It was early 2011, and Charlie Baker’s dream of becoming governor had just been dashed. He was starting over at 54 years old.
The whiz kid of Governor William Weld’s administration who later took the helm of Harvard Pilgrim Health Care, and steered it back from the brink of financial ruin, had stepped away from his high-paying private-sector career and gambled it all on politics.
“There wasn’t a plan B,” Baker said recently. “I hadn’t thought about what would happen after the campaign if I lost.”
He had, however, thought about what he didn’t want. He had spent years grappling with big bureaucracies in challenging, even unpleasant, jobs that he recalls in flashbacks tinged with regret — the missed family dinners and kids’ sporting events, the innovations he couldn’t prod out of a sprawling organization, even as chief executive. The word he uses to describe his high-pressure work at both Harvard Pilgrim and on Beacon Hill: “icky.”
What had excited him most on the campaign trail were his interactions with small business owners. Rather than take another CEO position, he was attracted to an offer from a venture capital firm working with startups.
By teaming up with General Catalyst Partners, at the suggestion of cofounder Joel Cutler, Baker could become its in-house health-care expert, helping identify entrepreneurs for the firm to invest in, and sometimes he would invest as well.
“It just seemed a lot more appealing than jumping back on the big rig that I’d been on, at that point, for almost 20 years,” Baker said in a wide-ranging interview with the Globe about his business experience since his last campaign.
Numerous opportunities would come Baker’s way to advise companies and serve on their boards — lucrative appointments that were less time-consuming than leading one large enterprise. A review of Baker’s career over the past four years found he leveraged his connections in business and politics with ease, expanding his resume and his investment portfolio while he mulled his next run for office.
General Catalyst provided more than half of the $865,000 he earned last year, according to his tax returns. Separately, he made hundreds of thousands of dollars sitting on the boards of two high-profile Massachusetts companies led by businessmen in his circles.
In one case, Baker was paid $180,000 a year to attend six meetings of the mutual fund board of Natixis Global Asset Management, a Boston company run by John Hailer, a relative by marriage.
In the other, he was offered more than $150,000 a year to serve on the board of publicly traded athenahealth Inc., a fast-growing company that won a $9.5 million state tax credit in exchange for the promise of nearly tripling employment and dramatically expanding its Watertown campus.
At the same time, Baker was invited to invest in a private real estate project with athenahealth’s exuberant CEO, Jonathan Bush, a first cousin of former president George W. Bush.
Jonathan Bush had a grand vision of transforming Watertown’s historic Arsenal section into a new tech corridor combining the best of Kendall Square and Brooklyn’s Williamsburg, with restaurants, shops and thousands of young high-tech workers. His redevelopment of the adjacent Arsenal Mall property would create an appealing live-work playground for the new employees athenahealth recruited.
While the mall redevelopment is legally separate from athenahealth’s project, their fortunes are deeply entwined — a point Bush acknowledged.
“I have this beautiful symphony of self-interest,” he told the Globe.
Baker, however, bristled at questions about his investment in the mall project, saying it had nothing to do with the expansion of the company where he was a director until last December . He said he had merely responded to a “boilerplate” solicitation to invest in a real estate opportunity.
“The Bakers have a sort of long list of things we’ve invested in. Some successfully, some not so,” he said.
Baker dove into the world of venture capital at General Catalyst in March 2011, agreeing to become an executive-in-residence — a consulting position that would pay him to help startups in which the venture firm invested.
In his three years there, he worked closely with three companies, traveling to meet with their executives, sitting on their boards of directors, and serving as a sounding board as they made plans to grow and attract more customers and revenue.
One was TearScience, a North Carolina company with a high-tech treatment for dry-eye disease, in which General Catalyst had invested before Baker arrived.
“He provided solid business guidance to TearScience,” cofounder Tim Willis said in a statement, “as well as to me as CEO of the company.”
Another was Oceans Healthcare in Louisiana, which runs psychiatric facilities for geriatric patients.
“It’s a really cool company,” Baker said. “It’s doing really important work.” And it has a place close to his heart, he said — beating his chest three times with his fist — because his mother has Alzheimer’s disease. “I care a lot about geriatric psych.”
Because he was not a partner in General Catalyst, Baker did not earn the kind of profits that his colleagues would reap.
However, he did have a direct hand in the Oceans deal, recommending that General Catalyst invest. The firm agreed, putting in $17 million, and Baker invested an undisclosed amount personally as well. Baker could earn profits on that investment in addition to the $150,000 he was paid last year to serve on the company’s board.
He becomes most excited when he talks about a third startup he advised for General Catalyst, Oscar Insurance, which appealed to the health care wonk in him. Oscar, based in New York, markets health plans directly to consumers with a website that tries to simplify the process.
