Should the President of OHSU make more than President Obama?

By Dan Gicker of Portland, Oregon. Dan describes himself: "I am a registered nurse, an employee of OHSU and a member of the Oregon Nurses Association's Cabinet on Health Policy, but in this post, I speak only for myself."

Senator Claire McCaskill (D-MO) has introduced introduced a new law limiting salaries of CEOs in companies that take government TARP money. Senator McCaskill states as long as the TARP companies are getting funds from the government, then no one in the company should make more than $400,000/year, the salary of President Barack Obama.

My favorite quote from the video:

"These people are idiots. You can't use taxpayer money to pay out $18-billion in bonuses... What planet are these people on?"

Most people don't want their tax dollars going toward excessive CEO compensation.

So how does this federal situation compare to our own recent controversy about excessive executive compensation at OHSU? First off, OHSU is a public corporation. That means while it is an actual corporation, it gets significant funds from the state for operating expenses of the hospital and to run the University. The current state budget funds OHSU at 120 million and this doesn't count capital expenses like the 450 million for a new Science center on the South Waterfront.

OHSU management realized that awarding bonuses in Nov 08 and then announcing cutbacks and future layoffs two weeks later might look bad, so they announced that they would be eliminating executive bonuses for next for next year and taking a 20% pay cut.

However, even with the voluntary cuts, the CEO still makes 620,000 base pay a year or over 150% of what President Obama makes.

So I ask you, should the head of an organization that takes $120 million of Oregon state tax dollars make 150% what the President of the United States makes?

I urge our legislators to pass a bill similar to Sen. McCaskill's limiting compensation of OHSU execs to not exceed that of the President.

Comments

  • (Show?)

    Did the CEO of OSHU drive it into a financial ditch?

    That is the issue at hand.

    While I think is of dubious value (and fairly detrimental overall) to have the obscene worker to executive pay disparity we find in many companies and industries, I don';y think you will se as huge a pay discrepancy at OSHU between their average employee and the CEO (unlike many major corporations).

    I think this article is comparing apples to oranges though, since OSHU is not being grossly mismanaged and asking for emergency Federal bailout money to keep from imploding into a black hole that sucks the rest of the economy down with it, and then still giving out bonuses and obscene CEO pay.

  • Unit (unverified)
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    I think it's also important to consider the pay scale in the industry. If you cap the OHSU CEO's salary at 400k while comparable positions in other states make much more, then we become less competitive for talent.

  • (Show?)

    So I ask you, should the head of an organization that takes $120 million of Oregon state tax dollars make 150% what the President of the United States makes?

    Yes.

  • Richard (unverified)
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    OHSU is lobbying the legislure to bail them out, again, from their mismangement under former pres. Peter Kohler who is now living large on a fat cat retirement.

    I'll wager the legislature delivers and the current OHSU will be praised for his leadership.

  • Dan Gicker (unverified)
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    Lestat: I don';y think you will se as huge a pay discrepancy at OSHU between their average employee and the CEO (unlike many major corporations).

    ask a resident what they earn

    Unit: if pay is indicative of talent, then by this logic, the average hospital CEO is more talented than the POTUS. I don't think it's apple and oranges, as lestat says, to compare the two: they both run large organizations.

  • Joel H (unverified)
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    by this logic, the average hospital CEO is more talented than the POTUS.

    Why do you think that is false?

  • Joel H (unverified)
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    by this logic, the average hospital CEO is more talented than the POTUS.

    Why do you think that is false?

  • (Show?)
    Posted by: Dan Gicker | Feb 2, 2009 1:22:33 PM ask a resident what they earn

    Their pay is not anywhere close to the 200 to 1 ratio that the CEOs of major corporations to worker which we are talking about here, by an order of magnitude I might add.

  • Irene (unverified)
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    since OSHU is not being grossly mismanaged

    Of course OHSU is being grossly mismanaged. Their current economic situation is not entirely due to a tanking economy. It is also due to some incredibly bad decisions by their so called executive leadership team.

  • (Show?)

    Yes.

    If $400,000 can't buy a competent CEO then no amount of money can. The actual real-world value of executive star power is dubious at best.

  • anon (unverified)
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    Yes, if OHSU wants to attract top talent and that's what the going rate is. Getting someone who both has the necessary medical / scientific expertise and who the administrative and management skills necessary to lead one of the city's largest employers may require paying a salary well into the six figures.

