WellPoint Executive Resigns; Company Cites Conduct Violation
WellPoint CFO David Colby on Wednesday resigned because of an unspecified violation of the company code of conduct, the Los Angeles Times reports (Girion, Los Angeles Times, 6/1).
Outgoing WellPoint President and CEO Larry Glasscock, incoming President Angela Braly and the board of directors asked Colby for his resignation.
According to the AP/Hartford Courant, the 25-page WellPoint code of conduct applies to all employees, both inside and outside of work, and "covers a gamut of issues, including ethical decision-making, inappropriate e-mails and drunken driving," the AP/Courant reports.
WellPoint officials did not provide details about the violation. However, Glasscock on Thursday in a conference call said that the violation did not involve illegal conduct and was "in no way related" to the business of WellPoint (Murphy, AP/Hartford Courant, 6/1). Glasscock also said that WellPoint hired outside counsel to investigate Colby after "concerns were raised" in recent days.
WellPoint in February appointed Colby as vice chair and awarded him 20,000 shares of restricted stock valued at about $1.62 million, as well as 40,000 stock options, one week after an announcement that Braly would succeed Glasscock as company president.
Colby will lose his unvested stock options but will receive a $666,000 post-termination bonus (Fuhrmans, Wall Street Journal, 6/1).
Wayne DeVeydt, who has served as chief accounting officer at WellPoint since March 2005, will succeed Colby, effective immediately (Lee, Indianapolis Star, 6/1).
According to the Journal, "Colby's resignation was seen as ... puzzling because the company had worked hard in recent months to assure investors that Mr. Colby would stay on as part of the management team, despite being passed over for CEO."
Goldman Sachs analyst Matthew Borsch said, "Some uncertainty is likely to linger until investors are completely reassured that the departures have no bearing on the underlying fundamentals of the company" (Wall Street Journal, 6/1).
Thomas Carroll of Stifel Nicolaus said, "It's troubling but doesn't appear to be disastrous. I think investors may be looking at the second and third quarter more closely just because Angela and Wayne are going to be on stage for the first time running the company" (AP/Hartford Courant, 6/1).
Glasscock said, "We did absolutely the right thing based on where the facts led us" (Indianapolis Star, 6/1).