Cigna maintains a "flawed" payment scale that has lead to gross overcompensation of its top executives, including CEO David Cordani, according to a union-based investment group.
Based on this allegation, the Change to Win (CtW) Investment Group sent a letter to Cigna stockholders on Tuesday, urging them to reject the insurer's executive compensation vote during its April 25 shareholder meeting, reported the Hartford Courant.
"Cigna has a long track record of overpayment among its executive ranks," said CtW Investment Group Director of Research Richard Clayton said. He specifically called out Cordani's 27 percent increase in pay last year, which amounted to $12.5 million in salary, plus $8.4 million in stocks and options. CtW Investment Group also panned the $8.29 in severance packages that Cigna gave two executives it fired last year.
CtW blamed the inflated payments on Cigna's over-reliance on adjusted income from operations instead of executive performance, the Hartford Business Journal reported. "In this case, the formula for triggering overcompensation is extremely flawed," Clayton said.
"Shareholders should send a clear message that Cigna executives should not be rewarded for the fact that fewer members can afford to seek care," Clayton added. "It is extremely short sighted to think this model of measurement will withstand the test of time."
Cigna, however, said "more than 90 percent" of CEO Cordani's compensation is based on the company's performance, the Courant noted. The company also said its pay policies are based on solid shareholder returns, reported the Business Journal.