Individuals can profit plenty at nonprofits. Blue Shield, the 77-year-old nonprofit California health insurer proved that yesterday, when it unveiled the salaries of its top executives in response to criticisms over its lack of transparency.
At the very top of the organization, CEO Paul Markovich made $3.5 million last year. Just over $1 million was base salary, while the rest amounted to incentive-based bonuses. Records showed he started at $2.5 million in 2013 and saw his pay rise $500,000 in each of the last two years.
The state of California forced the group's hand, first through a 2010 law requiring nonprofits to submit executive compensation data and then in 2015 when its tax board stripped Blue Shield of its tax-exempt status (at least relating to state income taxes) after an audit.
Recommended For You
Oddly enough, Blue Shield has already been subject to federal income taxes for 30 years, ever since Congress passed a law to treat Blue Cross Blue Shield health plans the same as for-profit ones.
It was because of this peculiar legal status that Blue Shield was able to avoid some of the disclosure requirements that most nonprofits are subjected to. Most nonprofits have to submit an annual form to the IRS, which is available to the public, detailing the compensation of its top officers.
As many nonprofits do when confronted with criticism over executive pay, Blue Shield has pointed out that its leaders are compensated similarly to its for-profit competitors, suggesting that it takes millions to acquire top talent in the field.
And Blue Shield is certainly not the only nonprofit insurer lavishing millions on its executives. The largest nonprofit in the insurance game, California-based Kaiser Permanente, paid its CEO over $10 million last year.
The third largest health insurer in California, Blue Shield's membership rose 17 percent last year, to roughly 4 million.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
