This week, California Gov. Jerry Brown signed into law Assembly Bill 130 — which will prohibit public hospital and healthcare districts from paying pension benefits to the CEO prior to his or her retirement.
The bill will take effect Jan. 1, 2014. Assemblyman Luis Alejo (D-Salinas) authored the bill after his district's public health system, Salinas Valley Memorial Healthcare System, awarded former CEO Sam Downing millions in gross pay from a supplemental executive retirement plan while he was still on the payroll.
"This legislation is a straightforward approach to prevent pension double-dipping problems and overly generous retirement benefit promises," Mr. Alejo said in a news release. "This new law will improve the transparency and accountability for the policies that healthcare districts implement to manage the retirement benefits of their top executives."
Gov. Brown's signing marks the second major hospital executive compensation law to hit California in the past year. AB 2180, which went into effect this year, requires hospital and healthcare districts to include specific information regarding compensation, retirement benefits, severance and any other benefit that differs from those available to other full-time employees, and all information must be included in employment agreements.
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