KEMI Board Trims CEO's Salary After Audit Findings

Tuesday, April 23, 2019 | 0

Just days after a state auditor's report questioned some spending practices at Kentucky's largest workers' compensation carrier, the mutual company's board has recommended that the CEO take a pay cut and lose his long-term contract.

Jon Stewart

The board of directors for Kentucky Employers' Mutual Insurance Co. met for three hours last week behind closed doors with representatives from the governor's office and the attorney general's office, according to a Lexington news report.

When they emerged, board members said they voted unanimously to reduce CEO Jon Stewart's salary by an amount they did not reveal, and switch his contract from one that expires in 2023 to a year-to-year probation-based agreement. Stewart now earns an annual salary of $445,438, plus bonuses and incentives, according to news reports.

The board requested the audit earlier this year because of concerns that some contracts KEMI officials signed had not been reviewed by board members. The report by State Auditor Mike Harmon found that KEMI spent money on bar tabs, an unusually large tip and several no-bid contracts. The report also noted that KEMI had obtained coveted tickets to college basketball games because of a major advertising agreement with Rupp Arena, but those tickets were given to KEMI officials and were not used for a legitimate business purpose.

A state senator who has followed KEMI through the years said the company has done a good job of bringing competition and lower premiums to the Kentucky workers' compensation market, but the audit was needed.

“We've been a little lax on this from the General Assembly side of things,” said Sen. Tom Buford, R-Nicholasville.

He added that the audit findings will likely be the subject of the Assembly's program review, which is held about once a month to scrutinize state agencies and state spending.