UnitedHealth Shareholder Proposes Distinct Chairman And Chief Executive Roles: Report

UnitedHealth Group’s (UNH) shareholder Accountability Board has reportedly filed a proposal seeking an independent chairman of the board, separate from the CEO.

Bloomberg reported on Friday that the nonprofit advocacy group’s proposal, if approved by shareholders, would ask the board to amend the company’s bylaws to codify an independent board chair. Currently, Stephen Hemsley serves as both CEO and chair of the board.

“We were very disturbed to see recently that at such a trying time for UnitedHealth, the company chose to go backward and combine the CEO and chair roles,” Accountability Board President Matt Prescott said, as reported by Bloomberg. Prescott also called for a stronger leadership structure at the insurer while declining to disclose the size of the group’s stake in UNH, the report said. However, he noted that the stake meets the minimum requirement to file a shareholder proposal.

The report noted that it is unclear whether the Accountability Board’s resolution will proceed to a shareholder vote.

Shares of UNH traded 3% higher at the time of writing. On Stocktwits, retail sentiment regarding UNH stock remained within the ‘bearish’ territory, while message volume remained at ‘low’ levels.

Hemsley has been chairman of the company’s Board of Directors since 2017. Before that, he also served as CEO. He was reappointed as CEO in May when Witty stepped down, citing personal reasons, but while retaining his chair position. This is contradictory to UnitedHealth’s principle of governance, which also calls for separate roles, Bloomberg noted.

The insurer issued fresh guidance of full-year revenue of $445.5 billion to $448.0 billion and adjusted earnings of at least $16.00 per share in July after suspending its previous outlook in May, citing higher medical costs. The company had previously forecast adjusted profit of $29.50 to $30.00 per share, nearly double its latest forecast. The company also appointed Wayne S. DeVeydt as CFO in July, replacing John F.Rex.

UNH stock is down 28% this year and approximately 39% over the past 12 months. 

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