News & Events

Blue Cross board suspends pay, CEO perks cut

By Laura Crimaldi And Joe Dwinell
Tuesday, March 8, 2011

View Boston Herald Article

After a week of glaring scrutiny, pay for members of the Blue Cross Blue Shield board was suspended today as the health care giant announced it is also reviewing its non-profit status and cutting the benefits of its current CEO.

The moves come after a series of Herald reports on the $11 million severance package paid to Blue Cross ex-president and CEO Cleve L. Killingsworth and the salaries doled out to board members.

“Over the past several days, we have heard clearly the community’s anger at the compensation package paid to our former CEO,” the board announced this afternoon at the start of a meeting with Herald editors and reporters.

“Looking back now, we understand why the community feels the contract was too generous, even for that time,” the board stated.

Blue Cross announced three immediate steps:

  • New CEO Andrew Dreyfus “urged” that his compensation be “substantially reduced.”
  • The 18-member board will suspend their pay “immediately and indefinitely.”
  • Blue Cross will examine its legal classification as a public charity.

The 18-member board of directors approved the severance for Killingsworth, who left the non-profit health insurer after it lost nearly $150 million in 2009. In today’s statement, the board of directors stated “the entire board voted to … honor (Killingsworth’s) contract” and his hefty payout.

Blue Cross paid its directors more than $1.2 million last year, records show. They earned pay ranging between $56,000 to $89,000 for attending just 26 meetings a year. The board said today they have “voluntarily” agreed to suspend the checks.

Attorney General Martha Coakley today said she was “encouraged” by the board moves, but she called paying board members “extraordinarily rare” for Massachusetts “and for a good reason.” The AG added her office is still probing the “compensation and separation agreement” handed to Killingsworth.

Earlier today Boston Mayor Thomas M. Menino slammed the Blue Cross payouts as excessive when cities and towns are trying to cope with soaring health care costs.

“I think it’s outrageous with the cost of health care going up,” he said, adding he too questions the Blue Cross non-profit status and pay to board members.

The Blue Cross board admitted, following a week of coverage by the Herald, that it was time to review their decisions.

“We cannot change what happened in the past, but we can ensure that our future actions are consistent with what the community has expected from Blue Cross during its nearly 75 years of serving the community,” the statement reads.

Gov. Deval Patrick, who is on a 10-day trip to Israel and Great Britain, ducked questions about the payout last week and asked the public to change its focus.