PA Court Exempts Hospital Where Executive Pay Includes Bonus Based on Financial Performance

Hospital does not operate for private profit where total comp is “reasonable” and competitive within the industry

The Pennsylvania Supreme Court has clarified its standard for determining whether a charity should lose its state charitable tax exemption for violating its requirement to operate “entirely free” from private profit motive. It has held that an executive compensation bonus based in part on the economic results of a hospital is permissible where the total compensation is reasonable and is within the fair market value when compared to similar executives in similar institutions.

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PA Court Exempts Hospital Where Executive Pay Includes Bonus Based on Financial Performance

PA Court Exempts Hospital Where Executive Pay Includes Bonus Based on Financial Performance