Per Crain's - who hides their content behind a paywall...but here you go, just in case you were wondering! Also reported HCSC spent over $400 million to acquire Trustmark, about 10 times what they paid to acquire BCBS of Montana.
HCSC told Crain’s its leadership pay is “in line” with that of other similarly sized health insurers and justified Smith’s $20.6 million bonus in 2022, saying that under his direction the firm has expanded access to health care coverage despite recent industry and economic challenges. Smith was promoted to CEO in 2020 after serving in several other leadership roles over a more than 30-year tenure at the company. He has led the company to grow its membership and revenue, expand its digital capabilities and increase its community impact, including creating local jobs, HCSC spokeswoman Colleen Miller told Crain in a statement, adding that executive compensation is determined by HCSC’s board of directors with input from other independent advisers. “Compensation decisions are based on competition in the industry for talent as well as near- and long-term performance standards, including benefits to members such as expanded access to coverage and efforts to help control the rise in medical costs”, she continued. John Blank, a managing partner in the Nashville office of executive search firm Caldwell, says Smith’s $22 million paycheck is on par with the insurer’s peers. “If you look at the top 10 insurance companies . . . you’re in the 20s,” he said. Proxy statements show Molina Healthcare paid CEO Joseph Zubretsky $22.1 million last year in a combination of cash, stock and option awards. Similarly, Elevance Health, formerly known as Anthem, paid CEO Gail Boudreaux $20.9 million last year and Humana paid its chief executive Bruce Broussard $17.2 million. Cigna paid CEO David Cordani $21 million, but he also serves as the company’s board chair.
Unlike his peers to which he's compared, Smith is paid strictly in cash because the company doesn't have a publicly traded stock. Cash compensation is generally considered more valuable than stock because there are no vesting periods and recipients can invest it however they choose. Meanwhile, HCSC gives unusually high pay to its board chairman, Carroll, who was paid $9.4 million in 2022. In stark contrast, Molina, Elevance and Humana paid their board chairs about $558,000, $585,000 and $605,000, respectively. All other HCSC board members made considerably less than Smith, with compensation ranging from $62,000 to $321,000. HCSC declined to disclose how many hours or days worth of work Carroll completes in a month but said he “dedicates significant time to matters of critical impact to the company, including strategic direction, board governance and oversight and company stewardship.” Carroll has served on HCSC’s board for 25 years, but his current term expires next year, according to HCSC’s website.
Following Carroll was Executive Vice President of Commercial Markets Dr. Opella Ernest, who saw her pay rise 34% to $7.7 million. HCSC spent at least $12 million in 2022 on now former executives. Jeffrey Tikkanen, formerly an executive vice president and special adviser, and Stephen Hamman, former president of Blue Cross & Blue Shield of Illinois, were paid $7 million and $5 million, respectively. Altogether, the 10 highest-paid employees at HCSC received a combined $70 million last year, up 27% from 2021. The raises came in the same year that HCSC saw profits jump 20%, which the company attributes to a growing customer base and a decrease in claims related to COVID-19 care. In its annual report, published in May, HCSC reported net income climbing to nearly $1.5 billion as revenues reached $49.3 billion in 2022.Despite some wins last year, HCSC was also fined $339,000 for allegedly violating Illinois law when, according to state regulators, it failed to detail changes to its network on time after terminating a contract with Springfield Clinic, a move that attracted criticism. HCSC's Blue Cross Illinois plan has grown to become the state’s largest insurance provider, with 77% of the market as of 2021, the most recent data available. Aside from Illinois, HCSC owns and operates other Blues plans in Montana, New Mexico, Oklahoma and Texas. Unlike its insurance peers, many of which are publicly traded companies required to disclose full financial and compensation records on a quarterly and annual basis, HCSC classifies itself as a "mutual legal reserve company," meaning it is customer-owned and operates like a private nonprofit.