- One of the country's biggest labor unions is asking Tenet shareholders to reject pricey executive pay packages at the hospital chain's May 28 shareholder meeting. The union, the International Brotherhood of Teamsters, funds its members pensions and benefits through a fund that invests in Tenet stock.
- In a Wednesday letter to other shareholders, Teamsters General Secretary and Treasurer Ken Hall called out Tenet CEO and Board Chairman Ronald Rittenmeyer, along with COO Saum Sutaria, for recent pay raises and other bonuses that "lack real ties to performance."
- Rittenmeyer, who began his stent two years ago, has annual total compensation now topping $24 million, in addition to $42 million in time-based stock awards. At the same time, Sutaria received $12 million in sign-on grants and a $4 million long-term incentive opportunity, according to the letter. Tenet did not respond to a request for comment.
In wake of COVID-19-related volume and revenue declines, Dallas-based Tenet, which operates 65 hospitals and hundreds of other clinics, furloughed 10% of its workforce without pay. Rittenmeyer has taken a 50% pay cut for three months in response to the setbacks, but "is cushioned by a recent board decision to boost his future annual base salary," according to the letter.
Executive compensation is a common issue among labor unions representing workers who make a mere fraction of what their company's CEO takes home. But this case is somewhat different — the union's gripe centers on how that compensation will weaken investments it made to fund its members' pensions and benefits.
Teamsters has 1.4 million members and 350 are employed by Tenet, a spokesperson told Healthcare Dive. The union funds its members' pensions and benefits through an array of capital investments, including $2 million in Tenet stock.
But Rittenmeyer's $24 million annual salary that caught the Teamsters' attention stacks up close to that of other CEOs at major for-profit hospital chains.
In 2019, competitor HCA Healthcare CEO Samuel Hazen made nearly $26 million in total compensation, according to U.S. Securities and Exchange Commission filings, while Universal Health Services CEO Alan Miller made roughly $24.5 million. Community Health Systems CEO Wayne Smith made $8 million in 2019.
Asking shareholders to vote on a public company's top earners' compensation is referred to as "Say-on-Pay" votes, according to the SEC. The results are non-binding and votes are required to be held once every three years.
On top of furloughs at Tenet hospitals, the union's letter also called out some labor issues, and said nurses are fearful of contracting the coronavirus and worry they will be fired or disciplined for talking about understaffing and shortages of protective gear.
Beyond voting against executive pay raises at the upcoming meeting, the union wants other shareholders to vote in favor of an independent board. Rittenmeyer currently holds the titles of both CEO and board chairman, and the proposal aims to separate those two roles.
Tenet pulled its 2020 and full-year guidance in early April and plans to report first quarter earnings Monday.