Did CEO of Valley Children’s Hospital take a pay cut? Here’s what tax documents show

In the Spotlight is a Fresno Bee series that digs into the high-profile local issues that readers care most about. Story idea? Email tips@fresnobee.com .

After months of public scrutiny of its executive pay structure, Valley Children’s Hospital in Madera County made its most recent federal nonprofit tax filings public on Friday, showing a total compensation of $3 million for its CEO in the tax year ending Sept. 30, 2023.

That’s a decrease of about $2 million to CEO Todd Suntrapak’s compensation from 2022 , when the hospital’s tax filings, recorded on the IRS Form 990 for nonprofits, showed Valley Children’s compensated him $5.1 million and also gave him a forgivable $5 million home loan. That year, Suntrapak was the third-highest compensated children’s hospital CEO in the nation, despite Valley Children’s bed count ranked 16th in the nation for children’s hospitals.

The hospital’s tax filings for 2021 show he was compensated a total of $5.5 million that year.

“The Form 990 for fiscal year 2023 shows — as Valley Children’s indicated earlier this year — that the compensation figures for Mr. Suntrapak for the two prior years were an anomaly resulting from a one-time accounting change and adjustments to retirement benefits,” Valley Children’s said in a statement Friday.

Fresno City Councilmember Miguel Arias, who has been critical of Valley Children’s since March, told The Fresno Bee on Friday that he thinks executive compensation at the hospital is still too high. Arias and Councilmember Garry Bredefeld called for a state investigation into the hospital’s finances in March.

“The million-dollar compensations continue with the folks from the previous year,” Arias said in a Friday phone interview, referring to the six executives compensated more than $1 million, according to the new tax filings.

Arias also noted that Suntrapak’s $3 million compensation comes after two consecutive years of “exorbitant” pay.

“It’s worse than I expected,” Arias said of the hospital’s new tax filing.

Suntrapak’s compensation is decided by the Valley Children’s Healthcare Board of Trustees, which sets policy for its entire healthcare network across the Central Valley. In its statement, the hospital said the board sets its CEO’s compensation and benefits based on his “12-year tenure, performance against goals and information on comparable compensation packages provided by nationally recognized compensation consultants.”

“It includes retirement contributions and retention considerations, recognizing the disruption that would occur to Valley Children’s leadership team if we had to search for a new CEO,” the hospital said.

Suntrapak and Valley Children’s Board Chair Michael Hanson repeatedly declined The Bee’s multiple requests for an interview about the hospital’s compensation structure after news of its executive pay levels broke in March. The Bee attempted to contact Hanson through hospital spokesperson Zara Arboleda, his Sacramento County Office of Education work email, and at his home in Sacramento County, but did not reach him.

The Bee also attempted to contact Suntrapak in April at his home in the Monterey County city of Carmel-By-The-Sea, which property records show he purchased for $6.5 million in 2022. The hospital never confirmed whether the CEO used the $5 million forgivable loan it granted that same year to make the home purchase in the beach town that’s about three hours away from the hospital.

Hanson defended Suntrapak’s compensation and the hospital through prepared statements earlier this year, calling scrutiny of the nonprofit’s finances the product of “ misinformation ” and an “ill-informed reading” of its tax forms. The board chair also explained Suntrapak’s $5 million home loan, described in the hospital’s 2022 tax filings as a loan “in lieu of other compensation,” as a tool that’s not uncommon for retaining executives.

“We are fortunate to have leaders of the caliber of our CEO Todd Suntrapak at a time when there is intense nationwide competition for them, and to have the kind of staff that provides the level of care our community has come to expect,” Hanson said in a prepared statement in March, responding to Fresno City Councilmembers’ calls for a state investigation .

The CEO took the brunt of the public backlash this year against Valley Children’s, long considered a trusted go-to nonprofit for charitable donations for area residents and known for its donation drives at local fast-food restaurants. The hospital is considered one of the best for children in the nation, serving a 12-county region, often touting that more than 70% of its patients are beneficiaries of Medi-Cal, the state’s insurance program for low-income people.

Community benefits spending

The hospital has also faced criticism this year over how much its spends on community benefits, such as free medical care for some patients. In June, an analysis by The Fresno Bee of Valley Children’s 2022 tax filings found that the hospital spent $15.4 million on community benefits, which was 2% of its total spending. That year, the hospital held $2.1 billion in assets , and the following fall announced its plans to build a shopping center on its nearly 500-acre campus around Highway 41 in Madera County, where it has expanded rapidly in recent years.

Valley Children’s addressed criticism of its re-investments, stating on Friday that the $66 million that its latest tax filings show were spent on community benefits “only presents a limited picture of our impact.”

“In fact, Valley Children’s has spent more than $1 billion over the past 11 years in support of our community through programs, equipment and facilities, and direct charity care,” the hospital’s statement said.

What about the other executives?

Total compensation figures for some of the other highest-paid Valley Children’s executive officers received slight changes to their pay. Michelle Waldron, a senior vice president who was compensated a total of $2.9 million in the tax year ending Sept. 30, 2022, and was the second highest-compensated executive that year, saw her pay dip to $1.3 million in the latest tax filings.

In total, six executives at Valley Children’s were compensated more than $1 million in the 2023 tax year — the same as the year prior.

The tax filings posted Friday show “split insurance” loans to Valley Children’s executives with a “balance due” total of more than $50 million, an increase of about $20 million from the previous year’s documents. The current tax filing explains these “loans” as life insurance-based arrangements with “certain key executives.” According to IRS instructions for filling out the Form 990, split-dollar life insurance arrangements are meant to be documented in the “Loans to and/or From Interested Persons” section of the tax filing.

Valley Children’s explained in the tax filing that “under the arrangements, the hospital will accrue investment returns and interest on the premiums paid for the life insurance policies. Upon the death of a covered executive, the hospital will be repaid the investment and accrued returns and any remaining excess proceeds will be donated to the hospital to be used to serve the community.... The value of this donation as of 9/30/23 is estimated to be in excess of $78.9 million.”

“The purpose of these arrangements is to retain the executives for a specified period of time and therefore access to this benefit is subject to vesting requirements,” according to the tax filing.

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