KY workers’ comp agency raises president’s salary by 50 percent in last two years
Kentucky Employers’ Mutual Insurance has raised the salary of its president by 50 percent over the past two years, following a 2019 state audit that sharply criticized the agency for spending excessively for insiders’ personal benefit.
On Oct. 11, the KEMI Board of Directors boosted the salary of KEMI president Jon Stewart from $362,000 to $428,065. The board last year hiked Stewart’s salary to $362,000 from the $286,100 set in his current five-year employment contract that he signed Oct. 13, 2020.
KEMI provided Stewart’s salary information to the Herald-Leader through an Open Records Act request. The agency removed Stewart and its other executives from the state government’s public salary database in 2020.
Stewart declined to comment this week.
But other officials at KEMI, a state-founded workers compensation insurance agency, said hefty pay raises were necessary for Stewart’s compensation to more fairly reflect what others in his position are paid in the insurance industry.
According to Aon Ward Benchmarking, which studies the industry, even Stewart’s new salary is 13 percent below the median paid to chief executives in comparable positions nationally, said KEMI board chairman Mark Workman, owner of Bacon Farmer Workman Engineering & Testing Inc. in Paducah.
“KEMI’s board believes Stewart should be paid a wage in line with the market based on his outstanding performance over the past decade,” Workman said.
Among Stewart’s successes are tens of millions dollars in policyholder dividends; refunds for Kentucky school districts and eligible coal operators; and higher policyholder equity, he said.
“KEMI’s success is remarkable, and the board recognizes the importance of strong leadership as a key factor in the organization’s ability to effectively navigate a myriad of challenges as a mono-line, mono-state insurance company,” Workman said. “Jon has clearly demonstrated his commitment to serving KEMI’s employees, policyholders, injured workers and many other stakeholders.”
Apart from his salary, Stewart also collects “incentive payments,” most recently the sum of $93,632 in March.
Headquartered in Lexington, KEMI is Kentucky’s largest issuer of workers’ compensation insurance, providing coverage to more than 20,000 policyholders.
The General Assembly created it as an independent nonprofit in 1994 to serve as an insurer of last resort, staking it with a $7 million loan of public funds. Gov. Andy Beshear — who makes $164,355 annually — appoints its governing board, including seven at-large members and three of his cabinet secretaries.
In 2019, state auditor Mike Harmon said his office uncovered spending problems at KEMI, including a lack of competitive bidding and cost controls; inaccurate reporting of contracts; “generous” incentives paid annually to Stewart and others that boosted base salaries as much as 20 percent; and business funds used for expensive meals, liquor, gifts and entertainment for Stewart and others.
Among Harmon’s recommendations was adding one or more new members to the KEMI board specifically to represent the financial interests of the agency’s policyholders.
“If this had been done, you could have more confidence that executive compensation was done in the best interest of the policyholders,” Harmon said this week in response to Stewart’s raises.
