August 19, 2019 | Modern Healthcare 13
CEO, Ron Rittenmeyer, ends June 30, 2021. In each of the
two years that follow, Tenet will pay Rittenmeyer $750,
for working a maximum of eight days per month as a con-
sultant. Rittenmeyer is also covered under a noncompete
agreement that lasts for one year after he steps down as CEO.Institutional knowledge
A Tenet spokeswoman said post-employment consulting
is a common way to ensure smooth transitions from one
leadership team to another.
Franklin, Tenn.-based Community Health Systems’ for-
mer chief financial officer, Larry Cash, retired in May 2017,
but still makes $300,000 a year working as a consultant for
the investor-owned hospital chain. His employment agree-
ment, which runs through March 2020, bars him from work-
ing for any CHS competitors, affiliates or suppliers during his
time as a consultant.
The agreement with Cash gives CHS access to his 20 years
of historical knowledge of company matters, CHS spokes-
woman Tomi Galin wrote in an email.post-CEO consulting gigs
Joseph Swedish | Anthem
DATE LEFT ROLE: November 2017
POST-CEO TITLE: Senior adviser to the
CEO and consultant
START, END DATE: May 16, 2018-
May 1, 2020
TIME COMMITMENT: “From time to time”
BASE PAY NEW ROLE: $4.5 million/year
EQUITY AWARDS, BONUS PAY AND OTHER:^ Current awards
continue to vest
BENEFITS: Eligible for health, welfare and life insurance
benefits, retirement savings, access to company aircraft
for business travel, access to current administrative
assistantKent Thiry | DaVita
DATE LEFT ROLE: June 1, 2019
POST-CEO TITLE: Executive chairman
START, END DATE: June 1, 2019-
June 1, 2020
TIME COMMITMENT: 40%-60% average level service during
employment prior to effective date
BASE PAY NEW ROLE: $1 million/year
EQUITY AWARDS, BONUS PAY AND OTHER: Bonus of 100%
base salary
BENEFITS: Eligible for company benefitsBeyond enforcing noncompete agreements, there are other
operational benefits to keeping former CEOs on the payroll.
It adds continuity during the CEO transition period, with the
former CEO acting as a sounding board for the new one, said
Allen Reed, a partner in Odgers Berndtson’s healthcare and
life sciences practices.
Deb Bilak, a partner with human resources consultancy
Mercer, said companies sometimes transition the outgoing
CEO to a consulting role when that executive has not yet com-
pleted a strategic initiative that was launched during his or her
tenure. While the practice happens in other industries, it may
be more common in healthcare given ongoing transforma-
tion in the sector.
Compensation for consulting is typically based on what the
executive was making as CEO and the time commitment re-
quired, Bilak said. While high-paying, the gigs don’t pay the
executives at the levels they made as CEO.
HCA’s Johnson made about $21.4 million in total compen-
sation in 2018. Swedish made about $18.6 million in total
compensation in 2017, his last year as Anthem’s CEO.
Consulting agreements carry the potential downside of un-
dermining the incoming CEO, especially if that person was
recruited externally and there’s no established relationship be-
tween the new CEO and the organization, Paul Bohne, man-
aging partner and healthcare practice leader with WittKieffer,
wrote in an email. Staff members, directors and physicians are
accustomed to the former CEO making decisions, and it can
be tough to break those habits.
“Even with the best intentions, it is difficult to decondition
others in the ways they were accustomed to working with the
outgoing CEO,” Bohne said.
Not all outgoing CEOs become consultants. Organizations
that want to retain the CEO’s knowledge may opt to put the
executive on the board of directors instead.
After Michael Neidorff retires as CEO of Medicaid man-
aged-care insurer Centene Corp. in 2023, he’ll stay on as ex-
ecutive chairman of the board for a year before becoming
non-executive board chairman, according to a February 2019
amendment to Neidorff ’s employment agreement.
The agreement doesn’t detail compensation, but states that
“for the remainder of his life,” Neidorff will have access to a
full-time administrative assistant and an office at the compa-
ny’s headquarters. During his time as chairman and for five
years after, Centene will require he use the company’s aircraft
for all air travel.
Longtime DaVita CEO Kent Thiry will make up to $2 million
in base and bonus pay for serving as executive chairman for
one year following his retirement, which was effective June 1.
That’s a far cry from his $32 million in total compensation in
2018, but much more than DaVita’s director salaries that year,
which ranged from about $323,000 to $445,000.
Thiry continues to provide counsel and is active in the com-
pany’s policy efforts to deliver integrated kidney care, DaVita
spokeswoman Courtney Culpepper wrote in an email.
The difference in pay could spell problems if fellow direc-
tors protest the disparity, Reed said.
“That’s probably where it would be more favorable to have a
consulting engagement,” he said. lSource: Company employment agreements and other
communications filed with the U.S. Securities and Exchange
Commission