    But hey, if you all want to meddle in the salaries of employees and managers of a pseudo public university, go for it. Oregon will slip further into higher educational mediocrity, and we'll lose more of the few professional jobs that exist in this state. But hey, why not just have a totally sustainable city economy based on everyone being an under-employed barrista / artist. That would be grand...

  • (Show?)

    The real question is this: will we apply the same standards to college football coaches? In most States they're by far the most highly compensated state employees.

    However, in fairness, I do have to say that College Football Coach is one position in which gross incompetence at doing your job is not rewarded - even by Republicans. So maybe, they do deserve the money.

  • anon (unverified)
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    Also, the obvious response to the original comparison of the pay of the POTUS and pay of the OHSU president is the huge difference in the selection process. Many candidates line up to attempt to be elected POTUS (President's cash in well beyond their official $400K salary anyway [see Bill Clinton after he left office, Obama's current book royalties]), whereas, a private employer like OHSU must compete to lure top talent to lead the organization. If the president of the University of Washington Medical School has done an amazing job, and OHSU wants to lure her away to lead OHSU, good luck with that if there's a legislatively imposed cap on the salary that the institution may offer.

  • Marshall Collins (unverified)
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    I guess for me I can justify paying that amount if that is what the going rate is for the TOP TALENTED and TOP PERFORMING CEO's. If they want to be paid as if they are the best then they sure as hell better be the best at their job. My problem with CEO's isn't so much about how much they get paid as it is with the fact that it seems that they have absolutely no fear of losing there job and if they do most of them have disgusting severence packages written into their contracts/hiring agreements. Maybe if CEO's were employed under the same premise as the rest of us schmuck's (if you don't do a good enough job to justify the amount you get paid then you get thrown out on your ass and the company doesn't pay you a single penny more) maybe then we wouldn't have such a problem with executives running companies into the ground and getting away with it scott free.

  • YoungOregonMoonbat (unverified)
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    Anon,

    Name me 5 private sector CEOs who have gone to 5 different publicly traded companies, raised the stock of each of the 5 publicly traded companies without laying off thousands AKA restructuring, and left the 5 in a better position once they left.

    Please don't bring up Al "Chainsaw" Dunlap or any CEO whose main modus operandi is to go from corporation to corporation laying off thousands to boost the stock price and then leaving for their next multi-million hatchet job.

    Thanks.

  • (Show?)

    Why stop at OHSU? The total compensation for the OSU and UofO are also more than $400k. Of course as has already been pointed out, the salaries of the football coaches are way higher than the college presidents.

    We also need to keep in mind that the compensation for POTUS also includes a few benefits that the university presidents don't get starting with both a first home and a second vacation estate, car and driver, plane and pilot, personal chef, great pension, personal security. Anyway you get the idea. The real compensation is way more than $400k.

    Having said all that, I do believe that those who run non-profits, whether they are universities or hospitals or charities should not be paid according to what the market will bear. There should be some sense of shared burden because they are non-profits asking others to contribute. The head guy should not be paid what they could get at a profit making institution. There has been a lot of BS over the last decade about the need to pay ever increasing salaries to get only the best talent. The result has been a race to the top at the top and a race to the bottom at the bottom. The ethical amount has gotten lost in the shuffle.

  • (Show?)
    Posted by: YoungOregonMoonbat | Feb 2, 2009 4:50:51 PM

    Why does it have to be 5 different companies?

    I can name numerous CEOs that have moved from one company to another and done outstanding work at both.

  • (Show?)

    I think many Higher Ed administrators are paid too much. For example, our three major public university presidents are nice people and they have difficult jobs, but “they are just paid too much.” From my July, 2008, post on Daily Kos titled “Are Oregon’s University Presidents Paid Too Much?” (here):

    “China is rising. A recent Carnegie Endowment report estimates that China’s economy will be as large as the US economy in the year 2035, and then twice the size of the US economy in 2050. And China’s military will inevitably modernize and keep pace with its economy. The world will be very different for our next generations. Our educational leaders know this. To justify those large salaries, they should act on what they know and prepare our next generations to engage China. That is their job. That means talking about the importance of China relations for our future, getting more of their students to study Mandarin and study abroad in China, and telling the Oregon K-12 educational system that more Mandarin proficient students should graduate from their system. Otherwise, and I say this as respectfully as I can, they are just paid too much.”

