The business section of today's New York Times carries an article written and reported in collaboration with ProPublica reporting that the CEO of Memorial Sloan Kettering Cancer Center in New York, Craig Thompson, is quitting the boards of two for-profit companies.
The Times reports:
Dr. Thompson has served on the board of Merck, the maker of the blockbuster cancer drug Keytruda, since 2008. He has been on the board of Charles River Laboratories, a publicly traded company that assists research in early drug development, since 2013.
The compensation for the two corporate boards is in addition to what he is paid as chief executive at Memorial Sloan Kettering, the nonprofit institution that is one of the nation's leading cancer centers. In 2016, he received $6.7 million in total compensation from the hospital and related organizations, according to the most recent Internal Revenue Service filings.
It struck me that the story here isn't so much what Dr. Thompson is getting paid by Merck or Charles River Laboratories, but what he's getting paid by Memorial Sloan Kettering. If the Times and ProPublica are correct that it was $6.7 million, that is a lot more than the heads of comparable peer institutions. I checked the most recent publicly available tax returns of the Dana Farber Cancer Institute in Boston, and it reported that its CEO, Edward Benz, earned $1,517,759. The head of the University of Texas MD Anderson Cancer Center, Peter Pisters, reportedly earns about $2 million a year.
I'm all for non-profits paying what they need to to attract excellent leaders, and if the Sloan Kettering board and donor base thinks that Dr. Thompson is creating $6.7 million a year in value, far be it from me to second-guess them. I do think, though, that as a practical matter there's probably some kind of ceiling on how high these salaries can go before they start getting some push-back from the politicians funding Medicare and Medicaid and from the employers funding private insurance premiums.