By Molly Tanenbaum
The El Camino Hospital Board of Directors finally reached agreement on March 3 about how its compensation committee should be structured: with no doctors on it.
The board voted 4-1, with interim CEO Marla Gularte abstaining, to place Wesley Alles and Mark O’Connor on the two-person committee that determines CEO pay. The decision, however, was not a policy change for future compensation committees, only the current one.
“I thought the issue was skirted instead of dealt with,” said board member and cardiologist Dominick Curatola after the meeting. Curatola voted against the motion and was previously a member of the compensation committee with vice chair David Reeder.
Over the past four monthly meetings, the board has heard several consultants discuss whether or not physicians should be able to sit on committees that would determine the salary of their own CEO. Until last Wednesday, the board had been unable to pass a motion because several members had called for more education on recent changes in law, which are not as black and white for nonprofits like El Camino as they are for public companies.
Stricter laws now govern how public companies disclose financial information, and nonprofits have been following suit. The advice of some of the board’s invited guests — including the most recent one, health care lawyer Dan Roble — has recommended staying on the safe side and taking physicians off the compensation committee.
Roble presented an IRS sample conflict-of-interest policy to the board, which states, “Physicians who receive compensation directly or indirectly from the corporation … are precluded in membership on any committee whose jurisdiction includes compensation matters.”
According to Roble, the IRS recommends against physicians determining executive pay, but this is just a recommendation.
The motion that passed in the end was board chair Edward Bough’s last-ditch effort to end the discussion, by creating a new compensation committee made up of two non-doctors: Alles and O’Connor.
“I am intensely tired of hearing about the compensation committee,” Bough said. “I’m willing to just ignore the issue.”
His motion came in the middle of a different motion by Reeder proposing a policy change to remove physicians from the committee. While Reeder was the one to second Bough’s motion, he said he was also hoping for the board to take a firmer stance on the issue.
“I’m somewhat disappointed that the rest of the board doesn’t feel as strongly as I do that board members should not have divided loyalties,” Reeder said later in a phone interview. He said he believes that having a compensation committee of non-doctors would be “prudent” based on the consultants’ advice.
Curatola, however, was not convinced by the consultants brought in to advise the board on this matter.
“This is not the Ten Commandments,” he said. “They aren’t Moses or the Lord.”
Curatola would have preferred to keep doctors on the compensation committee, but with full, up-front disclosure of any potential conflicts of interest.
E-mail Molly Tanenbaum at mtanenbaum
