About Chelyen Davis:
Chelyen Davis is health reporter for The Free Lance-Star
Rankin earned $3 million in 2010, thanks to one-time retirement payment
A one-time payment from a special retirement program pushed Fred Rankin’s total compensation for 2010 to more than $3 million, according to a federal filing by Mary Washington Healthcare.
Rankin, president and chief executive officer of the Fredericksburg hospital company, received a retirement payment of almost $2.4 million. The retirement money combined with his annual salary of $638,659 and benefits meant that his total compensation for 2010 was $3.03 million.
The salary numbers for Rankin and other hospital executives and physicians are included in the company’s annual 990 report. Because Mary Washington is a nonprofit organization, the Internal Revenue Service requires it to file a 990 and to make the report available to the public. The hospital published the latest version, which covers 2010, in December.
Mary Washington executives, including Rankin, generally earned lower base salaries in 2010 compared with 2009, according to the 990 form. Performance bonuses were paid in 2009 but not in 2010, said John Fick, chairman of the board of trustees. Bonuses were withheld since the company did not meet all of its annual goals, Fick said.
The IRS requires that any payments the company makes to a supplemental executive retirement plan, or SERP, must be included in the report. Mary Washington has provided a SERP for its executives for many years. Unlike other retirement plans, which pay out over the life of the retiree, the SERP features a lump-sum payment made when the executive “vests.”
At Mary Washington, vesting is triggered when the executive meets the plan’s age and years-of-service requirements. At vesting, the executive takes ownership of the money set aside for him or her and pays taxes on it.
Rankin, 60, vested under Mary Washington’s plan in 2010. The hospital has been setting aside money for him in an interest-bearing account.
“This benefit takes into account his entire career,” said Jina Haikey, senior vice president for regulatory affairs and risk management.
Rankin started working for Mary Washington in 1992 as its president. He added chief executive officer to his title in 1995. He has no immediate plans to retire, said Eric Fletcher, senior vice president for marketing and communications.
All of the executives at Mary Washington participate in its SERP, which is funded entirely by the company. SERPs are a common type of deferred compensation that for-profit and nonprofit companies offer their executives. These executives frequently are limited in the amounts they can contribute to other retirement plans, such as the hospital’s 403B plan. A 2011 survey by Yaffe & Company found that 75 percent of nonprofit hospital systems offer the plans.
“Many organizations use it as golden handcuffs to try to retain executives,” said Alexander Yaffe, president of Yaffe & Company and consultant to Mary Washington on executive compensation issues.
Rankin’s SERP is part of a compensation package that includes a base salary, incentives and other benefits. The package is set by a committee of the board of trustees, with the assistance of Yaffe & Company.
In setting Rankin’s salary, the committee reviews the compensation paid to CEOs doing similar work at hospitals of similar size, Fick said. Alexander Yaffe described Rankin’s compensation as being “on the low end of the range” for similar-sized health systems.
Added Fick: “Fred runs a $700 million corporation. It’s bigger than anything in town. You can’t compare it to the school board. You can’t compare it to county government. You may not even be able to compare it to GEICO. He earns every dollar that he makes.”
|Compensation for top executives at MWHC|
|Fred Rankin*||President, CEO||$638,659||$955,282||$783,569|
|J. Thomas Ryan||Executive VP, CMO||470,458||489,334||415,358|
|Walt Kiwall||Executive VP, COO||467,002||501,843||487,909|
|Sean Barden||Executive VP, CFO||389,616||436,698||387,973|
|Kevin Van Renan||Senior VP, administrator||381,192||382,647||309,690|
|* Rankin also received payment of $2.4 million from a retirement program.|
(For more on Rankin’s retirement payment and the salaries of Mary Washington’s top executives, see the story soon in the paper.)