Dairyland, Mayo, Gundersen CEO Pay Up 47% In Three Years

The CEOs of the three most powerful regional nonprofits saw their compensation rise by an average of 47.2% in just three years, according to public tax records.

Gundersen CEO Dr. Scott Rathgaber saw the biggest increase, with his compensation package increasing from $655,000 when he was appointed in 2015 to $1.064 million in 2018, an increase of 62.5% (although he was CEO for only part of that year).

The numbers come from 990 forms that Gundersen, Dairyland Power Cooperative and Mayo Clinic, all nonprofits, must file with the federal government. The three tax-exempt heavy hitters had combined  revenue of at least $12.8 billion in 2018, the most recent year for which their tax forms are on record, although the lion’s share of that total comes from Mayo Clinic.

Barbara Nick, the CEO of La Crosse-based Dairyland Power Cooperative, who is due to retire next month, saw her compensation package increase 42.3% to $883,000 in 2018 compared to her 2015 earnings.

Dr. John Noseworthy received compensation of $3.45 million in 2018 as Mayo Clinic CEO, up 36.9% on what he made in 2015 for the nonprofit, which is headquartered in Rochester, Minnesota, but has hospitals and clinics throughout the region. Noseworthy stepped down from the CEO position at Mayo in 2018, and was replaced by Dr. Gianrico Farrugia.

It’s worth noting that the salaries of the the three nonprofit CEOs are modest compared to the leaders of major for-profit corporations. In 2018, the CEOs of S&P 500 companies received, on average, $14.5 million in total compensation. The average CEO-to-worker pay ratio at S&P 500 compares was 287 to 1. In 1965, the ratio was 20 to 1.

Nonprofit profits

Dairyland had revenue of $482 million in 2018, compared to $451 million in 2017, and finished the year with a $9.4 million surplus. Electric cooperatives are granted federal tax-exempt status provided that 85% or more of their annual income comes from members. Dairyland provides wholesale electricity to 24 distribution cooperatives and 17 municipal utilities.

The cooperative recently hired former state Sen. Jennifer Shilling as a lobbyist. She will replace another former state senator, Brian Rude, who also once held the District 32 seat Shilling recently vacated. Rude’s compensation from Dairyland in 2018 was $346,000, a far cry from the $53,000 salary state senators receive, excluding per diem and benefits.

Gundersen Lutheran, which runs the Gundersen hospital complex in La Crosse, had revenues of $1.1 billion in 2018, up from $1.04 billion the previous year. Total expenses were around $997 million, producing a surplus of over $117 million. 

Most hospitals in the U.S. operate under a tax-exempt status, the total value of which was estimated at $24.6 billion in 2011.  However, the federal government requires that hospitals provide community benefits in exchange for getting a break on taxes. Nonprofit hospitals must report these benefits, which include the amount of charity care they offer to patients who likely cannot afford to pay for treatment.

For 2018, Gundersen provided charity or uncompensated care to 3,382 people at a cost of $2.9 million, or 0.3% of the hospital’s revenue. The much bigger Mayo system provided a proportionally slightly higher amount of charity care, at 0.7% of its revenue, or $51 million. Mayo reported $11.1 billion in revenue for 2018, which was $275 million more than the organizations expenses, according to public records.

Nonprofits also are required to report their political lobbying expenses. For 2018, for example, Mayo reported spending $1.7 million on lobbying activities at the state, local and federal level, while Gundersen reported $231,000.

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By Eric Timmons. Questions? Email lacrosseindependent@gmail.com. Featured image: Former Mayo Clinic CEO John Noseworthy being interviewed Judy Woodruff during a segment titled “Preserving excellence – delivery of complex healthcare in America” at the Aspen Ideas Festival. Credit: Bluerasberry/CC BY-SA 4.0