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KershawHealth releases CEO exit package

Posted: August 9, 2013 6:34 p.m.
Updated: August 12, 2013 5:00 a.m.

Donnie Weeks will officially retire as president and CEO of KershawHealth on Jan. 3, 2014, according to documents obtained Friday by the Chronicle-Independent through a S.C. Freedom of Information Act (FOIA) request. On that date, Weeks will receive a lump sum payment of $524,000, “which is intended to be the rough, approximate equivalent of the value of one year’s cumulative compensation and benefits,” according to a transition agreement and release obtained as part of the FOIA request.

However, that may not be the total amount of Weeks’ payout for retiring two years ahead of the end of his current employment agreement in January 2016. The transition agreement and release also states that the $524,000 amount does not include the cash value of Weeks’ accumulated but unused “PTO,” or paid time off, balance. That amount -- which was not disclosed in the document -- will also be paid out on Jan. 3, 2014. It did state that the total payout could be affected by “tax treatments.”

The transition agreement and release has no legal effect until approved by the KershawHealth Board of Trustees during its next public meeting, which is not scheduled until Aug. 26.

The transition agreement and release, signed Thursday, includes language stating that it “is the compromise of doubtful and disputed potential claims,” but that it should not “be construed as an admission of liability on the part of the parties released and the parties herby released deny liability of any nature or kind whatsoever to Mr. Weeks.”

During much of the past 10 months, some members of both the KershawHealth Board of Trustees and Kershaw County Council have been critical of Weeks and past decisions, including those approved by previous and current members of the board.

Through the transition agreement and release, Weeks has agreed not to make any disparaging remarks about KershawHealth, its employees and agents; KershawHealth and the board have agreed not to make any disparaging remarks about Weeks.

As part of his existing compensation, Weeks receives a health insurance benefit, the premiums for which are paid by KershawHealth. Once he retires, the transition agreement and release states, he will be “exclusively responsible for the health insurance premium costs of any continuation insurance coverage for which Mr. Weeks is eligible under ‘COBRA.’”

Unless a successor is named prior to the Jan. 3, 2014, date, Weeks will continue to “keep all duties, responsibilities and authority entrusted to him.” However, even if a successor is named prior to that date, it will not affect his receiving the $524,000 and PTO payout. In addition, Weeks has agreed to make himself available for consultation purposes through June 1, 2014.

In exchange, KershawHealth is agreeing not to enforce any non-compete or non-solicitation agreements contained in his current contract, allowing him to seek other employment without penalty.

The transition agreement and release also revealed that KershawHealth has agreed to pay attorney Terry E. Richardson, of Richardson, Patrick, Westbrook & Brickman’s Barnwell office, $5,000 for his legal services in connection with preparing the transition agreement and release.

The document also have both Weeks and KershawHealth agreeing not to sue each other under various state and federal laws, with “the Age Discrimination in Employment Act” printed in bold letters. However, the agreement and release allows him to rescind his waiver of any potential age discrimination claim within seven days of the date he signed the agreement.

For comparative purposes, the Chronicle-Independent included in its FOIA request Weeks’ current employment agreement with the hospital. The C-I recently reported that, as of 2010, Weeks was earning a base salary of $317,000 with his contract extended to January 2016. Documents obtained in the FOIA request showed that amount to actually be $316,511.

Among the documents obtained through this part of the FOIA request are a pair of Sept. 30, 2012, KershawHealth personnel action forms, both signed by then Board Chairman Scott Ziemke on Dec. 23, 2012. The first form indicates that Weeks was earning a base salary of $328,443 and that he was receiving a $5,551 increase to a new base salary of $332,994. The second form dealt with his “variable pay award,” based upon meeting certain goals. At the bottom of the form is a formula showing that his award that year -- based on his pre-raise base salary of $328,443, multiplied by 40 percent and then multiplied again by 50 percent -- came to $65,689.

Attached to those personnel action forms were Weeks variable pay goals for the 2012 fiscal year, ending Sept. 30, 2012. They covered a host of items in three categories: quality, safety and satisfaction; financial; and strategic. If Weeks had met all the goals in full, the 50 percent figure in the bonus calculation could have been 125 percent. In other words, it would have been $328,443 x .4 x 1.25, which would have increased his bonus for Fiscal Year 2012 to $164,221.50.

