By Brett Arends
Mutual Funds Columnist
5/9/2007 10:25 AM EDT
A senior member of the Bush dynasty is about to get a large sum of money
from a company with a history of ethical violations.
Stop me if you've heard this one before.
Jeb Bush, the president's brother and former governor of Florida, is up
for election Thursday as a director of troubled hospital chain Tenet
Healthcare (THC - Cramer's Take - Stockpickr - Rating). Assuming he's
waved through, his pay in his first year would come to nearly $37,000 a day.
This is the same Tenet that had to pay $900 million to Uncle Sam last
summer to settle charges that it had overbilled Medicare and Medicaid
over many years.
Nine hundred million dollars.
The U.S. attorneys announcing the settlement accused the company of
"fraud" and trying to "manipulate and cheat the system."
Mike Leavitt, the Health and Human Services Secretary appointed by Jeb's
brother George, said the company had "fraudulently abused the Medicare
It's also the same Tenet that just paid $80 million to the IRS after an
audit found it owed back taxes going back as far as 1995.
The company recently had to restate nearly five years of earnings
statements after an investigation into its books.
And this is just the big stuff. Tenet's recent public filings read like
a police blotter. One of its clinics in South Carolina performed 436
open heart operations without certification. The company is being sued
in California by staff claiming they were systematically short-changed
on pay and overtime, in breach of the state's labor code. Three former
Tenet staff members, at a New Orleans hospital it owned, are under
investigation for allegedly euthanizing four patients following
All in all, it's hardly a surprise Tenet Healthcare stock has lost 85%
of its value over the past five years.
The company hadn't returned phone calls seeking a comment by press time;
neither had the former governor's representatives.
Tenet isn't partisan. Among its current directors is Bob Kerrey, the
former Democratic senator from Nebraska.
This will be Jeb Bush's first job since leaving the governor's office in
Tallahassee four months ago.
Of course, it's not quite the election he was hoping for. Once upon a
time, the dynasty was grooming him to run for president. But his older
brother got there first and has probably poisoned that well forever.
Chris Matthews and Wolf Blitzer won't be on hand for the vote at
Thursday's stockholders meeting. Do not expect to see many "Jeb '08"
badges around the Westin Hotel in Dallas. Somehow, the atmosphere won't
quite match the excitement of waiting for the returns from Ohio.
But Jeb, look on the bright side.
You've been complaining about your finances. Your last filings as
governor showed your net worth was down to just $1.4 million. Obviously,
that figure won't count any of the vast Bush family fortune. But still,
it's embarrassing. Who wants to ask mom and pop for extra cash every
Fourth of July? At your age, you should be buying your own yacht.
Sure, the Tenet job may look pretty tacky for someone of your standing,
but the pay isn't bad.
It's lucky the media aren't paying too much attention. Anyone reading
the public filings would have discovered that in your first year, you'll
earn $474,500 -- for 13 days' work.
That's $36,500 a day. And the "work" consists of sitting in a board
room, so it's not exactly heavy lifting.
If the board meetings last an average of four hours, you'll be pulling
in $9,125 an hour.
Not bad for a guy who could manage only a B.A. in Latin American Studies
from the University of Texas. Many of Tenet's 65,000 personnel are
qualified medical staff with years of experience. Yet according to
public filings, their average salary and benefits last year came to
around $69,000 for full-time work.
You get that in two days.
Who says all the good jobs are going to China?
I'm sure your family lawyer has already explained the details, Jeb, but
just to recap the terms: As a nonemployee director you'll get an
immediate golden handshake of $260,000 in "restricted stock units."
Nothing says "welcome aboard" quite like a quarter-million. Plus you'll
get another $130,000 in restricted stock units each year. That's on top
of your retainer of $65,000 a year.
And all that is before you turn up for a single board meeting. For each
one you attend, you get another $1,500. There's another $1,200 every
time you show up at a committee meeting.
A word of advice: Avoid the audit and compliance committees. There's too
much work and there's always the risk something will go wrong. For an
easy life, join the compensation committee. It meets only seven times a
year and you don't have to do anything. Just hire some consultants to
review executive pay, and agree to whatever they suggest. The executives
will be grateful, and that can pay real dividends down the road. See it
as using shareholder money to stock up the favor bank.
What a deal!