What's Market, Executive Employment Agreements: Health Insurer Pay | Practical Law

What's Market, Executive Employment Agreements: Health Insurer Pay | Practical Law

A comparison of the compensation and benefits provisions of the employment agreements of certain Chief Financial Officers (CFOs) within the health insurance industry, including the CFOs of Anthem, Inc., UnitedHealth Group Incorporated, and Molina Healthcare, Inc., using What's Market, Executive Employment Agreements: Detailed Analysis.

What's Market, Executive Employment Agreements: Health Insurer Pay

Practical Law Article w-004-3846 (Approx. 5 pages)

What's Market, Executive Employment Agreements: Health Insurer Pay

by Practical Law Employee Benefits & Executive Compensation
Published on 06 Dec 2016 • USA (National/Federal)
A comparison of the compensation and benefits provisions of the employment agreements of certain Chief Financial Officers (CFOs) within the health insurance industry, including the CFOs of Anthem, Inc., UnitedHealth Group Incorporated, and Molina Healthcare, Inc., using What's Market, Executive Employment Agreements: Detailed Analysis.
Health insurer executive compensation practices may face increased scrutiny as Affordable Care Act (ACA) exchange-related issues continue to mount (see Affordable Care Act (ACA) Overview). Several of the nations' largest health insurers, including Aetna, United Healthcare, and Anthem, have experienced ACA-related losses and have either threatened to leave or are in the process of leaving the ACA health exchanges. Some participants in the ACA exchanges are expecting higher premiums and reduced flexibility.
Bearing in mind the industry's rising profits and stock prices, resentful plan participants and the media may take aim at the industry's corresponding rise in executive compensation. Use the table below to compare the compensation and benefits provisions of the employment agreements of certain health insurance industry CFOs, including:
  • Anthem, Inc., which has stated that if ACA exchange profitability does not improve in 2017, then it may pull out of the exchanges in 2018.
  • UnitedHealth Group Incorporated, whose operating business United Healthcare expects to lose roughly $850 million on exchange policies sold to individuals in 2016 and has already committed to leaving many state exchanges.
  • Molina Healthcare, Inc., which, in contrast to most insurers, is considering expanding its ACA exchange presence.
EMPLOYMENT AGREEMENT
Anthem, Inc.
Executive Vice President and Chief Financial Officer 
June 1, 2016
UnitedHealth Group Incorporated 
Chief Financial Officer 
June 7, 2016
Molina Healthcare, Inc.
Chief Financial Officer
March 16, 2016
ANNUAL RATE OF BASE SALARY
$750,000, effective May 30, 2016.

Page 1 
$800,000, subject to periodic increase.

Section 2(A)
At least $878,000, subject to periodic adjustment and at least annual review for increase.

Section 3(a)
ANNUAL BONUS AND CASH INCENTIVES
Annual target bonus is 100% of eligible earnings, payable under the employer's annual incentive plan.

For 2016, the annual bonus will be pro-rated based on time spent in his new position.

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Annual target bonus is 115% of base salary, payable under the employer's incentive compensation plans, subject to employer discretion.

Section 2(B)
Participation in all of the employer's bonus or incentive plans applicable to senior executives.

Eligible to earn annual discretionary and/or performance bonuses, as determined by the board. 

The executive receives any earned but unpaid annual bonus for the most recently completed fiscal year prior to termination due to death or disability.

Section 3(b) 

Section 5(b)
ONGOING EQUITY GRANTS
Eligible to receive stock options and restricted stock awards commensurate with the executive's position.

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None specified. 
Eligible for equity grants under the employer's equity compensation plan in the discretion of the compensation committee.

Section 3(b) 

Section 4(e)
BENEFITS AND PERQUISITES
Participation in the employer's total rewards program.

Beginning in June 2016, participation in the employer's directed executive compensation plan (an executive perquisite plan providing cash credits to pay for certain job-related expenses). The executive is entitled to $30,000 in cash credits per year.

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Participation in the employer's employee welfare, retirement, and other benefit plans on the same basis as other similarly situated executives.

Paid time off.

Term life insurance with a $2,000,000 face value.

Long-term disability insurance that covers 60% of base salary.

Section 2(C) 
Participation in all of the employer's health and welfare plans and programs available to, and on the same terms and level as, other executives, including medical, dental, vision, and life benefits, long-term disability plans, and life insurance in the amount of the executive's base salary.

Participation in all of the employer's fringe benefit plans and perquisites offered to, and on the same terms and level as, other executives.
At least 28 days of paid time off per year.

Participation in all of the employer's retirement, 401(k), deferred compensation, and other savings plans generally available to other executives or employees, on the same terms and levels as provided to other executives.



Section 4
What's Market, Executive Employment Agreements: Detailed Analysis provides summaries for a variety of executive positions and a diverse group of employers, based on size, industry, and location. The summaries cover terms that are typically heavily negotiated, such as compensation, severance, and non-competition provisions, and often reflect emerging trends.
For additional executive employment agreement summaries, see What's Market, Executive Employment Agreements, which provides a broader sampling of publicly filed executive employment agreements summarized at a higher level. Each detailed summary contains a link to the underlying publicly filed executive employment agreement.