UnitedHealth (UNH) Shareholders Approve CEO’s $60M Stock Award amid Uncertainty

UnitedHealth (UNH) shareholders have approved a substantial pay package for returning CEO Stephen Hemsley. The approval comes as the healthcare giant faces multiple crises, such as regulatory probes, rising medical costs, and a stock price that has plunged 40% this year. The move signals shareholders’ confidence in Hemsley’s leadership.

The pay package includes a $1 million annual salary and a $60 million stock option award, which will vest over three years.

It must be noted that the approval came despite a warning from investor advisory group Institutional Shareholder Services (ISS) last month. ISS advised to vote against the pay package, saying it raises concerns because the bonus is not tied to company goals.

Leadership Change at UnitedHealth

In a brief background, Hemsley took over from Andrew Witty, who led UNH for four years before stepping down. The company faces several challenges during this change.

In December, Brian Thompson, head of the company’s insurance branch, was killed in midtown Manhattan. Adding to the company’s woes, shareholders filed a lawsuit last month alleging that UNH hid how Thompson’s death hurt its business. The lawsuit claims UnitedHealth misled investors by changing its claims strategy without warning about lower profits.

Further, UNH is reportedly under investigation by the Department of Justice for potential criminal Medicare fraud, according to The Wall Street Journal.

Hemsley Pledges to Rebuild Trust

Speaking at the annual shareholder meeting, Hemsley acknowledged the company’s recent missteps, promising to restore investor trust and conduct a review of UnitedHealth’s policies.

Hemsley said that UNH underestimated both the volume and the cost of medical care that patients would require. He added that the company is updating its estimates and has adjusted its bids for Medicare Advantage plans.

What Is the Future of UNH Stock?

Turning to Wall Street, UNH stock has a Moderate Buy consensus rating based on 19 Buys, six Holds, and one Sell assigned in the last three months. At $377.77, the average UnitedHealth stock price target implies a 23.97% upside potential.

See more UNH analyst ratings