Kevin Nazemi, co-CEO of the company, declined to be interviewed but in a statement said Baker “has made invaluable contributions as a board member to the building and scaling of Oscar.”
Baker describes his experience at Oscar as a stark contrast to the frustrations he had endured at giant Harvard Pilgrim.
Citing an industry health questionnaire that insurers have to beg patients to complete, Baker mocked its name, “health risk assessment,” as “the stupidest term in health care.” Oscar’s entrepreneurs didn’t even recognize it, he said.
Instead, Oscar developed an incentive program called “10 for 10” that paid consumers $10 for every 10 questions they answered about their health.
Baker dubbed it “gorgeous.” Its success rate: “friggin’ awesome.”
His work with Oscar gave him a chance to “totally get my ya-yas out of my system on all the projects of all the things that I ever wanted to do with a consumer-directed health plan.”
Yet for an executive so captivated by the minutiae of consumer questionnaires, Baker can be surprisingly cavalier about the fine print of his own business affairs.
The month after he joined General Catalyst, Baker misstated his job title when he contributed $10,000 at a GOP fund-raiser held by New Jersey’s governor, Chris Christie, in Boston. Baker identified himself as a “partner” of General Catalyst, though his job was executive-in-residence.
It was sloppy shorthand that would generate ethical questions for both his firm and his campaign.
Later that year, New Jersey invested $15 million in one of General Catalyst’s venture funds.
Questions arose last spring about whether Baker’s Christie donation violated New Jersey’s pay-to-play rules, which bar financial executives from making contributions that could influence politicians to direct money to their firms. The New Jersey state treasurer’s office opened an investigation of the matter; it remains ongoing.
Baker maintained that the pay-to-play regulations did not apply to him, because he was neither a decision maker at General Catalyst nor a registered investment professional. Though he made some recommendations about companies General Catalyst should invest in, he was not in charge of investment decisions.
He later said it was an error to have identified himself as a partner.
“I’m not part of the management hierarchy,” he said of his role at General Catalyst. “I’m not part of the team. I’m not even an employee.”
Yet his business relationship with General Catalyst is not as distant as he makes it sound.
To invest in a project with the partners, Baker created a separate investment vehicle with the principals of General Catalyst. He called it Baker’s Dozen, and listed five General Catalyst executives, including Cutler, as co-managers. (Baker later renamed the company CBDI Partners, in a twist on his initials, after deciding Baker’s Dozen was a “stupid name.”)
His payments from General Catalyst come through CBDI Partners. Any profits on the Oceans investment also would be paid through CBDI, he said.
General Catalyst declined to comment for this story. Baker took leave from the firm in August. For the second time, he gambled that his next career move could make him CEO of Massachusetts.
Given the reputation he’d built among Boston business people for turning around Harvard Pilgrim, Baker was asked to serve on the boards of a variety of companies, from medical to financial.
“He has an unbelievably terrific ability to net things out, to get through the noise and focus on important things,’’ said Nancy Brown, a former executive of MedVentive Inc., a Waltham maker of software for physician groups. She invited him to sit on the board because of his experience in health care and for his “no-nonsense” approach.
“Charlie is a true manager,’’ she said. “People forget that governors need to know how to manage.”
One of the more challenging boards Baker joined was that of Tremont Credit Union, a struggling community institution in Boston. State banking regulators had sanctioned Tremont in 2010 for serious issues, including poor supervision that allowed risky lending practices and “instances of self-dealing and insider abuse by officers.”
The board was tasked with hiring a permanent chief executive but did not do so on Baker’s watch.
“They’re better,’’ Baker said. “But it’s hard to fix stuff.”
Baker’s longest term board appointment was at Natixis, a Boston investment group owned by a French bank. Natixis is one of the world’s largest investment firms and the parent of more than 20 brands, like the Boston bond firm Loomis, Sayles & Co.
Natixis is run by John Hailer, whose sister is married to Baker’s brother. Baker calls him his “brother-in-law,” though he says he only saw him at “two or three family gatherings” over the years. In 2009, the two overlapped at the New England Council, a Boston-based lobbying and policy group for business, when Baker was chairman and Hailer was vice chairman.
Baker said he did not know whether Hailer had recommended him to the Natixis board back in 2005. Both Baker and Sandra Moose, chairwoman of the Natixis funds, recalled him being brought in by board member Graham Allison.
Moose said she had no recollection of Hailer putting Baker’s name in the hat.
“I had no idea that Charlie’s brother was married to John’s sister,’’ she said.
