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United Health CEO earned $124.8 million in 2005

February 14, 2006 in Current Events, Health Insurance

Forbes magazine reports that William W. McGuire, CEO of UnitedHealth Group) received compensation of $124.8 million in 2005. Managed Care Magazine also says that the average executive compensation (excluding unexercised stock options) for an executive of a ‘top 10 for profit health plan’ was $11.7 million and that was back in 2000.
Are these high salaries a good for the welfare of American citizens?​

Liberals would state that this is an outrage. The Dissident Voice website abhors these “robber barons” stating:

William McGuire of UnitedHealth Group, the nation’s leading insurer, was the third-highest paid CEO on the Forbes list. His pay of $124.8 million could cover the average health insurance premiums of nearly 34,000 people….​

While workers are having a tougher time making ends meet, CEOs are getting perks worth more than worker paychecks. CEO freeloaders expect perks such as lifetime use of company jets, chauffeured cars, company apartments, club memberships, sports tickets, financial planning, personal assistants and more. ​

In CEO World, the more money you make, the less you should have to pay for.​

BusinessWeek’s profile of McGuire is much more complimentary. It shows how McGuire has helped increase consumer choice in the marketplace.

When McGuire took over in 1991, UnitedHealth was little more than a regional health-maintenance organization. By trying to offer something for every-body and identifying lucrative niches, McGuire, now 55, has turned it into one of the most diversified health-services companies. If you don’t like the restrictions of an HMO plan, you can sign up for a preferred-provider organization. Belong to AARP? You can sign up for a special drug-discount card…​

[McGuire has also] set up a program to track cardiology centers of excellence, so that patients can find the best places for treatment.​

Economists generally would not have a problem with the large compensation in a competitive marketplace. Firms who pay executives more than their marginal productivity will lose money and competitors with less expensive CEOs could earn more profits.
McGuire does seem to be a productive CEO; according to Forbes UnitedHealth Group returns are 19% higher than the S&P 500 over his tenure. Further, the majority of McGuire’s compensation was in the form of stock options. With stock options, however, it is dificult to ascertain what amount was given as compensation (amounts below the current value of the stock) and which amount was due to increased productivity which raised the stock price.
So what is the solution? Regulating CEO salaries is not desirable. Shareholders should be the ones who are outraged at the compensation which is cutting into their profits. If the health care insurance market is not competitive, United Health can pass on the cost of McGuire’s salary to consumers. I believe that the health insurance market is very competitive and this is not an option for united health. Thus, the ones who truly suffer from the large CEO salary are United Health shareholders. If citizens wish for a more equitable society, that can be accomplished with a more progressive tax structure. While seeing exorbitant CEO salaries highlights the sad inequitities of society, putting a cap on salaries is not the solution.

 

[dime line]

April 9, 2007
RE: United Airlines CEO and executive compensation
Dear Representative:
The alarming growth in wage disparity between executives and workers in this country is in critical need
of Congressional attention. I call your attention to a gross example of this disparity that is emerging at
United Airlines, where I represent 17,000 Flight Attendants in the Association of Flight Attendants-CWA.
United Airlines CEO Glenn Tilton received $39.7 million in 2006, including salary, bonus, incentives,
perks, above-market returns on deferred compensation and the estimated value of stock options and
awards granted during the year. At the same time, United Flight Attendants continue to experience lifechanging
wage, healthcare and work rule concessions, along with termination of their pension plan.
Incredibly, Tilton’s 2006 compensation exceeded the airline’s entire annual profit of $25 million reported
by United’s parent company UAL, Inc (UAL).
The United CEO and senior executive compensation package outpaced other corporate executive
compensation by large margins. The Corporate Library, a corporate governance watchdog group,
surveyed the proxy filings of 1,000 large U.S. companies and found that overall CEO compensation in
increased at a rate of 16% in 2005 and 9.29% in 2006. By comparison, UAL Securities and Exchange
Commission filings show Tilton and his suite of senior executives received increases in compensation
equaling 40% on a year-over-year basis, as well as bonuses throughout the company’s bankruptcy.
This troubling trend continues post-bankruptcy, in addition to generous stock rewards. The Institute for
Policy Studies – United for a Fair Economy, reported in 2006 that executive wages were 411 times the
average pay of workers. At United, Mr. Tilton’s executive compensation is 1,000 times what a Flight
Attendant earns on average at the top of the pay scale, or over 2,000 the pay of a new hire.
The airline industry is expected to report record profits in 2007 after a traditionally slow first quarter.
The Air Transport Association (ATA), an airline trade group, conservatively forecast industry annual
profits to be $4 billion this year, and some analysts predict that the industry could top the record profits
of approximately $5.4 billion set in 1999. The dedication, sweat and sacrifice of all United employees
have led United Airlines on the road toward sustained profitability. Shared sacrifice must now equal
shared rewards. We are insisting that United Airlines executives uphold this premise promulgated by
them during the course of bankruptcy and share the financial rewards management currently enjoys.
The House Financial Services Committee proposed legislation (H.R. 1257) would let shareholders
register disapproval of executive pay packages without the government directly regulating pay. This
legislation is a step in the right direction and we encourage you to support it. We also believe that more
must be done to provide solutions for workers who are suffering at the hands of executive greed.
We call on Congress to act and end the disparity that exists between worker and executive
compensation.
Sincerely,
Greg Davidowitch, President​

