Blue Shield Executive Pay Hike under Microscope
The Los Angeles Times reports that, according to an audit by the California Franchise Tax Board, Blue Shield of California, a large nonprofit insurer, increased executive compensation in 2012 by $24 million. The pay raise, says the story, is a 64% increase over the prior year’s level, and places Blue Shield’s compensation of approximately 60 senior company officers at $61 million for 2012 (compared to $37 million for 2011 and $39 million for 2010 and 2009).
The company did not report a number of details about precisely who received what and in what form, a decision that has led to speculation and criticism. The story explains as follows:
The health insurance giant won’t say who got the money or why. But Blue Shield’s former public policy director, Michael Johnson, who left this year and is now a company critic, said senior officials at the insurer told him that former Chief Executive Bruce Bodaken received about $20 million as part of his 2012 retirement package, on top of his annual pay.
Half a dozen other top executives also left the company near the end of 2012, which could have accounted for some of the spike in compensation. Some of this severance or retirement money may be paid out over time, extending beyond 2012.
The San Francisco insurer declined to confirm the total compensation for Bodaken, who was chairman and CEO from 2000 to 2012.
Why are the details of compensation still a mystery? According to the Times story, California law requires Blue Shield to file a report of compensation for its 10 most highly compensated employees. The company reportedly interprets the law to apply only to executives within the company’s employ at the time of filing the required report. Although the company insists that it has fully complied with the law, the state insurance commission appears to be concerned:
California Insurance Commissioner Dave Jones said the company’s decision to exclude pay for Bodaken and other executives from its regulatory filing “raises very serious and troubling questions with regard to whether Blue Shield misled the Department of Insurance.”
“We will be investigating this discovery by the L.A. Times and looking at all of our options,” Jones said.
JRB