Blue Cross Blue Shield Plans See Biggest Exec Pay Jumps in '20

Today's Featured Story Blue Cross Blue Shield Plans See Biggest Exec Pay Jumps in '20 by Leslie Small Although some health insurers notched record-high profits when the COVID-19 pandemic's first wave drove down routine care utilization, those fiscal benefits do not appear to have translated into big compensation bumps for some of the highest-paid insurer CEOs, according to the key findings from AIS Health's annual collection of compensation data for the country's largest health insurance companies by commercial enrollment. Some Blue Cross Blue Shield plan CEOs, however, saw big pay bumps. Stock performance plays a big role in pay: All six of the largest publicly traded insurers — Anthem, Inc. Centene Corp., Cigna Corp., Humana Inc., Molina Healthcare Inc. and UnitedHealth Group — either raised or maintained the base salary of their CEOs in 2020 compared with 2019. However, a bump in base salary does not necessarily mean a rise in overall annual compensation, as exemplified by Centene's CEO Michael Neidorff, who saw his salary rise but his overall compensation drop 5.6% year over year. An explanation for that can be found in the amount of Neidorff's stock award, which dipped in 2020. By contrast, Cigna's David Cordani and Anthem's Gail Boudreaux, the only CEOs out of the top six who saw their overall compensation rise in 2020, experienced year-over-year increases in their stock awards. "These executives put a lot of their compensation at risk, which is a huge incentive for them to make sure their company performs," says Heidi Leeds, senior client partner and sector leader, health insurance at Korn Ferry. Hamed Mahmudi, Ph.D., an assistant professor of finance at the University of Delaware, says that making executive pay so sensitive to stock price has both advantages and disadvantages. One potential downside is that it "could create myopia or short-term-ism," with executives primarily incentivized to "pump up" their firm's stock price in the near term, he says. Blues plans see pay hikes: Some Blue Cross Blue Shield insurers gave their chief executives sizeable pay hikes, including a 109% raise for Blue Cross Blue Shield of Minnesota's Craig Samitt and a 73% bump for Independence Blue Cross' now-retired Daniel Hilferty. "Blues are complex organizations, and to attract the right talent they have to be competitive with the public companies," Leeds says. "For the most part, they're still paid slightly less — or maybe considerably less in some cases — than the for-profits, and state regulators scrutinize the Blues heavily." From Health Plan Weekly Subscribers may read the in-depth article online. Learn more about subscribing to AIS Health's publications.