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Executive compensation issue in CareFirst conversion
In yet another blow to Caterer's already hotly contested conversion plans, a consumer healthcare advocacy group has accused the massive health insurer of using charitable assets to grossly overpay its executives.
Since Owings Mill, Md.-based CareFirst announced its plans last November to merge with for-profit WellPoint Health Networks, state legislators, regulators, healthcare experts and business leaders have lined up one potential roadblock after another-to the point where some believe the deal will not go through.
Now, the Washington-based Fair Care Foundation is petitioning the attorneys general of Maryland and the District of Columbia to investigate what it calls "exorbitant and improper" executive compensation packages approved by CareFirst in the months leading up to the company's announcement of the $1.3 billion deal.
In particular, CareFirst's president and chief executive officer, William Jews, stands to receive $18.6 million if he quits or is fired after the company changes ownership.
"We can find no example in the history of the world where the head of a charitable nonprofit took that kind of money from the public," said Fair Care Chairman A. G. Newmyer III, who filed the petition earlier this month. I believe the CareFirst board has been taking ethics lessons from Enron."
Jews' compensation would top the $14 million severance package paid to Richard Shirk, former CEO of Blue Cross and Blue Shield of Georgia, when his company was acquired by WellPoint in March 2001.
CareFirst-the parent of the Delaware, D.C. and Maryland Blues plans-has operated as a charitable not-for-profit since 1937. The 3.2 million-member insurer, however, has said its merger with Thousand Oaks, Calif-based WellPoint is necessary to remain...