Putting Exec Compensation in Context

1. Putting Executive and Board Compensation into Context Roy Vaughn Vice President, Corporate Communications Nov. 10, 2011

2. The Environment • Other Blues plans receiving enhanced scrutiny over executive compensation. Among them were: • BlueCross BlueShield of Massachusetts • BlueCross BlueShield of South Carolina • BlueShield of California • Local newspapers write annual stories on BCBST’s financialperformance, including a look at executive pay • Since the debate over and passage of health care reform, health care profits and pay receive more public attention • IRS 990 form for charitable trust requires disclosure of all board compensation by any related entities; timing and filing errors enhanced difficulty of response

3. Response Strategy • Define the process and the “D” • Engage the board and board chair in creating and delivering responses • Provide comparable compensation data for CEOs and boards • Go above and beyond with information to demonstrate transparency and gain attribution of data • Provide advance/real-time notice to key stakeholders • Spirited intervention with media about every aspect of the story

4. Key Messages • A company that serves 3 million members and 5,500 employees • A not-for-profit that pays all taxes • The scope and scale of our business requires talented leadership to ensure success • Board decision with assistance from outside experts • Strive to compensate our people – including executives and board members – in the competitive range • The real cost drivers of premiums are the rising costs of medical care

5. The Results • One day story, one news cycle • All of our key messages wereincluded in coverage; balanced • Very little reaction – online, social media, internally • One legislative inquiry • Internal video message from our Board Chairman

6. CEO and Board Salaries

7. Online Article Comments

8. Internal Video Message to Employees Lamar Partridge, Chairman of the Board