HELENA — Top executives at Montana’s major hospitals are paid handsomely for their work, but they often get an additional pay perk if they stick around long enough: Deferred compensation.
They also sometimes receive substantial payments into their retirement funds, on top of their six-figure salaries.
In Montana, retirement payments and deferred compensation, the latter of which executives can’t collect unless they stay at the job for a set period of years, can total anywhere from a few thousand dollars to more than $200,000 in a single year for a single hospital executive.
The amounts tend to be higher at Montana’s largest hospitals.
Billings Clinic CEO Nicholas Wolter received more than $150,000 in annual deferred compensation and retirement payments from 2008-2010, and CEO John Goodnow of Benefis Health System in Great Falls has averaged $165,000 a year in these set-asides for the past five years.
Heather Palermo, spokeswoman for Benefis, said the hospital considers deferred compensation to be an important “retention incentive” to keep talented executives on board.
“The organization is best served by not having its good executives leave, which is the reason to establish deferred comp as a retention incentive,” she said.In 2010, Benefis, on the advice of its private-compensation consultant, required its executives to cash out deferred comp and retirement payments from some prior years, to comply with expected exchanges in federal and state laws and rules on these types of compensation.
The result was a $1.23 million payment to Goodnow, and payments ranging from $266,000 to $356,500 to five other top executives.
Benefis President Laura Goldhahn had a salary and bonus of $376,000 that year, and an additional payout of $331,000, for total compensation of $707,000. And, she booked another $83,800 in deferred comp and retirement payments.
Palermo said the executives at Benefis would have preferred not to receive the big payout in one year, requiring them to pay high marginal income tax rates on the amount, but they weren’t given a choice.
C.J. Bolster, a management services consultant who often works with hospitals, said about three-fourths of hospitals offer the benefits of deferred compensation and extra retirement payment to executives, for various reasons.
For example, federal rules limit the amount of contributions an employer can make to a “common core retirement plan.” Because executives earn high salaries, that limit can be easily reached, and the hospital board may design a different plan so its executives get the same proportion of retirement assistance as other employees, Bolster said.