institute, a branding consulting firm, said in a report on CEO pay in Business Insider. "And now, as their stocks are performing at very high levels, those CEOs are reaping the benefits."

"If you look at CEO pay compared to the average pay of people in the top 0.1 percent, it's about where it was 20 years ago--in line with that of lawyers and private-company executives, and less than hedge-fund managers," Steven Neil Kaplan, Ph.D., of the University of Chicago Booth School of Business, told Business Insider.

Meanwhile, a California initiative capping nonprofit hospital CEOs' pay fell short of the requisite number of signatures to make the ballot, the Post-Periodical reports. The initiative needed valid signatures from 504,760 registered voters, and would have limited nonprofit executives' annual compensation to that of the president of the United States, which is $450,000, according to the article.

In a move to promote transparency and stave off the backlash, MultiCare Health System, the largest private employer in Tacoma, Washington, released executive pay data yesterday, according to the Tacoma News-Tribune. MultiCare's top six executives made more than $500,000 each last year, led by President Diane Cecchettini, whose base salary, incentives, non-taxable benefits, bonuses and deferred compensation totaled more than $1.4 million.

Whatever the reason for high CEO compensation, some providers seek to offset the perceived public relations problems it causes. A Texas hospital used executive bonus funds to instead increase frontline employees' pay, FierceHealthcare reported on Tuesday.

To learn more:
- read the Becker's article
- here's the Business Insider report
- here's the Post-Periodical article
- read the News-Tribune article