After more than a month of negotiations, Erlanger trustees reversed a previous vote and approved a controversial $728,000 severance package for outgoing CEO Jim Brexler.
Trustees voted 4-4 against the same severance package in December but voted 5-4 to approve it during a 30-minute meeting Monday morning.
Board Chairman Ronald Loving said the vote allows trustees and the hospital to put Brexler's tenure behind them and move on to pressing issues of improving profitability at the hospital.
The vote comes at a time when Erlanger has lost more than $6 million over five months and asked employees to take time off this year to cut labor costs.
The approved agreement provides 15 months of severance for Brexler, worth about $713,000. He also keeps his Erlanger health coverage for 18 months, paying his employee portion, a benefit worth about $15,000.
"The 15 months is within the general boundaries of what severances are paid for CEOs for this size and nature of the organization, and also this would bring closure to this item," Gregg Gentry, Erlanger's vice president for human resources, told trustees during Monday's meeting.
The hospital announced Brexler's retirement in November. In December, the board approved a resolution to accept his resignation.
Board members have been divided deeply about Brexler's severance package. Some say his performance did not warrant one, while others said his contract left them with no option but to approve it.
Much of the discussion has taken place behind closed doors, as trustees met with their lawyers to determine their legal options.
Before the 9:30 a.m. public board meeting Monday, trustees met in a 7:30 a.m. planning committee meeting and an 8:30 a.m. legal meeting.
Several trustees have declined to discuss their attorneys' advice on the severance package, citing client-attorney privileges.
Trustees Michael Griffin, Donnie Hutcherson, Dr. Charles Longer, Dr. Phyllis Miller and Kim White voted for the severance package, while Richard Casavant, James Worthington, Jennifer Stanley and Russell King voted against it.
Brexler's contract stated that, if he is let go without cause, he will receive 18 months' pay and benefits as severance. If he is fired for cause, he's entitled to nothing. Other scenarios would apply if he voluntarily terminated the contract.
Although Brexler was not fired, trustees who opposed the package said they would have had cause to fire him. Trustees have cited a survey of Erlanger physicians, which showed doctors were unhappy with Brexler's leadership.
Erlanger has not released the survey.
"I think he ought to be terminated with cause," Casavant said during the meeting. "It's difficult when you just listen to attorneys and you hear a lot of opinions about the legalities and how it might wash one way or another. But I think it is important to remember this is also a management question."
Casavant noted the hospital was saving $1.4 million by asking some employees to take 12 days off before March, money that will be used to pay Brexler's severance.
"That's how employees are going to view it. I think this agreement is very one-sided," Casavant said.
Worthington echoed Casavant.
"I am very troubled with this document. I think had we taken the time to search for cause, we would have found an abundance of reasons why we could take action based on cause and terminate accordingly."
Longer disagreed, saying Brexler's contract required they pay the severance.
"The award is actually less as then might be construed as dictated under the contract," he said. "I've not seen anything to say that the contract is no longer valid, so if we say the contract is valid, then it would result in this resolution."
Despite the divided vote, Loving said the board will be united in supporting interim CEO Charlesetta Woodard-Thompson and finding ways to address Erlanger's financial problems.
"We are 100 percent united in support of our interim CEO and working on improving our numbers," Loving said after the board meeting.