Blue Cross gave CEO 7.3 percent raise this year $486,923 base salary was augmented by 'incentive' pay of $196,000

November 22, 1995|By John Fairhall | John Fairhall,SUN STAFF Sun staff writer Jay Hancock contributed to this article.

In his second full year as president and chief executive of nonprofit Blue Cross and Blue Shield of Maryland, William L. Jews received a 7.3 percent raise totaling $47,000, boosting his pay to $683,000.

Most of the other top executives of Blue Cross also received raises this year and are earning from $136,304 to $448,975, with the average salary $258,000.

Mr. Jews' compensation this year consists of a $486,923 base salary and "incentive" pay of $196,000.

The company disclosed the salaries to state legislators in response to a request seven weeks ago by Sen. George W. Della Jr., a sometime critic of Blue Cross. Legislators publicly released the information yesterday after receiving it from Blue Cross.

Although Mr. Jews did not comment yesterday on the information given to legislators, he has said repeatedly that he is underpaid compared with the chief executives of comparable Blue Cross companies and for-profit insurers.

Executive-pay consultants support his contention.

Sibson & Co., a consultant hired by Blue Cross, found that Mr. Jews earns $62,000 less than the average sum paid to presidents of comparable Blue Cross companies. He receives $422,000 less than the average for presidents of a mix of Blue Cross and for-profit insurers, Sibson reported, according to information provided to legislators.

Graef Crystal, a business professor at the University of California at Berkeley, said that Blue Cross executives generally "are paid nothing like their private-sector counterparts." But the differences are narrowing, he said.

And a survey earlier this year by the Plain Dealer newspaper in Cleveland found that Blue Cross chief executives earned as much as $1.8 million in 1994.

Mr. Jews has urged legislators and reporters not to "sensationalize" Blue Cross salaries in light of what other companies pay and in view of his performance. Since he took over in April 1993, Blue Cross has substantially bolstered its once-weak financial condition.

But salaries and benefits of Blue Cross executives undergo extra public scrutiny because of the company's tax-exempt status and the behavior of some of Mr. Jews' predecessors.

The compensation of one former president, Carl J. Sardegna, leaped from $221,000 in 1986 to $850,000 in 1991, a period in which the company flirted with insolvency.

After 2 1/2 years on the job, Mr. Jews' compensation remains $167,000 less than Mr. Sardegna's.

Unlike for-profit insurers, Blue Cross is required by the state to disclose executive compensation every year because it is nonprofit and exempt from state premium taxes. Although Blue Cross normally releases the information after the year has ended, Mr. Della insisted on obtaining current numbers.

Mr. Della would neither comment yesterday on the salaries nor elaborate on why he wanted them. He asked for them in early October during a Senate Finance Committee discussion of Blue Cross' plan to split into nonprofit and for-profit businesses. That plan is unlikely to be acted on for another year.

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