Insurance CEOs See Generous Pay

From Health Plan Weekly

Generous CEO pay among major managed care companies in 2017 reflects the stock market's strong performance and the ongoing use of peer grouping to determine executive compensation levels, finance experts say.

Overall, Centene Corp. CEO Michael Neidorff tops health insurers' 2017 executive compensation list, earning $25.3 million in total compensation last year and easily besting CEOs' pay among other major publicly traded health insurers. The heads of the largest Blues plans made closer to $10 million in total compensation last year, while pay for CEOs fell below $1 million — but topped $500,000 — for regional players including Health Alliance Plan of Michigan and SelectHealth, Inc.

As for how health care CEOs' compensation is broadly approached, "everyone basically does their compensation by peer groups, and nobody wants to be in the bottom," says Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

For 2017, the Blues plans "are all up quite a bit" with their executive compensation, Elson says, as the Blues compare themselves with each other and some public companies.

Health care executive search expert Tom Giella says that, contrary to several years ago, companies are finding themselves now wanting to put these dollars in the pockets of executives who are innovative risk-takers, "tech savvy and more comfortable with consumerism."

Potential CEO candidates are a bit younger than previously, often in their late 40s or early 50s, according to Giella. Given the complexity of the health care business, he says most plans are looking for someone from within the industry. "Innovation and strategic pivoting are to me the two most important" attributes in a CEO search, he adds.

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