Carl Armato, chief executive and president of Novant Health Inc., received a 7.9% increase in salary during fiscal 2019 to $1.62 million, the health system reported Tuesday.
Armato’s incentive pay increased 9% to $1.45 million.
Total compensation for Armato was up 3.9% to $4.14 million. That includes $999,114 in retirement contributions, $40,938 in nontaxable benefits, such as life- and health-insurance premium expenses, and $24,300 in accounting accruals for deferred compensation.
Not-for-profit health-care systems are required to report executive compensation to the Internal Revenue Service in annual filings.
Fiscal 2019 represents the latest filing by Novant, which typically files its annual financial report in February.
Armato took over as Novant’s top executive in January 2012 after the retirement of Paul Wiles. His salary has risen 137.5% from $699,113 in 2011, the last fiscal year before his promotion.
Novant is based in Winston-Salem, but with a major Charlotte presence. It operates 15 hospitals, including Forsyth, Clemmons, Kernersville and Thomasville medical centers and Medical Park Hospital in Winston-Salem.
It is awaiting approval from N.C. Attorney General Josh Stein on its planned $5.3 billion acquisition of New Hanover Regional Medical Center in Wilmington.
Novant has 28,092 employees overall in its four-state network, including about 8,145 in Forsyth County.
Hospital management pay has become a hot-button issue in recent years, particularly as Forsyth and Wake Forest Baptist medical centers have cut or outsourced hundreds of jobs in response to regulatory changes.
Critics say hospital systems use their nonprofit status for tax advantages and public-relations purposes, while compensation committees have sought to justify corporate-level wages and benefits to top executives.
Some critics of paying not-for-profit executives more than $1 million in annual compensation challenge the notion of the skill level needed to run a health-care system.
The Novant Board of Trustees repeated previous language that executive compensation “must be considered ‘reasonable’ and within an acceptable range compared to similar organizations.”
“Compensation is designed to be competitive and to help recruit and retain leaders. Novant Health establishes executive base salaries in the same way it establishes compensation for all employees, by using market data and comparing to similar jobs.”
The system says “a significant part of executive compensation is based upon the performance of the organization and achieving goals that are challenging, balanced and focused on improving the services we provide to patients and communities. The executive team performs in the top quartile nationally.”
Novant reported Feb. 28 having excess revenue over expenses of $523.48 million, compared with $94 million in fiscal 2018. Excess revenue over expenses in a not-for-profit organization, such as Novant, equates to profit in a for-profit business.
The system had $5.43 billion in core operating revenue, up 9%. Operating expenses rose 12.3% to $4.93 billion.
The biggest difference was having $378.55 million in investment income for fiscal 2019, compared with a loss of $160.51 million in fiscal 2018.