UnitedHealth’s comeback CEO is getting $1 million a year and $60 million in stock options
Huge stock grants are taking over top CEO pay packages.
UnitedHealth is giving new CEO Stephen Hemsley more than $60 million to step back into the top job, eight years after he left the position in 2017. According to an SEC filing from the company on Wednesday, the 72-year-old will get $1 million a year, no annual bonus, and $60 million worth of stock options that will vest after three years.
Hemsley returned to UnitedHealth this Tuesday to replace Andrew Witty, who unexpectedly resigned owing to “personal reasons.” Before stepping aside in 2017, Hemsley led UnitedHealth for over a decade to become the healthcare giant that we know today, expanding the company into moneymaking areas like pharmacy benefits and helping shares climb more than 200% over his tenure.
The company has changed a lot since Hemsley was last at the wheel though, with shares heading toward their worst month in history, down more than 40% since mid-April. The new CEO signed during a hell of a week, after his predecessor’s abrupt departure, the company withdrawing full-year guidance, and The Wall Street Journal yesterday reporting that the insurer is under investigation for possible Medicare fraud.
Given that the options “will not have any value if the stock does not increase,” per a company spokesman, and that Hemsley would forfeit them if he’s removed or resigns before three years, the pay package will likely serve as pretty strong motivation for the new chief. The deal is just the latest example of a growing shift in how top execs are compensated.
Money talks
American CEOs are getting paid more than ever, with a record median pay of $16.8 million last year, largely because of big boosts from stock grants, a high-risk, high-return compensation plan with an incentive to meet stock prices. Take Coherent’s CEO James Anderson for example, who topped last year’s list of the highest-paid CEOs with a whopping nine-figure pay package. Some 99% of his pay consisted of stock grants, the value of which multiplied as the shares skyrocketed.
