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 Down-hearted Cross and Down-hearted Ditch plans ' executive compensation may seem trivial compared to corporate bonuses and golden parachutes at many goodly for - profit companies, the plans are not immune 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 " any more as a aftermath of the economic recession. These changes involve reducing salaries and changing the short - and long - term yearning opportunities to resonate the expectations of lower performance working forward. " Overall, he says, " According to Equilar, Inc., total compensation of S&P [i. e., Standard & Destitute ' 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 ring against senior executive pay has been against financial service executives. Their packages often " involved a modest stipend, with a substantial discretionary annual appetite, which comprises the vast majority of pay. "
Some Blues Plans Criticized for Severance Pay
Still, Blues plans have notorious 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 unbiased " for work performed. Tyler certified 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 carton that Gloomy Tetchy and Dispirited Salt away of Vermont ( BCBSVT ) paid to former CEO William Milnes Jr. in 2008.
" That amount was larger than we expected, " Thabault spoken. Lassie enhanced, " I am not working to rule out a regulatory response. " Thabault does not have the alike authority to approve a chicken feed in executive compensation that the Maryland commissioner does, but can " go over BCBSVT and all insurers, and to craft supplemental orders whenever imperative, " spokesperson Peter Newborn tells The AIS Report.
Indeed, the department required BCBSVT to " contraption a number of changes related to executive compensation as a returns of a huge inquiry in 2007 into BCBSVT ' s administrative costs, " Early 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 gift compensation at BCBSVT.
Last month Low Crotchety and Downcast Shield of North Dakota ( BCBSND ) fired CEO Mike Unhjem. When the plan spoken that his severance container included $2. 2 million in payments unbefitting his 2007 employment agreement, state Mansion Democratic master 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 Stomping grounds Republicans left the proposal, and the bill died.
Still, those amounts wan in comparison to the $15. 3 million Gail Boudreaux celebrated when wench empty her position as president of Melancholy Crotchety and Melancholy Bury of Illinois, a Health Care Service Corp. ( HCSC ) suitable. Boudreaux ' s resignation was announced a month after the company named Patricia Hemingway Entry 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 discernment. The program " is designed to concede us to compete for and retain talented employees to lead our company and support our members with the best market price 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 bygone several years. "
The compensation practice, he asserts, is reviewed annually " to arrange 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, close as Excellus BlueCross BlueShield, are reducing executive salaries in 2009. In its 2008 results, the plan vocal CEO David Klein, who admitted 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 close way appetition pay on a dally induction for multiple monastic years ' course, " the plan vocal. So " compensation reported for 2008 may have risen becoming to favorable progress in 2007 and earlier years. " The plan, which sagacious a snare loss for 2008, changed executive compensation as part of a exceptional elbow grease to rally 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 unhesitating on a case - by - case commencement. And packages are designed without the ability to offer stock options, as for - assistance firms can. Excellus says senior executives are occupied to mix and stay with the company through a combination of long - term and short - term system - based incentives. The awards are hampered to goals, including financial stability and customer service, the company says.
The foodstuff ' 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 selection compensation information, " particularly among health plans of homogeneous size, and recommendations " from independent national compensation consultants, parallel 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 verbal CEO Robert Hiam volunteered to freeze his base pay in 2009 at $1. 3 million, an ball game 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 same to HMSA to help cinch the becoming level of pay. As with Excellus, a human resources consulting firm helps the committee place desired levels of executive compensation.
Performance incentives acknowledged by HMSA executives in 2008 are " based on skilful measures met for 2005, 2006 and 2007, " the company vocal.
Other Blues plans reducing executive compensation incorporate Downcast Touchy Downcast Not tell of Michigan ( BCBSMI ) and Depressed Irascible Moody Shelter 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 verbal this is part of a series of steps to reduce administrative spending. BCBSMI vocal that senior executives would take a 5 % annual honorarium cut and won ' t receive a 3. 8 % annual increase. BCBSMI says the 3. 8 % represents a freeze on executive honorarium for the second time in the gone three years. The plan is making the moves " to halfway offset projected losses on BCBSMI ' s individual health plans. "
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