LMH funded executive retirement program in years leading up to merger

GREENEVILLE, TN (WJHL) - In the years leading up to its merger with Mountain States Health Alliance, Laughlin Memorial Hospital gave its top executives roughly $1.2 million in combined deferred retirement benefits, according to tax records. Those hospital-funded incentives are only awarded to senior staff who are designated by LMH's board, according to a hospital spokesperson.

The Greeneville not-for-profit hospital merged with MSHA a week ago today.

According to tax records, three executives in all benefited from the board's decision more than a decade ago to create the retirement program. All three have worked for LMH for more than 30 years, according to a spokesperson.

Tax records show board members awarded CEO Chuck Whitfield more than $675,000 in deferred retirement pay in the 2013 tax year on top of his $330,000 base pay. The $675,000 plus is the culmination of 10 years of deferred compensation and earned interest, according to LMH Human Resources Director Noah Roark.

"Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a later date after which the income was earned," Roark said. "Examples of deferred compensation include pensions, retirement plans, and employee stock options. This deferred compensation was fully funded by the hospital."

Just a year later, tax records show the hospital's Chief Financial Officer Mark Compton and Roark received deferred retirement compensation too. The 2014 tax filings show Compton collected roughly $307,000 on top of his $185,000 base pay and Roark collected more than $232,000 on top of his $140,000. Both payouts also represented 10 years of retirement savings.

"The 457 (f) plan was created by the IRS as a way for executives to defer compensation as part of their retirement savings," Roark said. "In a for-profit company, the CEOs can generate equity for retirement by holding stock, but in a not-for-profit like Laughlin Memorial Hospital, we don't have that option, so our executives use the 457(f) as a way to save for retirement. The 457(f) allows an executive to defer a portion of his or her compensation so it can earn interest pre-tax, but there is a limit to how long it can stay in that account. In our case, we are required to disburse those funds after 10 years of employment, and those funds are taxed when they are paid out."

Roark originally arranged an on-camera interview with the board chairman to talk about the compensation, but cancelled the day before that interview was scheduled.

"Our hospital board would prefer that Mr. (Dominick) Jackson not conduct an on-camera interview," Roark told us over email.

We sent multiple emails asking for clarification of the reason behind the cancellation.

"In my role as Director of Human Resources I am not privy to the reason for the board's decision not to conduct an on-camera interview," Roark said initially."

We requested he ask the board for an explanation.

"Unfortunately, I was not able to obtain an explanation from the board," he said in an email yesterday.

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