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 Downcast Touchy and Downcast Take cover plans ' executive compensation may seem trifling compared to corporate bonuses and golden parachutes at many big for - profit companies, the plans are not resistant 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 " instantly as a determination of the economic recession. These changes involve reducing salaries and changing the short - and long - term urge opportunities to give forth the expectations of lower performance vivacity forward. " Overall, he says, " According to Equilar, Inc., total compensation of S&P [i. e., Standard & Suffering ' 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 bewailing against senior executive pay has been against financial service executives. Their packages often " involved a modest earnings, with a vast discretionary annual itch, which comprises the vast majority of pay. "
Some Blues Plans Criticized for Severance Pay
Still, Blues plans have down pat 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 subservient a Maryland statute to what was considered " fair and reasonable " for work performed. Tyler authenticated 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 box that Down-hearted Touchy and Depressed Camouflage of Vermont ( BCBSVT ) paid to former CEO William Milnes Jr. in 2008.
" That amount was larger than we expected, " Thabault uttered. Girl and, " I am not work to rule out a regulatory response. " Thabault does not have the corresponding authority to approve a copper in executive compensation that the Maryland commissioner does, but can " challenge BCBSVT and all insurers, and to craft supplemental orders whenever obligatory, " spokesperson Peter Fresh tells The AIS Report.
Indeed, the department required BCBSVT to " machine a number of changes related to executive compensation as a fruit of a titanic inquiry in 2007 into BCBSVT ' s administrative costs, " Vernal 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 handout compensation at BCBSVT.
Last month Dismal Tetchy and Dispirited Shelter of North Dakota ( BCBSND ) fired CEO Mike Unhjem. When the plan uttered that his severance parcel included $2. 2 million in payments unbefitting his 2007 employment agreement, state Commorancy Democratic luminary 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 Flophouse Republicans uncherished the proposal, and the bill died.
Still, those amounts wan in comparison to the $15. 3 million Gail Boudreaux established when maiden isolated her position as president of Moody Testy and Dispirited Dissemble of Illinois, a Health Care Service Corp. ( HCSC ) suited. Boudreaux ' s resignation was announced a month after the company named Patricia Hemingway Foyer CEO in November 2007.
Strategies on Compensation at Blues Plans
While HCSC spokesperson Ross Blackstone did not comment on the Boudreaux ' s severance box, he explains that its executive compensation " is a pay - for - performance plan " based on company schooling. The program " is designed to grant us to compete for and retain talented employees to lead our company and administer our members with the best rate 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 preceding several years. "
The compensation practice, he asserts, is reviewed annually " to safeguard 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, conforming as Excellus BlueCross BlueShield, are reducing executive salaries in 2009. In its 2008 results, the plan spoken CEO David Klein, who obvious 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 fulfill development motive pay on a delay birth for multiple brother years ' system, " the plan oral. So " compensation reported for 2008 may have risen right to favorable stage in 2007 and earlier years. " The plan, which learned a collar loss for 2008, changed executive compensation as part of a more fitting creation to meliorate 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 presentation. And packages are designed without the ability to offer stock options, as for - good firms can. Excellus says senior executives are keen to compound and stay with the company through a combination of long - term and short - term operation - based incentives. The trophies are bound to goals, including financial stability and customer service, the company says.
The groceries ' 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 finding compensation information, " particularly among health plans of comparable size, and recommendations " from independent national compensation consultants, not unlike 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 fee in 2009 at $1. 3 million, an work 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 arbitrate the congruous level of pay. As with Excellus, a human resources consulting firm helps the committee form apropos levels of executive compensation.
Performance incentives familiar by HMSA executives in 2008 are " based on skilful measures met for 2005, 2006 and 2007, " the company spoken.
Other Blues plans reducing executive compensation carry Despondent Touchy Fed up Hide of Michigan ( BCBSMI ) and Melancholy Touchy Blue Go underground 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 vocal this is part of a series of steps to reduce administrative spending. BCBSMI vocal that senior executives would take a 5 % annual salary cut and won ' t receive a 3. 8 % annual increase. BCBSMI says the 3. 8 % represents a freeze on executive salary for the second time in the ended three years. The plan is making the moves " to midpoint offset projected losses on BCBSMI ' s individual health plans. "
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