Executive Compensation

In recent letters sent to seven major publicly traded health insurers, two U.S. senators take aim at the industry’s fierce lobbying campaign against proposed Medicare Advantage rate adjustments — saying insurers are responding to the proposal by threatening to cut benefits for seniors despite spending billions on executive compensation and stock buybacks.

Corporate finance experts say there are valid criticisms to be made about both rising CEO pay and buybacks, but they argue that larger, systemic issues are driving such behavior across all types of industries.

Struggling health insurer Bright Health Group Inc. raised eyebrows with its recent announcement that CEO George Mikan III and other top executives earned more than $3.7 million in performance bonuses — despite posting a net loss of more than $600 million last year. The troubled startup insurer is under supervision by at least two state regulators, and one persistent critic of the firm’s executives tells AIS Health, a division of MMIT, that the bonuses are “outrageous.”

Bright’s 2022 Form 10-K, an annual filing all publicly traded companies are required to submit to the Securities and Exchange Commission (SEC), revealed that Mikan received $1.69 million, with other notable officers of the company receiving between $190,115 and $765,000 in bonuses. Each of the executives who were awarded a bonus received the full amount they could have received based on performance incentives. Bright added in the filing that Mikan’s total compensation was $9,993,169, while the median compensation for a Bright employee was $71,500, meaning Mikan earned 140 times the average Bright employee.

Cigna Corp. filed a lawsuit on Jan. 26 against Amy Bricker, the former president of the company’s Express Scripts PBM, and CVS Health Corp., which hired Bricker last month to a C-suite position.

The complaint in the U.S. District Court for the Eastern District of Missouri alleges that Bricker should not be allowed to join CVS due to a non-compete agreement that “prohibits her from working for any Cigna competitor.” It came three weeks after the Federal Trade Commission (FTC) proposed a rule that would ban employers from imposing non-compete agreements and as some states look more closely at such arrangements.

See a full list of director compensation for Presidents and/or CEOs of Blue Cross and Blue Shield Affiliates at https://bit.ly/3GPOdyK, compiled by AIS Health.

N/A = Not Available.

Compensation data for Jared Short includes payments allocated to Regence insurance operations in Washington state, Oregon and Utah but not Idaho.

SOURCE/METHODOLOGY: All data is compiled from individual health insurance companies, state insurance department documents and U.S. Securities and Exchange Commission filings.

Health plans selected based on commercial medical risk enrollment as of the beginning of 2022, per AIS’s Directory of Health Plans.

In AIS Health’s annual roundup of health insurer executive compensation data, four newly public startup insurers stand out because their CEOs’ total compensation in 2021 easily outstrips that of chief executives at major firms like UnitedHealth Group and Cigna Corp. However, experts tell AIS Health that the startups’ filings with federal regulators paint an unintentionally deceiving picture, as the CEOs of those not-yet-profitable firms are highly unlikely to collect hundreds of millions of dollars’ worth of stock awards listed there.

“They’re never going to realize, in one year, that much compensation,” says Ari Gottlieb, a principal at A2 Strategy Group who has been closely tracking the performance of the four startup insurers that went public in 2021: Alignment Healthcare, Inc., Bright Health Group, Inc., Clover Health Investments Corp. and Oscar Health, Inc.

See a full list of director compensation for top health insurers at https://bit.ly/3gR963N, compiled by AIS Health.

N/A = Not Available.

Compensation data for Jared Short includes payments allocated to Regence insurance operations in Washington state, Oregon and Utah but not Idaho.

SOURCE/METHODOLOGY: All data is compiled from individual health insurance companies, state insurance department documents and U.S. Securities and Exchange Commission filings.

Health plans selected based on commercial medical risk enrollment as of the beginning of 2022, per AIS’s Directory of Health Plans. All publicly traded companies are included except Aetna, which was acquired by CVS Health Corp. in 2018.