Sen. Loretta Weinberg says CEO's $8.7M package needs restraint
The Horizon Blue Cross Blue Shield blimp in this Star-Ledger file photo.TRENTON — Stunned by the earnings of top executives at New Jersey largest health insurance company last year, the chairwoman of the Senate health committee Monday proposed imposing some pay restrictions in the future.
Sen. Loretta Weinberg (D-Bergen) said she was following the lead of Gov. Chris Christie’s administration, which is restricting executive pay and perks for nonprofit social services agencies doing business with the departments of Human Services and Children and Families.
Weinberg and members of the Senate Health, Human Services and Senior Citizens Committee grilled executives from the nonprofit Horizon-Blue Cross Blue Shield of New Jersey Chairman, targeting CEO William J. Marino, who earned $8.7 million in salary and bonuses last year.
Horizon said $3.9 million received by Marino last year had been deferred from the two previous years. Without that, his 2009 earnings would have been $4.8 million, less than he received the previous year.
According to company filings with the state, three other Horizon executives made more than $2 million in total compensation, and six others exceeded $1 million.
“You are the largest insurer in New Jersey,’’ Weinberg told Marino and a panel of executives whom she invited to testify. “You are being paid a tremendous amount of money which is covered by the taxpayers of New Jersey. Since we are talking statewide about the necessity of capping the salaries of other people from other organizations that get a portion of their money from tax payers, I firmly believe this should be part of that landscape.’’
But Horizon is not like a typical nonprofit agency, such as the Red Cross, said John Leyman, Horizon’s government affairs director. The company is not supported by charitable gifts, he said.
“Horizon is not a tax-exempt company,” he said. “In fact, Horizon paid $172 million in federal and state taxes last year.’’
Peggy Coons, Horizon’s vice president of human resources, said the rigorous process includes the board of directors hiring a consultant to survey executive pay scales at 200 companies, one-half of them nonprofit.
Horizon, which employs 4,700 people and insures 3.6 million people in New Jersey, last year had total revenues of $8.3 billion. The average CEO salary at a Fortune 500 company of similar size and revenue last year was $14 million, Horizon board member Aristides Georgantas said.
Upon questioning from the committee, Horizon officials disclosed 200 employees were laid-off last year, the same year the company paid $30 million in bonuses to a wide range of employees. The layoffs saved the company about $15 million, Marino said.
Sen. Fred Madden (D-Gloucester), said the layoffs could have been avoided. “You would have still have had enough money for bonuses,’’ he said.
Marino said the “gut-wrenching’’ layoffs were “driven by loss of commercial enrollment and unemployment in the state.’’