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UnitedHealth Group Inc. overcame a sluggish economy to manage 28 percent profit growth last year and rewarded CEO Stephen J. Hemsley by more than doubling his total compensation.
Hemsley, 57, received 2009 compensation valued at $8.9 million from the Minnetonka, Minn., managed care company, according to an Associated Press analysis of data filed with regulators Wednesday.
That included a salary of $1.3 million for the third straight year, a performance-based cash bonus of nearly $2 million and stock options and restricted stock valued at about $5.6 million on the days they were granted. He also received $86,916 in other compensation, including matching contributions to his 401(k) and executive savings plan.
In 2008, Hemsley received total compensation valued at $3.2 million. He saw no option awards that year or in 2007.
UnitedHealth is the largest publicly traded health insurer based on revenue. It also sells wellness programs and information services. The company's profit grew to $3.8 billion in 2009 from $2.9 billion in 2008, when some large one-time charges dragged down performance. Revenue grew 7 percent to $87.14 billion.
UnitedHealth saw its commercial health insurance enrollment sink more than 6 percent last year to 24.6 million, as companies cut jobs in the struggling economy and reduced the number of people receiving employer-sponsored coverage. However, UnitedHealth said in the proxy statement that 2009 revenues, operating income and cash flow surpassed target levels.
The company added that Hemsley's compensation recognized his "overall leadership in positioning (UnitedHealth) for long-term success in a very difficult overall economic environment." Hemsley has served as CEO since 2006.
Shares of UnitedHealth climbed 15 percent to close 2009 trading at $30.48, compared with a 23 percent jump in the Standard & Poor's 500 index over the same span.
Health insurance stocks went through periods of volatility last year, as investors worried about the possible effect on the industry of the recently concluded health care reform debate, swine flu and unemployment, among other concerns.
The Associated Press 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 Securities and Exchange Commission.
Hemsley also exercised options last year to purchase nearly 4.9 million shares of UnitedHealth valued at $98.6 million. A company spokesman said the CEO exercised the options because they were about to expire and did not sell the stock, so he realized no cash value from them.
That sum was not included in AP's calculation of Hemsley's 2009 compensation.
UnitedHealth shares fell $1.06, or 3.3 percent, to $31.10 in Wednesday afternoon trading.