Cigna CEO sees compensation jump 25 pct in 2011
Cigna Corp. CEO David M. Cordani's total compensation climbed 25 percent last year, as the nation's fourth-largest health insurer launched a $3.8 billion acquisition, and its stock outperformed the broader market.
Cordani, 46, received compensation valued at $18.9 million last year from the Bloomfield, Conn., company, according to an Associated Press analysis of a regulatory filing Monday.
That included the same salary Cordani received in 2010 — $1 million — and a performance-related bonus that climbed 27 percent to $9.3 million. Cordani's stock and options awards totaled nearly $8.5 million, also up 27 percent from the previous year.
The executive, who became CEO in 2010, also received $62,865 for security alarm installation and maintenance in 2011 after the company gave him $48,733 for the same thing the previous year.
Health insurers have taken criticism in recent years for giving their top executives big compensation hikes while the cost of insurance continues to outpace inflation and growth in wages. But insurers have said executive compensation makes up a small part of their total expenses, and the biggest driver behind the growing premiums for their coverage is the spiraling cost of health care.
Cigna is the fourth-largest commercial health insurer in the United States, based on enrollment. The insurer said in a proxy statement filed with the Securities and Exchange Commission that Cordani's leadership helped it grow last year.
Cigna's earnings fell slightly last year to $1.33 billion, or $4.84 a share, while its medical membership rose slightly to 11.5 million people. Revenue climbed 3.5 percent to $22 billion in 2011.
Cigna said the earnings dip reflected higher losses from a segment it discontinued several years ago that operates in run-off mode, meaning it seeks no new business for it. It said losses from that guaranteed minimum income benefits business were due mainly to lower interest rates, and that performance countered higher overall earnings from the company's ongoing businesses.
Cigna has a broader business mix than some of its competitors. It also has an international segment that sells individual insurance in several countries, and it operates an expatriate business that covers people living outside their home countries.
The insurer launched a joint-venture in India and new operations in Turkey, and Cordani "continues to position Cigna as a leading global health services company," the proxy statement said.
The CEO also received praise from the company for leading Cigna's pursuit of key acquisitions.
In October, Cigna announced its $3.8 billion purchase of Nashville, Tenn.-based HealthSpring Inc., a deal aimed to strengthen Cigna's Medicare Advantage business, a segment of the market expected to grow quickly as baby boomers age and become eligible for the plans.
Medicare Advantage plans are privately run versions of the government's Medicare insurance program for the elderly and disabled. Cigna had about 45,000 Medicare Advantage customers when the deal was announced, while HealthSpring had about 340,000 and another 800,000 Medicare prescription drug plan members. The acquisition closed earlier this year.
Overall, the price of Cigna shares climbed nearly 15 percent in 2011 to close the year at $42, while the Standard & Poor's 500 index was largely flat.
The Associated Press executive compensation formula is designed to isolate the value the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don't include changes in the present value of pension benefits, making the AP total different in most cases from the total reported by companies to the SEC.
