Steve Nelson
CVS HEALTHAbout Steve Nelson
Steve Nelson is Executive Vice President and President of Aetna at CVS Health, joining the leadership team as part of the 2024 executive updates to accelerate performance improvement at Aetna . He previously served as CEO of UnitedHealthcare, where he led commercial and government businesses to improvements in growth, profitability, employee engagement, culture, and customer satisfaction . Under his leadership, Aetna reported industry-leading Medicare Advantage Star Ratings for 2026 (over 81% of MA members in 4+ star plans; over 63% in 4.5-star plans) , and the Health Care Benefits segment showed year-over-year improvement in Q3 2025 with adjusted operating income of $314 million vs. an adjusted operating loss of $924 million in Q3 2024 while MBR improved to 92.8% from 95.2% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| UnitedHealthcare (UnitedHealth Group) | Chief Executive Officer | — | Led commercial and government businesses to significant improvements in growth, profitability, employee engagement, culture, and customer satisfaction |
Fixed Compensation
- Nelson was not a Named Executive Officer (NEO) in FY2024; his specific base salary, target bonus, and actual bonus were not disclosed in the 2025 proxy’s Summary Compensation Table .
- CVS sets executive base salaries via the MP&D Committee’s annual review, benchmarking against peers and adjusting for role scope, experience, and market conditions .
Performance Compensation
- CVS long‑term incentive (LTI) design for executives (2025 program) emphasizes performance equity with a mix of 60% PSUs, 20% RSUs, and 20% stock options, an rTSR modifier, and a one‑year post‑vest holding period on net PSU shares . RSUs and options vest in four equal annual installments beginning on the first anniversary of the grant . PSUs granted in 2024 vest after three years (Apr 1, 2027) subject to continued employment and metrics, with a one‑year post‑vesting hold .
PSU Structure and Metrics (Company Program Design)
| Component | Weighting | Metric Design and Notes | Vesting |
|---|---|---|---|
| PSUs | 60% | 70% weighting on 3‑year cumulative Adjusted EPS; 30% Strategic Scorecard; rTSR modifier; strategic metric curves range from 40% payout at threshold to 200% at maximum performance | Cliff vest at 3 years; one‑year post‑vest hold on net shares |
| RSUs | 20% | Time‑based retention equity | 25% per year over 4 years starting year 1 |
| Stock Options | 20% | Granted at FMV; value only if stock rises; time‑based | 25% per year over 4 years starting year 1 |
Strategic Scorecard (30% of PSU funding)
| Metric | Weight |
|---|---|
| % of Medicare members in 4+ Star plans (3‑year period) | 10% |
| % of Commercial members on CVS CostVantage by end of 2026 | 10% |
| % of unique customers with 2+ CVS offerings by end of 2026 | 10% |
Annual cash incentive (MIP) framework for executives uses: Target % of salary × eligible earnings × Corporate Performance Factor × Individual Modifier (0–120%) × Workforce Modifier (downward only, up to 10%); capped at 200% of target . Steve Nelson’s individual MIP outcomes are not disclosed .
Equity Ownership & Alignment
- Stock ownership guidelines cover ELT and all corporate‑level EVPs/SVPs, requiring compliance within five years; NEO multiples are 7x salary for the CEO and 4x for other NEOs (unvested RSUs count; unexercised options and unearned PSUs do not) .
- Trading policy prohibits pledging or margining CVS stock, short sales, and hedging; 10b5‑1 plans are permitted under strict pre‑approval and cooling‑off rules, reducing forced‑sale/pledging risk signals .
Employment Terms
- CVS discloses leading practices for executives: double‑trigger vesting of equity, robust recoupment (clawback) policies, no excise tax gross‑ups, a broad executive severance plan, and a cash severance cap at 2.99x base plus bonus .
- Recent executive appointments (e.g., CFO in April 2025) included customary change‑in‑control agreements and restrictive covenant agreements with 18‑month post‑employment non‑competition and non‑solicitation covenants, illustrating standard terms used for senior hires at CVS .
- Steve Nelson’s specific employment agreement, severance, or CIC terms were not disclosed in the proxy/8‑K excerpts reviewed .
Performance & Track Record
Aetna Medicare Advantage Quality
| Indicator | 2026 Plan Year |
|---|---|
| MA members in 4+ Star MAPD plans (% of MA members) | >81% |
| MA members in 4.5‑Star plans (% of MA members) | >63% |
Health Care Benefits (Aetna) – Q3 Performance
| Metric | Q3 2024 | Q3 2025 |
|---|---|---|
| Total revenues ($ billions) | $33.0 | $36.0 |
| Adjusted operating income (loss) ($ millions) | $(924) | $314 |
| Medical Benefit Ratio (MBR) | 95.2% | 92.8% |
Management actions and commentary: Nelson emphasized disciplined repricing of Group MA contracts (typical 3–5 year cycles) to return to target margins; he highlighted derisking of Part D via simplifying to a single standard plan, and the wind‑down of the Individual & Family Plans (IFP) business proceeding as planned . He also called out strengthened operations and management rigor driving improved insight and action on medical cost trends .
Enterprise Context (select disclosures)
- CVS raised 2025 Adjusted EPS guidance to $6.55–$6.65 in Q3 2025; Aetna received industry‑leading MA Star Ratings; Caremark retention remained in the high 90s .
- Q3 2025 total revenues were $102.9B, up 7.8% y/y; Adjusted operating income increased to $3.46B from $2.55B y/y .
Risk Indicators and Red Flags
- Insider trading/pledging risk is mitigated by policy prohibitions on pledging, margining, and hedging for insiders; trades require pre‑clearance and are generally limited to post‑earnings windows or via approved 10b5‑1 plans .
- Legal scrutiny: external law firms publicized investigations alleging improper use of AI in Aetna prior‑authorization decisions; the U.S. Senate reportedly scrutinized the topic, introducing reputational and regulatory risk considerations (statements reflect third‑party allegations) .
Compensation Committee and Pay‑Performance Linkages
- Most important measures used to determine 2024 “Compensation Actually Paid” (CAP): Adjusted EPS, Adjusted Operating Income, and TSR, evidencing alignment to key financial outcomes .
- The program maintains robust governance practices: clawbacks, double‑trigger vesting, capped LTI awards, post‑vest holding for PSUs, and no option repricing .
Investment Implications
- Incentive alignment: Nelson’s operating focus at Aetna (Star Ratings, disciplined MA repricing, derisked Part D) maps directly to the Strategic Scorecard metrics and Adjusted EPS drivers embedded in PSU design, supporting pay‑for‑performance alignment as MA profitability normalizes and quality metrics sustain .
- Retention risk: Specific employment/CIC economics for Nelson are undisclosed; however, CVS’s standard executive frameworks (CIC agreements, restrictive covenants, double‑trigger vesting) and ownership policies suggest reasonable retention structures without shareholder‑unfriendly gross‑ups .
- Trading signals: Anti‑pledging/hedging policies reduce forced‑sale risk; absent Form 4 data, no current view on insider selling pressure—monitor future 8‑Ks/DEF 14A for grant and vesting detail, and Form 4s for planned sales under 10b5‑1 plans .
- Execution watch‑list: Track Aetna’s Group MA repricing cadence and margin recovery, sustainability of high Star Ratings, Part D performance under IRA changes, and continued MBR improvement; these are key levers for Nelson’s scorecard and for CVS’s HCB AOI trajectory .