Top executives at Pinnacol Assurance, Colorado's state-chartered workers' compensation insurance fund, are being asked to waive agreements that would give them hefty payouts if the quasi-state agency is privatized.
The action comes as the state's Gov. John Hickenlooper and Pinnacol are negotiating over a proposal to privatize the insurer, a deal that even Hickenlooper says will be tough politically to get done. The deal calls for turning the insurer into a private mutual-assurance company, owned by its policyholders.
In exchange, the state — which created Pinnacol — would receive a 40 percent ownership stake in the new company, from which it could draw $13.6 million a year in dividends to fund business-development and education initiatives.
But under existing legal agreements, if there were a substantial "change in control" of the Pinnacol board, something that could occur if a governor sought to replace a number of board members or if the insurance fund were privatized, executives would be eligible for severance packages.
The payouts for 14 executives would total $6 million, a sum critics called "golden parachutes" for top Pinnacol officials.
Blair Richardson, chairman of the Pinnacol Assurance board, told The Denver Post on Monday the severance packages were put in place by a previous board concerned about lawmakers attempting to tap funds from Pinnacol's reserves. Lawmakers mulled taking $500 million from Pinnacol's assets in 2009 to help balance the budget but later dropped the idea.
Pinnacol's chief executive, Ken Ross, "has signed a document rescinding his change-of-control agreement," Richardson said. "We are working through with the rest of the management team rescinding these."
Ross told The Denver Post's editorial board Monday he expected the rest of Pinnacol's executives to sign away the severance packages by the end of the week.
Any deal would have to be approved by lawmakers, and that approval could be difficult in the face of a skeptical business community.
"The business community came out immediately kind of against it," Hickenlooper said.
"A lot of Republicans came out against it, and a lot of Democrats came out against it, which in our book is a sign that we're pretty close — on the right track," he joked.