Union Calls for a “No” Vote on Say-on-Pay; Urges “Yes” Vote for Independent Board Chair at Tenet Healthcare’s Annual Meeting
(WASHINGTON) –The International Brotherhood of Teamsters, whose pension and benefit funds invest in Tenet Health Corp. (NYSE: THC), today urged other shareholders to reject the company’s “Say-on-Pay” proposal over lavish executive pay, at the health care company’s annual meeting on May 28. Since becoming CEO two years ago, CEO Ron Rittenmeyer has taken home $42 million in restricted stock, on top of lucrative cash compensation, with his 2019 pay topping more than $24 million. The Teamsters are raising the alarm over the company’s huge pay packets to its top executive officers while it has furloughed 10 percent of its workforce without pay during the COVID-19 pandemic.
Tenet claims those furloughs were necessary as elective surgeries are put on hold, but has failed to meaningfully rein in executive pay at a time when working people are bearing the brunt of the coronavirus crisis. On top of these job cuts, nurses say they are fearful of contracting the coronavirus and worry they will be fired or disciplined for talking about understaffing and shortages of protective gear.
Teamsters General Secretary-Treasurer Ken Hall said in a letter to shareholders that the problem with the pay packages is not just “its optics.”
Even without the added stress of COVID-19 on the business, “it should be clear that the very culture of accountability that CEO Rittenmeyer claims to be instilling is missing in the compensation structure of the two most senior executives. CEO Rittenmeyer’s decision to give up 50 percent of his base salary (circa $400,000) for three months is a gesture towards shared sacrifice. However, it is only a gesture and one that is cushioned by the board’s recent decision to boost CEO Rittenmeyer’s future annual base salary. Gestures are no substitute for comprehensive pay reform that matches executive pay with performance,” Hall said.
The Teamsters represent 50,000 health care workers at facilities across the United States. Teamster affiliated pension and benefit funds have more than $100 billion invested in the capital markets and are long-term shareholders in Tenet.
In the letter, the union highlighted CEO Ronald Rittenmeyer’s series of lucrative employment extensions providing $42 million and COO Dr. Saum Sutaria has, similarly, been awarded $12 million in sign-on grants and a $4 million long-term incentive opportunity. With these agreements relying on time-vesting awards, Tenet has made its two most senior executives the least exposed to corporate performance.
The letter also highlights eye-popping consulting agreements the company has signed with the executives for their retirements. Along with his 2019 contract extension, Rittenmeyer has a two-year post-retirement consulting arrangement that pays $750,000 a year (plus benefits) for advisory services not to exceed eight days per month.
“Frontline workers are going to battle every day against this virus to save lives. They are in desperate need of PPE and safe workplace conditions but corporate hospital executives are focused on ensuring they can get tens of millions of dollars in bonuses and consulting fees for their retirement,” said Teamsters Health Care Division Director Nina Bugbee, who spends her days advocating for doctors, nurses, respiratory technicians, EMTs and other medical workers who are toiling around the clock to help COVID-19 patients across the industry. “These executives should be on the hospital floor NOT holed up in their yachts or mountainside vacation homes.”
The union is also introducing a proposal to have independent board leadership and separate the functions of CEO and Chair of the Board.
“We appreciate Tenet’s board has a lot on its plate at the moment, but that does not justify giving a free-pass to a pay structure that reserves the least accountability for the highest paid individuals. In fact, rightsizing this structure, along with enhancing the independence of the Board’s leadership, becomes ever more critical amid the current pandemic. For these reasons, we urge shareholders to join us in voting against the company’s Say-on-Pay for our resolution to appoint an independent chair,” Hall said.
The Teamsters Health Care Division represents more than 50,000 workers. Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women throughout the United States, Canada and Puerto Rico. Visit www.teamster.org for more information. Follow us on Twitter @Teamsters and “like” us on Facebook at www.facebook.com/teamsters.