UnitedHealth former CEO David Wichmann earned $42.1M in his last year

David Wichmann earned $42.1 million in compensation during his final year as CEO of UnitedHealth Group, one of the 10 largest publicly traded companies in the United States by revenue.

Wichmann, who also stepped down from the UnitedHealth board of directors, was succeeded as CEO by Andrew Witty on Feb. 3.

Witty realized $17.4 million in compensation during the year. He had taken an unpaid leave from April to November to help lead the World Health Organization's COVID-19 vaccine development program.

But prior to Witty leaving for that role in April he was awarded a $550,000 bonus from UnitedHealth for his performance to that point in the year leveraging the Optum business to help customers, communities and employees with the COVID-19 crisis.

Long-term equity awards that were exercised or vested during the year formed the majority of both men's compensation for the year.

Wichmann's compensation was down from the year before, when he made $52.1 million.

Wichmann had been an executive of UnitedHealth since 2004. He served as the company's chief financial officer from 2011 to 2016, was named president of UnitedHealth in June 2016 and CEO in September 2017, succeeding longtime CEO Stephen Hemsley.

Wichmann over his tenure had accumulated a lot of stock options and restricted stock awards. In 2020, he saw $17.3 million from restricted stock that vested, and exercised 76,024 stock options for a gain of $19.7 million.

Revenue fell below the target set for annual cash incentive bonuses, but the company made or exceeded income and cash flow goals. A quarter of the bonuses also is based on stewardship goals. Executives earned approximately 125% of the targeted bonus.

As a result, Wichmann earned a cash incentive of $3.5 million to go with his $1.4 million annual salary.

Witty was the former CEO of pharmaceutical company GlaxoSmithKline. He briefly served as a UnitedHealth board member in 2017 and 2018 before resigning his board seat to join executive management of UnitedHealth as CEO of its Optum business.

When he left for the WHO in April 2020, he was both CEO of Optum and president of UnitedHealth Group and came back to those roles on Dec. 1. In February, he succeeded Wichmann as CEO.

UnitedHealth is the nation's biggest health insurance company. During 2020, UnitedHealth's revenue increased 6% to $257 billion and earnings per share increased 12% to $16.03 per share. During 2020, UnitedHealth's stock had a total return of 21%.

Early this year, UnitedHealth also announced plans to buy a health care information technology company, Nashville-based Change Healthcare, for approximately $13 billion in cash and debt that would be the second-largest acquisition in its history.

Among goodwill efforts the company listed: $2 billion in direct customer and consumer support through premium credits and cost-sharing waivers; acceleration of $2 billion in payments to care providers increasing liquidity for the health care system; grace periods on premiums for employers and employees; donation of $5 million to the Mayo Clinic's convalescent plasma study; and distribution of $105 billion in CARES Act funds to care-delivery providers.

The CEO pay ratio was 321-1. The ratio used Wichmann's 2020 total compensation as listed in the proxy, $17.9 million, which includes the grant date value of long-term equity awards but not all long-term stock awards. Compensation for the median employee at UnitedHealth was $55,696.

The company increased compensation for some of its front-line clinic workers and provided employees with enhanced COVID-19 benefits such as full pay if employees needed to be quarantined. The company did not furlough any employees as a result of the pandemic.

Patrick Kennedy • 612-673-7926