Report details fight over exec pay

North Central Health Care (NCHC) Chief Executive Officer (CEO) Michael Loy resigned July 17 a week after an investigation by a Milwaukee law firm found that he received fringe benefits approved by Wausau county supervisor Jeff Zriny, chairman of the NCHC Board, but not three other controlling bodies, including the Retained County Authority Committee (RCAC), the NCHC Board or the NCHC Executive Committee. The benefi ts included a $60,000 forgivable loan for continuing education and a vehicle stipend of $500 a month.

The circumstances leading to Loy’s resignation are detailed in a redacted report obtained through a Wisconsin Open Records Law request. The report, authored by the vonBriesen and Roper law firm, detailed that the RCAC authorized paying Loy $168,850 a year to lead NCHC, a large agency that provides mental health, substance addiction and developmental disability services for Lincoln, Langlade and Marathon counties. This sum was significantly lower than the $230,000 a year paid to Loy’s predecessor, Gary Bezucha. The RCAC also dropped the pay grade of other key employees as a result of an organizational restructuring.

The report states that Zriny was frustrated with these pay cuts, as well as general loss of control to the RCAC, even to the point of losing sleep.

Zriny’s frustration turned to action when Loy told him he had been offered lucrative jobs by other employers. Under a theory that he had power as chairman, Zriny authorized Loy get a bonus retention loan and a car allowance on Aug. 26, 2019. Other loans had already been authorized by Loy for other NCHC executives: Information Technology Executive Tom Boutain, $23,210; Chief Medical Officer executive Dr. Robert Gouthro, $100,000; NCHC Operations Executive Jarret Nickel, $7,200; and Chief Financial Officer Brenda Glodowski, $12,200.

The report states that Zriny was frustrated with the NCHC Board’s lack of authority to set salaries. “I couldn’t sleep last night and was up at 3:30 this morning thinking about the lack of leadership we have in Marathon County,” he told Loy in a November 2017 e-mail. After Loy said he was willing to turn down higher compensation in order to be named NCHC CEO, Zriny continued: “I am so angry. I appreciate your thought process. You’re doing just what they want. I’ll have to think about my strategy.”

Loy responded he was doing “the right thing” in not pushing for higher pay and Zriny should stop worrying. “We can move past this and you [can] start to sleep better,” he wrote.

In turn, Zriny said he may have “some flexibility” after Loy’s appointment to “do things behind the scene[s].”

During an Aug. 26, 2020, interview, Loy said Zriny said he approved Loy’s benefi t retention loan to make up for him being undercompensated by over $100,000 a year. Loy said that Zriny remarked: “I’m chair and you’re CEO and under this policy we can do this.”

The report states that Loy on Dec. 16, 2020, requested from Zriny that his next year’s salary be reduced by the amount of the $60,000 loan with interest.

Zriny resigned as chairman of the NCHC board on Dec. 20, 2020.

In a statement that is part of the report, Loy defends himself. He states that he had historic authority to grant retention benefits to keep employees. “I sought direction from legal counsel, the board chair and Executive Committee and ultimately acted within the authority I believed I had,” he wrote.

Further, Loy said he cannot be held responsible for his compensation when others decided how much he should be paid.

“At the end of the day, I am an employee of NCHC and somebody above me makes the decision regarding my compensation, people other than me have to process it, and then ultimately, I receive it,” he wrote. “That is what occurred here. I adamantly contend that I do not determine my compensation other than by the quality of my performance.”

Loy said he will “never understand” why his offer to repay the retention benefit was not acted on. “The fact that I could not unilaterally undo these benefi ts only reinforces the fact that I could not have effectuated them for myself in the first place,” he wrote.

Loy wrote he has repaid in full his retention bonus to NCHC.