El Camino Hospital has done a lot in the last six months to make its operations more visible, including releasing the CEO’s compensation and that of other top managers.
And now it can take one more step to make sure the salaries and benefits of its most highly compensated managers are free from any conflict of interest.
At its meeting next month, the five members of the hospital’s publicly elected board will have the opportunity to redefine the eligibility rules for members of the compensation committee, which recommends the salary and benefits package of the CEO to the remaining board members. We urge them to do so.
Until recently, this committee was appointed by management, and then recommended the salary and benefits for management. And although no apparent conflicts surfaced under that system, now the board should name two of its members who are not affiliated with the hospital to this important committee.
The stumbling block to making this decision appears to be board chairman Edward Bough, a cardiologist who is resisting the move for immediate action and is requesting more information on the topic — despite the recommendations of both a consultant and a doctor who serves on the boards of two hospitals in Illinois and Pennsylvania. Both said the board should act to remove any hint of conflict from the compensation committee.
“If it ain’t broke, don’t fix it,” Bough told the board last week, disagreeing with member David Reeder’s opinion, who said “I don’t think we have the luxury to wait to do this.” Reeder is a program manager for Sun Microsystems.
In December, the board heard from consultant Jim Nelson, hired to give advice on how to determine the salary of a new CEO. He said physicians who work in the hospital don’t qualify as “independent parties” and have a potential financial incentive in setting the CEO’s salary.
We couldn’t agree more. The compensation committee soon will be busy setting the salary and benefit package for a CEO to replace Lee Domanico, who resigned and left last month for a new job in Portland, Ore.
If the committee is changed, it would mean that Dr. Dominick Curatola, also a cardiologist who sees patients at El Camino, would have to step down. None of the remaining board members, except Dr. Bough, would have a conflict.
As a public hospital, El Camino has a responsibility to conduct its operations in public. At the Feb. 1 meeting, League of Women Voters official Jane Turnbull, who last year challenged the board to become more transparent, said she was appreciative that the board was having the discussion about the compensation committee in public.
The board is on the right track, becoming more open about all its operations. It should follow through and remove any potential conflict of interest from its compensation committee, before the committee sets the salary of a new CEO.
