New Haven Register (New Haven, CT)
Report: CEO of Conn.-based Cigna awarded nearly $21M in 2022 compensation
In 2022, the largest companies across the U.S. faced uncertainty that was punctuated by widespread concerns about a potential recession. But those clouds did not deter them from again providing super-lucrative compensation to their top executives.
The median compensation for chief executive officers reached $22.3 million in 2022, according to the 2023 edition of the Equilar 100, an annual study of the American firms with the largest revenues to file by March 31 annual “proxy statements” on key issues — equating to a nearly 8% yearover-year increase among those companies that was driven by the rising value of stock awards. The list included David Cordani, CEO and chairman of Bloomfield-based The Cigna Group, one of the world’s largest health insurers and pharmacy benefit managers, who was awarded compensation that totaled nearly $21 million, ranking No. 66 overall.
“Should CEOs be paid a lot? Yes, but what’s the limit of ‘a lot’?” David Souder, a professor in the Boucher Management and Entrepreneurship Department in the University of Connecticut’s School of Business, said in an interview. “It’s proven very hard to determine where it stops being the appropriate amount of ‘a lot.’ ”
Cordani comprised the sole CEO of a Connecticut-headquartered company to rank in this year’s Equilar 100. His total awarded compensation — which comprised a 6% yearover-year increase — included awards of about $12.6 million in stock and $2.9 million in stock options. He received a base salary of $1.5 million, supplemented by a cash bonus of $3.6 million and around $321,000 in perks/other compensation.
Under the leadership of Cordani, who has served as CEO since 2009 and worked at the company since 1991, Cigna last year produced revenues of about $180 billion, up 4% from 2021, while it recorded a nearly $7 billion profit. Cigna finished 2022 with a total of about 190 million customers.
Based on its 2021 revenues, Cigna ranked No. 12 overall and highest among Connecticut-headquartered companies in the 2022 Fortune 500 list of the largest U.S. corporations.
“Mr. Cordani is one of the longest tenured leaders in health care at a company proudly based in Connecticut, and his compensation is a direct reflection of the value we achieve for those we serve — heavily weighted toward performance-based awards rather than fixed compensation,” Cigna said in a written statement.
The median value of stock awards for Equilar 100 CEOs last year rose by nearly 20%, to $13.8 million — the largest increase across the compensation components. Oftentimes, however, CEOs cannot cash in on stock or options for years, or possibly ever, unless their businesses meet performance goals.
“While 2022 was a turbulent economic year, most awards were granted at the beginning of the year when there was less uncertainty in the market,” Equilar said in a news release. “Nevertheless, the median total return for Equilar 100 companies was down 11.1%, which negatively impacted companies’ willingness to pay a premium bonus — cash bonuses decreased by 5.9% in 2022 to $4.2 million.”
At the same time, this marks the first year for Securities and Exchange Commission requirements for “pay versus performance” (PVP) disclosures. The PVP rules call on publicly traded companies to disclose information about the relationship between “compensation actually paid” (CAP) to a company’s named executive officers and the company’s financial performance. Cordani’s CAP last year amounted to about $57 million, according to Equilar — with that total including performance-based compensation he had earned in previous years.
“Mr. Cordani’s performance-based awards are a direct reflection of his leadership between the time the options were granted, which in some cases date back to 2009, and the time they were exercised,” Cigna said in its statement.
The highest-paid CEO in this year’s Equilar 100 was Peloton Interactive’s Barry McCarthy, whose awarded compensation totaled about $168 million. At No. 2 was Apple’s Tim Cook, whose awarded remuneration amounted to about $99 million.
Equilar’s survey also highlighted the huge gap between CEO compensation and the income of rank-and-file workers. Last year, there was a median ratio of 288 between CEO compensation and median worker pay; the ratio was 254 in 2021. The compensation awarded last year to Cigna’s Cordani equated to about 277 times his company’s median worker pay of $75,627, according to Equilar. Including several thousand employees based in Connecticut, Cigna operates globally with more than 70,000 employees.
At many companies, shareholders weigh in on executive compensation through “say on pay” proposals that let them cast advisory votes. Shareholders typically endorse remuneration, as seen in the results of Cigna’s 2023 shareholders meeting that was held on April 26. About 221 million votes were cast in support of the company’s executive compensation, compared with nearly 30 million votes against, about 18 million “broker non votes” and nearly 612,000 abstentions.
Some progressive elected officials such as Sen. Bernie Sanders, I-Vermont, and Sen. Elizabeth Warren, D-Massachusetts, are unhappy with CEO compensation levels at large companies because they believe their pay constitutes corporate greed that hurts rank-and-file workers. Among their proposals, they have sought to pass legislation that would increase taxes on companies that pay their CEOs more than 50 times the median level.
“The pay disparities raise questions that are very hard to answer,” Souder said. “If you want an experienced chief executive, and they’ve been paid at these (exceptionally high) levels, then you have to also pay at these levels. And nobody wants a below-average CEO. So you end up with these subtle underlying pressures that cause CEO pay to rise.”