UnitedHealth Group Inc. is giving Stephen Hemsley a one-time US$60 million equity award on top of a $1 million base salary as he begins his second round as chief executive officer of the beleaguered insurer.
Hemsley, the company’s board chair and former CEO, will also get additional personal security benefits following the December murder of UnitedHealth’s top insurance executive, according to a Wednesday filing.
UnitedHealth on Tuesday unexpectedly replaced CEO Andrew Witty, who resigned “for personal reasons.” Witty notified the company of his decision to step down on May 12, the company said, noting that he will continue as a senior adviser to the insurer.
The company also suspended its 2025 earnings guidance, sending its shares down 18% and shaving $61 billion off its market value. The shock disclosures raised questions over how a company that was once regarded as a safe bet by investors got its cost predictions so wrong.
Hemsley, 72, first joined UnitedHealth in 1997 and served as CEO for about a decade starting in 2006. Throughout his tenure, the company’s growth skyrocketed as it expanded into areas such as pharmacy benefits and care delivery.
As part of the change, Hemsley will stop getting compensation as a board director. He also won’t get an annual cash award. The one-time $60 million equity award is in nonqualified stock options that vest after three years and there will be no additional annual equity awards during those first three years of Hemsley’s tenure.
The filing did not outline an exit package for Witty. Company representatives didn’t respond early Wednesday to a question about whether he would get one. Witty’s employment agreement says he’s entitled to severance only if he’s terminated without cause or leaves “for good reason.”
Hemsley’s salary will be lower than what Witty was paid. Last year, Witty got $1.5 million in base pay and a cash incentive bonus of the same amount, according to a company filing. Counting stock and options awards, Witty’s total compensation in 2024 was over $26 million.
In 2016, Hemsley’s last full year as CEO, he was paid almost $18 million in salary, bonus and stock awards, according to a filing.
John Tozzi, Bloomberg News
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