The CEO of health insurer Cigna made nearly $79 million last year. Here's why 8 top healthcare company execs scored major paydays as the pandemic upended the industry.

  • Health-insurer and hospital CEOs scored big paydays in 2020, a year defined by the pandemic.
  • Six out of eight CEOs made more last year than in 2019 on stock options and awards.
  • The paydays came as big insurers and some health systems grew profits despite COVID-19 challenges.
  • See more stories on Insider’s business page.

The CEOs of some of the biggest healthcare companies brought home tens of millions more in pay in 2020, despite the toll the COVID-19 pandemic took on the US economy at large.

Sam Hazen, the top executive at HCA Healthcare, the largest investor-owned hospital chain in the country, pocketed $83.6 million last year — more than four times what he made in 2019 — according to an Insider analysis of the company’s financial documents.

David Cordani, the CEO of Cigna, made nearly $79 million, a giant increase from the $13.4 million he made the year before.

These CEOs and six others included in Insider’s analysis reported big paydays in the middle of the pandemic, largely because they cashed in on stock options and awards. The analysis included eight publicly traded health insurers and hospital systems. It did not include pharmaceutical or lab companies.

Spokespeople for HCA and Cigna said the stock options or awards were given to their CEOs years before and that those figures don’t represent one year’s compensation.

“Most of that amount was derived from stock awards granted almost a decade ago, when our stock was trading around $43 per share,” a Cigna spokesperson said, “and represents compensation earned over the course of eight-plus years, aligned to the tremendous value created for our customers, clients, employees, and shareholders during that time.”

Cigna’s stock closed at $208 per share on December 31.

Stock-based pay makes up the bulk of CEO compensation

Matteo Colombo/Getty Images

Insider calculated compensation based on the “actual realized gains” of the CEOs’ stock-based pay, which makes up the bulk of total executive compensation. Actual realized gains are a measure of the income stock-based pay generates. We also included salaries, bonuses, nonequity incentives, changes in pension value, and other compensation in our calculations.

In contrast, publicly traded companies report total executive compensation using a measure of the “estimated fair value” of stock awards or stock options when they are granted. These estimates represent pay that may not be received, or pay that may be worth more than indicated by the estimate, according to Matt Hopkins, a senior researcher at the Academic-Industry Research Network who studies CEO compensation.

Measuring the actual realized gains provides a precise account of an executive’s total income in a given year, Hopkins said.

The big paydays came during a year when many health insurers and some big health systems grew their bottom lines, even as they faced challenges with COVID-19.

Insurers’ profits ballooned early in 2020 as hospitals called off surgeries to make room for COVID-19 patients and people avoided the doctor’s office to keep from getting sick. People started getting care again later in the year, dampening those profits.

Some big hospital systems also did well, particularly in the second half of the year as COVID-19 cases rose. HCA grew net income 5.8% to $4.4 billion in 2020, even as it returned provider relief funds to the federal government.

Healthcare CEOs cashed in on stock options and awards in 2020

Centene CEO Michael Neidorff.Steven Ferdman/Getty Images

Michael Neidorff, the CEO of the Centene, a provider of government-funded health plans, made $58.9 million in 2020, up about 58% from $37.4 million the year before, according to Insider’s calculations. Of his 2020 pay, $51.5 million came from stock awards that vested during the year.

A Centene spokesperson said the stock was awarded in prior years. The representative added that based on stock awards granted during 2020 and not in previous years, Neidorff’s compensation decreased.

Ron Rittenmeyer, the CEO of the Texas hospital system Tenet Healthcare, made $26.6 million, an increase of 47% over 2019. He exercised $9.6 million in stock options last year, while another $10.3 million worth of stock awards vested.

Rittenmeyer exercised and sold those options in December, the same day Tenet announced plans to acquire 45 surgery centers, sending its stock up 22% to $42.78 at close. A Tenet spokesperson said the transaction was done in connection with a 10b5-1 trading plan, so Rittenmeyer did not have control over the timing of the exercise of the options, which she said were granted in 2017 as a performance incentive.

The spokesperson also said Rittenmeyer donated his full salary from April through June to Tenet’s employee-assistance fund. His base salary is $1.5 million, according to the proxy statement.

CVS Health CEO Larry Merlo.Forbes

Meanwhile, Larry Merlo, who was CEO of CVS Health in 2020 before retiring in February this year, was one of the few top executives who took home less money. According to Insider’s analysis, Merlo made $27.6 million in 2020, down 5.8% from 2019, as he cashed in on fewer stock options and awards. His nonequity incentive plan compensation was also lower in 2020.

Karen Lynch, the former president of insurer Aetna, took over as president and CEO of CVS on February 1. She took home $8.4 million last year, according to Insider’s analysis of the company’s financial documents.

A CVS spokesperson said the company delivered results that exceeded expectations in 2020 despite challenges and uncertainty, while building on its foundation to speed growth and expand its offerings.

“This progress was reflected in our 2020 executive compensation, the vast majority of which was performance-based. We are committed to a competitive compensation program that aligns pay and performance, supports our long-term strategic goals and drives stockholder value,” the spokesperson said.

Humana CEO Bruce Broussard made roughly $23 million, down 8.5% from 2019. Of his total compensation, $14.3 million was derived from options Broussard exercised during the year, and $3.6 million came from stock awards that vested.

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