Executive Compensation at Memorial Hermann Health (2020)

Memorial Hermann Health System (MHHS) is a Houston-based tax-exempt, non-profit healthcare provider with more than 29,000 employees and 6,000 physicians that serve in 17 hospitals (14 that the organization owns and 3 in which they have joint ventures) and nearly 300 care delivery sites in the Houston, Texas metropolitan area.

MHHS consists of many organizations (non-profits, corporations, trusts, and partnerships) but for the purpose of this post, the executive compensation reported on MHHS – a 501 (c) (3) – is addressed.

Key financial information on MHHS, as reported on the Form 990 (2019 for the year ending June 30, 2020) include:

1. There are 22 members (directors) in the governing body (Board of Directors), 19 of whom are independent, although there are 25 listed on the Form 990, Part VII.  21 of the 25 (84%) directors are male while 4 of the 25 (16%) are female.
2. Total revenue was $5.6 billion (compared to $5.4 billion in 2019 and $4.8 billion in 2018) most of which came from patient services (net) – $5.2 billion.
3. Expenses totaled $5.2 billion (including $309 million in depreciation) with the five largest expenses reported to be:  compensation ($2.4 billion), fees for services ($949 million), medical supplies ($883 million), office-related expenses ($343 million), and equipment rental and maintenance ($176 million).
4. Net assets increased from $4.1 billion to $4.7 billion from 2018 to 2019 and from $4.7 billion to $5.1 billion from 2019 to 2020, an improvement primarily attributable to spending less than received.

29,745 employees received $2.4 billion in compensation, which equates to an average compensation of $81,000.  4,210 employees received more than $100,000 in compensation with the 18 most highly compensated reported to be:

• $3,587,445:  Charles D Stokes, CEO, President
• $1,708,435:  Erin S Asprec, EVP, Acute Care Services/CTO
• $2,124,760:  Myron M Shabot, Former Officer
• $1,561,489:  Brian Dean, EVP, CFO, Treasurer
• $1,486,246:  Deborah Gordon, EVP, CAO, CLO, Secretary
• $  701,893:  Carroll E Aulbaugh, EVP, CFO, Treasurer
• $1,032,123:  Angela Shippy, SVP, CQO
• $1,094,902:  Joshua Urban, SVP, CEO-NE/TW
• $1,137,381:  Gregory L Haralson, SVP, CEO-SW/SL
• $1,019,602:  Paul C O’Sullivan, SVP, CEO-Memorial City
• $  951,055:  Susan Distefano, SVP, CEO-Children’s Hospital
• $1,281,658:  James McCarthy, EVP, CPE
• $  926,890:  Christopher M Halaska, SVP, CIO
• $  957,802:  Kyle Price, SVO, CEO-SE/PL/Heartvas
• $  910,508:  Lori P Knowles, SVP, CHRO
• $  875,241:  Amanda Hammel, SVP, CIO
• $  699,625:  David Callender, CEO/President 9/1 to Present
• $  558,988:  Warren Shea, VP, Asst Secretary

12 of the 21 (67%) most highly compensated employees are male while 6 of the 18 (33%) are female.

As illustrated above, Charles D Stokes, the President and CEO was the most highly compensated employee with nearly $3.6 million in compensation.  Mr. Stokes compensation over the past 5 years was reported to be $13 million:

• $3,587,445:   2020
• $2,825,968:  2019
• $2,277,116:  2018
• $2,214,625:  2017 (J Woltermandan, a special advisor revived $19 million in compensation)
• $1,970,347:  2016 (J Woltermandan, Pres and CEO received $5.3 million in compensation)

To read about contributions to the non-qualified supplemental retirement plan, see Schedule J, Part III, Supplemental Information on the Form 990.

308 independent contractors received more than $100,000 in compensation with the five (5) most highly compensated reported to be:

• $78 million:  JT Vaughn Construction, of Houston, TX for contractor
• $61  million:  Crothall Healthcare, of Chicago, IL for housekeeping
• $29  million:  Siemens Medical Solutions USA, of Malvern, PA for contract services
• $14  million:  Carefusion, of San Diego, CA for medication management
• $13 million:  Mark III Systems, Inc., of Houston, TX for digital solutions

To read the IRS Form 990 (2019 for the year ending June 30, 2020), click here.