Aetna CEO Has a $131 Million Golden Parachute

Aetna Inc. CEO Mark Bertolini has the most to gain among top executives at the three U.S. health insurers seen as targets in a potential wave of industry consolidation.

Bertolini could receive $131.3 million should he lose his job in a takeover, according to data compiled by Bloomberg. Cigna Corp. Chief Executive Officer David Cordani would get $58.7 million, while Humana Inc. CEO Bruce Broussard’s so-called golden parachute is valued at $26.1 million.

The five biggest publicly traded insurers are all eyeing potential combinations after a two-year lull in big managed-care deals. Anthem Inc. has explored a takeover of Cigna and Humana, and Aetna and Cigna have considered buying Humana, Bloomberg has reported. The Wall Street Journal has said UnitedHealth Group Inc. might be interested in Aetna or Cigna.

We “expect this merger frenzy will culminate in a ‘Big Three’ that is a more efficient industry landscape,” Ana Gupte, an analyst at Leerink Partners, said Tuesday. Humana is likely to be acquired by Aetna or Anthem for $200 to $225 a share, she wrote.

The change-in-control payouts are meant to keep investor interests in mind.

“These protections provide a certain level of comfort for executives to put aside their personal issues and think, ‘What’s in the best interest of shareholders?’” said Yonat Assayag, a partner at ClearBridge Compensation Group, an executive pay consulting firm. “The amounts may seem large, but the cost compared to the value that’s created for shareholders is usually a very small percentage.”

Rising Stocks

Spokesmen for Cigna and Aetna said they had no immediate comment. A Humana representative didn’t immediately respond to a request for comment.

Speculation over takeouts has helped drive managed-care stocks higher this year. Cigna is up 50 percent, Aetna has gained 41 percent and Humana has jumped 39 percent.

The largest part of Bertolini’s payment would come from early vesting of equity awards valued at $125.3 million as of Tuesday. It also includes $2 million in salary, about $370,000 in pension benefits, and a $3.6 million bonus, according to Aetna’s proxy statement.

Humana’s CEO Broussard would receive a $5.6 million cash severance, about $517,000 in pension and other benefits, and early vesting of options and restricted shares valued at $20 million.

Cigna’s Cordani would get $9.95 million cash severance, about $1.1 million in pension and other benefits, and early vesting of equity worth $47.7 million.