- As You Sow, a nonprofit foundation promoting corporate responsibility, is calling out Centene CEO Michael Neidorff as among the 25 most overpaid CEOs in the S&P 500.
- The executive, who has been with Centene for more than two decades, is the only non-pharma healthcare player in the top 25. CVS Health's Larry Merlo (No. 33) and Cigna's David Cordani (No. 77) round out payers in the top 100.
- This is the second year in a row the chief executive has appeared in the top fourth of the list, which tacks up CEO compensation versus company performance. Centene defended the paycheck Wednesday as in line with industry standards.
With healthcare costs rising faster than inflation, industry executives are ripe targets for criticism over compensation. Many CEOs say their pay is justified as its connected to higher profits and earnings for their shareholders.
Centene, among the biggest publicly traded managed care companies after its acquisition of WellCare last year, paid Neidorff $26.1 million in 2018 according to the company's last proxy filing in March, almost 400 times more than the average pay of its workers and a 3.4% bump from the year prior.
As You Sow estimates he is overpaid by $12.6 million.
The watchdog looked at total disclosed compensation reported under SEC requirements, including equity and stock option awards. It then compared compensation to what it would be if it were based on cumulative total shareholder return over the past five years, calculated using a statistical regression model, also taking into account shareholder votes on CEO pay and the CEO-to-worker pay ratio.
Employee compensation at Centene, which brought in $75 billion in revenue and $1.3 billion in profit last year, is based on on "industry-standard metrics" for their position, along with the overall performance of the company, spokesperson Marcela Hawn told Healthcare Dive. The compensation package for executive officers is compared to competitive market data and approved by Centene's board.
"Our company has long sought to compensate all employees with competitive packages," Hawn said. More than a quarter of investors voted against Neidorff's compensation package in its 2019 annual meeting in April, according to As You Sow.
Neidorff is No. 16 on the overall list, which is led by Oracle's CEOs Mark Hurd and Safra Catz ($216.6 million), Align Technology's Joseph Hogan ($41.8 million) and Walt Disney's Robert Iger ($65.6 million), who abruptly stepped down as the media powerhouse's chief executive Tuesday afternoon.
Merlo and Cordani, the other two payer CEOs on the list, received compensation of $21.9 million and $18.9 million in 2018 and have a worker pay ratio of 618:1 and 298:1, respectively. According to the report, Merlo is overpaid by more than $10 million and Cordani is overpaid by more than $6 million.
Pharmaceutical CEOs also pepper the list, including Regeneron CEO Lenoard Schleifer at No. 25, Johnson & Johnson CEO Alex Gorsky at No. 28 and McKesson CEO John Hammergren at No. 37. Top pharma executives are often maligned for raking in salaries in the millions.
But despite ever-rising healthcare costs on the average consumer, hospital CEO pay by comparison has risen only modestly compared to other industries, growing roughly 3% annually. For-profit health system HCA's R. Milton Johnson is the only hospital executive on As You Sow's list, ringing in at No. 49.
The report, authored by Executive Compensation Program Manager Rosanna Landis Weaver, recommends shareholders vote against CEO pay packages to check rampant compensation growth. Opposition to excessive pay seems to be growing, as so-called "say-on-pay" proposals mid-2019 received some of the highest investor opposition rates since they were introduced to U.S. ballots in 2011, according to proxy advisory firm Institutional Shareholder Services.