The management succession plan announced at UnitedHealth Group on Wednesday also comes with corresponding changes in compensation to reflect the changing responsibilities of executives.
David Wichmann will be promoted to CEO on Sept. 1 and see his base salary rate increase from $1.1 million a year to $1.3 million. In addition, he will be eligible for a larger annual cash incentive and receives additional long-term equity awards including stock options, restricted stock units and performance shares.
Wichmann has done pretty well in his 20-year tenure at UnitedHealth Group. The last two years he has been the highest compensated non-CEO of a Minnesota public company when he took home $25.2 million in 2016 and $30.2 million in 2015, mainly from the realized value of his long-term equity awards.
Conversely, Stephen Hemsley will become executive chairman of the board on Sept. 1 and his annual salary will move from $1.3 million to $1 million per year. Hemsley has had the same $1.3 million annual salary since 2007.
The executive chairman title is a new one at UnitedHealth Group and Hemsley is expected to continue his role in shaping the mission and strategic direction of the organization.
During Hemsley’s tenure as CEO the company’s revenue grew from $71.5 billion to an estimated $200 billion and UnitedHealth added more than 200,000 new jobs during that time, including 17,000 in Minnesota.
Hemsley, who has realized millions from long-term equity awards over the years, has generally held on to those shares after they have vested or he’s exercised options. According to the most recent proxy Hemsley now owns or controls more than 3.7 million shares of UnitedHealth Group which would be valued at nearly $725 million based on the current share price.
The role changes also affect chairman Richard Burke who will become lead independent director and his annual cash retainer will decrease to $75,000.