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Former Excellus CEO received $12.9 million retirement bonus

Rochester Business Journal
February 28, 2014

Former Excellus BlueCross BlueShield CEO David Klein collected a $12.9 million retirement bonus last year, the health insurer revealed in its annual state Department of Financial Services filing.

Klein stepped down at the end of 2012 after several decades with the non-profit insurance carrier.

New York’s largest non-profit insurer and its second-largest health insurance carrier, Excellus runs Blues plans in the Rochester and Finger Lakes regions, Central and Northern New York, the Utica-Rome region and operates a non-blues, non-profit HMO in Western New York. It serves some 1.8 million members.

In the annual disclosure, which lays out payments to top-earning executives and the largest payments to third parties, Excellus did not report additional retirement payments to former Chief Financial Officer Emil Duda.

Duda, who like Klein spent some four decades at Excellus, stepped down at the end of 2011. The next year he collected $10.95 million in retirement pay.

In a statement, Excellus chairman Randall Clark explained Klein’s retirement package as having been set by “multiyear employment and performance agreements made by the board that followed the executive compensation process and industry norms at the time the agreements were made.”

That statement hewed closely to one Clark issued last year explaining Duda’s retirement pay. Both executive’s retirement pacts include a non-compete clauses intended to keep them from going to a competitor, the Excellus chairman said.

In 2012, the company paid Klein $5.2 million, a 174 percent boost over his previous year’s pay of $1.9 million. His 2012 compensation included a more than $2 million retention bonus, which Excellus at the time explained as meant to keep Klein from jumping ship.

In 2013, only one of the company’s top earners, President and CEO Christopher Booth, whose 2013 compensation totaled $1.7 million, made more than $1 million.

Over the past year, Booth said, the company shaved some $50 million off its combined administrative and operating expenses, achieving a 7.4 percent reduction.  In 2013, it paid out approximately $5.7 billion in in claims, a $416 million, or 7.9 percent, increase over the previous year.

“The approach we’ve taken it to balance the mission of providing affordable access to coverage with the need maintain financially strong by making smart investments and maintaining discipline on administrative costs,” Booth said in a statement.

In 2012, Excellus paid Booth—then president and chief operating officer—$1.6 million.

In 2013, the next most senior officers after Booth—Excellus CFO Dorothy Coleman and its general counsel and chief administrative officer, Stephen Sloan—made $810,000 and $746,000. In 2012, Coleman made $826,000 and Sloan was paid $688,875.

In 2012, Klein’s compensation as CEO was $3.8 million. Duda’s 2011 compensation totaled $1.6 million, up from $1.36 million in the previous year.    

Last year, Excellus realized net income of $52.6 million on $6.3 billion in premium revenue, the state filing shows.

The insurer’s net gain of $138.9 million on investments offset a $72.9 million net operating loss and a $13.4 million income tax expense, the filing shows. As of Dec. 31, its reserves stood at $1.4 billion.
 
(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.
 



What You're Saying 

Margie Campaigne at 7:52:15 PM on 2/28/2014
I just will never understand how one individual is determined to be worth such a salary and benefit package. What does one actually DO to "earn" this much?

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