Bright Health’s CEO got a bigger bonus last year as the company completed its withdrawal from the health insurance business that once drove meteoric growth at Minnesota’s largest-ever IPO.
Bright Health CEO’s bonus grew to $1.95M amid slashed workforce
The company, which was founded in Minnesota, cut its workforce by more than half after exiting the health plan business.
The Minnesota Star Tribune
April 1, 2024 at 2:33PM
In the process, Bright Health — which in January announced it had decamped its headquarters from Bloomington to Florida and changed its name to NeueHealth — slashed employment by more than half. At the end of 2023, it had 1,252 employees, down from 2,840 workers the year before.
Chief executive Mike Mikan saw bonus pay of $1.95 million, up from $1.69 million the previous year, according to a regulatory filing Monday.
The bulk of Mikan’s overall compensation of about $9.9 million came in the form of stock-based pay, which hasn’t paid well over the years for Bright Health executives given the company’s poor stock performance.
According to the proxy, all of Mikan’s previously issued stock options are underwater, meaning the exercise price is higher than where the stock currently trades.
“For 2023, the compensation committee evaluated the company’s overall execution against performance metrics and approved a performance factor of 100% of target,” NeueHealth said in its disclosure.
The company did not respond to questions from the Star Tribune.
Bright Health was founded as a health insurer in 2015 and grew to cover more than 1 million people through individual market health plans and Medicare Advantage coverage. The company stumbled badly in health insurance markets by failing to accurately pay claims and calculate risk adjustment payments.
In September, while exiting the last of its remaining health insurance markets, Bright Health disclosed it hadn’t made full payment on its risk adjustment obligations to the federal government and entered into a $380 million repayment plan. The company still owes money under the agreement, where the federal government’s Centers for Medicare and Medicaid Services (CMS) will redistribute funds to other health insurers, noted Ari Gottlieb, a health care strategist.
”[The] board continues to pay for failure,” Gottlieb said. “A fair question ... is why CMS and the federal government did not put any limitations on cash bonuses until the repayment agreements were paid in full.”
In addition to Mikan, two other NeueHealth executives received bonuses exceeding $400,000.
CMS did not comment.
NeueHealth’s annual proxy statement did not describe the components that comprised the company’s annual incentive plan (AIP).
Generally, companies go into detail on what financial metrics comprise the AIP as well as performance against those metrics. Those totals are then reported under non-equity incentive plan compensation — the cash bonus for annual company performance.
Executives at public companies also can receive other cash bonuses that are made at the discretion of the board. These usually are things like signing bonuses, moving bonuses or retention bonuses and generally don’t have financial metrics attached to them.
As in year’s past, NeueHealth reports AIP awards in the bonus column and notes they are “bonuses awarded at the discretion of our board of directors.” NeuHealth did not describe the metrics in the proxy.
In January, Bright Health closed on the sale of its last Medicare Advantage health plan holdings, marking a full exit from selling insurance, which had previously been its primary business. It’s now focused on the much smaller NeueHealth division, which owns and manages medical clinics in Florida and elsewhere.
Employment at Bright Health peaked at just over 3,200 people at the end of 2021.
NeueHealth disclosed its most recent headcount figures on Thursday in its annual report to shareholders. Over the past year, the company has provided only limited comments about how the winding down of its health insurance business was affecting employment.
Bright Health said in February 2023 it was eliminating 68 jobs at its then-headquarters office in Bloomington.
In the annual report, NeueHealth also said it took a $900,000 impairment charge due to lease abandonment for one of its corporate office locations. The company did not identify the location, nor has it specified the size of its remaining workforce in Minnesota.
In its proxy filed Monday, NeueHealth said it’s asking shareholders for an additional 2.75 million shares of its common stock for use in granting retention awards for executives.
In October of 2023, the company issued a special restricted stock unit grant to retain current employees, including 2.5 million shares to executive and nonexecutive officers (970,000 of them to Mikan). Those awards have been approved by the compensation committee and will be completed if investors approve a shareholder proposal.
NeueHealth’s shares slid 3% to $6.30 Monday. It’s stock has fallen 17.4% so far this year.
Bright Health Group was funded in June 2021 with $924 million in the largest-ever initial public offering of stock for a Minnesota company.
The funding is expected to give more than 5,000 Minnesotans, especially in rural areas, high-speed broadband access across the state and help at least 139 businesses and 368 farms.