United Master Executive Council

 

[Galaxy]

LCCs have completely different missions than legacy carriers, they are apples and oranges. If LCCs attempted to accomplish what legacy carriers do, they are actually a lot less effiecient and could never pull it off and be profitable like legacy carriers are on international routes.

Even the most expensive CEO contract is pennies compared to a CBA and is a drop in the bucket compared to revenue. Not even a valid argument.

Well, I hate to tell ya that those apples are causing the oranges to go bankrupt because none of them will charge the true costs to cover expenses and make a profit.
Keep in mind that both groups agreed to the CBA. You make it sound like the union just did the old grab and run.
I understand you don't like unions...but unfortunatly in this and many other industries they are a much needed protection from greedy groups that would have them working for min wage.

 

[Galaxy]

April 9, 2007
RE: United Airlines CEO and executive compensation
Dear Representative:
The alarming growth in wage disparity between executives and workers in this country is in critical need
of Congressional attention. I call your attention to a gross example of this disparity that is emerging at
United Airlines, where I represent 17,000 Flight Attendants in the Association of Flight Attendants-CWA.
United Airlines CEO Glenn Tilton received $39.7 million in 2006, including salary, bonus, incentives,
perks, above-market returns on deferred compensation and the estimated value of stock options and
awards granted during the year. At the same time, United Flight Attendants continue to experience lifechanging
wage, healthcare and work rule concessions, along with termination of their pension plan.
Incredibly, Tilton’s 2006 compensation exceeded the airline’s entire annual profit of $25 million reported
by United’s parent company UAL, Inc (UAL).
The United CEO and senior executive compensation package outpaced other corporate executive
compensation by large margins. The Corporate Library, a corporate governance watchdog group,
surveyed the proxy filings of 1,000 large U.S. companies and found that overall CEO compensation in
increased at a rate of 16% in 2005 and 9.29% in 2006. By comparison, UAL Securities and Exchange
Commission filings show Tilton and his suite of senior executives received increases in compensation
equaling 40% on a year-over-year basis, as well as bonuses throughout the company’s bankruptcy.
This troubling trend continues post-bankruptcy, in addition to generous stock rewards. The Institute for
Policy Studies – United for a Fair Economy, reported in 2006 that executive wages were 411 times the
average pay of workers. At United, Mr. Tilton’s executive compensation is 1,000 times what a Flight
Attendant earns on average at the top of the pay scale, or over 2,000 the pay of a new hire.
The airline industry is expected to report record profits in 2007 after a traditionally slow first quarter.
The Air Transport Association (ATA), an airline trade group, conservatively forecast industry annual
profits to be $4 billion this year, and some analysts predict that the industry could top the record profits
of approximately $5.4 billion set in 1999. The dedication, sweat and sacrifice of all United employees
have led United Airlines on the road toward sustained profitability. Shared sacrifice must now equal
shared rewards. We are insisting that United Airlines executives uphold this premise promulgated by
them during the course of bankruptcy and share the financial rewards management currently enjoys.
The House Financial Services Committee proposed legislation (H.R. 1257) would let shareholders
register disapproval of executive pay packages without the government directly regulating pay. This
legislation is a step in the right direction and we encourage you to support it. We also believe that more
must be done to provide solutions for workers who are suffering at the hands of executive greed.
We call on Congress to act and end the disparity that exists between worker and executive
compensation.
Sincerely,
Greg Davidowitch, President​

United Master Executive Council

But DL...B19 said it was the unions fault...

