'The Chairman, Mr. Leonard, reported to the Board that on Monday, May 22, 1967, and again on June 27, 1967, he had met with State Insurance Commissioner, Mr. David J. Dykhouse, to discuss the Commissioner's letter to Chairman Leonard, dated April 14, 1967, with respect to compensation paid Mr. Bishop as Manager of the Fund. The Chairperson said that Commissioner Dykhouse feld that Mr. Bishop's present level of aggregate annual compensation at approximately the rate of $48,000.00 per annum was somewhat excessive in view of the nature of the Michigan State Accident Fund and its creation and operation under State auspices. Mr. Leonard said Mr. Dykhouse had pointed out that there was not the slightest implication of any criticism of Mr. Bishop's services but rather full appreciation of their worth, but there was an expression of strong conviction that the Board had permitted the compensation, in this instance, to get to a level that was somewhat out of hand.

'The Chairman said that further discussion with Mr. Dykhouse led to the suggestion that it might be feasible to reduce Mr. Bishop's present aggregate annual compensation, effective October 1, 1967, to the level amount of a suggested figure of $36,000.00.

'It was felt that if Mr. Bishop could be prevailed upon to remain as a special consultant to the Michigan State Accident Fund for five years after his retriement at a compenation of $12,000.00 per annum, this latter amount would, to some extent, recoup the lost compensation.

'The Chairman said that he thought favorably of this suggestion, and told the Commissioner so and that he would take up the matter with the Executive Committee. The Chairman said he had done so and now, with the Committee's and Mr. Bishop's approval, wanted to present it to the full Board for consideration and action.

'The Chairman said that he and Commissioner Dykhouse had discussed whether the Fund could make a firm arrangement with Mr. Bishop with regard to his acting as a consultant. It was felt that there were obstacles to any such long-term agreements, but that certainly with the good faith expressed intention by the Board and Mr. Dykhouse, coupled with Mr. Bishop's indication of his willingness to act and in view of the circumstances of the arrangement, that the Fund and Mr. Bishop, under the continuing auspices of the State Insurance Commissioner, could feel confident that the Board would take the necessary action from year to year to carry out the understanding.

'Thereupon, there was further discussion by the Board, after which Mr. Rockwell moved that the Chairman's agreement with Commissioner Dykhouse be approved, and the level of Mr. Bishop's compensation, effective October 1, 1967, be set at the rate of $36,000.00 per annum, to be paid periodically as salary and all previous subsisting special bonus arrangements be cancelled from and after said date of October 1, 1967. The motion was supported by Mr. Burtis and unanimously carried.'

'The Chairman reminded the Committee of the plans of Mr. Bishop, Manager of the Fund, to retire January 15, 1979, and stated that the members of the Executive Committee had considered the Fund's situation with respect to its obligations to the Manager, Mr. Bishop, and to the problems that would result from his retirement. Mr. Hubbard then introduced the following resolution:

'WHEREAS, on October 1, 1967, the Board of the Accident Fund entered into a contract with Mr. W. C. Bishop, Manager of the Fund, with which the Insurance Commissioner concurred, under which Mr. Bishop agreed to accept a $12,000.00 per year reduction in salary in consideration of the Board paying him a like amount as deferred earned income at the time of his retirement; and

'WHEREAS, Mr. Bishop has, at the persuasion of the Board, worked on beyond his normal retirement date--a total of 11 years under the terms of the contract; and

'WHEREAS, the Manager has received no merit raise during that period (only cost-of-living adjustments), it being the intention of the Board to honor its contract and fulfill its obligation to its Manager of 40 years, I move that the Board of the Fund direct the Fund's Comptroller to pay Mr. Bishop the above deferred earned income ($12,000.00 X 11 years--$132,000.00), $60,000.00 immediately and $72,000.00 during the first week of January 1979.

'Following the resolution, Mr. Hubbard moved that the action therein be approved. The motion was supported by Mr. Jameson and unanimously carried.'

'The manager, Mr. Bishop, asked to be excused from the meeting while the vice chairman read the minutes of the executive committee meeting held on Tuesday, November 28, 1978. Following the reading of the minutes, Mr. Morrow moved that they be approved. The motion was supported by Mr. Alstrom and unanimously carried.'

