Our Views: Feeling queasy over Javon Bea's pay
Being known as No. 1 can be an honor, though not so much in the case of Mercy Health System CEO Javon Bea.
He's tops in the region for hospital CEO pay, raking in $8,043,977 in 2014. To put that dollar amount into perspective, Bea's pay was nearly 3.5 times what the CEO of the world-renowned Mayo Clinic made in 2014.
Even The Wall Street Journal has taken notice. It analyzed the pay of officials at nonprofits across the nation and highlighted Bea's pay in a story Monday about the large differences in executive pay at nonprofit organizations.
Nonprofit executives are increasingly getting paid like executives at for-profit firms with their compensation tied to performance bonuses. In 2014, Bea received a “one-time” bonus for the hospital's merger with a Rockford health group, The Gazette's Neil Johnson reported Thursday.
Chairman of Mercy's board of directors, Rollie McClellan, defended Bea's compensation, as any loyal chairman would do. Bea wears many hats, McClellan explained. Bea works long hours. “I don't know when Javon is not at work, to tell you the truth. I don't know when he sleeps,” he said.
Maybe Bea does work hard—really, really hard. But if working hard were the primary metric for determining compensation, then we'd expect many more millionaires walking the streets nowadays.
Many patients who receive care at Mercy probably view themselves as darn hard workers, too. Some of them probably work long hours just to pay the bills, including their health insurance premiums and deductibles, which have been rising at rates far outpacing inflation.
Many of these patients also wear many hats, playing the role of parent, caregiver and employee. And they might not get much sleep, either, especially when their kids are up sick at night.
To be fair to Mercy's $8 million man, he's simply making what the market will bear. We can't fault him for negotiating the sweetest deal possible. Multimillion-dollar paydays for CEOs are the way the world works, apparently also among nonprofit organizations.
But let's not forget that nonprofits receive substantial tax savings because of their tax-exempt status. The Wall Street Journal reported nonprofits receive nearly $100 billion in tax benefits each year.
The IRS even has a rule prohibiting excessive pay at nonprofits, though the rule is rarely enforced.
Mercy isn't situated in Beverly Hills. It's headquartered in Janesville, where a lot of people's paychecks took a big hit in the Great Recession and never fully recovered.
Bea's pay looks like an outlier not only from the local level. At the national level, CEOs at some organizations larger than Mercy made substantially less money, such as the CEO of Red Cross at only $557,000. We cannot blame people for asking whether Bea is worth nearly 14 times the Red Cross CEO or 3.5 times the Mayo Clinic CEO.
“There's no question about it that people could feel that way if they're looking at it in terms of a totally local situation. But he could run any health care organization—profit or nonprofit. And he would be a handsome acquisition for somebody looking for a new CEO,” McClellan said. “So, I don't care how people think about it.”
Maybe it's time to care.