In 2007, the board that oversees UNC Health Care decided to purportedly “cut” $555,467 in executive bonuses. The board also purportedly reduced $834,753 in bonuses for 22 other managers.
Yet the only thing cut by the UNC board was the word “bonus.” Amounts reported cut or reduced, roughly $1 million, kept flowing to the same recipients.
Rather than going to the execs as “bonuses,” the amounts went to the same individuals as pay raises — a re-categorization of how the monies were defined and never reported in the press.
Why didn’t UNC communicate, at the time of the announcement in May 2007, what UNC vice president for communications Joni Worthington later stated by email (September 2008)? “The salary approved by the Board of Governors represents a 7.2 percent increase in Dr. Roper’s total compensation in the preceding year. That compensation base included the $110,100 bonus paid in 2006-07 (for performance in the prior year), as well as a mid-year salary adjustment.”
Worthington’s e-mail means that rather than only receiving a 7.2 percent increase between the two years in question, Roper’s raise ($489,030 to $690,000) was actually 41 percent.
But it wasn’t just the head of UNC Hospitals whose bonus was handled this way. The same 500-word news story emphasizing approximately $1 million in bonus “cuts” included 16 words of double-talk: “Base pay will be adjusted to make sure the total compensation is comparable to previous years.”
As there is a significant difference between bonus and base pay, this is accounting and rhetorical deception at its best. Bonuses are not guaranteed. Base pay is. And while bonuses are not factored into base salary to calculate future pay raises, once $1 million of bonus monies are redefined and rewarded as (unreported) pay raises, all future raises are then based on higher totals.
Equally disturbing were the comments of Roper and Bowles to the press in announcing the “cuts”:
” ‘I commend the board for making this fundamental change,’ said UNC system President Erskine Bowles, who had pushed hard for the board to address the issue after complaints.”
“In a prepared statement, Roper said he embraced the change. ‘These changes reflect our commitment to maintaining the public confidence in UNC Health Care’s service to its mission and the people of our state,’ said Roper.”
And from the same source:
“Roper and other system officials will continue to make recommendations for executive pay increases in consultation with the board’s compensation committee, according to a statement announcing the changes.”
Was there planning (conspiracy) on the part of Roper, Bowles and UNC Board of Governors to mislead (deceive) the public in what they intended when they announced the bonus cuts?
The expense is passed on to the patient and Blue Cross to absorb, and I suspect that Blue Cross raised their rates … and passed it all on to the State Health Plan and the insured.
Beyond masking an ethics problem behind standards that failed to provide adequate disclosure to the public, what happened to “there’s a formal process that the University has wisely set up to oversee these kinds of activities,” to quote Roper.
A slight lapse of judgment? How did all this happen, and on whose part?
— John Rhodes