Bright Health Group is rewarding its executives with more equity awards, even as the company has severely pared back operations.
The Bloomington-based health insurance company disclosed in a Securities and Exchange Commission filing on Monday that it has granted executives additional equity awards as retention bonuses. The company did not comment on the additional compensation.
Executives of the company will get 27.4 million restricted stock units (RSUs) as retention bonuses, including 7.6 million units to Chief Executive Mike Mikan and 2.8 million units to Chief Financial Officer Catherine Smith.
This year, the insurer sold health plans for individuals in 16 states through health exchanges launched by the federal Affordable Care Act. Bright Health sold Medicare Advantage health plans in six states.
Next year, it will only sell Medicare Advantage plans in California and exited the ACA market for now. Bright Health laid off 99 people at its headquarters because of the pullback.
The company cited those layoffs and the company's updated business plan as reasons for the new retention awards in the latest securities filing.
The new RSUs are in addition to retention bonuses awarded to executives less than a year ago. In December 2021, the board approved a first round of retention bonuses including 7 million RSUs to Mikan and 1.7 million to Smith. Those 7 million shares to Mikan had a grant date value of $26.4 million.
The company did not disclose the grant date value of the new RSUs.
Stock options lose value if the share price falls below the price when the options were awarded. However, while RSUs' values can drop, they do not zero out.
Last December, Bright Health shares were trading near $3.50 a share. Now, the stock is trading around $1.
Named executive officers are generally awarded substantial equity awards as part of their executive compensation package. Retention bonuses can be a useful tool to keep next-level executives and key employees when a company is struggling.
"Best practice would be to exclude named executive officers from additional retention restricted stock grants. Especially a second one, " said Rosanna Landis Weaver, who writes about CEO compensation for the shareholder advocacy group As You Sow.
Mikan already has been granted substantial equity awards. Bright Health's annual proxy filed earlier this year showed Mikan controlled about 15.3 million shares, or 2.4%, of Bright Health's 630 million shares outstanding. The majority of those shares are options.