Compensation paid last year to Excellus BlueCross BlueShield CEO David Klein totaled $5.2 million, the Blues disclosed in a state filing Thursday.
Klein’s 2011 compensation includes a $2.8 million bonus. The board of directors described the $2.8 million award to Klein, who this week announced plans to retire in December, as a retention bonus offered to insure his continued employment through 2010.
“As a governing board, we wanted to ensure continuity of leadership at a critical time for our organization,” Blues chairman Randall Clark said in a statement.
Klein’s 2011 pay package is up 173 percent from his 2010 compensation of $1.9 million. Subtracting the retention bonus, the pay package shows a 26 percent increase.
The company’s next highest paid executive last year was former Chief Financial Officer Emil Duda, whose pay totaled $1.6 million last year, up 14 percent over the $1.4 million he realized in 2010. Duda retired at the end of 2011.
If their post-employment packages compare with multiyear deals Excellus made with other top level retirees, Klein and Duda can expect generous compensation for several years to come. Former CEO Howard Berman’s retirement—paid out over three years—totaled some $5.1 million.
Excellus president and chief operating officer Christopher Booth, who widely is expected to succeed Klein, received total compensation of $1.2 million last year, up 9 percent from his $1.1 million 2010 pay package.
Factors detailed by Excellus’ board as determining the insurer’s executive compensation include marketplace standards and performance. Compensation consultants help directors determine how comparable health insurance executives are paid, while the board weighs how well management has guided the company in the previous year, directors said.
“When it comes to performance and value, the company has been very successful,” the directors said, citing the company’s high quality ratings, sound finances and relatively low premium costs.
In 2011, Excellus collected $5.7 billion in revenues, up from $5.2 billion in 2010. After seeing membership slide for several years, it also gained subscribers, enrolling 85,000 new members last year. Membership stood at 1.8 million at the year’s end.
After posting operating losses in two of the last five years, the company showed a 2.8 percent operating margin in 2011, with a net operating gain of $157 million. In 2010, Excellus posted net operating income of $32.97 million, a .06 percent margin. The insurer’s net income after investment gains and federal taxes was $223.3 million in 2011 and $44.5 million in 2010.
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