executive pay


Nonprofit Health Executives Reap Hefty Bonuses

WBUR’s Martha Bebinger reports that executives at the top three health insurers in the state have all won generous bonuses, some up to 245 percent of their salaries.

In the past three years, executives at the state’s three largest health insurers — all nonprofits — have received bonuses that range from 14 to 245 percent of their salaries. The payments are generally less than bonuses paid by for-profit insurance companies. But amid an outcry about paying nonprofit insurance board members, these bonuses are raising more questions about what it means to be a nonprofit health insurance company in Massachusetts.

The Massachusetts Hospital Association says the average bonus for hospital executives across the state is under 20%.

Here, you can see compensation for executives at Blue Cross Blue Shield, Harvard Pilgrim Health Care and Tufts Health Plan from 2008-2010:

Breaking News: Blue Cross Suspends Pay For Board Directors

Facing criticism about its eye-popping pay packages for executives and outrage over fees paid to its directors, Blue Cross Blue Shield of Massachusetts, the non-profit health insurer suspended pay to board directors pending an investigation by the state Attorney General.

The move was voluntary and unanimous, Blue Cross said, noting that it is currently in discussions with the AG over its classification as a public charity. Today’s action comes after a public uproar following disclosures about Blue Cross’ $11 million pay package to its former CEO Cleve Killingsworth.

Here’s the press release from Blue Cross:

BOSTON –March 8, 2011 – Blue Cross Blue Shield of Massachusetts is a locally-based, community- minded company that has been proudly serving the Commonwealth for nearly 75 years.We are committed to working earnestly and collaboratively with others on the central challenge of health care affordability for individuals, families, employers, and government in Massachusetts.

Over the past several days, we have heard clearly the community’s anger at the compensation package paid to our former CEO Cleve Killingsworth.

At a time when health care costs and premiums continue to rise at unacceptable and unsustainable rates, Cleve’s compensation has caused the community to appropriately question the sincerity of our commitment to improving the affordability of health care for our members, employer customers and the community.

With regard to Cleve’s package, we accept full responsibility for the decision. Continue reading

Bloomberg: Termeer Payout Could Top $221M

The $20B sale of Genzyme reaps a tidy sum for its CEO

Henri Termeer, the CEO of Genzyme Corp., is looking at a nice payout of as much as $221 million with the sale of the Cambridge-based biotech to French drug giant, Sanofi-Aventis SA, Bloomberg reports.

Termeer, 65, will get $145.9 million in cash from his shares, stock options and restricted stock units, the filing with the U.S. Securities and Exchange Commission today said. He will also receive a $12.5 million change-of-control payment if his employment is terminated when the deal closes. Termeer said Feb. 16 when the companies announced the $20.1 billion agreement that he planned to leave after a transition period.

The CEO, who held that position at Genzyme since 1985, also stands to gain as much as an additional $62.8 million in so- called contingent value rights tied to Genzyme’s experimental multiple sclerosis drug, Lemtrada.

Premium Pay: Ex-Blue Cross CEO Compensation Is Closer To $11.3M

Wow, health care costs are really rising fast.

Just a few hours ago we posted that former Blue Cross Blue Shield CEO Cleve Killingsworth received a pay package worth $8.6 million when he abruptly resigned as chief of the state’s biggest health insurer last year.

Well, on closer inspection, WBUR’s Martha Bebinger reports that Killingsworth’s total pay package is closer to $11.3 million. Here she is on All Things Considered earlier this evening:

Here’s how the deal breaks down: Cleve Killingsworth received $8.6 million dollars last year, most of which was his retirement benefit. The remaining $1.4 million was the first of three severance payments. Killingsworth will receive two more severance payments for a total of $11.3 million.

We asked Blue Cross Senior Vice President Jay McQuaide how the company could justify this expense at a time when rising health care costs are one of the state’s most pressing problems.

“There’s no questions that this is a significant amount of compensation and we would be the first to recognize that,” says McQuaide. “We also understand that affordability is the central issue facing the community today and that we need to lead by example.”

That example, says McQuaide, is a less generous payment package for the current CEO Andrew Dreyfus. His base salary is 25% less than what Killingsworth earned and the company is reducing the retirement and severance pacakages as well. But that attempt to say “we’ve learned our lesson,” isn’t persuading some critics.

“This kind of compensation package is outrageous, it’s inappropriate and it’s one of the exact reasons why health care costs are skyrocketing,” says Dierdre Cummings, the legislative director for MASSPIRG. It “leads the public to lose faith that we can actually be serious about driving down the cost of health care.”

“Frankly I think they lose all credibility that they are struggling financially when they grant these packages,” says Jon Hurst, president of the Retailers Association of Massachusetts. Hurst says this deal is out of line with the state of the economy.

“We’ve gone year after year with double digit premium increases for small businesses and working families in a very tough economy,” Hurst continues, “and we think the health care industry needs to better reflect what’s happening in our economy.”

Many low wage health care workers are also angry. Jeff Hall, spokesman for 1199, Service Employees International Union, says this deal is frustrating at time when members are making sacrifices to control costs.

“This sends a troubling message from the insurance industry,” says Hall, “and somebody ought to take a closer look given the situation around costs, it’s troubling.”

Attorney General Martha Coakley said in a statement, “While Blue Cross may be required to meet its contractual obligation to its former CEO, we continue to be concerned about high levels of executive compensation at health care organizations given current fiscal condtions and efforts to control costs in health care.”

The Patrick administration says it is reviewing the deal to see if it warrants further scrutiny or action.

Report: Highest Paid CEO’s In Mass. Are In Health, Science

Health, science execs get the most generous pay in the state

Recession? What recession?

Not when you sit atop a company that sells health or science-related products, it seems.

According to the recent Boston Globe ranking of the highest paid CEO’s in the state, the top three spots belong to chief executives in the world of health care or science. Even more eye-popping than the CEO pay packages, perhaps, is the less-than-healthy state of their companies while they are in charge.

Here are the top dogs, then, in order of total compensation, according to The Globe:

Number 1: Marc N. Casper, Thermo Fisher Scientific Inc., a Waltham-based scientific instrument maker
Total compensation: $34.3 million

“…with 30,000 employees and annual revenues of $10 billion, announced in August that it will close its 60-employee plant in Rhode Island next June. The company also recently cut its yearly revenue forecast by $50 million, citing less favorable currency-exchange rates.”

Number 2: J. Raymond Elliott, Boston Scientific Corp., world’s second-largest maker of heart devices
Total compensation: $33.5 million

“Elliott earned a $1.5 million bonus in 2009, even though he joined the company halfway through the year and the company posted a $1 billion loss last year.”

3. Matthew Emmens, Vertex Pharmaceuticals Inc.
Total compensation: $19.3 million

“The company is seeking approval for telaprevir, a hepatitis C treatment drug, but currently has no drugs on the market and has lost money every year since it was founded in 1989, including $642 million last year.”