From The AIS Report on Blue Cross and Blue Shield Plans. Not affiliated with the Blue Cross Blue Shield Association or its member companies.

Blues CEOs Collectively Cleared $102M In 2014, but Salary Gains Remained Flat (with Table: 2014 Annual Compensation of BCBS CEOs)

The AIS Report on Blue Cross and Blue Shield Plans (not affiliated with the Blue Cross Blue Shield Association or its member companies) is a monthly update for HEALTH PLAN WEEK subscribers that covers timely news, insightful analysis and comprehensive data on Blues plans’ products, market share, strategies, profitability and alliances. Learn more.

October 2015Volume 14Issue 10

See "2015 Annual Compensation for Top Executives at Blue Cross Blue Shield Plans" at

Thirty-three people who served as the CEO of a Blues plan for some or all of 2014 collectively earned more than $26 million in salary and about $102 million in total compensation, which includes bonuses, 401(k) retirement contributions and other incentives, according to data supplied by state regulators in response to The AIS Report’s Freedom of Information Act requests and other inquiries. While some top executives saw substantial overall compensation increases, salary levels remained relatively flat in 2014 compared with prior years (see table, p. 7).

Across all health plans, CEO compensation levels were fairly consistent between 2013 and 2014, and didn’t move much in 2015, according to Donald Gallo, a leader in Towers Watson’s health insurance team in its executive compensation practice who works closely with Blues plans. From 2014 to 2015, base salary among all not-for-profit health plan CEOs increased 2.6%, total cash compensation grew 2.9% and targeted total direct compensation was up an average of 4%, according to Towers Watson data.

Other C-level positions had larger gains in total direct compensation between 2014 and 2015. Chief operating officers had an average increase of 13.5%, while chief financial officers saw an average 10.8% increase. Compensation for health plan chief medical officers (CMOs) grew 5.7%, but Gallo says he’s surprised it wasn’t more. Hospitals and health systems, which tend to pay CMOs less than insurers, are trying to catch up as they become more involved in risk-based payment models.

“That is going to be one of the more significant trends, particularly on the provider side, but it will have implications for the insurer side,” Gallo explains. “Providers are going to be looking to insurers for executive talent that will give them the ability to effectively enter and sustain the risk business for their own insurance health plan businesses.”

Health Plan Week

Some Blues CEOs Saw Big Pay Bumps

He notes that the information not-for-profit health insurers are required to file with state insurance departments might not always reflect the entire corporate enterprise. An insurer with multiple subsidiaries, for example, might only be required to report information related to the insurance business. Reporting requirements vary by state.

Swedish Sees 20% Compensation Drop

Not surprisingly, the top executive at Anthem, Inc., which operates Blues plans in 14 states, had the biggest compensation package in 2014 with $1.2 million in salary and more than $12 million in other compensation. However, Joseph Swedish’s total package in 2014 was 20.3% lower than in 2013 when he was awarded $3.8 million to replace compensation he forfeited when he left Trinity Health Corp. (The AIS Report 2/13, p. 1).

Top executives at Wellmark, Inc., which operates Blues plans in Iowa and South Dakota, saw substantial bonuses in 2014 compared with prior years. While CEO John Forsyth’s salary ticked up a modest 5.2% to $967,000, he received $2.5 million in bonuses. A year ago, his bonus was just $60,000.

Several other Wellmark executives also received far larger bonuses in 2014 than they did the prior year, according to information filed with the Iowa Insurance Division. Executive Vice President Laura Jackson’s $553,540 bonus surpassed her salary, which was just shy of $500,000 in 2014. Her bonus in 2013 was $9,344.

Due to impending tax changes in 2013, the company’s board of directors decided to pay out certain variable compensation amounts in December 2012 rather than the following March. The decision resulted in a $1.8 million tax savings to the company, according to spokesperson Traci McBee. It also created significant variability in the insurance filing for 2013 and again in 2014. “This variability is due to the timing of payments, not due to significant changes in direct compensation for executives. We made this decision to save our company and ultimately our members $1.8 million,” she tells The AIS Report.

Health Care Service Corp. (HCSC) President and CEO Patricia Hemingway Hall, who will retire at the end of the year, earned $1.25 million in salary and $11.6 million in total compensation in 2014 — a 4.1% increase from 2013. She has headed HCSC, which operates Blues plans in five states, since 2008, and has been with the company for 23 years.

CEOs from 22 single-state Blues plans collectively earned about $57 million in 2014. Daniel Loepp, CEO of Blue Cross Blue Shield of Michigan, received $7.4 million in total compensation last year — up 11.3% from 2013, and double the $3.8 million in compensation he received in 2012. Chief Financial Officer Mark Bartlett received $2.8 million in total compensation in 2014 including a $753,000 salary. In 2012, he received $1.5 million in total compensation.

