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Highmark's still working out severance for fired CEO

| Tuesday, March 19, 2013, 12:01 a.m.

Nearly a year after firing Ken Melani, Highmark Inc. continues to negotiate a severance deal with its former CEO.

Melani, let go April 1 when he got into a fistfight with his girlfriend's husband, made $3.9 million last year.

His 2012 pay, which Highmark reported in an annual filing with the state Insurance Department, included $290,000 in salary, a $3.3 million bonus and $316,000 in other compensation.

It does not include a severance related to his firing, which is the subject of ongoing arbitration, Highmark spokesman Michael Weinstein said.

Weinstein would not say how much money Melani seeks.

Melani's bonus last year was deferred compensation, “earned in previous years for services performed, to which he was entitled,” Weinstein said.

Melani, 59, lives in Indiana Township with his family and is not working. He declined to discuss the arbitration and referred questions to his employment attorney, Sam Cordes, who declined to comment.

Highmark, the state's largest health insurer, fired Melani when police charged him with trespassing and assault related to the fight in Oakmont. The charges were dropped after he underwent counseling.

Highmark named William Winkenwerder as its CEO in early June; he started in mid-July. The former Defense Department assistant secretary for health affairs was paid $1.9 million last year, according to Highmark's filing.

In addition to Winkenwerder and Melani, Highmark paid eight current or former executives more than $1 million each, the filing shows.

In between Melani's firing and Winkenwerder's hiring, Highmark Chairman J. Robert Baum stepped in as interim CEO and received $310,725, in addition to pay for his board service of nearly $82,000.

Weinstein declined to comment on any executive's compensation.

“Generally speaking, the compensation level of Highmark's CEO and its 10 highest compensated employees reflects Highmark's size, the diversity of the company's line of business and its financial performance,” he said.

The insurer, with nearly 5 million members in Pennsylvania, Delaware and West Virginia, had revenue of $14.8 billion and net income of $444.7 million in 2011. It is expected to report its 2012 finances this month.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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