Gov. Bill Haslam on Thursday signed legislation overhauling the Erlanger Board of Trustees, his office said. The legislation introduced by Hamilton County lawmakers whittles the board from 12 to 9 members and makes the board self-perpetuating, instead of requiring political appointments.
DETAILS OF CONTRACT:
• $680,000 salary, with eligibility for incentive compensation after July
• $50,000 sign on bonus
• 18 months severance if terminated without cause
• Supplemental retirement pay
• Compensation for temporary housing and house-hunting and house-selling trips
Erlanger's new CEO will make a $680,000 salary and receive a $50,000 sign on bonus, according to the contract unanimously approved Thursday night by the hospital's board of trustees.
Kevin Spiegel will take the helm of Erlanger on April 1 with a contract that will initially run three years, with automatic one-year renewal afterward.
He will make the most of any Erlanger CEO in history -- and about 18 times the average Chattanoogan's pay -- but chief administrative officer Gregg Gentry said the figure hovers below the mid-range of what other hospitals of Erlanger's size and scope are paying their top executives.
The hospital worked with independent compensation experts SullivanCotter and Associates to work out appropriate salary and benefits. CEO salaries across the nation are rising because of the increasing changes and complexities facing the health care industry and higher rates of CEO turnover, Gentry said.
"$600,000-800,000 is the general range that you would see for our type and our size organization, with $700,000 as the midpoint," said Gentry. "Our compensation philosophy is to work toward that median."
Spiegel's predecessor, Jim Brexler, was paid $550,000 annually. Erlanger's current interim CEO, Charlesetta Woodard-Thompson, makes $486,737.
Trustee Jennifer Stanley voiced concern about the significant pay increase, saying that it "could seem like a really big jump" to employees of Erlanger and to members of the community.
"I want to encourage the future board take a hard look at salaries for everyone else here at Erlanger," she said. "I think we're pretty well aware that there hasn't been as big a jump in base salaries as we're seeing on the market for CEOs over the last several years."
The board approved Spiegel in a 5-3 vote on Feb. 18, finishing a search process that began after former CEO Jim Brexler stepped down under pressure from the board in December 2011.
Spiegel has been CEO at Methodist University Hospital, part of Methodist-Le Bonheur Healthcare in Memphis, for the past five years.
A representative with Methodist, a private, nonprofit system, said last week that details of Spiegel's contract there are confidential. But tax forms from 2010, the latest year available, show that Spiegel earned a base salary of $355,730. Additional compensation, bonuses and benefits boosted his total compensation package to $560,974 that year.
After the meeting, trustee and Erlanger Chief of Staff Dr. Dan Fisher said the financial improvements Spiegel has brought to Methodist prove the new CEO's worth.
"You're going to have to look at what are the market forces at the time, and I think that's what we've done," Fisher said. "I think this is what it takes to get a high-class guy. And I think he's high-class."
Woodard-Thompson, who was not at Thursday's meeting, will remain in place as the interim CEO until Spiegel's arrival.
Thursday's meeting could be one of the board's last under its current format, as a private bill that will overhaul Erlanger's current board was signed by Gov. Bill Haslam on Thursday. The bill still needs the Hamilton County Commission's two-thirds approval before it is implemented.
At the commission meeting Thursday morning, Commissioner Tim Boyd continued to express frustration over the bill's format, saying the Tennessee General Assembly has too much power over how the initial board -- which will eventually be self-perpetuating -- will be structured.
"We need to be very cognizant of this bill. It's going to set the tone for how Erlanger is run for years to come," Boyd said. "The fact that this commission is totally left out of that nominating process causes me grave concern."
With reporting contributed by staff writer Louie Brogdon.