'The Committee discussed at length the various transition problems which could occur during the period between the retirement of the present Manager, Mr. Bishop, on January 15, 1979, and the date upon which his successor might be selected and take office. The Committee agreed unanimously to retain Mr. Bishop as Acting Manager, at his present salary, on a month-to-month basis until his successor has been appointed and approved by the Advisory Board.'

'The Secretary next read the minutes of the meeting of the Executive Committee of the Advisory Board of the Fund held on Friday, January 5, 1979. Mr. Allen moved that the minutes of the Executive Committee meeting be approved as read. The motion was supported by Mr. Jameson and unanimously carried.'

'At this point, the Chairman, Mr. Leonard, requested that the Board go into executive session and that Mr. Bishop retire from the Board room, to be recalled later.

'Upon his return to the Board meeting, Mr. Bishop was informed by the Chairman that the Board had had under consideration the suggestion of the Governor that a temporary acting manager be appointed to serve for a brief period to permit a thorough search to be made to select and secure a permanent successor to Mr. Bishop. After careful consideration, both as to the procedures to be followed and the salary to be paid, the Board unanimously agreed to authorize the Chairman, Mr. Leonard, and the Secretary, Mr. Bishop, to negotiate with the Governor's representative and the proposed Acting Manager, Mr. Allison Green, with respect to the above action and, if satisfied, to agree to the employment of Mr. Allison Green in the above-described capacity, not to exceed six months, at a remuneration, for the temporary employment period, based upon a projected rate of $50,000.00 per year.

'The Chairman also informed Mr. Bishop that the Board was desirous of retaining him on a part-time basis as a consultant to the Fund for a period of one year from the effective date of the new Acting Manager's incumbency. At this point, Mr. Reynolds moved that Mr. Bishop be contracted with on the above basis (if acceptable to him) at a fee of $22,000.00 per year--Mr. Bishop to have office space, the services of a secretary, and expenses when on the business of the Fund. The motion was supported by Mr. Jameson and unanimously carried. Mr. Bishop stated that he would be willing to accept the Board's proposal.'

'Clearly the statute creating the State Accident Fund complies with the above test. The Fund was created by the legislature; it has been delegated a portion of the sovereign power of government in that it has the power to make assessments of its members, including the State of Michigan; it has been conferred with certain powers, duties and discretion to be exercised under the supervision of the Insurance Commissioner, and it has exhibited permanency and continuity.

'Thus, it is clear that the State Accident Fund is a state agency vested with the public purpose of providing worker's disability compensation insurance for state employers. As a state agency, the Fund is subject to the constitutional and statutory restrictions imposed on all state agencies; it is subject to control by the state legislature and supervisory control of the Insurance Commissioner, and it also receives certain benefits by virtue of being a state agency, such as the ability to utilize the services of the State Treasurer to hold, invest, and disburse its funds, and the right of its employees to be members of the State Employees' Retirement Fund.' (emphasis added)

'An accident fund is created to provide workmen's compensation insurance for employers under the supervision of the commissioner of insurance, herein referred to as the commissioner. . . .' (emphasis added)

'The commissioner . . . may employ such deputies and assistants and clerical help as may be necessary and as the advisory board may authorize, for the proper administration of the accident fund and the performance of the duties imposed upon him by the provisions of this act, at such compensation as may be fixed by the advisory board and may also remove them. . . .' (emphasis added)

'. . . At the annual meeting there shall be nominated by the members present 15 employer-members to constitute an advisory board, who, when certified to the governor, shall receive an appointment to serve for the term of one year. . . .'

'Neither the legislature nor any political subdivision of this state shall grant or authorize extra compensation to any public officer, agent or contractor after the service has been rendered or the contract is entered into.'

'. . . No such insurer shall make any agreement with any of its officers, directors or salaried employees whereby it agrees that for any services rendered or to be rendered he shall receive any salary, compensation or emolument that will extend beyond a period of 12 months from the date of such agreement, except the limitation shall not be construed as preventing the insurer from entering into contracts with its agents for the payment of renewal commissions.

'(2) No such insurer shall grant any pension to any officer or director thereof, or to any member of his family after his death, except that such insurer may in pursuance of the terms of a retirement plan adopted by the board of directors of such insurer and approved by the commissioner provide for any person, who is or has been a salaried officer or employee of such insurer, a pension payable at the time of his retirement by reason of age or disability, and also life insurance benefits payable at this death.

(4) No director, officer or employee of such insurer shall be compensated unreasonably. . . .'