Liberty Mutual chairman Edmund F. “Ted” Kelly, under fire for receiving $50 million a year from the Boston insurance giant, said Friday that an “accounting issue” made his compensation appear larger than it is.

Kelly said the compensation reported to state insurance regulators was skewed because it included performance incentives, called phantom stock options, that he’d collected over nearly two decades with Liberty Mutual and cashed in over the past few years. He estimated his annual compensation package was worth closer to $13 million to $15 million a year, in line with what many CEOs at other large insurers earn.

“It’s an accounting issue,” he told the Globe before speaking to students at MIT. “It’s as if I got stock options over the years. If the company does well, the stock options do well.”

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Although Liberty Mutual is mutually owned by its policyholders, and its stock is not traded, the company created a phantom stock program designed to mirror the stock incentives used to reward executives by publicly traded companies. Stock options give executives the right to purchase stock at a set price sometime in the future: if the stock appreciates, the executives make money; if it falls below the set price, the options become essentially worthless.

Liberty Mutual created a similar program to tie some of its executives’ earnings to increases in the company’s value.

Kelly pointed out that the company was near bankruptcy when he first joined Liberty Mutual as president in 1992. He became chief executive in 1998 before retiring last June. He remains chairman of the board.

Todd Wallack can be reached at twallack@globe.com