CLEVELAND (WJW) — Former MetroHealth CEO Dr. Akram Boutros “took deliberate steps” to conceal the $1.9 million in unauthorized bonuses he gave himself and “circumvented rules and processes,” an independent audit has found.
The board cut ties with Boutros in November and announced in December it would hire an independent auditor to review the company’s policies, practices and other issues involving the payments.
MetroHealth on Friday publicized the final report from that firm, BDO of Pittsburgh, which found, according to a news release:
- Boutros included himself in the pool of employees eligible for supplemental bonuses, without the approval of the board, which is the sole authority on the CEO’s bonuses
- Boutros evaluated his own performance and calculated his own bonus payouts
- Boutros then failed to disclose those bonuses to the board “on multiple occasions”
It also found Boutros excluded human resources workers from developing a plan for variable compensation and evaluating workers’ performance for bonus payouts.
Read the full report below:
Boutros has alleged his firing was retaliatory for exposing alleged Open Meetings Act violations committed by board members in its push for a new CEO. He’s since sued the board for defamation and breach of contract.
Boutros’ attorney in a statement Friday claimed the BDO report was biased, since the auditor was contracted by Tucker Ellis — “the same law firm that produced the biased and incomplete initial report”:
The report continues to deny allegations that we could definitively prove to be true today: The MetroHealth Board of Trustees approved the bonus program. They knew the CEO was included in the program. They approved the bonus payments for all eligible employees every year. The bonuses were awarded only after a robust assessment.
The BDO report does however highlight that the Board on multiple occasions fully delegated authority of salary, and wages for all employees to Dr. Boutros and that Dr. Boutros’s bonus payments were made only after board approval of the bonus amounts for all eligible employees.
At the end of the day, the Board falling down on the job and supposedly not knowing about a bonus program for 200 leaders over five years does not equal concealment. The Board’s continued response is an unparalleled admission of Board malfeasance.Attorney Jason Bristol
BDO’s analysis also showed several weaknesses in the system’s processes for compensation:
- There was a lack of formal policies and procedures for giving out the performance bonuses
- The chief financial officer didn’t segregate the duties for CEO performance bonuses
- The CFO didn’t confirm that trustees had authorized the CEO’s bonuses
- The total available pool for performance bonus payouts provided an opportunity for the CEO’s payouts
- The incentive compensation programs for the CEO were not specified and resolution wording changes were not identified
In the meantime, MetroHealth trustees are “taking specific steps” to strengthen oversight:
- Annual compensation for the CEO must now be approved by trustees in a separate resolution and audited
- Compensation consultants must now verify details of the CEO’s pay and benefits with human resources, “rather than relying on data provided by the CEO alone”
- The board will now get actual payroll data for all senior executives at least once a year
- A new compensation committee will manage all policies and procedures for paying executives
- A new position the board is now looking to fill will supervise human resources and give regular updates to the board