What's in their wallets? Health plan executives bring home the bucks

Executive pay is still rich, but various pressures might lead it to a decline. Just don't expect that savings to flow to health care or physician reimbursement.

By Emily Berry, AMNews staff. June 23/30, 2008.

Almost every CEO of a publicly traded health insurance company made more than the median salary for a top executive in the S&P 500 in 2007. But some analysts think that trend might not continue.

Despite growing scrutiny from their own stockholders, among others, last year health plan executives remained among the best-paid business managers, said Alexander Cwirko-Godycki, research manager for Equilar, a Redwood Shores, Calif.-based executive compensation research firm.

In its analysis of S&P 500 companies, Equilar found median total compensation for the CEOs was $8.8 million. The six publicly traded health plans that are a part of the S&P 500 index all paid their CEOs more than that median: from $9.1 million for WellPoint's Angela Braly to $25.8 million for Cigna's H. Edward Hanway. The highest-paid executive in the S&P 500 2007 was John Thain, CEO of Merrill Lynch, who took home $83.8 million, most of it in stock options and stock awards granted at his hiring last year, Cwirko-Godycki said.

Of the largest publicly traded health plans, only Health Net's Jay M. Gellert was below the median, at $3.7 million. His company is not part of the S&P 500.

Heidi Toppel, JD, senior executive compensation consultant for human resources consulting firm Watson Wyatt, said health plan CEOs' pay isn't out of line by Wall Street standards. "I would not consider the levels of pay to be stratospheric," she said.

But she and other experts acknowledge that pay is a thorny issue for health plans, particularly as physicians question why their reimbursement should be under pressure and why they need to jump through hoops to get care paid for while health plan executives take home large paychecks.