Criticism of KEMI Board’s vote to remove executive salaries from website

FRANKFORT, Ky. (WTVQ) – The governing board of Kentucky Employers’ Mutual Insurance (KEMI) is facing criticism after awarding “incentive payouts” to several top executives and voting to remove KEMI executive salary information from the state’s transparency website.

The action was taken Tuesday during a virtual meeting.

Kentucky Treasurer Allison Ball reacted on Wednesday.

“I am disappointed to learn of the KEMI board’s vote to remove KEMI executive salaries from the transparency website. I have championed transparency in governmental salaries and spending since first taking office.  KEMI was created by statute and Kentucky taxpayers have a right to know this information,” Ball said.

KEMI president and chief executive Jon Stewart defended the board’s action in an interview with the Lexington Herald-Leader.

“All we are looking to do is protect our talent at the top level.  I understand the perception.  But we’re trying to run a competitive insurance company here,” Stewart told the newspaper.

Stewart told the newspaper he will add about $51,000 in compensation to his $275,000 salary for meeting certain performance goals during the second half of 2019.

The report adds that smaller awards around $30,000 will be given to other KEMI executives, including vice president and general counsel Tim Feld, who the newspaper says has a reported base salary of $185,000.

Kentucky Auditor Mike Harmon released an audit report last year criticizing KEMI’s spending.  Among the findings, business money used for expensive meals, liquor, gifts and entertainment for Stewart and other top executives; University of Kentucky athletics tickets for top executives for no clear business purpose and the awarding of no-bid contracts.

Auditor Harmon reacted to the latest move by KEMI’s governing board.

“When we released our examination 16 months ago that resulted in 10 findings and provided what I believe were sound recommendations, my office was hopeful KEMI’s leadership would follow those in the spirit of accountability and transparency,” Harmon said in the Herald-Leader report.

“By taking these actions, it appears KEMI’s board is taking a step back from being transparent to the customers they serve as an insurer of last resort. It is our hope these actions don’t lead to negative results for businesses served by KEMI, who are already dealing with financial issues due to the current pandemic,” Harmon said.

KEMI is the state’s largest issuer of workers’ compensation insurance, according to the report.  The company was created by the General Assembly in 1994 as an independent nonprofit.

Seven of the board’s ten members are appointed by the governor; the other three are state cabinet secretaries.

The current board is controlled by new appointees from Governor Andy Beshear, according to the newspaper report.