For the second consecutive year, healthcare CEOs in the Standard & Poor's 500 index were compensated millions of dollars more than their counterparts in other industries, according to an Associated Press/Equilar analysis.
CEOs in the top 500 saw a 4.5 percent increase in compensation across the board. But the highest pay went to healthcare CEOs, who earned a median $14.5 million compared to the lowest-compensated sector, utilities, where chief executives made a median $9.3 million. Healthcare CEOs' earnings represent a 7 percent increase from 2014, according to the analysis.
Among the top earners: Mark T. Bertolini at Aetna, who received $17.3 million, and Joseph Swedish at Anthem, who earned $13.6 million.
The pay increases leave many scratching their heads, as they are nearly double the raise the average American worker saw in the past year, according to the AP. The median CEO raise of $468,449 alone is more than 10 times the average worker's annual compensation. The increased compensation is, in many cases, due to stock or option benefits included in their employment contracts. These options, rather than cash, comprised more than half of median CEO compensation. Other chief executives benefited from their companies' boards hiking their pay to prevent their competition from luring them away.
In another trend, the AP's analysis found an increase in the number of companies tying CEO pay to stock performance. "There's progress generally in aligning compensation with shareholder returns," Stu Dalheim, vice president of governance and advocacy at Calvert Investments, told the AP. "But I don't think this compensation is sustainable long term, because the U.S. population is increasingly focused and aware of the disparity."
However, experts have suggested such compensation packages hurt consumers by rewarding healthcare CEOs for higher share prices, FierceHealthPayer previously reported. A backlash against what detractors see as excessive packages for healthcare CEOs continues to grow, with Connecticut legislators proposing levying municipal property taxes against nonprofit hospitals whose leaders make more than $500,000, FierceHealthFinance previously reported.
To learn more:
- here's the analysis
- read the AP article