CORPORATE AMERICA: THE HEIGHT OF ARROGANCE

CORPORATE AMERICA: THE HEIGHT OF ARROGANCE
Liberty Mutual's Edmund "Ted" Kelly

MAY 23, 2012: A series of articles by the Boston Globe’s Brian McGrory highlighted the excessive salary and perks of Edmund "Ted" Kelly, former CEO of Liberty Mutual here in Massachusetts.

Aside from his multi-million dollar salary, Kelly was a close friend of Liberty Mutual’s Board of Directors, millionaires themselves, who OK’d Kelly’s $50 million salary/compensation package. They each received an annual $200,000 in director’s pay.

Kelly, himself with a retirement package worth millions, also sits on the Board of Directors, collecting an extra $200,000 for attending a relatively small number of meetings each year.
Boston based Liberty Mutual does employ some 4,100 workers in this state, but also recently negotiated $46.5 million in tax breaks from the Commonwealth and the City of Boston in agreeing to create 600 jobs in the city.

McGrory’s well-researched series revealed that there are nine executive officers with Liberty Mutual whose annual earnings range between $2.2 million and $18.8 million, most on the highends.

Liberty Mutual has its own fleet of five long-range corporate jets housed in a state-of-the-art hangar at Hanscom Field, sometimes used for doing the critical work of shuttling Liberty Mutual executives to and from a company-sponsored senior PGA golf tournament in Georgia.

While Liberty Mutual salaries and expenses may be on the high end of corporate salaries and perks here in Massachusetts, it is indicative of the living style of those who would complain about the “burden” that the public sector places on the taxes of Massachusetts’ residents.

Edmund Kelly himself was personally quoted in a news article that "residents of middle-class Massachusetts towns are paying excess taxes to support government workers who get high salaries and very rich benefits.”

Mr. Kelly lives in the town of Weston, which the 2010 census indicates has the highest per capita income of any community in the state and is the 6th wealthiest with a population of at least 10k in the US. He also owns ocean front vacation homes in Osterville on the Cape, as well as Indian River Shores, FL - both of which are near airports sometimes visited by Liberty's jets.

“By the way, Weston is in Middlesex County and its town employees are members of the Middlesex County Retirement System,” Association President Ralph White points out. “There are 31 towns in this system whose retirees receive an average pension of $20,000 and are not covered by Social Security. Are these the ‘very rich benefits’ to which he refers?”

Red Flag On Beacon Hill

Columnist Brian McGrory’s series has raised a flag on Beacon Hill where three senators; Patricia Jehlen, Brian Joyce and Mark Montigny, have proposed budget amendments to discourage other mutual fund companies from awarding outsized pay packages in the future.

The amendments would require mutual companies, both insurers and banks, to publicly disclose compensation for top executives, just as publicly traded companies are required to do. It would give policyholders at mutual insurers a chance to vote on executive compensation, similar to the “say on pay” votes by stockholders of public companies, which was mandated by the Dodd-Frank financial overhaul bill.

It would also bars directors at mutual companies from serving on compensation committees – which set CEO pay – if they have a conflict of interest, such as working for the chief executive. The measure would also require most directors on the board of directors to be independent – meaning they do not work for the CEO or have other conflicts.

“I hope we can do something to protect policyholders, the supposed owners of mutual companies,” said Senator Jehlen.

Note to Association Members: Today’s Boston Globe (May 23) contains Brian McGrory’s latest column on Liberty Mutual (Metro Section). Also included in the Business Section is the article on the proposed budget amendments. If you read these previous articles via the Internet, I would welcome your comments. My best wishes for the coming Memorial Day Weekend, Ralph White. Click here to read McGrory’s series on Liberty Mutual.

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