EDMONDS — Stevens Hospital chief executive Steve McCary, whose 14-year tenure ended with a unanimous vote from the hospital board, will walk away from his job with a severance package worth more than $2 million, hospital officials said Friday.
McCary’s contract termination is effective Feb. 29. No specific reason was given for the board’s action.
"It was a decision the board made unanimously after looking at the overall state of the district," said the board’s president, Fred Langer.
Langer acknowledged that the compensation package involved a lot of money for a hospital that ended last year with an estimated $2 million operating loss.
"The best answer I can give you is it’s a cost of doing business to move forward to the next level," he said.
Dr. John Todd, the hospital’s medical director, will take over as acting chief executive of the taxpayer-supported hospital.
McCary, 48, has a severance agreement that calls for him to be paid $1.18 million over the next seven years, hospital attorney Brad Berg said. His biweekly paychecks will be $6,489, including a 3 percent payment for inflation.
McCary also will receive deferred compensation of $921,049 in retirement money, Berg said.
"That’s 13 years of investment contributions plus investment earnings," he said.
Berg said the money was a type of retirement fund that can’t be accessed until 2011, when McCary is 55.
The separation agreement prevents McCary from working for or consulting with any competing hospital in King or Snohomish counties until March 1, 2016.
Much of McCary’s severance package was spelled out as part of a 15-year contract approved by the hospital board Dec. 15, 1995. None of the board members who approved the contract are now on the board.
The deferred compensation account was set up in a contract approved by the board when McCary was named chief executive in 1990, Berg said.
McCary was hired by the hospital on May 8, 1989, as its chief operating officer.
Hospital spokesman Beth Engel said Friday that McCary declined comment on his departure.
The termination of McCary was approved by board members Langer, Deana Knutsen and Jack Tawney at a meeting Thursday that lasted approximately 30 minutes, Langer said.
No public announcement was made of the meeting. Knutsen, who was out of town, participated via telephone, Berg said.
McCary’s employment was discussed in an executive session on Jan. 21, Langer said, although no meeting was listed on the board’s agenda for that day.
Berg said he believes the meeting met the legal requirements of the state’s open meeting act, but said he would review the issue with the board next week.
When asked why the board didn’t wait until its next meeting on Feb. 18 to approve the termination, Langer said, "There’s no easy way to do this.
"You have to understand, it’s an awkward thing. … Once the decision was made, it just seemed the best thing to do was to do it with the greatest expediency and dignity possible."
The board president said there was no one event that triggered the decision.
Langer said the decision to terminate McCary’s contract was difficult and not one he took lightly. Nevertheless, "there’s no question in my mind now and during the decision process that we’ve made the correct decision for the district."
Langer said a national search for a new executive will begin in a few weeks.
In 2003, the hospital, its affiliated clinics and related businesses had an overall operating budget of $132.8 million. The hospital took in $1.65 million in tax money from a maintenance and operations levy and $2.26 million in bond money, according to hospital officials.
During McCary’s tenure, the hospital had seven years of losses. The largest was $5.8 million in 2000. Its biggest operating profit was $8 million in 1992.
Last year, a four-story, $13.8 million medical office building named Stevens Pavilion opened, housing a new women’s health center, outpatient surgery center, sleep lab and imaging center offering mammograms, X-rays and ultrasound tests.
Reporter Sharon Salyer: 425-339-3486 or salyer@heraldnet.com.
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