State to curb fat paychecks with executive compensation cap

State-funded providers could earn a maximum of $199,000 under the new pay cap New York proposed last week, to take effect Jan. 1, 2013.

Gov. Andrew Cuomo on Wednesday proposed the maximum for both nonprofit and for-profit providers who receive taxpayer dollars, hoping to curb extreme compensation levels. For example, the governor cited an unnamed provider who paid a CEO up to $2.2 million, plus $1 million in shareholder options. The proposed regulations would block providers from spending more than $199,000 of state funding for executive compensation or administrative expenses.

However, the rules do allow some wiggle room. If a hospital chooses to offer more compensation, it can do so from other sources but must stay within a compensation level below the top 25 percent in the market (which is determined through survey data or by a state agency). Providers also can apply for waivers for compensation that exceed the proposed limits.

The $199,000 pay cap applies to total compensation, the Associated Press reported. Officials in the Cuomo administration said they aren't exactly sure how many people will be affected with the change; in some industries, it may be 100 and in others, it could be thousands, according to the AP.

"These regulations are designed to ensure that New York taxpayers are protected and the public's money is spent efficiently and effectively," Cuomo said in a statement. "Our providers of services in New York State are the finest in the nation. To ensure public confidence in those hard-working providers that play by the rules, these regulations will allow the state government to identify and stop the few providers that pocket taxpayer dollars rather than use them to serve the public."

The public has a month and a half to comment before the revisions take effect next year, according to the AP.

New York isn't alone in closely examining exuberant pay levels for people at the top of the food chain. Although New York is perhaps one of the most aggressive in implementing statewide limits, other areas are closely examining the paychecks of executives, particularly at nonprofit hospitals, in recent news.

At Tampa (Florida) General Hospital, President and CEO Ronald A. Hytoff received $2.3 million in total compensation for the year that ended Sept. 30, 2010, ABC Action News reported. Similarly, hospital CEO John McConnell received $2.5 million last year at Wake Forest Baptist Medical Center in Winston-Salem, N.C., The Business Journal reported. And 18 hospital executives at Connecticut's 30 hospitals made more than $1 million in 2009-10, the Hartford Courant reported.

For more information:
- see the governor's statement
- check out the proposed regulations
- here's the AP story
- read the ABC News story
- see the Business Journal article
- read the Hartford Court article

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