An audit of Colorado’s workers’ compensation insurer of last resort ordered by lawmakers last year was released this past Monday. According to the audit, executives at Pinnacol Assurance are paid more than their peers and luxury trips for its board and executives “border on abuse.”
When auditors examined the company’s records on the heels of heavy criticism by the General Assembly, they found the company had insufficient controls over travel and expenses.
In fact, this scrutiny has been going on for years – most recently when a crew from KMGH (Channel 7) followed three board members and several executives to a premier golf resort in Pebble Beach, California.
In regard to compensation, auditors did find that compensation for executives at Pinnacol was not “necessarily unreasonable in comparison” to other state run or quasi-governmental workers’ compensation insurers.
However, Pinnacol executives have been receiving bonuses at maximum levels for several years now. Auditors found where Pinnacol’s board regularly set bonus targets below prior years’ actual results between 2002 and 2008, allowing executives to receive the maximum bonuses for that time.
Between 2007 and 2009, the company gave nearly $2 million in bonuses.
In 2009, CEO Ken Ross received $563,459 in total compensation – $311,000 salary and around $167,000 in bonuses.
Ross has been at the center of much of this ongoing criticism but has remained defensive to any charges of wrongdoing. He maintains that Pinnacol must compete with private insurers for talent…company trips are often comparable to ones private insurers take.
Pinnacol officials appearing at a Legislative Audit Committee hearing on Monday concurred they needed tighter controls over bonuses and travel. Board member Gary Johnson did say though that Pinnacol’s travels were modest in comparison to private insurers.
Lawmakers on the committee asked Pinnacol officials to return in September to detail the steps they’re taking in response to the audit.
