By Jess Bidgood
Jul. 6, 2011
BOSTON — Massachusetts' largest health insurer is refunding its customers for the $4.2 million severance payout it gave departing CEO Cleve Killingsworth.
The move came Wednesday as state Attorney General Martha Coakley announced the findings of an investigation into the payout. Coakley concluded the payout was within the terms of Killingsworth's contract, but, in a statement, said such severance terms "diminish board independence, when triggered are costly both in dollars and public perception, and, in most cases, do not sufficiently advance legitimate corporate purposes."
The initial payout sparked an outcry when Killingsworth left Blue Cross in March and moved Coakley to begin a four-month investigation of the matter.
Coakley praised BCBS's decision to refund the money, but implored their board — and those of other non-profits — to consider whether large severance packages are really necessary or advantageous for their organizations.
"We hope that board members at all charities will closely scrutinize these severance packages and work to put the protection of chartiable assets above all other factors," Coakley said. "These terms are highly costly."
Overall, Killingsworth netted over $11 million from BCBS in 2010.
Earlier this year, BCBS suspended compensation for its board of directors after a separate investigation by the AG's office found no justification for that compensation.