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December 7, 2017

“Aetna CEO in Line for $500 Million Payout”

by Anne Paddock

Those were the headlines on the front page of the Business & Finance section of the Wall Street Journal (WSJ) yesterday. Mark T. Bertolini  – the CEO of Aetna since 2010 – stands to make a half billion dollars if Aetna successfully merges with CVS and he leaves his job. According to the WSJ, about $230 million will come from already vested stock appreciation rights while another $190 million would come from the common stock he already owns. An additional $60-$85 million  is estimated to be his payout if he is terminated when the company sells itself.

Many people (yours truly included) think this is an obscene amount of money for one person to be compensated for running a successful company for 7 years and selling it. Of course, the payout doesn’t include his compensation which was:

  • $18.7 million in 2016
  • $27.9 million in 2015
  • $15 million in 2014
  • $30.7 million in 2013
  • $36.4 million in 2012
  • $9.7 million in 2011

There are those who will argue that Mr. Bertolini earned his annual compensation by creating shareholder wealth (the stock increased from about $44 in 2013 to about $179 currently) and the argument is valid. Bertolini, without a doubt, ran a profitable company (Aetna reported net income of $1.7 billion to $2.4 billion every single year from 2012 – 2016 which equated to about $5 – $7 of earnings per share of stock) but he was also well compensated ($138 million over 6 years) for a performance well done.

But, now in the midst of a healthcare system that is broken where we as a nation don’t provide basic healthcare to everyone earning less than $15,060 (the government’s definition of the poverty level), where insurance companies (including Aetna) are aggressively raising rates, where insurance companies define what is covered but often deny authorization, where insurance companies contract out authorization services to private companies who make the whole insurance reimbursement difficult if not impossible, where people are not tasked to be more responsible for their own health (as in prevention and lifestyle choices), where those employed are able to buy health insurance with before tax dollars (whereas those purchasing health insurance on the private market pay with after tax dollars, and where many people think its more important to have a cell phone than health insurance, we have a CEO of a major health insurance agency who stands to walk away with $500 million if the proposed CVS deal goes through.  How is this ever ok?

To read the WSJ article, click here.

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