New CEO Schramm signs Rice contract of $250K
WILLMAR -- Michael Schramm signed a contract Wednesday, officially becoming the new chief executive of Rice Memorial Hospital.
The employment agreement gives him a $250,000 annual salary, plus an annual performance incentive of $10,000 this year and $20,000 in following years.
Schramm, 38, was selected last month for the top position at the city-owned hospital. He has been the chief executive at Meeker Memorial Hospital in Litchfield for the past seven years.
On Wednesday he attended his first board meeting at Rice, in preparation for stepping into his new role in June.
"I'm looking forward to joining Rice Memorial," he said. "It's been a really busy time but I and my family are very much looking forward to the transition."
Schramm's employment agreement was drafted by the hospital board's human resources committee and reviewed by the hospital attorney. Board members approved it unanimously at their meeting Wednesday.
Dale Hustedt, the interim chief executive, said the new CEO's salary is based on market study information collected from several sources, including the Minnesota Hospital Association. The hospital also hired a consultant to conduct a study to ensure Rice would offer a salary that's competitive.
Among local public officials, the hospital chief executive's pay is among the highest. The hospital is also one of the city's largest public entities, with a $90 million annual budget and employing some 900 people at the hospital, Rice Care Center and Rice Home Medical.
Rice has generally paid salaries that are at the market median, a practice the hospital has tried to follow with nurses, paramedics and other employees as well as its executive team. Lorry Massa, the former chief executive who left last September to become the new executive director of the Minnesota Hospital Association, earned around $270,000 a year.
According to a national survey released in February by the Internal Revenue Service, the average hospital executive compensation is $490,000; the median is $377,000. The IRS information comes from a survey sent to 500 nonprofit hospitals in the United States.
The $20,000 bonus that is part of Schramm's employment agreement will be based on an annual board assessment of his performance and his success at meeting specific goals.
The contract contains a clause allowing 12 months of severance pay if Schramm is terminated for any reason other than just cause.
"That's becoming more and more the usual and customary practice," Hustedt said.
A supplement to the contract also calls for a one-time $20,000 payment on June 1 for relocation and moving costs.
Hustedt said he and Schramm have exchanged several phone calls and e-mails over the past three weeks.
"I think the transition has begun in terms of getting information to Mike," he said. "By June 1 we'll be up to speed and ready to go."