Public Hospital District Gave Severance Pay to CEO Prior to Retirement

In 2008, Salinas Valley Memorial Healthcare System gave then-CEO Samuel Downing a cash payment of $947,594 from a special severance fund even though he continued working at the public hospital district until last month, according to records obtained by the Los Angeles Times.

Background

The new finding about the severance payment comes as SVMH is under scrutiny for the compensation and retirement packages it provided to Downing.

Earlier this month, the Assembly ordered an audit of SVMH's finances following reports that Downing received $3.9 million in supplemental retirement payouts in addition to his $150,000 annual pension when he left the company in April.

Severance Payment in Question

Experts say that employers typically provide severance payments to employees who are forced out of their jobs.

Jeff Christenson -- compensation consultant at Integrated Healthcare Strategies -- said, "It's absolutely outside of the industry standard to pay a severance upon retirement."

SVMH Response

Officials at the public hospital district said the severance payment stemmed from an earlier agreement between Downing and a previous SVMH board of directors.

Mike Profumo, a financial consultant for SVMH, said the hospital district's board also had concerns about how the severance money would be taxed after Downing turned 65 (Allen, Los Angeles Times, 5/19).