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Former Sanford Health CEO Kelby Krabbenhoft got $49.5 million after abrupt exit

Kelby Krabbenhoft, long-time CEO of Sioux Falls-based Sanford Health "abruptly left his job on Nov. 24, 2020, after he made series of controversial and unscientific comments about wearing a mask during the COVID-19 pandemic. Tax filings show he was paid a $15 million severance in addition to his annual salary and retirement plan payouts, totaling $49.5 million.

Kelby Krabbenhoft
Kelby Krabbenhoft
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SIOUX FALLS, S.D. — Former Sanford Health CEO Kelby Krabbenhoft received a $49.5 million payout as part of his abrupt departure from the health system in late 2020, according to federal tax documents filed Monday, Nov. 15, and obtained by Forum News Service.

Krabbenhoft's compensation included $15 million in severance, $29.4 million in retirement plan payouts and $5.1 million in salary for 2020, the Sioux Falls, South Dakota-based health system reported in an annual filing with the IRS.

Sanford Health cut ties with Krabbenhoft on Nov. 24, 2020 , after he made a series of controversial and unscientific comments about wearing a mask during the COVID-19 pandemic.

In a statement to media on Monday, Sanford Health explained the Krabbenhoft payout as largely a sum he would have been owed anyway, regardless of when he departed the health system.

"The majority of the compensation paid to Mr. Krabbenhoft upon his departure was contractually obligated as part of retirement plans over his 24-year tenure," the health system stated in an email. "The remainder was Mr. Krabbenhoft’s annual compensation and a severance agreement. These payments conclude Sanford Health’s financial obligations to Mr. Krabbenhoft."

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In an earlier Monday email to employees obtained by Forum News Service, current Sanford Health CEO Bill Gassen said he expected the filing that included Krabbenhoft's compensation "will raise questions, especially given the unexpected nature of his departure," and stated similar talking points later provided to the media.

A message Forum News Service sent to an email address set up for Krabbenhoft media requests bounced back as undeliverable.

Sanford Health is a multi-state health system with about 48,000 employees and major medical centers in Sioux Falls, Fargo and Bemidji, Minnesota, 224 clinics and 200 Good Samaritan Society senior care facilities.

Six days prior to Krabbenhoft's Nov. 24, 2020, departure from the health system, he had emailed employees to say he didn't think he needed to wear a mask on the job "as a symbolic gesture," because he considered himself largely immune due to antibodies he developed fighting a case of COVID-19.

Publication of the email, first reported by Forum News Service, drew national media coverage and a firestorm of comments in response.

Krabbenhoft, who is not a physician, largely defended his remarks in follow-up interviews, even as his own leadership team disavowed his comments as not in line with current medical knowledge, and acknowledged his words were likely frustrating and disappointing to Sanford's pandemic-stressed staff.

"We will continue to let science guide the work that we do every day to keep our communities healthy and safe. The science is clear, masks work," they wrote.

Sanford Health refused to disclose the terms of Krabbenhoft's severance when it announced his departure. Krabbenhoft also didn't address the terms of any severance package, issuing a statement calling the day "a good time to retire."

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Krabbenhoft was replaced by Gassen, then Sanford Health's chief administrative officer. The next week, Sanford Health halted its planned merger with Intermountain Healthcare of Utah. Gassen cited the leadership change at Sanford as the reason for the move.

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Jeremy Fugleberg is editor of The Vault, Forum Communications Co.'s home for Midwest history, mysteries, crime and culture. He is also a member of the company's Editorial Advisory Board.
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