Nonprofit hospitals skimp on charity while CEOs reap millions, report finds
CEO salaries should be understood in relationship to the resources that they control. For example, this CEO chose to spend $85M on travel nurses to counter the union strike happening at a hospital in their network. Presumably the CEO thinks that this gamble is worth it in forcing the union’s hand.That may be a terrible decision, but it shows the extent of resources a CEO of a $6bn organization commands. This is one choice out of tens to hundreds of 8-figure choices that this “super manager” will make in a year.If you’re on the board of an organization like that, settling for a second-best CEO to save a 7-figure sum just doesn’t make sense.I raise this for two reasons:1) I find that people have no concept of how to consider whether or not executive pay is reasonable. One of my neighbors was outraged that our Mayor makes $450k. “Could she really be working 6x harder than me?” But our mayor oversees thousands of employees and makes decisions that influence hundreds of millions of dollars of spending. I’d consider her quite underpaid in proportion to what she manages.2) Shaming organizations into lowering exec comp probably won’t work: there’s a strong economic incentive to pay competitively. Just bend the income tax contribution curve so that individuals who make more continue to pay more.