To remain successful, BETA Risk Management Authority (BETARMA) has recruited top-quality insurance professionals with executive management, underwriting, risk management, claims management, information technology and financial experience and expertise. Each year, compensation at all levels of the organization is reviewed based on the appropriate peer group data with the target being to structure compensation at the 75th percentile, reflecting the quality of employees BETARMA wishes to hire and retain and the high cost of living in BETA’s locations. At BETA, employees do not receive any stock options, restricted stock grants or equity participation such as are provided at some of BETA's insurance company competitors. BETARMA is in compliance with all State of California compensation reporting requirements.

Since joining BETARMA on January 1, 1993, a written employment agreement has always documented the compensation and benefits provided to the CEO. The current agreement runs from January 1, 2010 through December 31, 2013. Under the terms of the agreement, the CEO may receive an annual salary increase, which for 2010, 2011 and 2012 were 0%, 3% and 3.17%, respectively.

In 2002, the BETA Council approved and implemented a compensation and benefit policy for the CEO based on input from the leading medical liability insurance company compensation consulting firm, Total Compensation Solutions (TCS). Annually, the CEO's compensation and benefits are reviewed by the BETA Council, and the CEO's performance is evaluated against organizational and individual goals approved by the BETA Council. While the performance evaluation is conducted in closed session, all actions regarding compensation and benefits are voted upon in an open public meeting. The BETA Council periodically retains an executive compensation consultant or attorney specializing in employee benefits to review the work provided by TCS.

As part of the BETA Council policy adopted in 2002, the CEO has a targeted salary equal to the 50th percentile of the agreed upon peer group of medical liability insurance companies and targeted total compensation equal to the 75th percentile of total cash compensation. This approach, which is common among the peer group, rewards the CEO for performance by putting a significant portion of the total compensation "at risk." TCS provides the BETA Council with market information regarding the CEO’s salary, performance incentive, total cash compensation and benefits in comparison to the peer group to allow the BETA Council to make an informed decision regarding CEO compensation and benefits. TCS has extensive and unparalleled experience and information with a client base that encompasses more than 75 medical liability insurance companies.

The actual performance incentive awarded to BETARMA's CEO, if any, is determined objectively based upon the actual success in meeting or exceeding the CEO's goals which focus on financial results, member retention, growth, and risk management initiatives. For the past ten years, the BETA Council has always required that the CEO's performance incentive be subject to a three-year vesting requirement.

To help attract and retain its exceptional staff of insurance professionals, BETARMA maintains a defined benefit retirement plan and a retiree medical plan. These plans will provide BETARMA's employees with both retirement income and post-employment medical care based on their age at retirement and years of service to BETARMA.

BETARMA's retirement plan is designed to provide a competitive level of retirement income to career employees. As a participant in CalPERS since 2003, employees participate in the "Local Miscellaneous (2% at age 60)" plan. Employees with annual compensation in excess of the Internal Revenue Code (IRC) compensation and accrued benefit limits may participate in two supplemental retirement plans. These plans provide CalPERS-like pension benefits on the amount of compensation and/or accrued benefit in excess of the IRC limits. No current employees have any vested benefits in the supplemental plans. BETARMA also maintains a Section 457 Deferred Compensation Plan to which the employees and BETARMA contribute. This plan was required in order for BETARMA to opt out of Social Security, which it did many years ago.

As required by CalPERS, retiree medical benefits are provided to BETARMA employees with vesting based on age and years of service. At age 65, eligible retirees and dependents must enroll in Medicare Parts A and B, and also participate in the CalPERS Medicare Supplement Plan, with benefits and costs subject to CalPERS provisions.

There are no unfunded liabilities related to BETARMA's defined benefit and retiree medical plans. As stated by BETA's financial auditor, Larson & Rosenberger LLP, "BETARMA contributes to its defined benefit and retiree medical benefit plans annually based on actuarial valuations that determine the annual benefit cost and amount required to responsibly fund these plans. Unlike many employers providing these plans, BETARMA continually meets the actuarially determined funding requirements for both its defined benefit and retiree medical plans and, as a result, BETA's financial statements as of December 31, 2011, reported net obligations of $0."

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