Humana Chief Executive Bruce Broussard now has an even greater incentive to close the company’s $37 billion sale to Aetna.
If the federal government approves the merger between the two rivals, Broussard will receive $40.2 million if he resigns or is let go. The “golden parachute” compensation package includes a $6 million severance payout with most of the remaining money coming from cashing out stock, regulatory disclosures reveal.
The potential payout is noteworthy as one of the largest golden parachutes in the health insurance industry. Former Coventry CEO Allen Wise received $14.6 million after the company was acquired by Aetna in 203, and Herbert Fritch of HealthSpring was paid $29.7 million when Cigna bought the insurer.
Broussard’s package bears more resemblance to the $43.9 million golden parachute Michael Ball of Hospira received when Pfizer acquired the pharmaceutical company. It also represents a steep increase from the $16.9 million parachute package reported to be offered to Broussard when the deal was announced last March.
If the US Justice Department gives the merger its approval – instead of finding the deal fundamentally anticompetitive – Broussard will receive much more than his total $10.3 million compensation of the past year. Humana’s chief financial officer, Brian Kane, will also make $9 million if the Aetna deal closes and the company decides it no longer needs him.
The news of both parachutes comes amid efforts by healthcare providers and other groups to halt the recent approval of the merger by state regulators.
The American Medical Association, as well as two Florida medical associations, wrote an open letter late last week to state Attorney General Pam Bondi, urging her to reject the proposal.
The AMA, the Florida Medical Association and the Florida Osteopathic Medical Association told Bondi the merger would worsen an already anticompetitive environment and “eviscerate” physicians’ options to contract with other insurers. This would, they argue, raise the cost of care and restrict patient access to doctors.
An analysis authored by the AMA even suggests that the merger would violate federal antitrust guidelines by limiting competition in highly populated metropolitan areas across the state. Even without the merger, Florida’s health insurance markets are among the most concentrated, with 19 of the state’s metropolitan areas having two health insurers with at least a 50% share of the commercial market.
“Competition, not consolidation, is the right prescription for Florida’s health insurance markets,” AMA President-elect Andrew Gurman said in the latter.
The Florida Insurance Office has already given Aetna approval to acquire Humana, though groups in other states have requested investigations into the proposed merger.
As of January, 15 state attorneys general have joined the federal probe.
Both Aetna and Humana have defended the merger as providing customers with better care – not less choice.
“[The merger] will improve the healthcare system and offer consumers more choices and greater access to higher quality, more affordable care,” said Kristine Grow, an Aetna spokeswoman.
