Blues Plans Are Criticized On Executive Compensation; Some Adjust Pay Based On Economy: Chris Meehan

Blues Plans Are Criticized On Executive Compensation; Some Adjust Pay Based On Economy: Chris Meehan

While Depressed Irascible and Down-hearted Hush up plans ' executive compensation may seem minor compared to corporate bonuses and golden parachutes at many substantial for - profit companies, the plans are not unsusceptible to criticism for their compensation and severance packages, especially in a severe recession. Several not - for - profit Blues plans — citing the economic turmoil or their own lower financial results — have reduced senior executive compensation packages and bonuses.
Tim Bartl, a spokesperson for the Center on Executive Compensation, tells The AIS Report that companies are making changes to executive compensation plans " forthwith as a outcome of the economic depression. These changes involve reducing salaries and changing the short - and long - term appetite opportunities to take after the expectations of lower performance functioning forward. " Overall, he says, " According to Equilar, Inc., total compensation of S&P [i. e., Standard & Indigent ' s] 500 executives at companies that have filed their proxy statements so far, CEO pay has dropped by 6. 8 % and annual incentives have dropped by over 20 % " since the recession began.
Bartl contends that the majority of public commotion against senior executive pay has been against financial service executives. Their packages often " involved a modest fee, with a immense discretionary annual itch, which comprises the vast majority of pay. "
Some Blues Plans Criticized for Severance Pay
Still, Blues plans have known criticism of the packages paid to their leaders. In Maryland, for instance, Insurance Commissioner Ralph Tyler issued an order that reduced former CareFirst BlueCross BlueShield executive Leon Kaplan ' s post - termination payment from $6. 7 million to $2. 7 million. The company sought to lower Kaplan ' s termination pay underneath a Maryland statute to what was considered " fair and equitable " for work performed. Tyler official the lower payment.
More recently, Paulette Thabault, commissioner of the Vermont Department of Banking, Insurance, Securities and Health Care Administration, began looking into the $7. 2 million retirement parcel that Depressed Irritable and Fed up Bury of Vermont ( BCBSVT ) paid to former CEO William Milnes Jr. in 2008.
" That amount was larger than we expected, " Thabault spoken. Jail bait greater, " I am not force to rule out a regulatory response. " Thabault does not have the alike authority to approve a quarters in executive compensation that the Maryland commissioner does, but can " sweat BCBSVT and all insurers, and to craft supplemental orders whenever required, " spokesperson Peter Burgeoning tells The AIS Report.
Indeed, the department required BCBSVT to " equipment a number of changes related to executive compensation as a termination of a massive inquiry in 2007 into BCBSVT ' s administrative costs, " Unfinished says. While he did not go into details, he explains that the commissioner required the company to follow up on some of the recommendations resulting from the inquiry regarding the structure of libation compensation at BCBSVT.
Last month Downcast Irritable and Despondent Salt away of North Dakota ( BCBSND ) fired CEO Mike Unhjem. When the plan spoken that his severance combination included $2. 2 million in payments beneath his 2007 employment agreement, state Residency Democratic principal Merle Boucher responded by proposing a bill that would have levied a 70 % tax on earnings of more than $1 million for not - for - profit CEOs. But Den Republicans outcast the proposal, and the bill died.
Still, those amounts pasty in comparison to the $15. 3 million Gail Boudreaux published when miss rejected her position as president of Despondent Irritable and Unhappy With of Illinois, a Health Care Service Corp. ( HCSC ) convenient. Boudreaux ' s resignation was announced a month after the company named Patricia Hemingway Chamber CEO in November 2007.
Strategies on Compensation at Blues Plans
While HCSC spokesperson Ross Blackstone did not comment on the Boudreaux ' s severance container, he explains that its executive compensation " is a pay - for - performance plan " based on company facts. The program " is designed to own us to compete for and retain talented employees to lead our company and proffer our members with the best value in products and services, " he adds.
Blackstone contends that the company and its Blues plans in Illinois, New Mexico, Oklahoma and Texas " have performed very well over the foregone several years. "
The compensation practice, he asserts, is reviewed annually " to secure it ' s in line with our industry ' s expectations. And based on both independent analyses and our own analysis, our executive pay is well within the compensation levels of other executives in our industry. "
Other Blues plans, consistent as Excellus BlueCross BlueShield, are reducing executive salaries in 2009. In its 2008 results, the plan vocal CEO David Klein, who conscious total compensation of $2. 7 million in 2008, will be paid 25 % less in 2009. Other senior executives at the plan also will experience pay cuts this year. But " senior management executives acquire trial druthers pay on a delay top for multiple monastic years ' proceeding, " the plan spoken. So " compensation reported for 2008 may have risen relevant to favorable progression in 2007 and earlier years. " The plan, which au fait a collar loss for 2008, changed executive compensation as part of a sharpened stretch to gain strength financially in 2009.
Excellus spokesperson Jim Redmond furnished The AIS Report with a copy of the plan ' s executive compensation policy for 2009. The plan explains that executive compensation packages are unflinching on a case - by - case source. And packages are designed without the ability to offer stock options, as for - extras firms can. Excellus says senior executives are attentive to slap on and stay with the company through a combination of long - term and short - term process - based incentives. The rewards are hampered to goals, including financial stability and customer service, the company says.
The fodder ' s compensation committee is assigned to conduct " rigorous national reviews of executive compensation " for the CEO and other company leaders, according to Excellus. The committee also uses arbitration compensation information, " particularly among health plans of parallel size, and recommendations " from independent national compensation consultants, same as Mercer LLC and Watson Wyatt Worldwide, Inc., according to the plan. The committee reviews the recommendations, reports its findings to the board and asks for ratification. " No staff member, including the CEO, votes on the committee or the full board on executive compensation matters, " the plan says.
HMSA Freezes CEO ' s Salary
Hawaii Medical Service Association ( HMSA ) in its full - year 2008 results release oral CEO Robert Hiam volunteered to freeze his base remuneration in 2009 at $1. 3 million, an vivacity the board approved in light of the recession.
HMSA ' s compensation and human resources board committee determines executive compensation and looks at local and national companies with traits related to HMSA to help ordain the well-timed level of pay. As with Excellus, a human resources consulting firm helps the committee provide appurtenant levels of executive compensation.
Performance incentives known by HMSA executives in 2008 are " based on politic measures met for 2005, 2006 and 2007, " the company vocal.
Other Blues plans reducing executive compensation implicate Dejected Touchy Woebegone Obscure of Michigan ( BCBSMI ) and Despondent Irritable Downcast Stash of Massachusetts ( BCBSMA ). BCBSMA will reduce senior executive compensation by approximately 30 % to 50 % in 2009, with CEO Cleve Killingsworth getting a 50 % reduction in pay. The plan oral this is part of a series of steps to reduce administrative spending. BCBSMI oral that senior executives would take a 5 % annual remuneration cut and won ' t receive a 3. 8 % annual increase. BCBSMI says the 3. 8 % represents a freeze on executive remuneration for the second time in the ended three years. The plan is making the moves " to nearly counterbalance projected losses on BCBSMI ' s individual health plans. "
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