CEO Salaries Spark Controversy - WCAX.COM Local Vermont News, Weather and Sports-

CEO Salaries Spark Controversy

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Kevin Goddard Kevin Goddard
Jim Whitney Jim Whitney

Berlin, Vermont - March 27, 2009

You don't need to look to Wall Street to find seven-figure salaries for top executives, or the controversy that often surrounds it, especially in a down economy.

Blue Cross Blue Shield of Vermont raised some eyebrows for the compensation paid to its retiring CEO, William R. Milnes.

According to documents filed with state regulators, Milnes' total 2008 compensation totaled $7.25 million.

"While it actually appears as a lump sum payment in 2008, what it reflects is a retirement benefit earned over a career," explained Kevin Goddard, the spokesman for Blue Cross Blue Shield of Vermont.

Goddard said that payment was part of what was negotiated when Milnes was hired as CEO a decade ago, back when Blue Cross Blue Shield of Vermont was virtually bankrupt. Top pay was needed to attract top talent.

"In that environment, our board reached out in the national market and recruited for a CEO. Bill Milnes had been chief financial officer of the largest blue plan in the country. They acquired the skills they felt were necessary to manage the turnaround of our plant, and indeed the record over the last 10 years suggests that turnaround has occurred," Goddard said.

Blue Cross Blue Shield of Vermont now manages a billion dollars in health care benefits for some 200,000 people.

Experts say such a big job requires a big payout.

"The tool kit, the talent set of somebody in the corner office at that level is highly transportable across industries," said Jim Whitney, a business professor at Champlain College. "What that does is put pressure on the individual company to pay a salary that's competitive with all the other CEOs, often without regard to the industry."

Whitney says executive compensation has always worked this way. It just stands out in a down economy.

"It rubs people the wrong way, it just seems fundamentally unjust at a time when so many people are losing their jobs, being asked to cut back, that people are literally getting taxpayer dollars to not work," Whitney said.

Goddard says Milnes' compensation did not come from taxpayers but was built into the company's long-term budget, effectively paid by Blue Cross Blue Shield policy holders. And it should not be confused with what happened at AIG.

"The controversy, I think the record would suggest, most closely tracks to bonuses paid to executives of organizations that were mismanaged to the point they needed public funding to remain viable. None of that is the case here," Goddard said.

The state Banking, Insurance, Securities and Health Care Administration is investigating Milnes' payout because it was so large. We tried to contact Milnes for this story but we weren't successful.

Kate Duffy - WCAX News

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