Gov. Rick Scott outraged over salary increases at Citizens

02/20/2013 5:23 PM

02/21/2013 6:31 PM

Gov. Rick Scott blasted top executives at Citizens Property Insurance Corp. for “foolish” behavior Wednesday, calling on them to give back large pay raises they received last year.

“First off, they have these outrageous pay raises,” Scott said in an interview. “They ought to give that back. Those ought to go back.”

The raises, first reported by the Herald/Times, came as the state-run company was increasing homeowners’ insurance rates and scaling back coverage. In the Herald/Times interview, Scott said no one told him about the pay hikes — some as large as $31,000 — and made it clear that he did not approve.

Citizens has been involved in a number of controversies in the last year as news of the company’s spending habits has come to light. Expenditures unearthed by the Herald/Times, independent auditors and Scott’s chief inspector general include gourmet dinners, alcohol, international travel and stays in $600-a-night resorts.

A Citizens spokesperson said the company will "revisit" its board-approved compensation plan and "make a revised recommendation at the March meeting." The company did not say whether or not executives would return the money they received in raises last year.

In an opinion piece published Wednesday in the Bradenton Herald, Citizens’ board chairman Carlos Lacasa said that the company has “sound internal governance” and the raises were merited due to increased responsibilities and comparisons with the private insurance industry.

"The raises also followed three straight years of no merit raises and were accompanied by a decrease to benefits in the form of increased health insurance premiums and higher co-pays,” Lacasa wrote.

Scott said that his staff had heard Citizens’ rationale for raising the salaries, but he remained critical of the pay increases, which went out to some of the highest-paid execs at the state-run insurer. Thousands of employees at state agencies have not received a raise in six years.

On several occasions, Scott criticized executives’ use of the corporate credit card to buy alcohol, including purchases brought to light by Chief Inspector General Melinda Miguel.

Citizens responded to Miguel’s findings by saying that Lacasa had reimbursed the company for $300 in alcohol purchased at a company dinner last June. Receipts obtained by the Herald/Times show that seven or eight officials at Citizens ordered about $369 of red wine and Grey Goose Vodka during a $918 dinner at Orlando’s Ocean Prime restaurant.

“We shouldn’t be reimbursing them for alcohol,” Scott said. “This is a state-organized entity. It shouldn’t be any different.”

Citizens has agreed to adopt policies that more closely mirror travel laws that govern state agencies, with president Barry Gilway saying the company is “aggressively looking for ways to tighten its financial belt.”

Shortly after becoming president, Gilway approved raises topping $175,000 for a handful of execs and $2.1 million in additional raises for all employees. The executive raises went into effect last year between August and October. At the same time, internal investigators were looking into evidence that Citizens had paid out more than $750,000 in severance packages, including large awards to executives who resigned after misconduct allegations. After unveiling the questionable severance packages, the internal investigators were fired.

Scott, who has steered clear of taking major policy positions on the politically thorny issue of property insurance, did not hold back when it came to weighing in on the salary raises.

Breaking from his normally mild demeanor, the governor used words like “ridiculous,” “foolish,” and “outrageous” to describe the spending decisions at Citizens.

“When I see some people doing some foolish things — this is a government-organized entity,” said Scott. “People shouldn’t be doing these things.”

Toluse Olorunnipa can be reached at tolorunnipa@MiamiHerald.com or on Twitter at @ToluseO.

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