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Publicly Traded Health Insurers Give CEOs Big Bonuses for 2003
WASHINGTON -- Chief executives of most publicly traded managed care organizations clearly benefited in the pocketbooks from their firms' performance gains during 2003, according to executive compensation figures reported in the May 3 issue of Managed Care Week. As in the previous year, the majority of the cash compensation of most top-paid CEOs in the industry came in the form of bonuses, the figures show.Collectively, the 18 CEOs listed had total salaries of $16,572,488 and total bonuses of $32,654,347.William McGuire, M.D., CEO of UnitedHealth Group, narrowly topped Leonard Schaeffer, CEO of WellPoint Health Networks Inc., for first place in total salary plus bonus compensation for the third straight year. McGuire had a salary of $1,996,154 and a bonus of $5.5 million, while Schaeffer took in a $1,310,000 salary plus a $6,037,031 bonus. But Schaeffer also had $4,320,880 in other annual compensation, compared with $231,728 for McGuire.Other CEOs placing high in the rankings include John Rowe of Aetna Inc., with a salary of $1,042,146 and a bonus of $2,200,000; Larry Glasscock of Anthem Inc., with a salary of $1,040,000 and a bonus of $2,311,845; H. Edward Hanway of CIGNA Corp., with a salary of $1,030,000 and a bonus of $2,100,000; Anthony Marlon of Sierra Health Services Inc., with a salary of $995,246 and a bonus of $2,035,000; Howard Phanstiel of PacifiCare Health Systems Inc., with a salary of $976,155 and a bonus of $2,000,000; and Allen Wise of Coventry Health Care Inc., with a salary of $900,000 and a bonus of $2,100,000.The newsletter's annual report of executive compensation at publicly traded MCOs also notes that top executives of large MCOs were granted generous stock options to purchase company stock at a given price on the assumption that the stock's value would appreciate over the period during which the options vests.The list of CEOs with the most stock options granted during 2003 was led by McGuire with 1,300,000. His exercise price of $40.12 per share compares with UnitedHealth's closing stock price of $62.28 on April 29. Next came Schaeffer with options to buy 500,630 shares at a variety of exercise prices, all well below WellPoint's current stock price. Rounding out the top five were Phanstiel, Rowe, and Health Net Inc. CEO Jay Gellert. Phanstiel and Rowe had particularly favorable exercise prices -- both less than half of the April 29 stock price -- while Gellert's exercise price of $24.06 was nearly as high as Health Net's April 29 closing price of $25.40.Managed Care Week is a subscription newsletter in its 14th year as a provider of independent business news coverage and analysis of the managed care industry. The newsletter bases all compensation figures on data reported on company proxy statements and 10-K forms filed with the U.S. Securities and Exchange Commission. The newsletter is published by Atlantic Information Services Inc."