Liberty Mutual: Your premiums, his premium office
I assumed I had seen it all with Liberty Mutual. Once you learn about the chief executive’s $50 million-a-year compensation package, the fleet of corporate jets, the $90,000 flights to Hawaii, the tens of millions of dollars for senior managers, the board of directors that doesn’t feel the need to utter one public word of explanation, what more can there be?
But as we’ve seen, there’s always more, a fact that was never more apparent than when I was flipping through a mound of permit applications, building records, and engineering drawings on file in the Boston Inspectional Services Department describing a construction project the company undertook last year.
David Long decided to give his office a makeover when he became chief executive last June, replacing Ted Kelly. In the real world, that normally means a new desk and chair, perhaps a new couch, maybe carpet and fresh paint. But no one ever accused Liberty Mutual executives of living in the real world, that place they’re constantly flying over in their Gulfstream 450s.
So the company hired Suffolk Construction to oversee the job of renovating what the documents variously describe as the “Executive Suite’’ and the “President’s Office.’’ Suffolk, in turn, oversaw an architect, a security engineer, a structural engineer, an acoustical company, a lighting specialist, and a Waltham-based outfit that focuses on “audio visual integration,’’ according to city records.
Before we get to the details, let’s first reveal the cost, but first, the usual warnings. If you’re standing, please sit. If you’re drinking a carbonated beverage, put it down. If you’re on any sort of medication for heart ailments or stress, proceed at your own peril.
The grand total, according to city documents: $4,513,415.
Yes, folks, that’s $4.5 million to renovate a 1,335 square foot office suite that was, in all likelihood, working just fine a month before. It breaks down to $3,370 per square foot, making it perhaps the most valuable real estate in Boston.
Put another way, the renovation cost is equal to what a $100,000-a-year worker makes over the course of his or her entire career. It took the former Liberty Mutual chief executive, Ted Kelly, a full month to make that amount of money, that’s how high it is.
I called Liberty Mutual on Tuesday, figuring that David Long might be so proud of his new office that he’d offer to show me around. Company spokesman John Cusolito didn’t return the call, then ignored an e-mail Wednesday. Don’t I feel ridiculous for thinking we had a bond that he obviously doesn’t see. But hey, we’ll always have “Security reasons,’’ that delightful explanation he offered as to why he could not answer questions about whether Kelly used the fleet of five Liberty Mutual jets for personal travel.
So I was left to rely on that mound of paperwork and drawings on file with the city, which show that the office walls are adorned in woven silk wallcoverings from a pair of textile companies in the Netherlands. The ceilings have “linear Tuscan’’ tiles from an outfit called Innovative Ceilings. The suite will be illuminated by a Lutron lighting system that automatically dims and brightens.
This was no mere cosmetic makeover. They replaced all mechanical systems, which meant bringing in three new air conditioning units, three duct mounted heating coils, two steam generating humidifiers, and - get this - an 80-gallon water heater to make sure that Long could bask in the private shower that is part of his office suite. If the shower seems excessive, don’t be ridiculous; Long needs it after spending time in his personal exercise room.
All of this machinery needed to be hoisted up to the 10th story, one level above the executive suite. This required cranes to be brought in and streets to be restricted or blocked, according to city inspectors who monitored the job. Ceilings and parts of the roof needed to be reinforced. Construction workers were paid overtime to do most of the work at night.
But back to the cosmetics: the office and adjoining conference room feature custom wood cabinetry with stone tops and glass shelves. The personal gym is carpeted and has “glass tiled walls.’’ The lavatory is finished in “carved block stone.’’
The finishes, which include tiger’s eye stone and American burled walnut, cost $757,596.
A rather thorough city fire inspector was kind enough to list some of the office furniture, and let’s just say that somebody likes the cool comfort of Italian leather. David? There’s a leather couch, many leather chairs, and a moleskin leather bench.
Allow me to repeat for the umpteenth time that if Long owned or founded the company, if the money came out of his pocket, then he could line his office walls with original Rembrandts. There’s absolutely nothing wrong with being rich.
But Liberty Mutual is exactly what the name implies, a company mutually owned by its hundreds of thousands of policy holders, real people who are unwittingly funding these absurd $4.5 million renovations, the grotesque $50 million annual pay packages that Ted Kelly received, the ridiculous fleet of corporate jets that carry the self-entitled insurance executives to resorts the average person can’t afford to go.
And then there are the taxpayers, the people who gave Liberty Mutual $46.5 million in tax breaks so the company would build its new headquarters tower in Boston. If nature ever calls in the Back Bay, stop at 175 Berkeley Street and ask to use Long’s new bathroom, the one with the carved block stone. To quote another insurance company, you own a piece of that rock.
When this renovation occurred in the fall of 2011, unemployment was at 9.1 percent and the stock market was plunging nearly 17 percent. Good, average people were poring over checkbooks trying to figure out how to pay car insurance required by law and homeowner’s insurance required by banks. David Long, meanwhile, was poring over swatches trying to figure out what kind of woven silk he wanted on his office walls.
I’m ready to move on from this story, but something keeps drawing me back, and that something is this: In the month since Globe business reporter Todd Wallack broke the news that Ted Kelly received that grotesque pay, there has not been a murmur of regret from Liberty Mutual.
We’ve shown that the company operates its own air force, often for questionable trips (Bedford to Hyannis on summer nights?) We’ve shown that Kelly’s eight immediate underlings were paid a combined $63 million in 2010. We’ve detailed that Liberty Mutual directors, who make $200,000 a year apiece, golf at the same exclusive clubs as Kelly, live in the same resort towns, and sit on each other’s boards. It’s a rigged game.
And through these revelations, not one board member has returned a call or allowed so much as a syllable of acknowledgement that maybe it is time for some change. David Long, in his only public comments, said Kelly has nothing to apologize for. Kelly blamed “accounting issues’’ for creating a misperception about his compensation. Our governor is strikingly muted, calling Kelly a “friend.’’
The conclusion is as infuriating as it is inevitable. They don’t get it. They think they’re worth it. And they’re going to grab as much burled walnut, as many private jet rides, and as big a paycheck as their friends on the board of directors will allow.
I’ll leave you with a final thought: As the crews worked on Long’s office, many more construction workers were building the new Liberty Mutual tower across the street, the headquarters expected to open next year.
It’s a pretty safe bet that Long and his senior team will be relocating to the top floors as soon as the building is ready. So that $4.5 million renovation? It could end up being just a temporary fix.