Coakley: Nonprofit Board-Member Pay Unjustified

By Sarah Birnbaum

Apr. 14, 2011

BOSTON — Massachusetts Attorney General Martha Coakley is filing legislation that would allow her to prohibit nonprofits from paying their board members. The move follows the public uproar over generous salaries and severance packages at the state's largest health insurer.  

Blue Cross Blue Shield, the states largest health insurer, sparked public outrage when it disclosed that it was paying its board members five figure salaries, and that it was giving its former CEO an exit package worth $11 million. The hefty payouts came as company executives said they were doing everything possible to control health care costs. 

After investigating the company's practices, Attorney General Coakley says the board salaries are unjustified, and contrast with most other charities, which don’t pay board members anything at all. 

“We went to the board members and said, ‘tell us why you are different from virtually every other nonprofit in Massachusetts.'  We gave them an opportunity to justify why their boards were paid.  We did not believe in the course of the investigation that there was an adequate response or justification for why those board members as opposed to any others in Massachusetts should be compensated,” Coakley said.

Coakley says her bill would require Massachusetts-based charities to get approval from her office before they can compensate board members. 
Since the attorney general launched her review, Blue Cross and Fallon Health Plan have suspended board pay for their members.  Harvard Pilgrim and Tufts Health Plan said they would continue the practice.  Coakley’s office is still investigating the multi-million dollar severance package paid to departing Blue Cross chief, Cleve Killingsworth.

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