Is the Practice of Compensating Board Members on the Rise? Not among the Meds

Dollar.” Photo by Christophe Ducamp.

November 16, 2017; The Bulletin (Bend, OR)

Last year, we wrote a newswire about the trustees of Tampa General Hospital, who voted to pay themselves for board service at the healthy rate of $15,000 to $30,000 a year. Their decision to do so, they said, came only after a compensation consultant, there to do a periodic review of salary levels, suggested there was a “small but growing trend” in the direction of paying trustees. At the time, we said we would like to see the research on that.

Turns out there is no such research, nor is there evidence that paying board members makes for a better institution, notwithstanding the bleatings of NANOE. Yet, some would still have you believe they are part of a growing movement. Indeed, even as the organization faces up to a $35 million operating deficit, as staff suffer pay cuts, and as a full 102 positions are slated for layoffs, at the St. Charles Health System in Oregon, trustees remain unusually well compensated.

Let’s pause to consider that for a moment. St. Charles paid each of its trustees between $20,000 and $36,000 last year, placing it among less than 10 percent of nonprofit health systems which compensate their board members at all, according to the Governance Institute’s soon to be released latest survey of board pay. Even among those, most compensate their directors more in the range of $5000 a year. According to the survey, only about two percent of nonprofit health systems pay their directors $20,000 or more annually.

Furthermore, according to the Institute’s Kathryn Peisert, there is no increase in the proportion of nonprofit health systems that pay their directors. “Everybody hopes and thinks that this is going to be a trend that’s increasing, and that’s not what we’re seeing,” she said.

St. Charles’s trustees made a collective $293,000. It may not be a big add to that multimillion-dollar deficit, but it has its own expanded significance. Board member compensation is often justified with the argument that through paying trustees you get a better class of more skilled governors, but this has not been supported through research.—Ruth McCambridge