Ex-Blue Cross CEO walks away with $11M
Signed, $hield, delivered …
By Christine McConville | Wednesday, March 2, 2011 | http://www.bostonherald.com | Local Coverage
Bitter Bay Staters and health-care watchdogs are seeing red over yet another golden parachute from Blue Cross Blue Shield — this time, an $11 million kiss goodbye for a chief executive who oversaw staggering losses at the nonprofit before his abrupt resignation last year.
The state’s largest health insurer — with nearly 3 million members in the region — yesterday revealed the astonishing severance deal granted to former boss Cleve Killingsworth after he stepped down in March 2010 amid board fears about the company’s $149 million in losses.
His severance and bonus totalled $8.2 million in 2010. He also gets $1.8 million this year, and $925,000 next year, for a total of $10.9 million. Killingsworth’s deal was inked in 2005 as former CEO William Van Faasen was heading out the door with a then-controversial $16.7 million payout.
“These numbers are unconscionable, and people should be outraged,” said Ethan Rome of Health Care for America Now, a Washington-D.C. advocacy group.
“If you lose $149 million and then you get paid $11 million for doing it, it is very clear to people where their health-care dollars are going. And it is not for health care.”
Killingsworth could not be reached for comment. Red-faced Blue Cross officials said the decision was out of their hands.
Killingsworth’s compensation “was part of a binding employment contract that the board agreed to in 2005. It was a very different time,” Blue Cross spokesman Jay McQuaide said. “Three of the five years that Cleve was CEO were the best years that Blue Cross had. Membership grew under Cleve, and there’s little argument that without Cleve’s leadership and passion on payment reform, we would not be where we are today.”
Blue Cross Blue Shield board member Paul Guzzi, who’s also head of the Greater Boston Chamber of Commerce, said in a statement, “The Board understands and is sensitive to the community’s interest and concern about executive compensation. With the full support and urging of our new President and CEO Andrew Dreyfus, we have significantly reduced the CEO’s compensation and benefits.”
State officials aren’t buying it.
“This is a nonprofit in a very sensitive industry that is unable to keep their costs under control,” said state Sen. Mark Montigny (D-New Bedford), who has pushed for legislation capping nonprofit salaries at $500,000. “I have a real concern about this kind of parachute. It’s disproportionate, and I don’t think it’s justifiable.”
Attorney General Martha Coakley — who probed nonprofit pay after Van Faasen’s exit — said she is “concerned” about Killingsworth’s payout but pointed out the agreement was drawn up six years ago.
However, municipal union chief John Zuccaro, who represents more than 600 Hub city workers, called the news “troubling.”
“Our members are paying a 50 percent increase in their premiums this year, and have had their wages frozen,” Zuccaro said. “I don’t see that same type of partnership coming from the insurance companies.”
Said Michael Merlina, a Reading glass-fitter fighting the state over its health-care mandate, which forces people to buy private insurance or face penalties: “Why can’t they apply some of these salaries to help lower costs somehow? They are paying the people at the top all this money, when the people at the bottom are struggling to pay the monthly fees, that doesn’t make any sense.”
Article URL: http://www.bostonherald.com/news/regional/view.bg?articleid=1320386