    They have repeatedly asked but they have done nothing.

    So, I’m not impressed that paying top dollar gets us what we need. Forget those surveys of compensation at other peer universities. We could probably get equally competent academic leadership for much, much less, including OHSU.

  • YoungOregonMoonbat (unverified)
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    Lestat,

    The point is to point out that what works in one context may not work in another context.

    If you think that there is a one-size fits all style of leadership that is successful in all contexts and organizations, then please prove me wrong and give me the name of the book because I would love to read it.

    I stand by my belief that a CEO of a fortune 500 company will most likely be good in another fortune 500 company, but would have trouble finding the same results in the public or non-profit sectors.

    As for the original question, it is not proper to ask "Does such and such make too much?" when you do not list the base salaries of the past 2 or 3 CEOs of OHSU. To take a base salary out the historical context of the organization is just sloppy.

  • anon (unverified)
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    YoungOregonMoonbat,

    $600K is not an insane salary in the grand scheme of things. What is your alternative to allowing markets to dictate salaries?

    As for your notion that Presidents, CEOs, and other leaders of large organizations don't contribute much value to those organizations, do you believe this is true in the context of a very large organization called a nation? I assume you cared who was elected to lead the United States in 2008.

  • Patrick Story (unverified)
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    Couple of factual corrections:

    The expensive "leadership team" at OHSU did in fact drive the U into terrible debt last year, yet, on the Wall Street model, collected those big bonuses anyway.

    The perks of most college presidents do in fact include a prestigeous residence, car or car-and-driver, and various expense accounts. And yes, some presidents also have a personal aircraft available.

  • verasoie (unverified)
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    How many surgeons or other medical subspecialists at OHSU or elsewhere earn more than $400K annually?

    A helluva lot.

    Because that's what the market will pay them for their services.

    This post is silly because there are plenty of people at OHSU who earn more than Obama, and that's because their skills are valued more.

    What, are you going to start capping the salaries of neurosurgeons and orthopedic surgeons next?

  • (Show?)

    Yep,

    Way too much money is being dedicated to management. OHSU, PSU or other state run schools have top heavy management. Many administrators make more than teachers and that just shows how wrong we have education in this country. We don't need more management. WE NEED MORE TEACHING!!!

  • LT (unverified)
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    There are lots of nurses nearing retirement age. There was a legislative hearing on how to train more nurses.

    Turns out an RN can make more money as a nurse than on faculty.

    "Because that's what the market will pay them for their services." Oh really!

    If someone wants to work for a privately funded hospital, that hospital can pay any salary they want.

    But when it comes to public funds, there needs to be more oversight. Are we going to cut health care to needy Oregonians so management can be paid what the market will bear? Should all the staff at OHSU be paid prevailing private salaries--from RN to surgeon?

    What should be cut from the budget so that a hospital getting public funds can pay "what the market will bear"?

  • Dylan Darling (unverified)
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    I think the world needs to get everyone on an even playing field. The more administrators and management make, the more the company charges. Yes, some deserve good salaries, but not outragous amounts of money. We the consumers are getting ripped off, while the wealthy get richer.

  • Zarathustra (unverified)
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    Yes. All government service should be temporary service for a break-even wage, not a career. This idea is occasionally dignified with the moniker, "the dumbest idea ever proposed on Blue Oregon".

    Have OHSU management earned the compensation? Yes, by their board's criteria. Is it a sign of systemic rot in the society? Absolutely.

    The people I've been working with this week have a problem with OHSU too. It involves their "no questions asked" policy of taking strays from "independent contractors", that are often sitting in your parking lot with a bowl of food. A rotten organization is a rotten organization. I don't know why people always look at behavior as so compartmentalized. It never is.

    Aside, a shameless charitable plug: the Jane McGrath Foundation is a breast cancer charity that gives no money toward testing and research. All funds go toward training breast cancer nurses and subsidizing their eduction. We need more charitable organizations that aren't run by the same little clique of corporate board members you find in places like PDX.

