US healthcare executives hit pay jackpot – Evening Herald please note

BMJ 2011; 343 doi: 10.1136/bmj.d8330 (Published 29 December 2011) Cite this as: BMJ 2011;343:d8330

Janice Hopkins Tanne

Author Affiliations

Healthcare and pharmaceutical executives were four of the top 10 best paid executives in the United States in 2010, according to a report by GMI, an independent research firm that surveyed more than 2600 companies.

Pay for chief executives increased by 27% in 2010, the firm said. No bankers were on the top 10 list. Take home pay, the amount executives pay tax on, included annual compensation, increases in pension plans, profits from exercising stock options, and some other benefits, GMI said.

Several of the executives retired during 2010. Despite their high pay, in several cases the share prices of these chief executives’ companies declined during their time in office.

John Hammergren, chief executive of the drug distributor McKesson Corp, was the top earner, with total remuneration of $145 266 971 (£94 340 000; €112 730 000). According to GMI, he exercised 3.3 million stock options for a profit of $112m. In addition his retirement benefits grew by $13.5m. His also received $1.6m in salary. If he were to be fired, he would receive $469m in severance pay.

Second highest in pay was Joel Gemunder, chief executive of Omnicare, a geriatric pharmaceutical care company that serves nearly half a million residents in more than 5500 long term care facilities in 37 states. He earned $98 283 242 when he retired in 2010. That sum included cash severance pay of $16m.

Fifth highest paid boss was Thomas Ryan, head of the CVS Caremark pharmacy chain. He received $68 079 823, which included a $28m profit on his options.

Ninth in pay was Ronald Williams, chief executive of the Aetna health insurance firm, who retired with a final pay cheque of $57 787 786.
That included a $50.4m profit on his stock options.

By comparison, the pay of top hospital executives seems small. Herbert Pardes, who is retiring as head of New York-Presbyterian Hospital, the city’s largest hospital, earned $1.7m in salary, plus a $1.9m bonus and $648 686 in other compensation. Other New York hospital executives also received substantial pay, according to the New York Post. Linda Brady of Kingsbrook Jewish Medical Center received $736 481 in salary, a $241 090 bonus, and $3.2m in retirement benefits; Kenneth Davis of Mount Sinai Medical Center received a $1.2m bonus. Dean Harrison, chief executive of the Northwestern Memorial Healthcare System in Chicago, received $10.2m in 2010, including a $7.5m retirement fund payment. The national average payment for hospital chief executives is $630 000.

In 2010 the median US household income was $49 445, a 2.3% decline from 2009. The nation’s poverty rate was 15.1%, the third consecutive annual increase in the poverty rate. The number of people without health insurance increased from 49 million to 49.9 million.