Boston insurance giant Liberty Mutual had very profitable 2013, and so did its chief executive, David Long, whose pay package rose more than 20 percent last year to nearly $11 million.
Long took home $1 million in base salary and also earned a $4.9 million bonus and nearly $5 million in additional incentives and other compensation, including retirement savings and the personal use of a corporate airplane.
In Springfield, another state insurance powerhouse, MassMutual, boosted the compensation of its chief executive, Roger Crandall, by 5 percent to nearly $12 million.
Along with his salary of $1 million, Crandall earned a $3.4 million bonus and more than $7 million in additional incentives other compensation. State regulations require insurers to report the compensation of their top executives each year.
As mutual insurers, Liberty Mutual and MassMutual are owned by policyholders, rather than shareholders.
Critics of the multimillion dollar pay packages have argued that the surplus profits should go to the customers rather than executives, or be reinvested in the business.
But company officials say the pay reflects the growth the companies have had under these chief executives. The pay, they add, is comparable to that of their peers at other major insurers.
Executive compensation is “based on company performance, benchmark data, market practices, individual performance, and other factors,” said Mark Cybulski, a spokesman for MassMutual. MassMutual reported a 3 percent increase in its revenues in 2013 to $27.6 billion.
Liberty Mutual has done particularly well in recent years, John Cusolito, a spokesman for the company said, and Long is being paid for his success
“David Long’s compensation for 2013 reflects our improved operating performance from 2011 to 2012,” Cusolito said. In 2012, the company’s profits more than doubled to $829 million from the previous year.
Liberty Mutual did almost as well in 2013, with profits growing to $1.7 billion, according to its annual earnings reported this past week.
The company saw a strong growth in its sales of auto and homeowner’s polices while benefiting from fewer claims due to major storms.
In 2012, the company received nearly 100,000 claims related to Hurricane Sandy, which battered major cities along the East Coast and forced the company to record an $886 million pretax loss.
Last year, the company spent 39 percent less on damage from catastrophic weather.
Despite the profits in 2013, Liberty Mutual told employees last year that it would be reducing its contribution to worker retirement plans and other benefits. The company said the changes to the benefits package would bring it in line with those of similar financial firms.
Liberty Mutual’s executive pay became particularly controversial after state filings two years ago revealed that the company’s longtime former executive Edmund F. “Ted” Kelly received $50 million a year from 2008 to 2010, making him one of the highest paid corporate executives in the country .
Kelly stepped down as chairman of the Liberty Mutual board of directors in June 2013.
For his half a year on the board, Kelly earned $214,618 in pay and $40,631 in personal use of the company’s plane.Deirdre Fernandes can be reached at email@example.com. Follow her on Twitter @fernandesglobe.