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Shareholders Move to Curb Extravagant Pay for WellPoint CEO

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headshotWilliam H.T. Bush – a WellPoint board member and President George H.W. Bush’s younger brother — collapsed at the annual shareholder meeting the other day, just as the health insurer’s CEO, Angela Braly, was trying to explain to angry shareholders why profits are up but the company’s reputation is in the tank. Thankfully, Bush improved enough to go home from the hospital, but the meeting never recovered. Braly refused to continue after paramedics wheeled Bush out, so she got away without answering any of the tough questions about her company.

Shareholders never got to ask why WellPoint and its Blue Cross plans in 14 states look like a train wreck to 34 million uneasy customers. Before Bush collapsed, the AFL-CIO, Connecticut’s public employee retirement system and other shareholders criticized WellPoint for abusing consumers, funding a duplicitous campaign to block health reform, and misusing premium money to give indefensible compensation packages to top executives. In 2009, Braly’s pay jumped 51 percent to $13.1 million. Many of us didn’t get a raise at all last year. Ten percent didn’t even have jobs.

Shareholders at the meeting didn’t get answers to some other big questions on the minds of investors. Why did legendary stock picker Warren Buffett, the world’s third richest man, dump 1.3 million shares (worth about $70 million at today’s price) of WellPoint stock during the first quarter. Buffett knows a little bit about money. What’s the deal? And what’s up with the company’s outrageous submission of inaccurate data to get California regulators to permit premium increases as large as 39 percent for individuals this year? And why is the company driven to pursue sleazy policies, like targeting patients with breast cancer for fraud investigations, and then calling President Obama a liar for saying the practice should stop? Is that really in the interest of the owners of $23 billion worth of WellPoint stock? Most investors want WellPoint to make money, not enemies.

Maybe Braly wasn’t worried about how things would look because her P.R. team decided shortly before the shareholders meeting to drop plans to webcast the event. Only reporters who attended in person could observe. Just like the health insurer Cigna did at its annual shareholder meeting last month, WellPoint shut out the media to minimize the impact of embarrassing questions.

Greed has made WellPoint completely lose touch with the founding mission of the nonprofit Blue Cross companies it acquired over the last 15 years (in California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, New Hampshire, New York, Nevada, Ohio, Virginia and Wisconsin). The Blue Cross plans, once seen as a refuge for each state’s sickest residents, have been transformed by Braly and her ilk into cash machines to satisfy the unbridled greed of Wall Street and corporate executives.

Rather than accept responsibility for the insurance industry’s unwillingness to slow the growth of health costs through tougher negotiations with doctors, hospitals and drug makers, Braly and her industry peers prefer to just keep raising prices, cutting benefits, denying care and boosting their profits and compensation. They serve the needs of the high rollers on Wall Street instead of millions of Americans.

The good news is that more shareholders are refusing to accept WellPoint’s unconscionable behavior and are taking action. The evidence of that came at the meeting when shareholders adopted a resolution to limit excessive CEO compensation by giving themselves an advisory vote on executive pay during the company’s annual meetings. Among the shareholders who demanded more “say on pay” was Connecticut State Treasurer Denise L. Nappier, who controls investments for the $23 billion pension plan for state employees. Similar proposals were defeated by WellPoint shareholders in 2008 and 2009, but the tide has turned.

The grotesque compensation paid to insurance CEOs costs more than the face value of their pay packages. It also exerts unhealthy influences on CEOs’ decisions about company finances and health care policy even when customers’ lives are at stake. That’s why shining a light on companies like WellPoint is so important.

Even by the standards of people who believe that it’s okay to do just about anything to make money, WellPoint consistently goes too far. Their turbo-charged greed is out of control, and their lack of any moral compass is shocking.

About The Author: Ethan Rome is executive director of Health Care for America Now and served as deputy campaign manager in HCAN’s 2009 successful campaign to win comprehensive health care reform. Rome has been a grassroots organizer, political activist, and strategic communicator for progressive issue and electoral campaigns for more than 20 years.

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Insurance companies go before Kucinich panel

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In a room filled almost to capacity with K street lobbyists and company lawyers, executives from the nation’s top six insurance providers testified before the Domestic Policy subcommittee during day two of the subcommittee’s hearings. While yesterday committee members heard from victims of insurance companies and industry whistleblowers who shared their disheartening stories of industry abuse, today brought a much different tone.

The witness list included executives from United Healthcare Group, WellPoint, Aetna, Humana, CIGNA and Health Care Service Corporation. They repeatedly expressed their support for health care reform, but when questioned about specific industry practices or guidelines, they tirelessly dodged the issue. Whether the committee members asked about rescission policies or executive salaries, the witnesses seemed reluctant to provide anything beyond vague generalities extolling the virtues of their industry.

However, it seemed that many of the committee members took yesterday’s testimony to heart. Following up on Dr. Linda Peeno’s statement from yesterday that her salary was directly related to how many claims she denied, Representative Cummings asked all the witnesses if there was any reward at their company for doing likewise. Frustrated by the complete denial of such practices by all executives, Rep. Cummings said “Well, I guess there must be those other insurance companies out there doing this.”

Rep. Conyers also dropped in on the hearings, even though he is not a member of the subcommittee. He took a slightly different line of questioning, asking the witnesses if they were aware of a wide variety of insurance-related facts, such as the existence of the organization Healthcare for America NOW. None of the witnesses said they had ever heard of it.

Overall, the hearings posed several tense moments between the Democratic representatives and witnesses. At one point, Rep. Conyers asked Patricia Farrell, the Aetna representative, how much she made per year. She refused to disclose the amount to the committee, offering instead to submit it in written form after the hearing. All of the other witnesses, except the Humana and Health Care Services Corporation executives, refused as well.

While it is unclear exactly how much light today’s hearing shed on the internal practices and operations of the insurance companies, the committee members did request large amounts of additional information from the witnesses, including tapes of internal meetings discussing raising profits and compensation listings for their top executives. Rep. Kucinich closed the hearing by noting that this is just the beginning of an ongoing process to learn exactly how the insurance companies operate and how they can be reformed to better served the American people.

About the Author: Maria Tchijov is an online organizer & new media specialist in healthcare on SEIU’s New Media team. SEIU is the nation’s largest union of health care workers, with over half of the union’s 2.1 million members working in the field, including 110,000 nurses and 40,000 doctors.

This article originally appeared in the SEIU blog on September 17, 2009. Reprinted with permission by the author.

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