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WellPoint execs get double-digit pay bumps while stock falls

April 4, 2013

WellPoint Inc.’s top brass all enjoyed double-digit bumps in 2012 compensation, according to a proxy released April 2, even though the stock price fell and the company admittedly did not meet its financial goals.

The Indianapolis-based health insurer’s board of directors approved higher salaries and larger potential stock awards heading into 2012 after most of its top executives saw their pay hold steady or decline in 2011.

The company’s performance merited its executives receiving only 83 percent of their target stock awards. But because the board had already established larger pools of stock to award to executives, the value of those awards still rose over previous years. Bonus amounts fell in 2012 compared with the previous year.

The extra cash and stock drove up Chief Financial Officer Wayne DeVeydt's overall pay 11.9 percent to nearly $4.4 million.

Ken Goulet, executive vice president of WellPoint's commercial insurance business, saw his total compensation rise 18.2 percent to nearly $4.4 million.

And Lori Beer, executive vice president of information technology, enjoyed a 17.9-percent boost. She earned $3.2 million, although that was still below the nearly $4.5 million she received in 2010.

John Cannon, the general counsel, saw his compensation more than double to nearly $6.5 million. But that was partly because WellPoint hiked his salary by $350,000 and gave him a $500,000 bonus for agreeing to serve as interim CEO after the August resignation of former CEO Angela Braly.

Braly received compensation of $20.6 million last year after she was allowed to stay on as an employee until year's end so that additional stock awards kicked in.

WellPoint spokeswoman Kristin Binns said WellPoint achieved important goals in 2012.

“Though financial performance is only one metric upon which compensation is based, WellPoint saw net income increase to $8.18 per share from $7.25 per share in 2011,” she wrote in an email. “And medical enrollment increased by 1.9 million for the year to approximately 36.1 million members at December 31, 2012. The company also achieved metrics regarding member satisfaction and improvements in our members' health.”

WellPoint’s membership growth came mainly from its acquisition of Virginia-based Amerigroup Corp., which operates Medicaid managed care plans for states. The rest of WellPoint’s existing business lost customers during 2012.

And while WellPoint has boosted earnings per share by continuing to buy back shares, overall profit was unchanged last year compared with about $2.6 billion in 2011.

WellPoint raised its dividend in 2012 and acquired 1-800-Contacts Inc. But its stock price fell 8 percent to close the year at $60.92 per share. Even taking into account dividends, WellPoint shares lost 6.3 percent of their value during the year.

“Despite these accomplishments, we did not meet our financial goals for the year,” the compensation committee of WellPoint’s board of directors said in the proxy statement.

WellPoint shares were up nearly 1 percent to $68.79 in early-afternoon trading on Thursday.

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