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Share this pageShareholders urge WellPoint to oust CEO Angela Braly
Posted by Don McCanne MD on Tuesday, Aug 28, 2012This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Shareholders urge WellPoint to oust CEO Angela Braly
By Chad Terhune
Los Angeles Times, August 28, 2012Investors in health insurance giant WellPoint Inc., which runs Anthem Blue Cross in California, are pressing for a change in top management as criticism intensifies about the company’s lagging stock, managerial missteps and disappointing earnings.
Shareholder complaints about WellPoint’s chairwoman and chief executive, Angela Braly, have grown louder since last month, when the Indianapolis company posted another anemic quarter and cut its full-year profit outlook as its enrollment fell again.
The investor unrest follows years of consumer fury that beset WellPoint as it repeatedly raised premiums on many families and small businesses by 10% or more.
A New York hedge fund, Royal Capital Management, sent a letter to WellPoint’s board last week saying that Braly has “failed miserably” as CEO and that “it is incumbent upon the board of directors to fulfill its fiduciary responsibility to shareholders by changing leadership.”
Other influential WellPoint shareholders, such as Leon Cooperman’s Omega Advisors hedge fund in New York, have expressed similar concerns about the company’s lackluster performance, particularly compared with its chief competitors’, and they have urged the board to replace Braly.
Thus far, WellPoint’s board has voiced strong support for Braly. “The board has been fully involved in the strategy WellPoint is pursuing and is supportive of the strategy and our management team,” Jacquelyn Ward, the company’s lead outside director, said in a statement last month after analysts began questioning management’s performance.
“Braly has presided over the most arbitrary and capricious health insurance rate hikes of our time,” said Jamie Court, president of Consumer Watchdog, an advocacy group in Santa Monica. “Now she is learning the rules of Wall Street: Cross policyholders all you want, but don’t step on the wallets of shareholders.”
http://www.latimes.com/business/la-fi-wellpoint-under-fire-20120828,0,4090962.story
Our politicians have left the private insurance industry in charge of our health care, but what is this industry really all about? As Jamie Court says, “Cross policyholders all you want, but don’t step on the wallets of shareholders.”
Addendum to today’s Quote of the Day on Angela Braly:
Angela Braly resigned today as president and CEO of WellPoint.
It would be a mistake to celebrate this action as some sort of elimination of an evil-doer. She will be replaced. From the perspective of patients, nothing changed.
The action that we need is from the President and Congress. They need to eliminate the private insurers and replace them with an improved Medicare for all. Hold the celebration until we can accomplish that goal.
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Barbara
August 29th, 2012 at 7:30 am
“…Thus far, WellPoint’s board has voiced strong support for Braly. “The board has been fully involved in the strategy WellPoint is pursuing and is supportive of the strategy and our management team,” Jacquelyn Ward, the company’s lead outside director, said in a statement last month after analysts began questioning management’s performance…”
When I read the above paragraph from Don’s QOTD I knew it meant exactly the opposite, even before seeing Don’s addendum that Braly has resigned. When a Board makes this sort of statement it so very often precedes an ouster.
As Don has nicely pointed out, one cannot “step on the wallets of shareholders.”
There is a subtext to the way media discuss and portray “shareholders” and their demands of improved earnings, profits, dividends, etc. This plays into bigger stories about misdeeds, crimes, and misdemeanors committed by corporations. This is because the media buys into, and promotes, the myth that corporate execs should be forgiven for practically anything as they are “just answering to the demands of shareholders.”
WHO are these shareholders? The media, and Wall Street conveniently portray shareholders as individual citizens. And yet, an enormous number of shares traded on the stock exchanges are traded on behalf of the traders’ own accounts, and/or the corporation’s own account. They are their own shareholders. The other “blocks” of so-called shareholders include hedge funds, institutional investors, and sovereign entities outside the USA.
The average person has little control over retirement accounts (if they are fortunate enough to have one) and do not get to “pick” individual stocks to purchase. The average person knows little to nothing about how stocks are traded, or if there is any fundamental value to stocks within a portfolio. Finally, even when one tries to control their hard-earned retirement funds (again, if these exist at all) one is penalized with unaffordable fees.
Funds are invested in giant portfolios. Only the most diligent and investigative person knows where their funds are or how to track a single company. Yet citizen-shareholders are routinely blamed by executives for the “pressure” they apply on them for better performance in the market.
This pervasive myth needs busting.
As for Wellpoint, and Braly stepping down to improve their Wall St., performance, it can only mean more anti-patient moves and more aggressive actions against the unwitting patients who are forced by our system to use Wellpoint as their insurer.