Hearings ordered on Horizon executives’ pay [Asbury Park Press, N.J.]

May 20--New Jersey Senate President Stephen M. Sweeney today called for legislative hearings to look into the compensation packages of executives for Horizon Blue Cross Blue Shield of New Jersey.

The request came after the Asbury Park Press, citing documents filed with the New Jersey Department of Banking and Insurance, reported William J. Marino, Horizon's president and chief executive officer, received a compensation package of $8.7 million in 2009, or 59 percent more than the previous year.

Marino was one of nine executives who received compensation packages for a total of $24 million last year, 61 percent more than the previous year, according to the filing.

"Million-dollar private-sector CEO salaries are nothing new, but a $9 million payout to the head of a supposed not-for-profit organization is simply obscene, excessive and offensive," said Sweeney, D-Gloucester.

Newark-based Horizon is the state's biggest health insurance provider, with 3.6 million members. It has 812 employees in Wall. The company is not-for-profit, which means its profits are put in a reserve fund for emergencies such as natural disasters or health crises.

The report about executive compensation came at a touchy time. Some consumers have complained about annual premium increases that can top 30 percent. Doctors have complained about declining reimbursements. The nation went through a bruising battle over health care reform that included highly paid insurance executives testifying before Congress. And, Sweeney noted, Gov. Chris Christie, faced with a huge budget deficit, has called on residents to sacrifice.

Marino's compensation included a salary of $934,615 and a bonus of nearly $7.8 million, the filing said. It isn't clear what criteria Horizon's board of directors has used to award bonuses.

Horizon officials took issue with the newspaper's story. They sent an e-mail today to employees and the Asbury Park Press that said the newspaper's report was misleading and inaccurate.

Among their biggest contentions:

Marino's compensation last year included $3.9 million that was deferred from previous years. Without that, they said, his compensation would have amounted to a pay cut.

Marino had declined numerous salary and bonus increases that were due to him since 2005.

The compensation committee is made up of independent, outside directors and retains outside consultants to ensure the compensation is in line with other companies.

"Senate President Steve Sweeney appears to be reacting to an Asbury Park Press story that inaccurately reported Bill Marino's earnings in 2009," said Thomas Rubino, director of public affairs and advertising for Horizon.

"The Asbury Park Press was told the earnings amount was inaccurate and published it anyway. Moreover, a 2008 study conducted at the request of the Department of Banking and Insurance found that Horizon Blue Cross Blue Shield of New Jersey's executive compensation was below market level in relation to peer companies and that the company has a "strong corporate governance environment."

"It is unfortunate that the Asbury Park Press chose to run an inaccurate story and we have reached out to Senator Sweeney to provide him the facts," Rubino said.

Horizon critics, however, said it didn't matter whether a portion of the compensation was deferred. "I fully understand Sen. Sweeney's frustration that the only not-for-profit health care company in New Jersey is raising rates 30 percent a year, only to see it go into the CEO's pocket," said Michael Kornett, chief executive officer for the Medical Society of New Jersey, which represents 9,000 physicians. "It's outrageous."

Sweeney said he will ask Senate Majority Leader Barbara Buono, chairwoman of the Senate Legislative Oversight Committee, to examine the issue of executive pay at Horizon.

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