Minneapolis-based Fairview’s recent string of operating losses didn’t stop its chief executive from receiving nearly $1.4 million in annual bonus and incentive pay in 2022.
The pay matches a national trend of nonprofits opting to provide incentive compensation even when financial performance fell short of targets, consultants say.
In November, Fairview Health Services pointed to its series of financial losses over a four-year period to illustrate why it can’t maintain current payment levels for academic medicine at the University of Minnesota.
According to a Star Tribune review, data for the most recent of those years, 2022, show Fairview’s pay increase fits with compensation jumps for the CEOs at three other large Minnesota health systems, none of which paid performance-based incentives during the previous year.
Consultants say nonprofits generally are concerned about retaining their top executives.
“Minnesota hospitals and health systems are facing unprecedented financial challenges that are testing the skills and resilience of even the most experienced leaders,” the Minnesota Hospital Association said in a statement. “Compensation is one way hospital boards — which represent their larger communities — are trying to keep good leaders in place, working 24x7 on this crisis.”
The Star Tribune’s annual report on executive compensation and financial performance at the state’s largest nonprofit groups examined pay data across 10 health systems and health insurers in 2022.
With more incentive pay in the mix, median compensation for the CEOs was $2.46 million, an increase of 25% compared with the previous year. Pay changes for individual executives ranged from -2% to 67%.