Integrated Health chief took a cut in '98

No bonus for Elkins as earnings disappoint

Executive pay

May 08, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

As a result of the company's disappointing performance, Robert N. Elkins, chairman and chief executive officer of Integrated Health Services Inc., did not earn a multimillion-dollar bonus last year, according to a company proxy statement.

He did collect $809,935 in salary. In 1997, Elkins picked up $752,277 in pay and $3.25 million in bonuses.

The company, which is based in Owings Mills and operates nursing homes and other health businesses, agreed to pay $14 million in severance and other payments to its departing president, Lawrence P. Cirka.

The company announced in March 1998 that Cirka was leaving "to pursue other interests." IHS said in a statement, "Mr. Cirka's departure is amicable."

According to the recent proxy statement, IHS concluded a settlement agreement with Cirka in July calling for $11.3 million in severance, $2.47 million from a "supplemental retirement plan" and $262,244 in "deferred compensation."

Deducted from the severance payment was $4.85 million Cirka paid for a house in Florida that he had been leasing from IHS and $1.45 million in principal and interest due on a loan to Cirka from the company.

Elkins, who founded the company in 1986, receives a bonus equal to his annual salary if the company meets earnings goals set by the board of directors, according to the proxy statement.

He also received bonuses over the past few years tied to the sale of IHS' pharmacy division, the spinoff of a subsidiary and the acquisition of a home health company that has since been sold.

The company has not been performing up to expectations. In the fourth quarter of 1998, it earned 37 cents a share -- about half as much as analysts had been expecting. And in the first quarter of this year, it lost 13 cents a share -- about twice as much as analysts had projected.

Its troubles stem primarily from a new Medicare-reimbursement scheme designed to save $9.2 billion over five years.

Integrated has specialized in nursing homes that treat not just the elderly with long-term stays but recuperating hospital patients who need rehabilitation. Medicare pays for many of these patients and, when its rates were cut, Integrated's revenue dropped.

Integrated stock, which traded at nearly $40 a share a year ago, fell 25 cents in trading yesterday to close at $4.50 a share.

Other nursing home stocks have similarly seen their prices decimated after Medicare payments dropped.

Pub Date: 5/08/99

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