The median employee pay was less than $55,400 last year, counting exclusions permitted by the SEC’s rule.
The top executive for Nashville-based HCA Healthcare Inc. earned 312-times as much in 2017 as did the for-profit healthcare facility operator’s median employee.
Chairman and CEO R. Milton Johnson’s total annual compensation was nearly $17.3 million last year, while the median total annual compensation of all HCA employees was less than $55,400, according to documents the company filed Friday with the Securities and Exchange Commission (SEC).
Companies are beginning this year to make the pay ratio disclosures as required by the Dodd-Frank Act’s financial reforms, after the SEC adopted a rule in 2015 to implement the requirement.
Rather than wringing their hands over the prospect of unflattering news stories stemming from their pay ratio disclosures, most employers are concerned with how their own employees will take the information, David Wise, a senior client partner at Korn Ferry, told The Washington Post.
“I think they’re worried about how their own people will react,” Wise said. “How do you communicate to an employee who now knows they’re paid in the bottom half of the company?”
In calculating its pay ratio, HCA excluded 6,783 of its employees in the United Kingdom and 4,981 of its employees added as a result of 2017 acquisitions—which excluded about 4.7% of the company’s workforce.
“The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices,” the company noted in its filing.
“As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.”
In assembling HCA’s executive compensation package last year, the company reviewed data from a number of other companies, including several providers, such as Community Health Systems, LifePoint Hospitals, Tenet Healthcare Corp., and Universal Health Services.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.