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. Compensation targets are set at the 75th percentile, reflecting the quality of employees BETArma wishes to hire and retain, as well as 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 through December 31, 2019. Under the terms of the agreement, the CEO may receive an annual salary increase as determined by the BETA Council.

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 labor negotiations and the performance evaluations are conducted in closed session, all actions regarding the employment contract, compensation and benefits are voted upon in a properly noticed open public meeting.

The CEO has a targeted salary that is set each year by the BETA Council between the 60th and 75th percentile of the agreed upon peer group of medical liability insurance companies with 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 are approved each year by the BETA Council. The BETA Council has sole discretion to determine if the CEO is eligible to earn additional performance incentive compensation and the amount of such compensation.

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 the Qualified Supplemental Executive Retirement Plan (QSERP). The QSERP provides CalPERS-like pension benefits on the amount of compensation and/or accrued benefit in excess of the IRC limits. Only qualified employees age 60 or older with at least ten years of service have vested benefits in the QSERP. BETArma also maintains a Section 457 Deferred Compensation Plan to which the employees and BETArma contribute. The Section 457 plan was required in order for BETArma to opt out of Social Security, which it did in 1997. For the CEO, QSERP benefits are limited to a retirement income replacement ratio of 60% of “Final Average Earnings” at age 63 and 65% at age 65. For all other QSERP participants, benefits are limited to a retirement income replacement ratio of 70% for retirement, death or disability on or before age 65.The amount that participants may receive from the QSERP is reduced by the value of the CalPERS and Section 457 plan benefits, as determined by the plan actuary. Effective January 2, 2015, the QSERP was closed to any additional participants, whether hired before or after January 1, 2013. Employees hired on or after January 1, 2013 are subject to the changes required under the Public Employees’ Pension Reform Act of 2013.

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, JLK 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.”

Pay Schedules

BETA HEALTHCARE GROUP RISK MANAGEMENT AUTHORITY

Controller’s Government Compensation in California Internet Website: http://www.publicpay.ca.gov