However, under quality, safety and satisfaction, Weeks appears to have met only five of the 15 goals; only one of three goals under financial; but met all eight goals under strategic.

Going back another year, documents obtained through the FOIA request showed that in September 2011, Weeks’ base Fiscal Year 2010 salary of $316,511 was increased by 3.77 percent to the $328,443 base salary. His variable pay amount for Fiscal Year 2011 was $96,219. Based on the goals he met that fiscal year, Weeks’ second bonus multiplier came to 75 percent, but the board granted him an additional 1 percent factor. That year, he met seven of the 15 quality, safety and satisfaction goals; all three of the financial goals, but did not meet the full requirements of two of them; and six of the eight strategic goals.

The requested documents also showed that Weeks earned a base salary of $310,306 in Fiscal Year 2010, with a $59,190 variable pay bonus, the same bonus he received during Fiscal Year 2009. Weeks did not accept a salary increase that year. Based on a weekly salary figure on a Sept. 1, 2008 personnel action form, Weeks’ base salary was $292,090 during Fiscal Year 2008.

Weeks’ current employment agreement, originally signed in 2008 and amended several times since, listed out the requirement that any “severance benefits” be paid out as a lump-sum payment. His incentive compensation -- the variable pay award -- was not to exceed 35 percent of his base salary. His total compensation was to range between the 75th and 90th percentiles “of all similarly situated organization for fully comparable positions.” Board members said in 2010, when Weeks’ employment agreement was modified to eliminate automatic one-year extensions, that his base salary was in the mid-range of similar public non-profit healthcare organization CEOs. In addition to the variable pay award and his base salary, the 2008 employment agreement noted that Weeks was allotted vacation, retirement benefits, welfare benefits, term life insurance (with a $660,000 death benefit), and a $7,200 annual automobile allowance.

In addition, an amendment to Weeks’ 2008 employment agreement indicated that KershawHealth agreed -- from Oct. 1, 2010, to Sept. 30, 2015, to place $9,500 per month into a Supplemental Executive Retirement Plan. On an annualized basis, that would equal $114,000.

The 2008 employment agreement also spelled out under what conditions Weeks could be terminated for cause: being convicted of a felony, embezzling funds from the hospital or causing KershawHealth to be excluded from participating in Medicare or Medicaid programs unless he did so by following directions from the board. If he had been terminated for cause, Weeks would have only received a severance package of his accrued salary, accrued but unpaid paid time off and any “vested deferred compensation contributions.”

The 2008 agreement stated that KershawHealth recognized that “Medical Staff discontent, agitation, or other disruptive behavior, including, but not limited to, requests for Executive’s resignation or ‘votes of no confidence’ shall not constitute ‘cause’ for termination.

However, it also entitled the board to fire Weeks without cause, but did not state under what conditions that could take place.

Friday, KershawHealth also issued a press release officially announcing Weeks’ plans to retire. It noted that he oversaw both a major expansion of the facility in 2004 and the opening of the Elgin outpatient/urgent care center in 2008.

Trustee Don Witham -- who has served on the board twice, including as chairman -- further summed up Weeks’ accomplishments.

“Quite simply Donnie led our transformation from a small rural hospital into a comprehensive community healthcare system,” Witham said. “Today, KershawHealth cares for the people in our community in ways we couldn’t have imagined when I first served on the board.”

Current Chairman Paul Napper said Weeks’ 16 years of leadership has put KershawHealth in “excellent position” to adapt to changes in American healthcare.

“The healthcare services and facilities available to our community have grown significantly during his tenure,” Napper said. “This has been accomplished while maintaining relatively low debt and strong cash reserves. All of that represents a strong foundation for the future.”

The press release stated that the board of trustees is currently considering options for a search to identify a new CEO. It did not include any statement concerning a possible interim CEO should Weeks leave before a new lead executive is chosen.

Weeks had the last word in the press release, reflecting on his 16 years with KershawHealth.

“It has been a privilege to serve the people of Kershaw County and to be a part of all that has been accomplished in these years,” he said. “KershawHealth’s Christ-like mission to care for everyone reflects my own faith, and that is why my time here has been so personally fulfilling.”

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