Health plan gains bring higher pay packages for CEOs
■ Company statements with the SEC reveal only two insurance executives saw declines in compensation.
By Bob Cook — Posted May 3, 2010
Five of the seven major publicly traded health plans had better earnings in 2009 than 2008. Five of those seven plans' chief executives had a better 2009 than 2008, too, according to proxy statements filed with the Securities and Exchange Commission.
The biggest winner was UnitedHealth Group President and CEO Stephen Hemsley, whose firm's earnings jumped 35% in 2009. Hemsley's total compensation increased 175% in 2009, to $8.9 million, from $3.2 million in 2008. Slightly more than $5.5 million in stock and stock option awards accounted for nearly all the change.
The United proxy also revealed that Hemsley had exercised options given to him in 1999, when he was senior executive vice president, good for a net gain of $98.6 million.
WellPoint Chair, President and CEO Angela Braly got a 51% bump, to $13.1 million in 2009 from $8.7 million in 2008. Her company had the highest earnings gain in 2009, up 107.6%, though much of that came from a one-time credit for the sale of a pharmacy benefits management subsidiary.
In addition to Braly's pay, the proxy stated, about $151,000 was spent on extra security "in light of growing concerns regarding the safety of Ms. Braly and her family as a result of the national health care debate."
The highest-compensated top executive among publicly traded health plans in 2009 was Cigna CEO and Chair H. Edward Hanway, who received $18.8 million. He retired Dec. 25, 2009. The lowest-compensated was Health Net President and CEO Jay Gellert, who received $3.6 million.
Health Net's earnings fell 153.4% in 2009 -- in part because of a write-off for selling its Northeast operations to United -- and Gellert's compensation fell with it, down 59% from $8.8 million in 2008. The only other top executive to see a decline in 2009 was Aetna Chair and CEO Ronald Williams, whose $18.1 million was down 3%, despite the company's earnings increasing slightly, 0.4%.
Coventry Health Care, with a 35.4% fall in 2009 earnings from 2008, was the only major publicly traded plan besides Health Net to record a profit decline. However, it compensated two executives a combined $25.7 million in 2009, through severance payments for CEO Dale Wolf, who stepped down Jan. 26, and startup bonuses and awards for his replacement, Chair Allen Wise.
As with many other public companies, several health plans have shareholders offering proposals at their annual meetings in May that would place limits on executive pay. No health plan board has recommended that those be approved.