Stephen Schuckenbrock likely will take a big pay cut to be CEO of Accretive Health Inc. compared with the nearly $13 million he took home from Dell Inc. in 2012.
Mr. Schuckenbrock’s annual base salary at Chicago-based Accretive will be $595,000, under a one-year employment agreement, according to a filing April 5 with the Securities and Exchange Commission.
He was named CEO last week while Accretive is still sorting out a restatement of revenue going back to 2010. Sales haven’t rebounded from last year’s investigation by the Minnesota attorney general into the company’s collection practices.
As president of services at Round Rock, Texas-based Dell, Mr. Schuckenbrock’s total compensation for the year ended Feb. 1, 2012, was $12.7 million, which included bonus payments, stocks and options. His pay was second only to Michael Dell, the company’s founder, chairman and CEO. In fiscal 2011, Mr. Schuckenbrock received $5.4 million.
His base pay at Accretive is 22 percent below his base pay with the computer giant in fiscal 2012, according to filings with the Securities and Exchange Commission. Even so, the chance to be the head of a publicly traded company for the first time may have been a powerful lure.
“It’s a very big deal to be a CEO, and it’s not out of line to take a lower base salary” for the opportunity, said James Schrager, a clinical professor of entrepreneurship and strategic management at the University of Chicago’s Booth School of Business. “If you’re stuck in your own organization and can’t ever get there, you’ve got to step out.”
Mr. Schuckenbrock replaces Accretive co-founder Mary Tolan, who made $3.9 million in 2011, a record-setting year for sales at the company, which helps hospitals manage their revenue cycles.
Ms. Tolan isn’t going far. She was named chairman April 2, when Mr. Schuckenbrock was named CEO, and retains a key interest in Accretive as the second-largest shareholder, controlling a 13.1 percent stake, according to the company’s most recent proxy statement filed in March 2012.
In addition to his base pay, Mr. Schuckenbrock also is eligible for a bonus of 100 percent of his base pay of $595,000.
A key to his compensation will be Accretive’s stock price, which has dipped nearly 4 percent, to $9.61 a share on Monday from $10 a share just before he was named CEO.
As a part of his employment agreement, he received 2.9 million in stock options to vest over four years. The options have an exercise price of $9.56 a share, the closing price April 3, his first day on the job.
A spokesman for the company declines to comment except to say, “Accretive Health incentivizes its leadership team to be aligned with the long-term performance of the company.”
The Accretive offer may have been all the more enticing because Dell is experiencing the most turbulent period in its history, Mr. Schrager said.
Weeks after Mr. Schuckenbrock’s departure, speculation surfaced about a potential buyout by investors that would take the company private. Once the world’s largest PC maker, Dell since has been overtaken by rivals. It booked $56.94 billion in revenue in its latest fiscal year, two-thirds of which came from sales of computer hardware.
Accretive, by comparison, is a much smaller company, posting $826 million in revenue in 2011, the latest annual results available.
The company was flying high before April 2012, when Minnesota Attorney General Lori Swanson publicized allegations that Accretive employees were using high-pressure tactics to extract payment from patients at a Minneapolis-area health system. The company later settled a federal lawsuit with Ms. Swanson’s office. Without admitting any wrongdoing, Accretive agreed to leave the state for at least two years and pay out $2.5 million to patients allegedly affected by its practices.
More than 90 percent of Accretive’s revenue comes from so-called revenue-cycle management, in which it helps hospitals and health systems charge patients and insurers for services and collect outstanding payments.
Dell once offered revenue cycle services to hospitals and health systems, but in November it sold the business to Frisco, Texas-based Conifer Health Solutions, a subsidiary of Dallas-based Tenet Healthcare Corp.
Before joining Dell, Mr. Schuckenbrock worked from 2003 to 2007 at Plano, Texas-based Electronic Data Systems, where he was co-chief operating officer and executive vice president of global sales and services.
He also served as chief operating officer at Feld Group, an IT consulting firm, from 2000 to 2003 and was global chief information officer for PepsiCo Inc. from 1995 to 2000.