UnitedHealth Group CEO Stephen J. Hemsley's total compensation jumped 24 percent in 2011, a year in which the health insurer's earnings and revenue climbed and its stock price soared.
The largest U.S. health insurer gave its top executive a compensation package valued at $13.4 million, according to a proxy statement filed with the Securities and Exchange Commission. That's up from $10.8 million in 2010.
Last year, Hemsley, 59, received a $1.3 million salary, a $4.9 million performance-related bonus, stock awards totaling $7 million. He also got $154,804 in other compensation, consisting mostly of company matching contributions under an executive savings program.
Hemsley's salary has stayed at $1.3 million for several years, and more than half of his compensation last year came in the form of stock awards, the value of which will ultimately depend on how the company does.
UnitedHealth Group Inc. did well in 2011. Earnings climbed 11 percent to $5.14 billion, or $4.73 per share, and revenue rose 8 percent to top $100 billion. The insurer raised the quarterly dividend it pays shareholders to 16.25 cents per share, and its stock price soared 40 percent to close the year at $50.68.
Health insurance is UnitedHealth's biggest business by far, and it saw enrollment grow 5 percent to 34.6 million people last year.
Lower-than-expected growth in health-care use also helped insurers beat earnings expectations over the past several quarters, and investors gravitated more to their shares last year, as they learned that some initial provisions of the health care overhaul law would not have as big of an impact on the industry as initially thought.
Hemsley has served as CEO since 2006, and his compensation has climbed considerably since he received a total of $3.2 million in 2008, when the company's stock fell 54 percent and its earnings tumbled.
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 some cases from the total reported by companies to the SEC.
Hemsley also made about $41.7 million last year from previously awarded stock units that vested or options that he exercised. That total was not included in AP's calculation of his 2011 compensation.