A Star Tribune analysis shows that options exercised plus newly vested stock awards pumped up 2018 compensation to $65.6 million last year for Stephen Hemsley, the executive chairman at UnitedHealth Group.
In September 2017, Hemsley shifted from his previous job as chief executive to the executive chairman position at Minnetonka-based UnitedHealth, which is Minnesota’s largest company and runs UnitedHealthcare, the nation’s largest health insurer.
Hemsley and the four other executives identified this month in a regulatory filing as the company’s highest paid employees collectively in 2018 received compensation of about $117 million, according to the Star Tribune’s method of calculating pay, which factors the value realized during the year from stock-based compensation awarded in earlier years.
The collective compensation tally for the five executives was lower at about $69 million according to the regulatory filing’s summary compensation table, which includes a projected value for stock awards granted during 2018.
On the summary table, the highest paid executive was Andrew Witty, who started effective July 1 as chief executive of UnitedHealth Group’s Optum division, which sells a variety of health care services.
Most of Witty’s $21.2 million in pay came by way of stock-based compensation that depends on future performance. It includes a new-hire award with a projected value of $10 million that vests over five years.
“The vesting terms of this new hire award are one year longer than the company’s typical vesting provisions,” UnitedHealth said in the regulatory filing.
A compensation committee of UnitedHealth’s board of directors considered several factors in setting Witty’s pay, the filing said, including compensation during his previous employment as CEO of pharmaceutical giant GlaxoSmithKline. Witty ran the drug company from 2008 through 2017.
As reported on the filing’s summary compensation table, Witty’s pay for 2018 topped pay for chief executive David Wichmann ($18.1 million). According to the Star Tribune's method, however, Wichmann'a pay came in at $21.5 million compared to about $2.8 million for Witty.