So enough said about Ted Kelly’s exquisitely obscene $50 million annual compensation package at Liberty Mutual. It’s time to move on to other things.
Just kidding. Of course there’s more to say about Kelly and Liberty Mutual. There will always be more, which coincides with their philosophy on executive compensation - more, more, more.
First, we learned from the Globe’s Todd Wallack about Kelly’s pay, which equates to $192,000 a day, or $24,000 an hour. Then we learned about Liberty Mutual’s own air force, the fleet of five long-range corporate jets housed in a state-of-the-art hangar at Hanscom Field, ready to hurtle on a moment’s notice to Vero Beach, Fla., and Cape Cod, where Kelly happens to own vacation homes.
One astute reader asked whether the Liberty Mutual jets might do the pregame flyover at Fenway Park’s 100th anniversary celebration last Friday. Wouldn’t that have been something, the company’s Gulfstreams and Bombardiers screaming over the field while so many fans proudly exclaimed, “Our insurance premiums at work!’’
I didn’t have the heart to tell the reader that these planes would never be used for something so frivolous. In fact, at that time of April, the fleet is usually doing the critical work of shuttling Liberty Mutual executives to and from a company-sponsored senior PGA golf tournament in Georgia.
But through all of this, the question has nagged, how much do Kelly’s immediate underlings make? Are they deprived so their boss can earn the big bucks?
For answers, we turn to the Massachusetts Division of Insurance, which kindly provided documents about the nine highest earners at Liberty Mutual. The next sound you heard was my jaw hitting the floor.
You, like me, have probably never heard of A. Alexander Fontanes, listed on the company website as an executive vice president and chief investment officer, but his banker certainly has. How’s $18.8 million in 2010 sound to you? For comparison, that is $2.6 million more than the compensation package of the chief executive of
Then we go to Gary Greg, listed as an executive vice president. He was good for $10.6 million in 2010. J. Paul Condrin, another executive vice president, comes in at $8.2 million. David Long, then the president, now the chief executive, made $5.6 million in 2010.
It keeps going. Christopher Mansfield, a senior vice president and general counsel, made $4.9 million in 2010. Dennis Langwell, another senior vice president, was paid $4.4 million. Helen Sayles, a senior vice president, got $4.3 million. Timothy Sweeney, an executive vice president, got only $4 million, providing a good case for a raise. Company treasurer Laurance Yahia, rounded out the list at $2.2 million.
Pay dropped some in 2011 for reasons that aren’t clear, but the damage was already done. By my calculation, that’s $63 million in compensation for Kelly’s executive team in 2010, $108 million when you factor in Kelly’s pay. It’s enough to understand why the company hiked its auto premiums in Massachusetts more than all but one other insurer, and why it demanded the $46.5 million in tax breaks from the city and state. Nobody ever said it was cheap running an insurance company.
Liberty Mutual spokesman John Cusolito responded to the question of why the executives were paid so well with the following quote: “The individuals in our filing are members of the executive team that run either major business units or corporate departments.’’
Thank you, John. That explains everything.
I figured the members of the Liberty Mutual board of directors might be ready to apologize for this bacchanal and vow closer scrutiny in the future, so I called each one of them over the past couple of days to see what they had to say.
Ends up, it’s nothing. Silence. Well, one board member, Charles Clough, the chairman and chief executive of Clough Capital Partners in Boston, left me a voicemail saying, “I’m not really in a position to comment on anything.’’
Compared with the reaction from everyone else, I feel like Charles and I just drained a fifth of Jack talking about lost love. A nice-sounding assistant from director Frank Doyle’s Boston office called and said, “Evidently, all questions about Liberty Mutual are being handled by Liberty Mutual.’’ A spokeswoman at
But at least they acknowledged the calls, which is more than can be said for director John Manning, head of Boston Capital; Michael Babcock, private investor in Vero Beach; William Van Faasen, chairman of Blue Cross Blue Shield of Massachusetts; and Marian Heard, former head of the United Way of Massachusetts Bay.
The $200,000 a year they all make in director’s pay apparently doesn’t cover the responsibility of explaining grotesque executive compensation at a company that is a mutual - owned by the policyholders, who in this case foot the bill for the executive salaries.
But here’s where the game is really rigged. Does anyone truly believe that Bill Van Faasen, to use just one example from Liberty Mutual’s board, is going to put his foot down on corporate excess? He may be great with health insurance, but please remember his $16.4 million retirement package when he stepped down as chief executive of Blue Cross in 2006, even though there was that small technicality that he didn’t actually retire. No, he continued to be paid handsomely as the Blue Cross chairman.
Does anyone really expect Marian Heard to speak up? She was making $48,444 a year to be on the Blue Cross board when the insurer was tossing buckets of retirement money at its departing CEOs. She makes at least $260,000 a year to serve on the
Liberty Mutual director Martin Slark made $9.1 million in 2010 as CEO of Molex Inc., a publicly traded manufacturer of electronic components. Liberty Mutual director Tom May - forgive me if I’ve mentioned him before - made $9.2 million last year as chief executive of
On it goes, a system contrived and protected by a moneyed few, to nobody’s advantage but their own.