Executive Comp Throws Salt in Hospital’s 403(b) Wound

September 23, 2011 (PLANSPONSOR.com) – The Rhode Island Hospital union is balking over Lifespan executives’ salary, bonuses, and supplemental retirement contributions following the health systems announcement it is eliminating employer match contributions to its 403(b) plan.

Providence Business News reports that the non-profit’s Internal Revenue Service Form 990 shows Lifespan’s nine highest-paid executives received $9.4 million in total compensation in the last reported year, including $1.8 million in bonuses and $2.6 million in supplemental retirement contributions. Lifespan President and CEO George A. Vecchione received a total of $2.9 million in salary and benefits – including $853,024 in base salary, $522,051 in bonuses, and $1,485,197 in supplemental retirement contributions.  

Lifespan has recently announced a decision to cut the matching contributions to employees’ 403(b) plan for 2011 and eliminate the matching contribution for 2012. “We are angry, we feel disrespected,” said Helene Macedo, president of the United Nurses & Allied Professionals which represents 2,200 employees at Rhode Island Hospital, according to the news report.  

In response, Alfred Verrecchia, chairman of Lifespan’s board of directors, said because of the hospital system’s significant size and complexity, the board places a priority on recruiting and retaining a highly skilled leadership team who can manage in both good and bad times, with the goal of providing the highest quality care to patients.  

In explaining the rationale for reductions of Lifespan’s corporate contributions to employees’ retirement plans, Lifespan spokeswoman Gail Leach Carvelli said the effects of the current recession was the major cause, creating a need to reduce expenses. Lifespan made a choice to cut the corporate contribution to employees’ retirement plan in order to continue making investments in the hospital systems infrastructure, she said.  

Carvelli added that Lifespan continues to offer rich and comprehensive health and benefits plans, despite the reduction in employer contributions to the 403 (b), including a significant component of the retirement plan paid for entirely by Lifespan.