UnitedHealth CEO cashes in on big pay gap

One-Percenter of the Week: A new study finds the insurer has by far the largest income spread between its bosses and other employees.

By MSN Money Partner Dec 9, 2011 12:41PM

By Michael Brush

 

One message from Occupy Wall Street that has resonated around the country is that a growing gap between the rich and everyone else is a threat to our nation’s economic future.

 

You may disagree with the conclusion, but it's hard to disagree with the premise. A lot of academic work, including research by Emmanuel Saez of the University of California, Berkeley, supports it. And the growing gap is shaping things like retail spending patterns, which show booming sales at high-end retailers, stagnant sales at mass-market stores and booming sales again at the dollar stores at the very low end.

 

In a study released this week, the compensation research group PayScale has identified the Fortune 50 companies with the widest pay gaps -- the biggest disparities between the top manager's pay and workers' median pay.

 

The top spot goes to UnitedHealth Group (UNH), the health insurance company led by CEO Stephen HemsleyStephen Hemsley/© Jay Mallin/Bloomberg via Getty Images.

 

Hemsley made 1,737 times the median pay earned by workers at his company in 2009, according to PayScale's study. That compares to an overall CEO-to-regular-worker pay ratio of  just 287 that year, according to the Institute for Policy Studies, a think tank that studies trends in worker pay. It was more than twice the disparity at the No. 2 company on the list, Wal-Mart (WMT), which had a ratio of 717.

 

Hemsley topped PayScale's list of CEO-to-worker pay disparities at Fortune 50 companies by pocketing $101 million, according to Forbes, whose CEO numbers PayScale used in its study. In contrast, UnitedHealth workers earned a median pay of $58,700, according to PayScale.

 

PayScale estimated median employee pay levels in various jobs and sectors by using total cash compensation, including bonuses, reported by people responding in online surveys. PayScale's pay estimates for workers are based on 23 million survey responses since 2002.

 

PayScale used 2009 pay data for Hemsley in its study because that's what Forbes used for its latest pay roundup. But Hemsley's realized pay for 2010 was robust as well, at $48.8 million, according to GMI, an independent provider of corporate governance research. That would work out to a CEO pay ratio of 831 -- and still top the PayScale list.

 

A UnitedHealth spokesman responds that Hemsley's pay was so high in 2009 because he cashed out a lot of stock options he had held for years, and which were due to expire. This is true. Forbes reports that $98.5 million in Hemsley's pay was from stock gains.

 

Unitedhealth also responds that Hemsley was able to earn so much on stock options because the company and its stock have performed well, due in part to Hemsley's efforts. He joined the company in 1997 and served as president and then chief operating officer through most of 2006, when he became CEO. Indeed, UnitedHealth stock has more than doubled in the past 10 years -- but after trading above $60 in 2005, shares today are trading below $49.

 

While $101 million is a lot to earn in any year, it's the gap between he and his workers that stands out. It comes at a time when the overall pay gap is widening in our economy, when household income gains are so meager that median household pay last year returned to levels not seen since 1990s, adjusted for inflation.

 

For earning so much compared to those who work for him, I’m making UnitedHealth's Stephen Hemsley my second "One-Percenter of the Week."

 

Related: Read about last week's "One-Percenter of the Week," Eugene Isenberg of Nabors Industries.

 

At the time of publication, Michael Brush did not own any shares mentioned in this column. Brush is an MSN Money columnist and the editor of Brush Up on Stocks, an investment newsletter.

VIDEO ON MSN MONEY

8Comments
Dec 10, 2011 3:13PM
avatar

    The giant money is mostly made on a 15% capital gains tax. This alone should be enough to condemn our prostitute government.

    Our big corporations are making record profits and paying low to no taxes. They get special treaties, tax breaks and all possible aid in outsourcing for slave labor.

    If  we had a government they would force our public owned corporations to pay our minimum wages wherever they go. This would bring back jobs and show a little regard for workers. Also, it would help greatly to have labor represented on corporate boards, as Germany does.

   Our obscene income and wealth gap is deadly and is leading straight to depression and chaos. We will force change or America will be destroyed by insane greed.

 