Florida Blue CEO Patrick Geraghty’s 2014 compensation was $7.3 million, which was 8.2% less than the prior year. David Gentile, who retired as CEO of the Kansas City Blues plan in August 2014, saw a 203% increase in compensation due to a nearly $3 million severance payment.

Blue Shield of Calif. Keeps Lid on Pay

Blue Shield of California hasn’t yet disclosed its 2014 executive compensation to regulators. In 2012, the non-profit carrier increased executive compensation by $24 million — up 64% from 2011, The Los Angeles Times reported Sept. 1.

The company’s former public policy director, who left this year and has become its top critic, said former CEO Bruce Bodaken received about $20 million as part of his 2012 retirement package, on top of his annual pay, according to the newspaper. Blue Shield of California came under fire early this year when it was learned that the state had revoked the company’s tax-exempt status in August 2014. The Blues plan also has been criticized for boosting premiums despite holding $4 billion in financial reserves (The AIS Report 4/15, p. 1).

SEC Rule May Influence Formula

On Aug. 5, the Securities and Exchange Commission approved a rule that will — beginning in 2017 — require publicly traded companies to disclose the ratio between CEOs and the median pay of their employees. The rule does not limit the level of compensation, but instead is intended to make the formula more transparent.

“It’s going to be a bad number for a lot of companies and will force them to rethink how compensation is formulated,” says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. While the rules don’t apply to not-for-profit companies such as most Blues plans, it could influence the way they determine compensation for their top executives.

“Compensation is like a giant pool, and anything you throw in the water creates ripples. Blues compensation is related to the compensation [paid by] for-profits, and for-profit compensation will be influenced by these regulatory factors,” he explains. “The use of the peer group is going to be a problem for some companies. For-profits will move away from it, and the non-profit Blues will be forced to do the same thing.”

For at least the past 25 years, most large companies, including Blues plans, have benchmarked against other companies to determine CEO compensation levels. But that strategy has caused acceleration in compensation increases and a separation of pay from the rest of the organization, says Elson (The AIS Report 9/14, p. 1).

Board members of not-for-profit insurance companies often include executives from publicly traded firms. Those members bring that governance perspective to the not-for-profits.

“A lot of what happens in publicly traded companies influences the not-for-profits….We need to see how it plays out within those companies and the media before we know if it will filter down to the not-for-profits,” says Gallo. It typically takes about five years for trends to filter down from publicly traded companies to the not-for-profits, he adds.

Most Salaries Stay Below $1 Million

Across all industries, CEO salaries have increased an average of about 4%, while employee salaries have grown about half that percentage, says Paul Dorf, chairman and founder of Compensation Resources Inc., a consulting firm in Upper Saddle River, N.J. Total compensation among some CEOs, however, has gone up substantially as companies emerge from the recession.

Only a handful of not-for-profit Blues plan CEOs had a base salary in excess of $1 million. Section 162(m) of the tax code limits the amount of deductible compensation that a company can pay to the CEO and top four other most highly paid officers to $1 million annually. Exceptions include performance-based compensation.

Dorf has come up with a CEO compensation formula he calls GRATE — Greed, Regulation, Accounting rules, Tax rule minimizing and Ego (to be compared to peers) — based on the forces that most influence company boards in setting CEO compensation. Board members “watch those things very carefully and they all have an impact on the company,” he says.

Some Blues plans have retroactively adjusted non-salary compensation amounts for previous years so that it lines up with 2014 and future years. Beginning with 2014, the National Association of Insurance Commissioners requires carriers to include defined contribution plans such as 401(k) retirement plans as compensation. Such contributions often weren’t included because the amounts aren’t counted as taxable income and are not paid to employees.

Health Plan Week

2014 Annual Compensation for Top Executives at Blue Cross Blue Shield Plans And Parent Companies (Ranked by Total 2014 Compensation)



2014 Salary

2014 Bonus

2014 Other Compensation

2014 Total Compensation

Increase (Decrease) From 2013

Publicly Traded, For-Profit Blues Plans

Anthem, Inc.

Joseph R. Swedish






Triple-S Management Corp.

Ramón M. Ruiz-Comas






Multistate Not-for-Profit or Mutual Blues Plans

Health Care Service Corp.

Patricia A. Hemingway Hall






Wellmark, Inc.

John D. Forsyth






Premera Blue Cross

H.R. Brereton Barlow3*






Jeffrey Edward Roe3






CareFirst, Inc.

Chester Burrell






Highmark Inc.

