Norman Gruber’s $1.2 Million Salary Explained
As president of Salem Hospital, Gruber had a supplemental retirement plan which he cashed out in 2008 because of IRS rules
October 21, 2010 -- The $1.2 million compensation package earned by Norman Gruber, president of Salem Hospital, in 2008 has caused quite a stir among the physician community.The Lund Report disclosed his take-home pay after receiving copies of the 990 IRS financial reports filed with the Oregon Department of Justice. Since our original article appeared, it’s been plastered over the walls of Salem Hospital.
Gruber’s compensation in 2008 represented an 87 percent increase over the previous year when he earned $645,288.
After receiving a message circulated to the medical community that The Lund Report “had used incomplete and unrelated information to reach a conclusion and distorted some of the facts,” we tried contacting Gruber for clarification but he did not respond to our request.
Looking at the facts, The Lund Report relied on information contained in the 990 IRS filing submitted by Salem Hospital. It showed that Gruber’s base salary in 2008 was $555,795; bonus and other compensation represented $53,130, other compensation was $567,821 and $32,529 was for non-taxable benefits. Another $384,874 was in a column headed “Compensation Reported in Prior 990” which was not identified.
There was no further explanation about his compensation package in the IRS filing.
However, a confidential source did provide The Lund Report with a message sent by Laurie Barr, vice president of human resources at Salem Hospital, which gave the following explanation about the “outrageously high salaries” paid to key executives.
“The earnings in the article by Ms Lund do not reflect annual salaries. Executives previously had a supplemental retirement plan that allowed them to defer a portion of their salary on a pre-tax basis to save for retirement. They also had the option of converting unused PTO [paid time off] into tax-deferred retirement savings.
“This supplemental retirement plan was discontinued at the end of 2008. When that occurred IRS rules required that all of their savings, and any accrued interest in these accounts, be paid to them as taxable income in a lump sum. This income was reported as earnings on the "990 tax form" that the hospital files. The numbers Ms Lund reported reflect five years of retirement savings and earnings under the discontinued plan.”
Gruber was apparently not alone when he received a high compensation package in 2008. The same was true for other top executives at Salem Hospital. In 2008, Aaron Crane, chief financial officer, earned $568,834 compared to $385,903 in 2007 (47 percent increase), Jack Canyon, general counsel, whose compensation in 2008 was $502,978 and $319,029 in 2007 (58 percent increase), Dr. William Holloway, chief medical officer who took home $631,744 in 2008 and $476,223 in 2007 and Beverly Bow, vice president of human resources who’s charged with running the Salem Health Production System also known as Lean, who earned $488,251 in 2008 compared to $263,313 the previous year.
Other highly paid staff in 2008 included Cheryl Nester-Wolfe, chief nursing officer, whose salary was $425,692; Kenneth Kudla, chief information officer, $359,873; Virginia Posey, vice president of patient care, $353,091; Eric Buckland, vice president of administration, $322,814; Patricia Harger, vice president of strategic planning, $311,458; Anne Diamond, vice president of service line operations, $223,360 and Martin Morris, executive director of the foundation, $195,420
The IRS requires that all non-profit organizations show the salaries of any executive earning more than $100,000 in any given year.
As reported earlier by The Lund Report, Salem Health is also sending its top executives to Japan to embark on a program to improve quality and meet patient needs. That program is estimated to cost approximately $2.5 million a year over the next five years, according to confidential sources.
For More Information
To take a look at the IRS 990s from 2008 and 2007 filed by Salem Hospital with the Oregon Department of Justice.
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No one is on salary at The Lund Report and we operate with a very low-cost budget and are supported by our readers. As editor, I do not draw a salary.
Diane Lund-Muzikant
Editor
Anonymous, Are you one of "these guys"?
Apples and oranges. This compares a one-time payout to annual compensation. Interesting, but not especially relevant. Looks like these guys make about as much as a prosperous anaesthesiologist or plastic surgeon, with a lot more grief.
The one difference is that a prosperous anesthesiologist or plastic surgeon actually earns their keep by doing good work. Mr. Gruber and his buddies took a once very prosperous well thought of healthcare facility from a surplus of $388 million dollars to not knowing how they are going to make ends meet, and they are still building, remodeling, buying land and making travel plans to Japan!
They are getting ready to make another large round of cuts in staff this month, but going to spend 1.5 million this year and several years to following sending their top executives to Japan to learn more about the "Lean Program."
It sounds like the Hospital Board of Directors needs to take their heads out of the sand and "Lean Out" the executives at the top of this organization, or better yet, just leave them in Japan.