Dec 16, 2011 7:48PM
avatar
Having had many years working with this company in the provider billing business in WI where the Midwest is their hugest block of business, and having had been the unfortunate receving end of their "insurance" after my own heath falling into severe decline and actually having to USE it-(oh what a CRIME!!!!), this company is one of hte biggest crroks and robbers of the sick and outsourcers for their workforce. 
I swear their entire CSR department is in INDIA as everytime I needed to call them for a claim problem, pymt error, contractual pymt error which resulted in severe underpayments, denials and the countless other mistakes or issues I had to either send back for adjustments or try and appeal, when you DID get a human being, they could were "Ahmed, Muhammad, Lakshmi, Avi or Abhu "something" and you had to explain the situation at least 5 times before you got off the phone before you were given your "reference #, told it would take 14-21 business days to get back to us" and then of course nothing got done and I'd be calling again on the same thing while 30 more problems just like it came in from UHC to deal with.  The contract rates on provider services?  They might as well be Medicare of Medicaid after hacking the crap out of charges-( I worked for a cardiolgist practice and what they did to our charges-especially surgery was pathetic).  I remember double checking many of our EOBS against the fee schedules to make sure they were right before I posted the pymts because the cuts in fees were so bad.
Disgusting, simply disgusting and meanwhile THIS guy and many more like him live like KINGS as policyholders can't even pay their medical bills because they had the NERVE To actually get a chronic costly illness or require one surgery or hsp too many and UHC "doesn't like that". One MORE thing.  For the selfish crabbing that HCR made nsurers "raise their rates", you're ful of it as had the public remained in the law as intended, THIS would have kept that price gouging from happening because the minute these gredy carriers tried to pul that nonsense, people would have the choice to "take the public option" and kept insurers honest but the repubs screamed such bloody murder "about socialism and government takeovers of healthcare" that the dems caved and took it out, thus taking one of the biggest lines of defense the American consumer HAD agaisnt the greedy insurance companies pulling that very thing so for all you crabbing about that now, quiet.
Hopefully, if the paty of repeal, cut and hack everything for the us and not for the rich and corporate welfare is OKAY but a single mother getting food stamps and Medicaid to supplment her pathetic Wal-Mart pa is "highway robbery" and the EPA is "job killing" but forced taxpayer subsidies for Big Oil is OKAY, don't succeed in killing HCR before the rest of the parts can be implemented, including eliminating the pre-x provsion for adults & creation fo the insurance exchanges to bring down rates so buying an individual policy will not cost what it does now for plans with HUGE elimination periods, outrageous ded/coins and often are so expensive that for many, they end up buying CHIP only.  The scare and fear mongering about "socialism, and Canada's plan is awful and we have the best ealthcare system in the world" is such BS, I don't have the space or time to print it all here.  Do your homework and educate yourselves on what really healthcare delivery in this country has been about, what "managed care" plans are and what/ who for "profit healthcare" really serves because it is not the patient and privatizing our system is NOT the answer.
Medicare for ALL NOW!!!

Dec 21, 2011 9:55PM
avatar

People we need to come together, ONE voice. We have allowed this to happen to ourselves. By sticking our head in the sand and allowing this to continue is insane. This is what happens when you have a 2 party system!!! Vote these aristocrats out, all of them. We need to gain traction here and quit bickering between us. The majority can  agree on most of these issues, so we fix them and work on the others! What is happening here will cause chaos and with the new laws going into effect the military will throw you in the limitless brig, no lawyer no corpus because you are a threat to the U.S. But heck WHO CARES RIGHT! We neeed to peacefully come together and stop this crap, and the only way is to come together as one voice, so important. A DEMO AND A REPUB wrote this into the defense bill and your politico's STAMPED IT INTO LIFE. And my Pres signed it, WOW!!!!!!   Find it and READ IT for yourself people...... Let's fix this in 2012 I will call it  "Come Together Campaign" Let's get involved as a LOUD VOICE!!!!!    peace

Dec 22, 2011 3:26PM
avatar

Couple of things I have to ask about... Is it just me or does no one else remember what happened when Reagan cut our so called payroll tax? Pay attention people.... they are cutting the withhoulding rate not the actual tax rate - two different items. Cutting the amount they take out of my check is nice only if I get to keep it. They need to cut the withheld tax rate allright - need to cut the rate they expect me to pay period.

 

I work two jobs to make ends meet and I still qualify for food stamps - why is ANYONE in this position expected to pay a federal income tax at all? Feds take out more than I get in food stamps is why....you can have the stamps back if I get to keep all the money I've worked for.

Jan 27, 2012 8:57PM
avatar
The problem Dave Corbin is this.

If the CEO of United collects 100 Million every year, which he has for many years; the question becomes, "how much does his "bonus+Salary" increase the monthly premiums for all United Health policy holders?"

United is the largest private Health care provider in the country.

His income raises monthly premiums.  100 Million in one year, significantly raise all policy holders monthly premium.

Capish?
Dec 11, 2011 12:51PM
avatar

One more thing. Don't you notice that the new 'health care' law resulted in a huge increase in premiums? Don't talk about the intention of the law. Just talk about the facts. And the facts are that the 'health insurers' gained big profits from that 'health care' law because that is how the law was designed. Forget about congress caring for the health of the citizens. The real result was increased health care profits. That's what campaign donation bribery will do.

If president Obama was so hot to help all Americans then where was he on single payer? No, instead he benefited the  increased profit of fat corporations. Facts are stubborn things.

Dec 11, 2011 12:42PM
avatar

Mr. Brush, you say that the great differential of income between ridh and poor is a threat to our economy. Then, like liberals do you don't back that statement up with facts. You go right ahead and assume it is true. Aren't you schooled well enough to see the contradiction in your reasoning? If the rich are getting richer then the economy must be good enough to enable them to do that, get richer. The plain fact is that American corporations rae international. In terma of comunications, work and transportation, this is now a small world. But the unemployed are getting no jobs from this economy.Could it be that empty campaign complaining is not leadership.

Only with progressive leadership can we develop our vast energy resources (think of the jobs), get utilities to replace aging gas lines that might explode (think of the jobs), gradually place our aging electric grid underground where is far less vulnerable to attack (think of the jobs), bring the trillkion dollars held abroad by corporations by offering a msaller tax but only if those corporations put that money to work here at home (think of the jobs)

Do you get the point?

avatar

I truely do not understand why people are so upset. Yes, some people make alot of money; many others do not. It has been this was since money (as a currency) was first introduced if not longer.

 

Additionally a net worth of $700K is not that much. I know people who have never made more that $50K a year who have higher.

 

All I see is alot of whining "I dont have ..... so no one else should either.

 

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min
Sponsored by:

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.