David Lynn Holmberg






Cambia Health Solutions, Inc. (operates Regence companies in Idaho, Oregon, Utah and Washington state)

Mark B. Ganz4






Single-State Not-for-Profit or Mutual Blues Plans

Blue Cross Blue Shield of Michigan

Daniel Loepp






Blue Cross Blue Shield of Florida

Patrick J. Geraghty






Blue Cross Blue Shield of Kansas City

David R. Gentile5*






Danette K. Wilson5






Blue Cross Blue Shield of Arizona

Richard L. Boals






Horizon Blue Cross Blue Shield of New Jersey

Robert A. Marino






Independence Blue Cross

Daniel J. Hilferty7






Blue Cross Blue Shield of Minnesota

Michael J. Guyette






Blue Cross and Blue Shield of North Carolina

James Bradley Wilson






BlueCross BlueShield of Tennessee

William Morgan Gracey9






Blue Cross and Blue Shield of Nebraska

Steven S. Martin






BlueCross BlueShield of South Carolina

David Stephen Pankau






Excellus BlueCross BlueShield

Christopher C. Booth10






Blue Cross and Blue Shield of Massachusetts

Andrew Dreyfus






Blue Cross of Northeastern Pennsylvania

Denise Cesare11






Noridian Mutual Insurance Co. (parent of Blue Cross Blue Shield of North Dakota)

Paul von Ebers12*






Timothy Huckle13






Hawaii Medical Service Association,

Michael A. Gold






HealthNow New York, Inc.

David W. Anderson14






Blue Cross & Blue Shield of Rhode Island,

Peter Andruszkiewicz






Arkansas Blue Cross and Blue Shield,

Paul Mark White






Capital BlueCross

Gary St. Hilaire16






Blue Cross and Blue Shield of Vermont,

Don George17






Blue Cross Blue Shield of Wyoming,

Richard F. Schum, Jr.












N/A = Not Available

* Indicates person is no longer CEO

1. Joseph Swedish's other compensation includes stock awards worth $7,500,081, option awards worth $2,499,931 and non-equity incentive plan compensation worth $2,141,625.

2. Ramón Ruiz-Comas' other compensation includes stock awards worth $1,999,989 and change in pension value and nonqualified deferred compensation earnings worth $985,000.

3. Herbert Randle Brereton (Gubby) Barlow retired on Sept. 30, 2014, and was succeeded by Jeffrey Edward Roe, former president of Premera Blue Cross.

4. Compensation data for Mark Ganz includes payments allocated to insurance operations in Oregon, Utah and Washington state, but excludes payments allocated to those in Idaho.

5. David Gentile retired in August 2014 and was succeeded by Danette Wilson, Blue KC's former group executive and chief marketing officer. Wilson served as interim president and CEO until Jan. 30, 2015, when she was appointed president and CEO.

6. David Gentile's other compensation includes a severance payment of $2,977,201.

7. Daniel Hilferty's compensation is the total annual compensation received for his service for Independence Blue Cross, Keystone Health Plan East, Inc. and QCC Insurance Company.

8. Michael Guyette's other compensation includes a sign-on payment of $250,000.

9. William Gracey's compensation is the total annual compensation received for his service for BlueCross BlueShield of Tennessee and Volunteer State Health Plan, Inc.

10. Christopher Booth's other compensation includes gross bonus.

11. Denise Cesare's compensation is the total annual compensation received for her service for First Priority Life Insurance Company, HMO of Northeastern Pennsylvania, Inc. and Hospital Service Association of Northeastern Pennsylvania.

12. Paul von Ebers' other compensation reflects amounts previously accrued for retirement benefits from prior periods earned and payable to von Ebers upon separation.

13. Timothy Huckle, COO of Noridian Mutual Insurance Co., was named interim president and CEO on May 5, 2014, replacing Paul von Ebers. Huckle was appointed president and CEO of Noridian on July 14, 2014.

14. David Anderson's other compensation includes gross bonus.

15. HealthNow New York, Inc. did not report 2013 executive compensation.

16. Gary St. Hilaire's compensation is the total annual compensation received for his service for Capital Blue Cross, Capital Advantage Insurance Company, Avalon Insurance Company and Keystone Health Plan Central, Inc.

17. Blue Cross and Blue Shield of Vermont's filing lists only total compensation for 7 unnamed officers, and does not cite Don George by name.

NOTE: New York does not collect separate figures for bonus and all other compensation. Alabama, Idaho, Kansas, Louisiana and Mississippi do not disclose compensation data for specific executives at health insurance companies. California does not require health insurance companies to disclose compensation data.

SOURCES: Individual Blue Cross and Blue Shield plans, state insurance department documents and U.S. Securities and Exchange Commission filings, compiled by Atlantic Information Services, Inc. September 2015.

© 2015 by Atlantic Information Services, Inc. All Rights Reserved.

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