What Near Depression? Healthplan Executive Comp. Jumps 26% In 2009

With the nation in a deep recession, in the midst of a financial crisis, with 2 million+ homes in foreclosure and unemployment at nearly 10% the compensation of the top executives and directors at the nation’s 7 largest publicly traded healthplans – Aetna, Cigna, Humana, Wellpoint, United Healthcare, Coventry and HealthNet – increased 26% over 2008 – rising from $180 M to $225 M.

The 7 combined for $12.4 Billion in profits and their stocks gained an impressive $19.7 Billion in market value even as the supposed evil specter of healthcare reform loomed.

Click the Piggy Bank for the Summary Chart.

Click Here to See 2009 Details by Company

Once again the total compensation of these executives ($224.7 M) add up to nearly  2 1/2 times the total salaries paid all of the 561 leaders of the 3 branches of the United States government ($100.3 M).

If the executive teams from the “non profit” Blues plans were included the total jumps nearly another $100 Million to over $325 Million led by Healthcare Service Corp (BCBSIL, BCBSTX et al).

In fact the “golden parachute” packages for 6 Wellpoint executives ($98.3 M) nearly equalled the total of the 561 government leaders salary alone.

While Aetna, Cigna and HealthNet CEO’s saw a decrease year over year in their total compensation Ron Williams of Aetna was still the highest paid of the group at $18M.

The largest percentage increases for CEO’s  were:

  • Coventry – Alan Wise -$17.4 M up from $9 M
  • United -Stephen Helmsley – $8.9M up from $3.2 M
  • Wellpoint – Angela Braly – $13.1 M from $9.8 M
  • Humana – Mike McCallister – $6.5 M from $4.8 M

Source – Reuters Finance / Company Proxy Statements

The Industry Radar has been publishing a summary of executive compensation for the last 3 years ever since the Dr. William McGuire options backdating scandal in 2007 and one area we looked at in more detail this year was the value of stock options held by healthplan executives.

You may recall Dr. McGuire in a CBS News interview famously stated that his $1.8 Billion in options did not impact the rates that were charged to their policyholders. He subsequently was forced to relinquish nearly $600 Million in options and United Healthcare paid over $900 Million to settle shareholder lawsuits.

Nearly $1.5 Billion of options are held by only 26 executives led by United Healthcare’s CEO once again:

  • United Healthcare – Stephen Helmsley – $843 Million
  • Aetna – Ron Williams – $227.3 Million
  • United Healthcare – David Wichmann – $81.6 Million
  • Humana – Mike McCallister – $71.8 Million
  • HealthNet – Jay Gellert – $62.3 Million
  • Coventry – Allen Wise – $26.4 Million

Source – Reuters Finance / Company Proxy Statements

Just the options held by these 6 executives could pay the salaries of the entire leadership of our government until 2022.

Clearly the job of executives in any public company is to increase shareholder value and that is what they are paid to do.

To see these types of rewards in the worst economic year in half a century coupled with the options listed above raises questions as to our healthcare system and its relationship to what is going on in society.

I would hope in the future that if companies are going to pay these types of compensation that the growth of their companies, and how they get rewarded will be based on running tight operational businesses that measurably increase the health and well being of their customer base – which thanks to PPACA will be 32 million more people – the largest legislative gift ever to any industry in the world.

Explore posts in the same categories: Business, Healthcare, Healthcare Insurers, Healthcare Reform

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2 Comments on “What Near Depression? Healthplan Executive Comp. Jumps 26% In 2009”

  1. Ed McManmon Says:

    When is this country going to put the highly excessive salaries of these health executives under the microscope? Congressional hearings?

    These companies need to be regulated like a utility company and not a for profit institutions

  2. M R Horn Says:

    Silly premise. Let’s look at the excessive salaries of these professional atheletes and hollywood stars. They make much more, and provide very little economic benefit. Government has been fouling the market for decades and blaming it on capitalism. I think much of the current crisis can be laid squarely on the doorstep of our leadership in DC. These executives make a lot of money, because they create a lot of value and employ a lot of people. Can’t say the same for A-Rod or George Clooney.

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