Ontario hospital executives are being criticized for their relatively high pay and lucrative perks. The perks include car allowances, free parking spots, and up to six weeks of paid vacation; they also receive a hefty annual salary, up to $100,000 per year in pension top-ups, and severance in excess of $1 million. This type of executive compensation is a hot topic being debated nationally, from Queen’s Park to union leaders, to activists, to employees, all of whom have, in general, voiced their disapproval of hospital executive pay. Andrea Horwath, leader of the NDP in Ontario, believes it is time to start being more careful with taxpayers’ money, suggesting that hospital CEO salaries should be capped at $418,000, which is twice what Ontario’s premier makes. 

Case in point: In 2014, President and CEO of Hamilton Health Sciences (six hospitals in Hamilton and South Central Ontario) Dr. Robert MacIsaac earned $755,715. This represents a roughly 9 percent increase over his predecessor, Murray Martin, who made $695,065 in 2013. In addition, MacIsaac gets a benefit package including a pension, life insurance, and a spending account.

He is also entitled to variable compensation to a maximum of 20 percent of his annual base salary with stipulated performance factors. 

Right behind Rob MacIsaac is William Reichman, president and CEO of Baycrest Centre for Geriatric Care, who received $748,562 in 2014. In addition, he is entitled to discretionary incentive totalling 26 percent of his base salary for achieving performance objectives as set out by the board of directors. He also gets an annual car allowance of $14,000 and a pension top-up of $50,000. 

The Ontario healthcare sector has been reeling under financial pressure, with nurses being let go, emergency wards being closed, and continuing longer wait times in the province’s emergency rooms. Yet executive pay for some hospital executives remains relatively high; apart from CEOs, other hospital executives earn rich compensation packages.

Questions 

1. Are CEOs and key executives worth the large pay packages they receive? Explain. 

2. Do you agree with Peter Drucker that corporate executives should receive compensation packages no larger than a percentage of the pay of hourly workers? Explain. 

3. Do you think that executives in the broader public sector, such as hospital executives, should receive such large pay packages?