HELENA – The state workers’ compensation fund paid $1 million of “incentive payments” to its employees last week, for meeting fiscal 2013 goals – but has ended the incentive plan for the future.
The Montana State Fund board, which oversees the quasi-governmental agency, decided earlier this year to halt the plan going forward, saying it had garnered “negative recognition” before the 2013 Legislature.
“The negative recognition during the last legislative session hindered productive discussion on some of the major policy issues that ought to have been addressed,” said Laurence Hubbard, president of the State Fund.
Nonetheless, the State Fund, which sells work-comp insurance to 26,000 Montana businesses, paid out incentives last Friday to 245 of its 280 employees, for the fiscal year ending June 30. Another eight former employees who are now retired also got incentive payments for 2013.
Also last week, the State Fund announced it will return $12 million in dividends to 23,000 of its customers, the largest annual dividend payout by the fund. Work-comp coverage, required by state law, insures businesses against on-the-job injuries to workers.
The 2013 incentive payments to State Fund employees averaged 6.3 percent of an employees’ eligible income and ranged from $600 to $9,500 for non-executive workers.
About 12 percent of the total incentive plan payout went to the State Fund’s five highest-paid executives. Those executives and their salaries and payments for fiscal 2013 are:
• Hubbard, State Fund president: $270,900 salary, $29,800 incentive payment.
• Albert Parisian, chief information officer: $189,900 salary, $23,600 incentive payment.
• Mark Barry, vice president for corporate support: $164,200 salary, $17,900 incentive payment.
• Nancy Butler, general counsel: $164,200 salary, $16,500 incentive payment.
• Richard Root, vice president for operations: $157,900 salary, $12,300 incentive payment.
State Fund spokeswoman Mary Boyle said the incentive payments are based on whether employees meet pre-determined financial and performance goals.
The incentive plan for the State Fund began in 1996 for its executives and was expanded to all employees in fiscal 2002. It had no payout or virtually no payout in 2003, 2004, 2009 and 2010, and state executives waived their payments in 2011.
The 2012 incentive payments came under fire at the 2013 Legislature, when Sen. Jim Keane, D-Butte, sponsored a bill requiring the State Fund to use its own assets to pay off a $60 million debt for pre-1990 work-comp claims. The state treasury has been paying off the debt, as part of an earlier agreement.
During the Legislature, Keane said if the State Fund has millions of dollars in equity and money to make incentive payments to employees, it can pay off the old debt, instead of having the taxpayers do it.
The bill died in the final days of the Legislature in April.
Hubbard said the incentive plan has been an “integral part” of the State Fund’s financial and operational success, but that he and the board don’t want it to color future debate on the fund’s role and operations.
He also said the State Fund wants to maintain a “market-based pay for performance” compensation structure so it can compete for talented professionals.