CEO compensation: Accomplishments translate into healthy paychecks

CEOs at top managed care firms are earning more than their counterparts in other industries. And with insurers outperforming the stock market, that's not likely to change.

By Robert Kazel, AMNews staff. May 26, 2003.

William McGarvey, MD, a retired Indianapolis otolaryngologist, found the high pay commanded by managed care CEOs so reprehensible that, at Anthem's 2002 annual meeting, he confronted President and CEO Larry Glasscock about his multimillion-dollar pay package.

In 2001, the year covered at that meeting, Glasscock got $3.1 million in salary and bonuses, as well as a $12.4 million long-term incentive payout. In 2002, Glasscock got $3.3 million in salary and bonuses, about the average for managed care CEOs at the largest firms.

His 6.5% raise was actually below the 17.7% average bump for the top managed care CEOs, as reported by Equilar Inc., an independent corporate research firm. But it was better than the 3% gain for all CEOs, who made an average of $2.1 million in cash -- not including stock options and other perks -- in 2002. Those gains have shareholder activists, unions and other critics of executive pay wondering why it continues to move upward during a down economy and stock market.

On top of that, many physicians, like Dr. McGarvey, feel that high pay for managed care CEOs is particularly galling considering companies are jacking up premiums by 20% or more, and tightening physician reimbursement as a means to raise profits. In their view, money that could presumably be used for care, or to make insurance more accessible, is instead heading into the pockets of paper-shufflers.

"We have 40 million people in this country who have no medical insurance because they can't afford it," Dr. McGarvey says. "They work just as hard as the CEOs. They just haven't had the breaks that they have, and it's not fair. The majority of Americans live from Friday to Friday."