UnitedHealth investors approve $60mn pay for returning CEO

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UnitedHealth’s returning chief executive faced shareholder frustration on Monday after commanding a $60mn pay package in his abrupt return to the top of the company, with its stock trading at a five-year low.

After he was named CEO on May 13, Stephen Hemsley was awarded $60mn in stock options that begin to pay out in three years. The pay “raises significant concerns” because it was awarded up front and lacks any performance criteria, according to Institutional Shareholder Services, which recommended UnitedHealth’s shareholders vote against Hemsley’s compensation.

A shareholder asked the board during the meeting whether Hemsley’s pay is justified, but UnitedHealth said his compensation was appropriate. Investors approved the pay package, the company said, but details of the vote were not immediately available.

Hemsley, 72, previously served as UnitedHealth from 2006 to 2017 and oversaw strong growth for the company and its stock. With his return as chief executive, UnitedHealth simultaneously withdrew its earnings guidance. At the company’s annual meeting on Monday, Hemsley said UnitedHealth would publish new earnings guidance on July 29 for the rest of this year and an outlook for 2026.

“Clearly we have got things wrong,” Hemsley said about the company’s performance this year.

Meanwhile, Norges Bank Investment Management, Norway’ s $1.8tn sovereign wealth fund and UnitedHealth’s 11th-largest shareholder, has said it voted against Hemsley because he now holds both the chief executive and chair roles. The company’s share price is down 40 per cent this year, making it the worst performer in the Dow Industrials index.

Governance issues are just one in a litany of challenges facing Hemsley as he retakes leadership of the healthcare giant, after the startling resignation of former head Andrew Witty and the December 4 killing of senior executive Brian Thompson.

Sources close to the company said Thompson, or “BT” as he was known inside the company, was widely seen as the most likely candidate to eventually takeover as chief executive. His killing outside a Manhattan hotel set up a succession problem for the company.

UnitedHealth is one of the world’s largest health companies, providing medical benefits to about 51mn people, including about 1mn outside the US as of December 2024, according to Morningstar. It operates a pharmacy business, and its healthcare services division was the largest caregiver in the US, Morningstar said.

UnitedHealth is fighting with the US justice department over an attempted $3.3bn acquisition of a rival home care provider, while also the subject of another justice department investigation into the company’s Medicare billing. UnitedHealth has said it was unaware of any new investigation. At the annual meeting, the company declined to comment about government investigations, saying it had already disclosed what it was required.

The company’s earnings growth had depended on its acquisitions, said Whit Mayo, an analyst at Leerink, a healthcare investment firm. “A major element of [its] growth has been dependent on the inorganic engine,” he said. Now, with the justice department scrutiny on UnitedHealth, “are they going to be able to buy at the same pace?”

UnitedHealth would be facing a challenging next few months, said Paige Meyer, an analyst at CFRA. The company was still reeling from the Covid-19 pandemic, she said. “People paused their care during the pandemic,” and now that people had resumed services, “costs are extremely high” for UnitedHealth.

Additional reporting by Andrew Jack in New York