Tuesday, January 12, 2010

Chit-chat: 'There are more ways to compensate CEOs and not report it than a camel has fleas'

John Curry, 1/11/10: Rich...I hear what you are saying!
Rich DeColibus, 1/11/10:
This is lawyer heaven. There are more ways to compensate CEOs and not report it than a camel has fleas. Not only are there non-profits, there are also not-for-profits, which is not the same (teacher unions, for example, are not-for-profits). It's difficult to actually compare CEO salaries because there are so many hidden ways to shovel money at CEOs. The best way is to use IRS data since those involved are less inclined to cheat the IRS than anybody else. Frankly, I can't understand all these bloated compensations; the way I figure it, no human being could possibly be worth more than a million to society in general; anything over that is wasted benefit society loses on. The best thing that could happen is for Congress to pass a law which said the stockholders had to approve any salary and other compensation before it became applicable. That's going to happen roughly when the moon falls on the earth.
John Curry, 1/10/10: good idea...I'll pass this one on to Rich...the guru of the Top 10 lists!
Linda Meinelt to John Curry, 1/10/10:
I think we need to come up with a new definition for "non-profit." Let's ask Rich, who does the top 10, to come up with one!
From John Curry, January 10, 2010
Subject: How does $2,900,000 annual salary for a CEO of a "non-profit" sound?
CareSource changes how it reports salaries to IRS, showing CEO earned $2.9M
By Jim DeBrosse, Staff Writer
Dayton Daily News, January 9, 2010

DAYTON — CareSource is the eighth largest Medicaid HMO in the country, and Chief Executive Pamela Morris is paid accordingly. But until its most recent nonprofit IRS filing, it was difficult to determine just how much Morris was being paid.

In 2006, no salaries were reported to the IRS because CareSource’s top executives were compensated through a for-profit arm created to expand the HMO’s business footprint into Michigan. And in 2007, CareSource reported that its top five executives earned a total of $3.2 million from its for-profit arm but did not provide individual compensation totals.

Nonprofits are required to file annually with the Internal Revenue Service. The form — called a 990 — is often the only source the public has on a tax-exempt organization’s financial information.

In its 990 for 2008, CareSource reported individual salaries of its top managers, with Morris earning a total of $2.9 million. That ranked her executive pay as the third lowest among Ohio’s seven major Medicaid plans.

Morris said all CareSource employees were paid through the for-profit arm in 2006 and 2007 because tax counselors advised against splitting pay between nonprofit and for-profit divisions. She also said information on salaries was available through the Ohio Department of Insurance.

“We have complied with all IRS regulations,” she said.

Failing to report executive salaries may have been legal, but it was a poor decision when health care costs are soaring, said Cathy Levine of the Universal Health Care Action Network of Ohio, a consumer advocacy group. “The only way we’re going to get quality, affordable health care for everyone is to have full transparency.”

Morris’ 2008 compensation included $1.5 million in bonuses and incentives and marked a 230 percent increase over her reported pay of $877,000 in 2005. In that time, CareSource grew by 134 percent from total revenues of $770 million to $1.8 billion, IRS filings show.

Ellen Leffak, chairwoman of the CareSource board, said Morris’ pay reflects the salaries of her for-profit competitors, who might have lured her away. “Our chief executive has given us outstanding service” for 24 years, Leffak said.

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