Blue Cross Executive Compensation

[arnguy]

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.

 

[JMO Fan]

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?

 

[Mr. Bill]

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.

 

[Mr. Bill]

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.

 

[TXINSURANCE]

Not all Blues are Not For Profit.

 

[JMO Fan]

Not all Blues are Not For Profit.

True, but Highmark and IBC are. Should Dr. Melani (Highmark CEO) not be paid enough to lure him from private practice?

 

[arnguy]

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.

 

[Newby]

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.

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.

 

[arnguy]

IMHO, Newby, unfortunately you are absolutely correct. I just think that it indicates a warped sense of priorities.