Molina Healthcare's compensation package for CEO Joe Zubretsky will total roughly $17.8 million this year, essentially on par with what the heads of larger national insurers UnitedHealth Group and Anthem earn each year, according to public filing data analyzed by Bloomberg.
Zubretsky's annual base salary will be $1.5 million under an executive employment agreement approved by Molina's board of directors, according to an 8-K Molina filed with the Securities and Exchange Commission on Thursday. Zubretsky also will receive equity grants worth $15 million this year, which the filing said was determined by comparing compensation packages paid to analogous executives running similar businesses. Zubretsky's retirement, health and life insurance, and other benefits are included in his compensation, Molina didn't specify their dollar value. Zubretsky will be eligible for a target bonus of 150% to 300% of his base salary each year.
The CEO's employment agreement is an update from the deal Zubretsky inked when he joined the company in October 2017, and was set to expire this October, the filing said. In the four years since becoming chief executive, Zubretsky's salary rose by $200,000 and his equity grants increased by $2 million.
Molina Healthcare, based in Long Beach, California, did not respond to an interview request.
"I appreciate the board's expression of confidence in the company's leadership team and our shared commitment to creating value to our constituents," Zubretsky said in a statement. "I am excited to continue executing on our strategic plan."
Zubretsky's compensation is now equivalent to with the CEOs of other major insurers are paid. Zubretsky is earning the same as UnitedHealth Group's Andrew Witty, more than the $17.1 million paid to Anthem's Gail Boudreaux and more than the $16.4 million paid to Humana's Bruce Broussard, according to Bloomberg. Centene CEO Michael Neidorff earns $24.9 million annually, the Bloomberg data show.
On a per-member basis, Zubretsky gets paid far more than his counterparts. At the end of its most recent quarter, Molina had 4.9 million Medicare, Medicaid and health insurance exchange customers. UnitedHealth Group has 49.6 million members, Anthem has 44.3 million, Humana has 17 million and Centene has 25.4 million.
Molina's operating performance may explain Zubretsky's high compensation. During the fourth quarter of 2017—the first quarter Zubretsky headed the company—Molina reported a $269 million loss on $4.9 billion in revenue. During the second quarter that ended June 30, Molina reported $185 million in net income on revenues of $6.8 billion.
Zubretsky assumed the position after the board fired Dr. J. Mario Molina, whose father Dr. C. David Molina founded the company in 1980. At the time they ousted the CEO, the board said the termination was the consequence of disappointing financial performances, but Dr. Molina attributed it to the board objecting to his liberal political beliefs.
"During his nearly four-year tenure, Joe has led the successful turnaround of Molina," Dale Wolf, chairman of Molina's board of directors, said in a statement. "He is now executing on our top-line growth plan with the same tenacity and insight. We are delighted to have him leading the company."