May 31, 2011
Massachusetts Moves Forward with Legislation to Require AG Approval for Compensating Directors
The Boston Globe reports that the Massachusetts state Senate added an amendment to the state budget which would prohibit public charities from paying their directors without prior approval of the state Attorney General's public charities division. The Attorney General could also rescind that approval if the compensation was deemed unreasonable. The bill containing the amendment is now on its way to conference committee for reconciliation with the state House's budget bill. The text of the amendment is not yet available on the state legislature's website, as the relevant bill (H03401) has not yet been updated to reflect the amendment.
As detailed in the article, Attorney General Martha Coakley begun pushing for this legislation after the board of Blue Cross Blue Shield of Massachusetts approved an $11 million compensation package for the health insurer's departing chief executive. The members of that board each receive compensation in the five figures annually, and the board members of three other major Massachusetts health insurers also compensated their board members. As explained in a press release issued by her office, AG Coakley issued a report finding no justification for this compensation. Blue Cross Blue Shield and another health insurer in fact suspended compensation for their board members in the face of AG and public criticism of this practice. The amendment appears to reach all public charities, however, and not only health insurers.
Additional coverage: Boston Herald.
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