Tenet CEO to Receive Double Pension
The chief executive of Tenet Healthcare Corp. gets a perk that most Americans can only dream about: retirement benefit credit for twice the time he actually has worked for the company.
It’s a lucrative arrangement for Jeffrey C. Barbakow, who stands to get $1.89 million in annual retirement pay from Tenet if he stays on the job until 2004, rather than the $945,000 he would have gotten. Barbakow started getting the two-for-one credit after he had begun to turn the company around four years into the job, said Harry Anderson, spokesman for Santa Barbara-based Tenet, the nation’s second-largest hospital chain.
By earning the two-for-one credit since fiscal 1998, plus two additional years in 2004, Barbakow gets credit for 20 years of work for just 11 years on the job. Tenet has disclosed this arrangement since 1998, Anderson said.
Although exorbitant executive compensation has come under heavy fire, particularly when it involves firms that have performed poorly or are under investigation for alleged fraud, experts said this package was not unusual.
“It’s not uncommon, particularly for executives who start with a company in the middle of their careers,” said Robert Felton of McKinsey & Co. in Seattle.
Barbakow already has caught some fire for earning $4.5 million in salary and bonus last year--four times more than the CEO of HCA Inc., the nation’s largest hospital chain. Tenet’s hard tactics of getting rid of under-performing hospitals and of driving hard bargains with health plans also have earned enemies.
But analysts point out that Barbakow took a firm that was headed for bankruptcy or sale in 1993 and turned it into one of the hospital industry’s standard bearers. Tenet’s share price has increased by a factor of seven and it has tripled its hospitals, from 35 to 115.
“It might look kind of funny, but the effect is the same if they had just paid him more for the years he worked,” said Alan Garber, director of the Stanford University Center for Health Policy. “I don’t see how we should necessarily think that Tenet is doing something wrong here.”
