How Blue Cross Chief Scored $11.3 Million Severance

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March 3, 2011; Source: Boston Herald | In follow up articles yesterday in Boston’s two newspapers, it was reported that Massachusetts Attorney General, Martha Coakley was beginning an investigation into how the former CEO of Blue Cross of Massachusetts, Cleve Killingsworth, ended up with $11.3 million in severance pay. The amount of the payout was what was agreed to in his contract if he was terminated, but not only did he resign; he did so after running approximately $150 million in losses.

“Apparently the board has never heard of the concept of ‘take a hike’ or ‘if you don’t like the deal, we’ll see you in court,’” concludes this Boston Herald editorial.

The Boston Globe points out that the current chairman of the nonprofit insurer is William Van Faasen whose very own severance package as CEO of the organization ran to $16.4 million. Maybe it was a higher payout because he was both CEO and chairman of the board – double duty . . . and double influence. Killingsworth started his tenure in the same dual positions but they were thereafter separated.

Van Faasen, whose appalling severance sparked its own investigation ending in another avowal by the AG to more carefully scrutinize compensation at nonprofit insurers, was not chairman when Killingsworth’s agreement was reached but he is part of a “cozy” high paid board. The 18 trustees individually are taking home between $64,000 and $80,000 and collectively taking home $1.2 million in payments for sitting on the board.

Meanwhile subscriber premiums and organizational reserves just keep rising. Herald columnist Margery Eagan, who does not believe anything of substance will emerge from the investigation, calls the whole mess “nauseating.”

She continues, “So where is the accountability? This is America, 2011. We get robbed by Wall Street, big banks, big corporations, big nonprofits with cozy board members. We get robbed by politicians who are in bed with Big Business or Big Labor. They steal. We pay. And the only one paying the price: the “have-nots” slipping beneath the waves.”

Tough to have an organization in our sector be lumped in with a bunch of robber barons. Maybe they do not belong here amongst the tax exempt – or maybe they need to be better controlled.—Ruth McCambridge