If he said it is so it must be....A LIE!

 

[Galaxy]

B19 said a CEO contract a drop in the bucket....


United Airlines CEO Glenn Tilton received $39.7 million in 2006,
Incredibly, Tilton’s 2006 compensation exceeded the airline’s entire annual profit of $25 million reported
by United’s parent company UAL, Inc (UAL).


That's a big UPSIDE DOWN bucket.

 

[dime line]

yea how is it a CEO can make more than the COMPANY? I don't get that one. Dam union, thats what!!

 

[dime line]

Lets not forget, FLOPS (Shtffing rule) was crying poor, broke, and everything else, but yet we still had money to fly salesman (and there wives, and girlfriends) on personal shopping trips, and most of upperlevel management's families in the airplanes.

note: I have not problem with management using the plane, its the "were broke, were not making money" and using the planes for personal use that i have a problem with.

 

[waka]

I don't have to know the real issues at FLOPS. I do understand and have worked intensely with unions in the past, and they ALL work the same.

This is yet another statement that illustrates how out of touch you are with reality

One thing I do know, is that on this board NOTHING has been said about the 128 unless it's been prompted. Lots of chest beating to show how wonderful 1108 is regarding the 70, but not a single moral or ethical statement regarding the coworkers caught up in the same mass firing unless prompted.

FYI, they have families too. Their existance within the company has a purpose and reason, no different than a pilot, regardless of the job function they perform.

By not mentioning anything about these 128, it shows the continued selfishness nature of union supporters. To hell with everybody else, as long as they get their way.

There actually has been mention of the others. However, this is a forum for fractional pilots and the 1108 happens to be a local for pilot's union. (geeez! No one can be that stupid!) Anyway, again, show me one a airline that has an all encompassing union.....since you missed that in your question dodging modus operandi.

 

[waka]

You have a responsibilty to fly the airplane on the flight, that is all. By the time you get to the aircraft, all the hard work is done.

Who are the people that set up your procedures and programs, unions? NOT!

Who does the hiring, the training and purchases the equipment, computers and software to run the company, unions? NOT!

The entire infrastructure of any company, airline or otherwise is designed and maintained by non-union workers.

You and those around you depend on non-union workers for your mere existance as a pilot. It's a non-union worker that writes your paycheck and a non-union worker that signs your paycheck.

Your thinking that it takes a union pilot to accomplish what non-union workers have prepared is laughable at best, yet when a union wants a raise they are willing to crap all over those non-union workers to get what they want.

On most accidents, the chain of events starts elsewhere and rarely with a pilot. Mechanics and support personnel have just as much responsibility than a pilot does, if not more. Ever hear of SMS?Safety starts with senior managment, not with the pilot.

The rest of the company has the responsiblity to ensure the safety for the entire company and passengers to an extent that is far greater than that of a pilot.

Unions don't help safety, they hinder safety.

It has been repeatedly demonstrated that FLOPS safety department has no teeth and it is the union's safety committee that has accomplished more for safety than management. Idiot.

Your first statement in the above quote affirms that the traveling public and aviators are better off that you lost your medical and are not in command or second in command of any aircraft. Did management have anything to do with how many survived on United 232? I said it before, the profession is better off without you......good riddance.

 

[skanza]

Lets not forget, FLOPS (Shtffing rule) was crying poor, broke, and everything else, but yet we still had money to fly salesman (and there wives, and girlfriends) on personal shopping trips, and most of upperlevel management's families in the airplanes.

note: I have not problem with management using the plane, its the "were broke, were not making money" and using the planes for personal use that i have a problem with.

Dime, on this one I totally agree with you. If the company is "broke" and everybody has to sacrafice to survive, that should mean everybody. Flying these people around for personal trips may be part of thier compensation package, but that doesn't mean they have to do it. What's it cost per hour to fly a Beechjet???