WASHINGTON (AP) — The compensation paid to outgoing Wellpoint Inc. CEO Angela Braly last year rose 56 percent, even as the company's shares slid on lower enrollment in its Blue Cross Blue Shield health plans.
Braly, who resigned in August, received 2012 compensation valued at $20.6 million, according to an Associated Press analysis of the company's annual proxy statement. Most of the increase came from stock options.
Braly, 51, became CEO in 2007. She received a $1.2 million salary last year, up slightly from $1.1 million in 2011. Her compensation included a performance-related bonus of nearly $1.4 million. More than 85 percent of Braly's compensation came from stock options and awards, which totaled $17.8 million. That total was up from about $10 million the year before.
She also received $179,618 in other compensation, including $3,700 spent on security measures for her and her family due to concerns about her safety "as a result of the national health care debate," according to the proxy, which was filed Tuesday with the Securities and Exchange Commission.
Health insurers have been criticized in recent years for churning out large profits and giving their executives big compensation hikes while the cost of insurance for many people continues to rise.
WellPoint plans covers more than 36 million people. Most people may not recognize the corporate name, but they might know the Blue Cross Blue Shield brand under which the company sells policies in 14 states, including New York and California.
Braly led WellPoint through several sizeable acquisitions during her tenure, including the $4.46 billion purchase of Medicaid coverage provider Amerigroup Corp., which closed after she left. Medicaid is the state-federal program that provides health coverage for needy and disabled people. Opportunities for insurers providing coverage through Medicaid are expected to grow as the health care overhaul expands starting next year.
But investors had grown frustrated with the company's performance, leading Braly to resign last August. WellPoint said July 25 that it was cutting its outlook after seeing enrollment slip. The insurer also reported that day second-quarter earnings that both fell and missed expectations.
The company blamed a sluggish economy for the sliding enrollment and said medical costs came in higher than it expected in May.
The insurer also took a $150-million hit in 2011 from its Medicare Advantage business, which involves privately run, subsidized versions of the government's Medicare program for the elderly and disabled people.
WellPoint wound up trumping Wall Street expectations in the final two quarters of 2012 and recorded its first quarterly, year-over-year increase in earnings since early 2011.
Even so, its shares fell 8 percent last year to close 2012 at $60.92, while the Standard & Poor's 500 index rose more than 13 percent.
WellPoint's 2012 earnings were nearly flat compared to 2011. The insurer earned $2.65 billion, or $8.18 per share, last year, as total revenue climbed 1.6 percent to $61.71 billion.
In February, WellPoint named veteran hospital executive Joseph Swedish to replace interim CEO John Cannon.
Cannon received a base salary of $744,232, plus a one-time bonus of $500,000.
The Associated Press formula calculates an executive's total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest that the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year. The AP formula does not count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
The value that a company assigned to an executive's stock and option awards for 2012 was the present value of what the company expected the awards to be worth to the executive over time. Companies use one of several formulas to calculate that value. However, the number is just an estimate, and what an executive ultimately receives will depend on the performance of the company's stock in the years after the awards are granted. Most stock compensation programs require an executive to wait a specified amount of time to receive shares or exercise options.