    LT's right. Nurses nearing retirement age + graying of the baby-boom means a big shortage. Particularly in rural areas. This should definitely be a target of Obamanomics. Pay for that education in exchange for 10 years service in nowheresville and I would quit my 6 figure job and change careers tomorrow. The big diff is the kind of people in the program with you. Sure I could do that today, but the personality variables, given what it takes to matriculate today, would be totally different. More important, the perception of having worked in a rural area in medicine would be totally different. It may be great service today, but it's not great on a resume. A Fed program could change all that. Of course, that isn't exactly what policy makers or most people want. They want me earning and paying taxes.

  • (Show?)

    Let's just put the POTUS comparison aside--that is completely silly. If anything, the POTUS deserves a HUGE raise, as do most of our elected officials, but try to get that past the voting public.

    A lot of posters here are really clueless about the wage market for top level leadership in both the private and public sectors.

    The head of OHSU is not in the Portland market, that individual is in the world market. A salary of 400k (suggested above) is not at all out of bounds for the head of a world class medical center.

    College presidents start at 125k and upwards, and that is at the lowest tier. The presidents of Reed and Lewis and Clark earn 350-400k. Presidents of major state universities earn 500k-800k.

    Sound outrageous to you? Please go check out the starting salary for a fresh out of school MBA or JD. Mid-level officers at non-profits (foundations or educational institutions).

    You want to critique the whole salary system in the US, fine. But the current salary of the OHSU president is not at all out of line with market conditions.

  • Gabe (unverified)
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    In this case yes !! Joe Robertson is way brighter and far more valuable that President Obama ... The President in reality is a short termer ( all Presidents not just Obama) while in Dr. Robertson's case he will be spending the vast majority of his career running/dealing with OHSU. The President gets $400k per year but lets not forget the deferred comp called books, speaking and the millions that brings after those short 4 to 8 years.

  • Irene (unverified)
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    Joe Robertson is way brighter and far more valuable that President Obama ...

    That comment made me spit up my coffee! No way does Joe Robertson outshine Barack Obama. Robertson is a tool of a clueless board. I wish the governor's office would take a closer look at OHSU.

  • YoungOregonMoonbat (unverified)
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    Anon,

    I never answered the original question because I felt that without knowledge of the last 2 or 3 base salaries of the last 2 or 3 CEOs of OHSU, my answer would be an ignorant, knee jerk reaction to an inapt comparison.

    If the last 2 or 3 salaries were in the ballpark of 200k to 600k, then I believe that yes he is entitled to that 600k base salary if the Board of OHSU believes that he is best for the job.

    On the other note, don't conflate an organization whose main focus is the short term (quarters) to the United States of America where the ultimate law of the land is the US Constitution and our 500+ CEOs in the Executive, Legislative, and Judicial branches are focused on protecting our civil liberties and protecting our national interests at home and overseas for the short term and long term.

    That analogy is completely absurd.

  • Bob Tiernan (unverified)
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    Forget what Obama will make per year in the near future. He'll be a multi-multi-millionaire when he leaves office because he'll have book deals, and will command hundreds of thousands per speech even when he has nothing to say.

    Bob Tiernan Mult Co.

  • jake (unverified)
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    Robertson earned over 1 million last year (performance based bonus included), but that is besides the point.

    The point is he and his Leadership Team are terrible at running OHSU and don't deserve their compensation. They are turning a non profit academic medical center into a corporation. They are abandoning their tri mission platform- education, health care and research- for the only one they deem makes money- health care. All they want to do now is fill hospital beds and could care less about their employees, students and the people of Oregon who partially subsidize their salaries. Departments are being cut across the board which pulls academic faculty into the clinics (where they make money) and away from the classrooms (where they "lose" money). Just ask any med student up there how "nice" their med school is despite paying the second highest public institution tuition in the country. These guys have taken pages from the Wall Street playbook. According to Robertson, their bonuses were earned before the economic downturn. But if the recesion started in 12/07 and they paid themselves for work done in 08, then I'd like to know how they see economic downturns as relative occurances. OHSU is in shambles. Robertson and his Team destroyed their credibility when they kept their bonuses then cried crocodile tears about the global downturn being the culprit for all OHSU's woes. They were in charge when this was happening, so how are they so guilt free in all this?

    I'm all for people being rewarded for doing their jobs well, but these guys clearly aren't and should be thrown out on the street.

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