Health plans - Survey of Pay for Publicly Traded Health Plan CEOs

What: Survey by Equilar, a Redwood Shores, California-based executive compensation research firm.

Why: Among critics of U.S. health care system and physicians, feelings persist that Health Plan CEOs are overpaid and symbolize high administrative costs of U.S. health care, which may run as high as 30%.

When: 2007

How: Based on analysis of compensation of top executives of S&P 500 companies. Median total compensation was $8.8 million for executives overall, and $9.1 for CEOs of six publicly traded health plan CEOs.

Where: Everywhere there is concern among stockholders that compensation may have no relationship to performance. So far in 2007, publicly traded HMO stocks are up about 15%, from a mean of 53 to a mean of 61.

Who: Total compensation is said “not to be out of line by Wall Street standards,” and included the following health plan CEOs.

• H. Edward Hanway, Chair and CEO, Cigna, $25,839,777

• Ron Williams, Chair and CEO, Aetna, $23,045,834

• Dale B. Wolf, CEO, Coventry Health Care, $14,889,823

• Stephen Hemsley, $13,164,529

• Mike B. McCallister, President and CEO, Humana, $10,312,557

• Angela F. Braly, President and CEO, Wellpoint, $9,094,771

• Jay M. Gellert, PRESIDENT AND ceo, Health Net, $3,686,230

Where to: With sluggish economy, CEO pay is expected to decline. With this decline, physician compensation may decline too, as CEOs “try to do what they’re paid to do – make the biggest profit possible.” This reality and the fact that the ratio of top health plan median CEO pay, $9.1 million, to median physician pay, $200,000, is 45.5/l makes some physicians wince. Pay standards for Wall Street and Main Street differ dramatically.

Source: Emily Berry, Health Plan Executives: What’s in Their Wallets, American Medical News, June 23/30, 2008