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The returning chief of UnitedHealth faces the ghost of shareholder rage on Monday after he directed a $60 million salary package with a sharp return to the company’s top position, with stock trading at the lowest in five years.
After being appointed CEO on May 13th, Stephen Hemsley was awarded a $60 million stock option that will begin paying in three years. The salary “stimulates serious concern,” according to the institutional shareholder services, which recommended shareholders vote for Hemsley’s compensation.
Meanwhile, the 11th largest shareholder of Norwegian S$1.8TN Sovereign Wealth Fund and United Health, Norwegian bank investment management, said he voted against Hemsley as he is currently in the role of CEO and chairman. The company’s stock price has fallen 40% this year, delivering its worst performance in the Dow Industrials Index.
Hemsley, 72, previously served as UnitedHealth from 2006 to 2017, overseeing the strong growth of the company and its stock. With his return as CEO, UnitedHealth will simultaneously withdraw its revenue guidance and will play against shareholders for the first time at the company’s annual meeting on Monday.
The question of governance is just one of the challenges Hemsley faces as he regains Healthley’s leadership following the astonishing resignation of former head Andrew Whitty and the murder of senior executive Brian Thompson on December 4th.
Sources close to the company said Thompson, or “BT,” he is known within the company, is widely viewed as the candidate who is most likely to seize as CEO in the end. His murder outside a Manhattan hotel set the issue of succession in the company.
In response to the ISS recommendation, UnitedHealth said in a regulatory submission that the board determined that Hemsley’s salary was “reasonable” and “strongly consistent with the interests of its shareholders.”
According to Morningstar, UnitedHealth is one of the world’s largest health companies, providing medical benefits to approximately 51 million people, including around 1 million outside the United States as of December 2024. It operates the pharmacy business, and its healthcare services division was the largest caregiver in the nation, Morningstar said.
UnitedHealth is fighting the US Department of Justice on an attempted $3.3 billion acquisition of rival home care providers, but is also targeted by another Department of Justice investigation into its Medicare claims. UnitedHealth says it is unaware of the new investigation.
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Whit Mayo, an analyst at healthcare investment firm Leerink, said the company’s revenue growth was dependent on acquisitions. “The main component of (that) growth relies on inorganic engines,” he said. Now, the Department of Justice scrutiny at UnitedHealth and say, “Can they buy at the same pace?”
Hemsley shares details on business performance at the annual meeting, a company spokesman added, “(Hemsley) is confident about UnitedHealth’s future.” On his return as Chief, Hemsley bought $25 million in UnitedHealth stock.
UnitedHealth will face challenges in the coming months, according to CFRA analyst Paige Meyer. The company was still upset from the Covid-19 pandemic, she said. “People have suspended care during the pandemic,” he said, “The cost is very high” for UnitedHealth now that people resume services.
Additional Reports by Andrew Jack of New York
