Health Care 

CEO of UnitedHealth Earned $457,000 Per Day

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If you’re a fan of the National Football League, you’ll recognize my next reference and the source of an astounding statistic. Former CEO of UnitedHealth, William McGuire, earned about $1.6 billion over 14 years. That’s an hourly rate of $57,000 for someone at the center of the backdating stock options scandal.

New Record for CEO Gluttony: Last week William McGuire, CEO of insurer UnitedHealth and a centerpiece of the latest corporate-boardroom scandal (backdated stock options) agreed to leave the company. The Wall Street Journal estimated that for his 14 years running UnitedHealth, McGuire pocketed a total of about $1.6 billion. That’s $457,000 per day, or $57,000 per working hour. So McGuire paid himself more per hour than the median American annual household income. And this was during a period when UnitedHealth was cutting benefits to those it insures, cutting benefits received by its own workers, and cutting payments to physicians and hospitals for health care. Obviously this greedy little man is beyond disgrace: To experience disgrace, one must have a conscience. But why isn’t McGuire’s $1.6 billion simply considered theft from shareholders? UnitedHealth is a public company, and there is no possibility the fantastic amount was justified by market forces — that is, that the UnitedHealth board could not have found a similarly qualified CEO for less than $1.6 billion.

via Tuesday Morning Quarterback on ESPN.

{ 4 comments, please add your thoughts now! }

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4 Responses to “CEO of UnitedHealth Earned $457,000 Per Day”

  1. Mike says:

    The backdating options scandal is not something I’d condone, and overall I do think companies go overboard on compensating their top executives. However, I would point out that the “cutting” of benefits/payments part might be precisely part of the reason why he was rewarded so highly–I checked the performance of UNH stock over the last 10 years, and the share price has gone from about $7 to $64 (and then back down to about $48) in that time, with a current market capitalization of over $67 Billion. So in the last decade he’s increased the company’s share price about 1000%, while during the same timeframe the S&P500 went up 100%.

    CEOs are generally given very lucrative performance bonuses to make their companies more profitable and to grow them faster. The best CEOs in the world generally want a piece of the action–they want some percentage of the money they’re making for shareholders. This guy outperformed the S&P500 by about 10 times over the last 10 years, which means UnitedHealth shareholders have probably been pretty happy campers (at least until this recent scandal). If Mr. McGuire had not produced that kind of profitability and growth, he probably would have been replaced, or at the very least not compensated so handsomely.

    Like I said, I do think companies go overboard on paying top execs, but at the same time, if you’re looking for top performers for a job that hardly anyone can do, you don’t start by picking the lowest bidder. That’s not how hollywood does it, it’s not how professional sports does it, and it’s not how corporations do it. Did you balk at Michael Jordan’s salary in his peak performance years because the Bulls could have found a “similarly qualified basketball player” for less?

    Put another way, if hypothetically there was another CEO that would have worked for 1/10th the price ($160 million over the 14 years), but because he didn’t want to cut benefits to the insured or physicians and workers, only produced half the growth in the earnings and share price ($32 billion market cap instead of $64 billion), which is the better deal for shareholders? If you were investing your money looking for the best return, would it be worth paying the extra $1.5 billion in pay-for-performance compensation to the CEO to get the extra $32 billion in shareholder value?

  2. blog reader says:

    This guy should be publicly tarred and feathered. At the very least he should have a special section reserved in hell. It’s a real shame to hear the increasing number of stories about over-paid executives. While some do raise a good amount of value to their companies, most just exploit their companies while putting on quarterly dog and pony shows to wall street.
    Unfortunately, it’s a national tradition in the US to let a select few reap the rewards earned by the masses. It’s upsetting though to see that after the Great Depression, the savings & loan scandal, and after the dot-com bust we continue to let this cycle repeat. We must be fools. Only a fool would allow these jerks to get away with this. Why do we allow our government representatives to continue the corporate shell game anyway?
    Let’s also not forget the giant elephant in the room. Virtually all of the offenders are white men. That says enough by itself. Just recently there was alot of news coverage of the US population growing to 300 million. A growing number of people in the US no longer fit the profile of the those who are allowed to endlessly collect our national wealth. This can’t continue. Something will have to change folks. Right ?

  3. Golbguru says:

    That is obscene. Are “rich” people having a problem with ethics? $57,000 an hour ! I am pretty sure that’s still not enough for him.

  4. Randy says:

    My initial reaction to this is horror. And I guess it still is after I decided to do some quick math for the greatest investor of all time that is also considered one of the most ethical business leaders of all time, Warren Buffet. Some of the numbers are approximate, so bear with me.

    Net Worth: ~$35 billion

    $35B / 40 years / 365 days / 24 hours = a little under $100K/hour over a 40 year period.

    Which also happen to be about the current stock price ($100K) and is also what his yearly salary from Bershire-Hathaway is.

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