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Highmark Health executive pay drops as performance goals go unmet

Natasha Lindstrom
| Tuesday, Nov. 14, 2017, 6:27 p.m.
Highmark Health is the parent company of Allegheny Health Network.
Highmark Health is the parent company of Allegheny Health Network.

Highmark Health President and CEO David Holmberg made $2.62 million last year — more than $1 million less than he pocketed during his first full year leading the nonprofit health care system, tax records filed Tuesday show.

Holmberg was one of several top executives for Highmark Health whose pay declined last year because the company failed to meet requirements for earning performance-based bonuses during the 2015-16 fiscal year, Highmark spokeswoman Lynn Seay said. Highmark Health includes insurer Highmark Inc. and Allegheny Health Network.

“In general, from 2015 to 2016, incentive-based compensation declined because the organization did not meet all of the objectives of the incentive plans,” Seay said.

Last year's highest-paid employee was John Paul, the hospital system's director and president until January 2016. He made $3.02 million — or $700,000 more than in 2015.

Among senior executives who received reduced pay and benefits:

• Karen Hanlon, chief financial officer and treasurer, made $1.1 million, about $300,000 less than the previous year.

• Dan Onorato, government relations and community affairs officer and former Allegheny County chief executive, made about $803,000, about $200,000 less.

• Thomas VanKirk, secretary, made about $967,000, about $880,000 less.

Highmark Health reported about $230 million in revenue during the 2015-16 fiscal year but lost about $26 million — down slightly from a $34 million deficit in 2014-15, the nonprofit's Internal Revenue Service Form 990s show.

Seven doctors cleared $1 million in pay and benefits: Dr. Donald Whiting, $1.77 million; Dr. Daniel Altman, $1.55 million; Dr. Gregory Altman, $1.5 million; Dr. Edward Westrick, $1.44 million; Dr. Nicholas Sotereanos, $1.32 million; Dr. Patrick Demeo, $1.29 million; and Dr. David Parda, $1.11 million.

Heftier bonuses could be paid out this year if the company demonstrates improvement across a range of areas including financial performance, enrollment, quality and service measures and strategic initiatives.

In August, Highmark Health reported an operating gain of $505 million for the first half of the year, attributing the improvement to improved performance of its government lines of business and Allegheny Health Network hospitals. The seven-hospital Allegheny Health Network reported an operating gain of $13 million for the half-year, following a 2016 operating loss of $39 million.

Holmberg — promoted from within to lead the company in May 2014 — made about $3.2 million for 2013-14 and about $3.8 million in 2014-15.

His latest $2.6 million compensation package included $1.32 million in base pay, $900,000 in bonuses and more than $300,000 in other reportable compensation, retirement plans and benefits.

Highmark's 2015-16 payouts also included $708,000 in severance for Holmberg's predecessor, William Winkenwerder Jr. Winkenwerder made $9.8 million in 2014 and another $1.6 million in 2014-15 as part of his separation agreement.

Highmark Health's board of directors approves compensation for the company's CEO, Seay said. A personnel and compensation committee sets pay for most senior executives. The committee hires an independent consultant to help.

Highmark rival UPMC operates on a different budget timeline and has not yet made public its 2016 tax records. UPMC CEO Jeffrey Romoff made $6.99 million in 2015.

Natasha Lindstrom is a Tribune-Review staff writer. Reach her at 412-380-8514, nlindstrom@tribweb.com or on Twitter @NewsNatasha.

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