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October 2, 2019

6

Executive Compensation at St. Jude’s (2018)

by Anne Paddock

When people think of St. Jude’s, they often associate the organization with the children’s research hospital but St Jude’s is actually two organizations:

  • St. Jude Children’s Research Hospital (St Jude’s): the children’s hospital that provides research and medical care; and
  • American Lebanese Syrian Associated Charities (ALSAC): the fundraising arm; an organization that exists to raise funds for St. Jude’s

Although most non-profits do not separate fundraising from services, St. Jude’s does, so both organizations need to be analyzed because St. Jude’s relies on ALSAC for the majority of it’s revenue and has a beneficial interest in the organization.

The following information is based on the most recent Form 990’s (2017 for the year ending June 30, 2018) submitted by ALSAC and St. Jude’s to the IRS.

ALSAC

ALSAC raised $1.652 billion (about $150 million more than the previous year), most of which came from contributions ($1.5 billion) and investment income/gain on the sale of assets ($150 million).

Total expenses for ALSAC were $1.240 billion, of which $757 million (46% or $46 out of every $100 in revenue) was given to the hospital (St. Jude’s) for operational and capital budget needs. ALSAC spent $483 million (29% or $29 out of every $100) on functional expenses related to fundraising (the mission of ALSAC) and retained $412 million (25% or $25 out  of every $100 in revenue) for the general fund (which some people refer to as the endowment).

So, the bottom line is: If you donated $100, $46 was given to the hospital, $29 was spent on organizational expenses at ALSAC (with the purpose of fundraising) and $25 was put into savings (which grew from $4.1 billion at the beginning of the year to $4.7 billion at year-end because ALSAC didn’t spend as much as they received and because of net unrealized gains on the sale of assets).

Functional expenses include compensation for the 1,818 employees (179 more employees than the year before) of ALSAC whose purpose is to raise funds for the hospital. The 1,818 employees were compensated $153 million which equates to an average compensation of $84,400 each. However, 295 employees of ALSAC received more than $100,000 in compensation. The nine (9) most highly compensated individuals were reported to be:

  • $1,202,948:  James Downing, Ex-Officio Director (compensation from St. Jude’s)
  • $  893,589:  Richard C Shadyac, Jr.:  CEO and Ex-Officio Director
  • $  575,408:  Emily S Greer, Chief Administrative Officer
  • $  550,757:  Emily Callahan, Chief Marketing Officer
  • $  545,573:  Jeffrey T Pearson, Chief Financial Officer
  • $  506,710:  Sue Harpole, Chief Development Officer
  • $  532,140:  Robert Machen, Chief Information Officer
  • $  510,440:  Anurag Pandit, Chief Investment Officer
  • $  499,043:  George Shadroui, Chief Strategy Officer

As illustrated above, 9 employees received total compensation of $5.8 million. Of the 9 most highly compensated employees, 6 (67%) are male, while 3 (33%) are female.

The 990 also reports ALSAC paid for companion travel and health or social club dues or initiation fees (See Schedule J, Part III for more information).

St. Jude’s 

St Jude’s reported total revenue of $981 million ($80 million more than the prior year) which came from four (4) sources:

  • ALSAC provided $757 million (or 77% of the revenue reported);
  • Patient Care (primarily insurance companies) provided $117 million (or 12% of revenue reported);
  • Government grants provided $83 million or 9% of revenue reported); and
  • Other sources (royalties, cafeteria, vending machines, etc) provided $24 million (or 2% of revenue reported).

Total expenses for St Jude’s were $951 million, which includes $506 million paid in compensation to the 5,185 employees (256 more than the previous year), which equates to an average compensation of $97,600. However, 887 employees received more than $100,000 in total compensation. The 14 most highly compensated employees were reported to be:

  • $1,365,679:  Andrew Davidoff, Chair
  • $1,202,948:  James Downing, President and CEO, Ex-Officio Director
  • $1,016,649:  Raul C Ribiero, Faculty
  • $  944,564:  Charles M Roberts, EVP/Director Cancer Center
  • $  929,491:  Ellis Neufeld, EVP, Clinical Director
  • $  912,661:  Stephen W White, Chair
  • $  893,589:  Richard Shadyac, Ex-Officio Director (compensation from ALSAC)
  • $  889,939:  Thomas E Merchant, Chair
  • $  884,005:  Charalampos Kalodimus, Chair
  • $  845,380:  Mary Anna Quinn, EVP/Chief Admin Officer
  • $  748,857:  Carlos Rodriguez-Galindo, EVP/Chair
  • $  722,490:  William E Evans, Faculty and Former President and CEO
  • $  718,114:  Pat Keel, SVP/CFO
  • $  597,847:  James I Morgan, EVP/Scientific Director

As illustrated above, the 14 most highly compensated employees received $12.7 million.  Of the 14 most highly compensated employees, 12 (86%) are male while 2 (14%) are female.

The 990 also reports:

The organization paid for first class or charter travel, companion travel and tax indemnification and gross up payments (for more detail see Schedule J, Part III of the 990).  In a non-profit where the decision is whether to pay for first class or charter travel, companion travel and tax indemnification/gross up payments OR help more sick children and their families, the answer should always be to help more sick children and their families.

In addition:

Payments were made to two employees under the non-qualified deferred compensation plan during the year:

  • $565,425 to Raul C Ribiero
  • $412,456 to Stephen W White

Business transactions involving interested persons include:

  • Mary Rellings (compensation of $521,401) is related by family to former officer, President, and CEO, William E Evans (compensation of $722,490)
  • Susanna Downing (compensation of $59,348) is related by family to James R Downing (compensation of $1,202,948)
  • Diane Roberts (compensation of $212,895) is related by family to Charles M Roberts (compensation of $944,564)
  • Jeremy Quinn (compensation of $73,845) is related by family to Mary Anna Quinn (compensation of $845,380)

Finally, it is important to point out St. Jude’s reported a large increase ($643 million) in net assets from $4.659 billion at the beginning of the year to $5.302 billion at year-end, that is not explained by the difference ($30 million) between total revenue and total expenses. In Schedule O of the Form 990, a $613 million increase in net assets is explained as a “change in interest in unrestricted net assets of ALSAC.” No other detail is provided.

The bottom line is that St. Jude’s endowment is at a record high of $5.3 billion (note:  In 2013, net assets were $2.4 billion: in 6 years, net assets or what some people refer to as the endowment have more than doubled).  Given that the hospital’s operating expenses are about a billion annually, there is more than enough funds to keep the hospital operating  for years if all donations ceased (which is highly, highly unlikely).  The question begs:  When are they going to stop allocating hundreds of millions of dollars annually to the endowment and expand their services to help more sick children and their families?

To read additional information (Top Ten Financial Tips to Know About St Jude’s), click here.

To read “Where Does $100 to St. Jude’s Go (2018), click here.

To read the IRS Form 990 (2017) for ALSAC for the year ending June 30, 2018, click here.

To read the IRS Form 990 (2017) for St Jude’s for the year ending June 30, 2018, click here.

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