UnitedHealth To Modify Executive Benefits
The UnitedHealth Group board on Monday voted to end equity-based awards for company CEO William McGuire and Chief Operating Officer Stephen Hemsley amid recent criticism of stock options and other compensation for top executives, the Los Angeles Times reports (Los Angeles Times, 5/2). The board also voted to eliminate for top executives:
- Increased severance payments in the event that the company is sold;
- Retiree health benefits;
- Life insurance and disability premiums; and
- Reimbursement for personal use of company aircraft.
Meanwhile, at the Society of American Business Editors and Writers on Monday in Minneapolis, McGuire defended the stock options that he and other top executives have received and said that his compensation did not affect health care costs for members (Phelps, Minneapolis Star Tribune, 5/1).
In related news, the Wall Street Journal on Tuesday examined how UnitedHealth shareholders at an annual meeting on Tuesday "will be demanding to know whether ... McGuire and other senior managers backdated past stock options" and "just as central to the company's prospects -- and to investors -- is how UnitedHealth will navigate the growing competitive pressures that threaten the thick profit margins of major health insurers."
According to the Journal, the "managed care industry appears to be on the downward slope of its profit cycle" after "a long streak of record earnings." Increased health care costs and reduced health benefits offered by employers have left "insurers ... struggling to expand, and more appear to be willing to win business with more aggressively priced premiums," the Journal reports (Fuhrmans, Wall Street Journal, 5/2).