Cigna and CVS's CEOs pulled in $632 million while 100 million Americans are buried under medical debt

A nonprofit shareholder advocacy group called As You Sow is out with its annual list of overpaid executives, and I wasn’t surprised to see the CEOs of three U.S. health insurers – including two of my former Cigna colleagues, David Cordani and Karen Lynch – on the roster.

The day I dreaded most when I was at Cigna was the day, usually in March, when we released our proxy statement and notice of the annual meeting of shareholders. Deep inside would be the section on executive compensation, which I knew a few reporters would home in on and call to challenge my ability to obfuscate. 

My unenviable job was to try to justify our CEO’s outsized paycheck when tens of millions of Americans were (and still are) uninsured and tens of millions of others were (and still are) functionally uninsured because of sky-high out-of-pocket requirements. Families can be on the hook for up to $18,200 in deductibles and other expenses this year before their health insurance policies will begin paying claims. (Know that big companies often cover their CEOs’ health insurance out-of-pockets, meaning they are exempt from putting any of their own “skin in the game,” which they demand of the rest of us.)

If I’d still been flacking for Cigna when last year’s proxy came out, I would have had my talking points ready. I would have emphasized right off the bat to inquisitive reporters that David Cordani’s base salary in 2021 was only $1.5 million, despite the fact that the company reported his total pay for the year as $19.87 million. I’d quickly note that everything north of the $1.5 million – in some years as much as 90% if not more of his total pay – was “at risk.” By that, I’d mean that the additional $18.37 million in 2021 pay would have been based on how well he’d met certain metrics. Chief among those metrics: shareholder return. If Cigna’s board felt Cordani helped the company’s shareholders achieve their financial goals (i.e., get richer), he would be rewarded accordingly with grants of stock and an array of perks, including the use of the company’s planes, helicopters, accountants, and lawyers. And, of course, excellent health insurance.

But even that would be obscuring the whole story. Proxies are complicated and typically hard to decipher, and only a few reporters take the time, as STAT’s Bob Herman does, to locate and add up all the other components of total compensation top executives get, such as gains from exercising vested stock options. 

As Herman reported last May, $19.87 million was just the tip of Cordani’s 2021 compensation iceberg. It actually was more than $91 million, making him the highest-paid of all U.S. health insurance company executives. Cordani’s haul between 2012-2021 was an eye-popping $366 million. Read Herman’s analysis of the compensation of the CEOs of the seven largest insurers here. You should print it out and have it handy the next time you have to call your insurer for refusing to pay for your colonoscopy.

MOST CIGNA EMPLOYEES MAKE A TINY FRACTION OF CORDANI’S PAY

Back to As You Sow, which every year since 2015 has analyzed CEO compensation and compared it to shareholder return to determine whether executives actually deserved all the millions they were paid. It also reports the ratio of CEO pay to that of their companies’ median employees. 

Using the $19.87 million figure for Cordani in 2021, As You Sow maintains that the Cigna board paid Cordani $5.34 million too much and pegs the CEO-to-worker pay ratio at 297-1.

For Karen Lynch, now the CEO of CVS/Aetna, As you Sow says that she didn’t deserve $5.98 million of the $20.38 million she got in 2021. At CVS, the CEO-to-worker pay ratio was 458-1. STAT’s Herman found that a closer look at CVS’s proxies revealed that the CEO’s compensation over 10 years actually totaled $265.7 million. 

The third insurance company CEO to make the As You Sow list was Centene’s Michael Neidorff, who was paid $20.63 million in 2021, not including all of his stock-based compensation. At Centene, the 2021 CEO-to-worker pay ratio was 290-1. According to Herman’s analysis, Neidorff was actually paid $322.6 million over 10 years. (Neidorff died in April 2022.)

Among the people Herman interviewed to get their take on all that money going to seven extraordinarily compensated people was Ted Doolittle, Connecticut’s health-care ombudsman and a former federal health-care official:

“If that group of seven individuals were delivering what they should be delivering to the American people, I would have no problem paying them $283 million,” said Doolittle. “What they should be delivering to Americans is no increases to their health care expenses. They should be focused on the prices they are paying to pharma and hospitals, in particular, but they’re not. So they’re being rewarded for the wrong thing.”

It’s important to point out that these overpaid executives played key roles in forcing almost all of us into high-deductible plans more than a decade ago. As a consequence, as Kaiser Health News has reported, 100 million people in the United States are now saddled with medical debt. You can be certain that David Cordani, Karen Lynch, and the CEOs of the other big five health insurance corporations are not among them.