Executives at WellPoint Health Networks Inc. are defending their company’s efforts to merge with Anthem Inc.
Anthem, Indianapolis, announced plans in October 2003 to acquire the bigger, Thousand Oaks, Calif.-based managed care company in a deal with a value of about $16 billion.
Executives at Anthem and WellPoint, which both hold Blue Cross and Blue Shield licenses in several states, say the deal will create a more efficient company that has the market share to be a major player in more markets.
But California Insurance Commissioner John Garamendi and officials at the California Public Employees’ Retirement System are raising questions about a disclosure that 293 WellPoint executives could collect more than $600 million in severance payments, enhanced retirement benefits and stock option benefits if the deal goes through.
CalPERS analysts have predicted that Leonard Schaeffer, WellPoint?s chairman and chief executive, would be entitled to $76 million in deal-related compensation.
WellPoint “and its executives should be required to publicly clarify the exact amount of these bonuses and stock options,” Garamendi said in a statement about the executive compensation plans.
Garamendi has asked California lawmakers for more authority to review the Anthem/WellPoint deal and WellPoint executive compensation practices.
Sean Harrigan, president of the CalPERS board, has called the WellPoint executive compensation package “beyond the realm of excessive.”