Blue Cross Executive Compensation

Dec 3, 2007

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  1. arnguy
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    Sunday's Philadelphia Inquirer had a headline splashed across the front page of the Business Section regarding the subject topic. It appears that the PA DOI is making a detailed study of the compensation of the CEOs of both Independence Blue Cross and Highmark. Those two BXs have applied to the DOI for a merger/consolidation. The IBC CEO makes $1,645,893 a year while the Highmark CEO makes $3,221,948 (the latter has been CEO much longer). The compensation includes base salary plus bonus. The Highmark CEO had a whopping bonus of $2,009, 689.:err:
     
    arnguy, Dec 3, 2007
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  2. JMO Fan
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    The question seems to be, Should the CEO of a nonprofit organization (like the Blues) make as much as CEO of a for-profit (e.g., stock) company, i.e., for comparable work?

    If not, does that compel nonprofits to hire less competent & competitive CEOs?
     
    JMO Fan, Dec 3, 2007
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  3. Mr. Bill
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    Really, and what do you think ceo's of hospitals and medical practices make? Not-for-profit does not equal non-profit does not equal charitable, philanthropic, or free.
     
  4. Mr. Bill
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    Oh, and as a quasi bad example, here is a "public" utility, a for-profit corporation, but let's not forget that the "clients" have essentially no freedom of choice, there is really no competition, and they are semi-regulated by government agencies:

    NEW YORK --Sempra Energy -- parent of Southern California Gas and San Diego Gas & Electric -- disclosed Tuesday that Chairman and Chief Executive Donald E. Felsinger received compensation valued at $7.7 million for 2006.



    San Diego-based Sempra paid Felsinger a base salary of $943,320, according to a proxy filing with the Securities and Exchange Commission.
    The executive received $1.9 million in non-equity incentive awards -- a bonus determined by the company's performance in a given year. Sempra set an earnings target of $913 million for 2006. Earnings for the year for bonus purposes, which exclude certain gains from asset sales, totaled $1.18 billion.
    Felsinger received $75,628 in above-market interest on certain deferred compensation.
    Sempra's compensation package to Felsinger included $404,040 in company contributions to his benefit plans, insurance premiums, use of the company cars and drivers, financial planning services and reimbursement of some personal income taxes -- amounts reported as "all other compensation."
    Felsinger also got stock and options valued at $4.4 million in last year.
    The Associated Press calculations of total pay include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
    Sempra posted net income of $1.41 billion, or $5.38 per share, last year on revenue of $11.8 billion.
     
  5. TXINSURANCE
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    Not all Blues are Not For Profit.
     
  6. JMO Fan
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    True, but Highmark and IBC are. Should Dr. Melani (Highmark CEO) not be paid enough to lure him from private practice?
     
    JMO Fan, Dec 4, 2007
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  7. arnguy
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    Speaking of non-profits, I think that this survey from USA Today indicates
    that there is money in non-profits. I suppose that the matter of executive compensation is a matter of what is the relative worth of the CEO. For example, Kirk Ferentz, football coach of Iowa has a base salary of $2,840,000. Pete Carroll, coach of Southern Cal has a base salary of $2,782,320. Bob Stoops, of Oklahoma has a measly base salary of $950,000 but maximum bonus of $745,000 and other income of $2,500,000 for a total compansation of $3,450,000. Jim Tressel, of Ohio State has a base of $890,000 plus a maximum bonus $375,000 and other income of $1,122,700 for a total compensation of $2,012,700. Poor Greg Sciano of Rutgers has a base salary of $875,000, a maximum bonus of $480,000, and other income of $35,000 for a total compensation of $911,000.

    Now, I like college football as well as pro football, and I concede that college football teams bring in a lot of revenue to their respective colleges, but doesn't the coaches salary make the professors salaries pale by comparison? I suppose it's a matter of priorities and we as a nation do not value our educators as hightly as sports coaches, sports stars, movie stars, etc.
     
    arnguy, Dec 4, 2007
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  8. Newby
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    It's not a matter of how much "society" values someone. It's how sellable they are. If you had a teacher who was packing in stadiums they would be paid millions. If they only fill 30 to 100 seats, they can only be paid for the money they bring in.
     
    Newby, Dec 5, 2007
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  9. arnguy
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    IMHO, Newby, unfortunately you are absolutely correct. I just think that it indicates a warped sense of priorities.
     
    arnguy, Dec 5, 2007
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