California system defends CEO pay amid criticism

Madera, Calif.-based Valley Children's Healthcare is pushing back against criticism of its compensation for top hospital executives. 

The response follows Fresno City Councilmembers Miguel Arias and Garry Bredefeld characterizing the compensation of Todd Suntrapak, president and CEO of Valley Children's Healthcare, as "excessive," according to KSEE24 and CBS47.

In a statement issued March 27, Valley Children's said it is "pushing back against misinformation and setting the record straight regarding recent criticisms of executive compensation." 

The statement specifically referenced a letter to the Fresno City Council from Valley Children’s Healthcare Board of Trustees Chair Michael Hanson and members of the board.

"Assumptions made about the compensation for our CEO are based on, at best, an ill-informed reading of our IRS Form 990 from 2021," the letter reads. "That year, on the advice of our accountants and tax counsel, we shifted to paying performance bonuses for director level and above by the end of the calendar year in which it was earned. 

"The result was performance bonuses for two years being paid and reported in a single filing year, with one year's bonus paid a month earlier than in the past."

Therefore, the resulting compensation figure in Valley Children's Form 990 for 2021 "does not in any way accurately represent a single year’s earnings for our CEO or other top executives," according to Mr. Hanson and board members.

They further attributed this to a one-time accounting adjustment and stated that Mr. Suntrapak's annual salary since July 2020 is $1,711,341, "which is in line with other health system CEOs with similar levels of responsibility; the remainder of his compensation largely consists of bonuses based on meeting significant performance goals — again, the norm for health system CEOs."

Tax documents available on ProPublica's Nonprofit Explorer show Mr. Suntrapak's combined salary of $5.5 million in fiscal year 2020 as well a $5 million loan to Mr. Suntrapak "for residence as a retention incentive in lieu of other compensation" in fiscal year 2021. They also show a $2 million bonus for Mr. Suntrapak in 2020.

This information prompted Mr. Arias and Mr. Bredefeld to request a state investigation into the executive salary structure at Valley Children's Hospital, and Mr. Arias called for an audit of the hospital and its expenditures of state Medicaid funds, according to KSEE24 and CBS47.

Mr. Bredefeld branded Mr. Suntrapak's compensation "exorbitant and unjustifiable" when comparing it with the CEO salaries of similar children's hospitals across California and the U.S., according to KSEE24 and CBS47.

"Executive compensation for the CEO and other top executives is determined on a thorough review and recommendations from multiple, independent executive compensation consultants," according to Mr. Hanson and members of the board. "Further, the loan provided to the CEO for the purchase of a home is not at all unusual as a retention tool; should the CEO voluntarily leave the organization within the 10-year period after the loan was advanced, the unamortized balance of the loan is required to be repaid."

The letter also addressed California's Medicaid program, saying, "we are able to provide an appropriate level of compensation for our leaders because of the superb performance of our investment portfolio and our financial stewardship — not from the payments we receive from the Medi-Cal program."

Read the full letter here

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