Editorial Editorial (April 22, 2005)

Fringes add up for hospital CEO

Finally, after the Voice filed a lawsuit and two public records act requests dating back to December of last year, El Camino Hospital CEO Lee Domanico has made public his total compensation package for the last fiscal year. The information adds an additional $237,000 to the CEO's compensation package, pushing the one-year total to more than $900,000 last year.

The final release apparently marks the end of the hospital's resistance to complying with the state's public record laws. In a settlement a few weeks ago, the hospital agreed to pay all court costs in the public records suit filed by the Voice. Domanico provided his information in the style of federal Form 990, and said the top five hospital executives, including himself, would provide their 2004-2005 compensation on the form beginning this November, or at the latest in May, 2006 if an extension was requested from the IRS.

The decisions represent a victory for hospital district residents of Mountain View, Los Altos, Los Altos Hills and Sunnyvale, who now will have much more information available about how much the top executives earn.

In Domanico's case, there is no doubt that he has done an excellent job running El Camino Hospital. Since he was hired in 2000, the hospital has reversed a money-losing trend and during the last fiscal year recorded a $20 million profit. In addition, several respected ranking systems have found patient and employee satisfaction very high when compared to similar institutions.

The publicly-elected hospital board of El Camino also holds Domanico in very high regard, awarding him one of the top salaries in the country to oversee the 395-bed hospital and its nearly 2,000 employees. His total compensation package was valued at $939,634 last year, including $110,000 in one-time relocation expense. In a meeting with the Voice last week, Domanico asserted that his base salary and bonus package are "in the ballpark" with CEOs who run similar-sized hospitals around the country.

Domanico said the board sets his compensation based on information from many sources, including a survey by Clark Consulting, which shows his earnings are in the 75th percentile of a group of CEOs who manage similar, stand-alone hospitals around the country. In the Bay Area, only Nancy Farber, CEO of the 337-bed Washington Hospital in Fremont, works for a similar institution. She earned $408,471 in base pay last year, compared to $429,136 for Domanico, although no details are available on her total compensation package.

In Domanico's case, it is fringe benefits -- $124,449 in "flex benefits" such as insurance and $113,284 in a supplemental retirement plan -- that very likely sets his compensation above most other executives in his category. Unfortunately, when salary comparisons are published, fringe benefits are not included, and so it is virtually impossible to determine how the El Camino CEO's total compensation ranks with others in the area or elsewhere in the U.S.

At least now hospital district residents know that Domanico's regular compensation in 2003-2004 totaled more than $800,000 and is certainly more this year. And while we agree that the CEO is doing an excellent job, it is hard to believe that it is necessary to pay him such lavish wages and perks. We urge voters to take a close look at how their board members stand on such lavish compensation agreements during the next election cycle, and challenge them to support their decision. Despite Domanic's performance, we question whether it is necessary to pay El Camino's CEO up to $900,000 a year, far more than executives at any other public institution, from city hall to the governor's mansion.

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