Under pressure from state Attorney General Martha Coakley, Blue Cross Blue Shield of Massachusetts said it will suspend payments to its board of directors and may also change its legal structure, reports the Boston Globe.
Coakley's office opened an investigation into the Blues plan after it was reported that it paid its departing chief executive officer more than $11 million in severance, and trustees sitting on the not-for-profit's board received annual compensation well into the five figures.
"These board fees for insurance companies are off the reservation,'' said F. Warren McFarlan, professor emeritus at Harvard Business School. He noted that the state's nonprofit hospitals and universities do not pay their part-time directors. "On for-profit boards, you expect to be paid. In the nonprofit world, it's about time, talent, and treasure. It's about serving the organization's mission.''
Partly as a result of Coakley voicing concern on such compensation, Harvard Pilgrim Health Care and Tufts Health Plan will meet later this month to also discuss suspending its pay to directors. They receive annual sums ranging from the low to high five figures. A spokesperson for Fallon Health Plan, which pays low five-figure sums to its directors, said the practice was being reviewed.
Tufts director Thomas P. O'Neill III--son of the late House Speaker Tip O'Neill--already announced he will not accept further payments.
To learn more:
- read the Boston Globe article on the change in director practices
- here's the Globe article on CEO and director compensation