Baker had served on Natixis’ mutual fund board as a trustee paid to oversee the interests of shareholders from 2005 through 2009. He left for his first gubernatorial campaign, and returned in January 2011.
That same month, Natixis made a large settlement in a lawsuit with a married, high-ranking saleswoman who alleged sexual harassment and discrimination by the CEO. The woman said she was fired months after she rebuffed Hailer’s sexual advances — and the day after she told human resources she was pregnant with her second child.
Baker said he was not aware of the settlement and it was never disclosed to the mutual fund board. Hailer, who also is a member of the mutual fund board, declined to comment.
“This is the first time I’ve ever heard about it,” Baker said. In a recent interview, Moose, too, said the board was not informed.
In a statement, Natixis said it handled the matter internally and informed its corporate board of directors in France. It said that fund trustees are not responsible for company operations or employee issues, and that Baker was on leave from the board during the discovery work in the lawsuit.
“We took this complaint seriously and ultimately agreed to settle this matter in early 2011 to avoid further costs and distractions of litigation,’’ the company said. “We followed rigorous governance and reporting processes — our corporate board chairman, all corporate board members, and the corporate audit committee were aware of the matter throughout.”
But several lawyers and specialists in the workings of mutual fund boards said the company should have told the fund trustees because the matter was so closely tied to the company’s integrity, working conditions, and ability to attract talent.
Arthur Levitt, a former chairman of the federal Securities and Exchange Commission who advocates for better mutual fund governance, said that in a case such as this, the company should “absolutely” have informed the board about the settlement.
“There’s no question that I think that should be revealed to the other board members,’’ Levitt told the Globe. “The revelation is consistent with good governance.”
The best known company where Baker held a board seat was athenahealth, a national leader in computerizing health care records. CEO Jonathan Bush had crossed paths with Baker in the health care world and became a major fund-raiser for his campaign in 2010.
“I’m a huge Charlie Baker fan,” Bush said in an interview. “I pinched myself when I got him to join the board.”
Baker was a guy after Bush’s own heart — fiscally conservative and socially moderate. He was a respected manager, a master of high finance during the Big Dig years and when Harvard Pilgrim was in receivership. Bush invited Baker to join the board in June 2012.
Over the next 13 months, Baker would have a front-row seat to a flurry of activity, as athenahealth would ink a $168.5 million real estate transaction, acquiring the historic Arsenal on the Charles property where it had been renting its headquarters from Harvard University.
That same month, in December 2012, athenahealth notified state and local officials it would seek a tax credit in exchange for creating 1,900 new jobs within a decade. The tax credit push was led by Dan Haley, athenahealth’s vice president of government and regulatory affairs, and one of four Baker campaign aides hired by the company.
Two months later, Bush approached board members, including Baker, inviting them to invest in the Arsenal Mall property down the block.
Baker was one of about 50 people who bought in, investing $250,000. Other athenahealth directors also invested, though Bush declined to say which ones.
“I found anybody who looked remotely rich,’’ Bush recalled. “Two days later, I was oversubscribed.”
Baker’s investment was perfectly legal. And neither he nor the board thought it needed to be disclosed to athenahealth stockholders. Directors primarily disclose relationships with a company when they are selling something, like legal services.
But in the case of athenahealth, matters could arise that could impact both developments — for example, improvements to the property that could also work to benefit Baker and other investors with a stake in the mall project.
An athenahealth spokeswoman said the company “will review situations in the future on a case-by-case basis, as to whether there are conflicts, in the event of any transaction between athenahealth and the mall development.’’
Regulators do not require public companies to disclose all board relationships, noted Jill E. Fisch, a professor at the University of Pennsylvania Law School in Philadelphia. But some relationships can raise questions about independence, Fisch said. “It’s the job of the board to decide if the director can be independent.”
Baker, a member of athenahealth’s audit committee, said he never gave any thought to whether his mall investment might benefit from the tax break, or the growth of the company.
“Nope. Nope,” he said, his tone frustrated. “It never occurred to me.
“That would mean that everyone who’s an investor in that real estate investment would somehow be a beneficiary.”
Baker took offense when asked whether, as a veteran of state government, he had helped advise the company on securing the tax credit. “No!” he said angrily.
He suggested he was so far removed from the tax credit decision process that he never learned of its outcome or its value — although he was on the board at the time and his name appears on athenahealth’s application for the tax break.
So far, Baker hasn’t made money on the investment, recording a $100,785 loss on his taxes last year. But he expects to eventually earn a profit.
“I mean, that is going to be a growth area. It just is,” he said.
Stephanie Ebbert can be reached at Stephanie.Ebbert@ globe.com. Follow her on Twitter @StephanieEbbert.
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