Mutual banks and thrifts in Massachusetts have dodged a bullet — at least for now — on a proposed state law that would have subjected them to new standards on executive compensation.
The Massachusetts Senate approved a state budget late Friday that removed language that would have required mutual banks to disclose more details about how top executives are paid. The budget amendment was introduced after it was learned that Boston-based Liberty Mutual Insurance paid Ted Kelly, its former chief executive, about $50 million annually.
More than 70% of the state's banks and thrifts are mutually owned. The language in the bill was changed after the Massachusetts Bankers Association explained to lawmakers the differences between mutual banks and mutual insurance companies, and stressed that the Federal Deposit Insurance Corp. already has substantial oversight of mutuals' pay rules, said David Floreen, senior vice president of government affairs.
The Senate version of the budget still includes new compensation rules for mutual insurance companies.
A joint House-Senate committee is still considering the budget, and language could be reintroduced to subject mutual banks to the new rules. But "it's not likely that it will surface again" before the end of June, when the final budget is likely to be approved, Floreen said.