Morgan Kendrick
Executive Vice President and President of Commercial and Specialty Health Benefits at Elevance Health
Executive
About Morgan Kendrick
C. Morgan Kendrick, Jr. is Executive Vice President and President, Commercial Health Benefits at Elevance Health (ELV), a role he has held since October 2021, after joining the company in 1995 and holding multiple commercial leadership roles including President of Anthem National Accounts/Central Markets (2015–Jan 2021) and President of National Accounts and GM for Anthem Blue Cross and Blue Shield of Georgia (2010–2015) . He is 59 years old as of February 1, 2025 . 2024 company performance against AIP measures was mixed (Operating Revenue exceeded target; Adjusted Net Income missed threshold), and PSUs for the 2022–2024 cycle paid at 95.1% of target; management cited Kendrick’s repricing initiative and Individual-market growth (~275,000 consumers added) in adjusting his 2024 AIP payout to 50% of target . Company TSR (value of $100 initial investment) stood at 130 at year-end 2024 (peer group 147), contextualizing long-term incentive alignment to shareholder returns .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Elevance Health | EVP & President, Commercial Health Benefits | Oct 2021–present | Leads Commercial Health Benefits; recognized for repricing initiative to align margins and Individual-market growth . |
| Elevance Health | President, Commercial Business West Markets | Jan 2021–Oct 2021 | Led West Markets (CA, CO, IN, KY, MO, NV, OH, WI) . |
| Elevance Health | President, Anthem National Accounts/Central Markets | 2015–Jan 2021 | Led national accounts and central markets portfolio . |
| Elevance Health | President, National Accounts & GM, Anthem BCBS of Georgia | 2010–2015 | Oversaw national accounts and GA plan operations . |
| Elevance Health (joined company) | Various leadership roles | 1995–2010 | Progressive leadership in commercial businesses . |
Fixed Compensation
| Component | 2024 Amount/Rate | Detail |
|---|---|---|
| Base Salary | $850,000 | No change from 2023 for Kendrick . |
| Target AIP (Annual Incentive Plan) | 120% of salary | Enterprise-weighted measures; individual performance modifier applies . |
| Actual AIP Paid (for 2024, paid 2025) | $510,000 | 50.0% of target for Kendrick (Committee increase based on Commercial business performance) . |
| All Other Compensation | $133,400 | Comprised of: Other perquisites $3,346 (executive physical), DEC Cash Credits $15,000, DEC Core Credits $15,000, 401(k) match $17,250, Deferred Compensation Plan match $82,804 . |
Performance Compensation
AIP (Cash, annual)
- Structure and weightings (2024): Adjusted Net Income 50%, Operating Revenue 20%, Improving the Health of Humanity 10%, Star Ratings 10%, Consumer Effort 10%; peer-based modifier 80–120% applied to overall funding .
- 2024 outcomes (enterprise): Adjusted Net Income missed threshold ($7,677m vs $8,644m target), Operating Revenue exceeded target ($173,349m vs $170,200m target); mixed non-financial results; relative peer modifier set at 92.5% .
- 2025 AIP change: Non-financial measures replaced by a Strategic Initiatives measure; financial measure weightings retained .
| 2024 AIP Summary (Kendrick) | Target | Actual | Payout as % of Target |
|---|---|---|---|
| AIP Cash Award | $1,020,000 | $510,000 | 50.0% |
LTIP (Equity, multi-year)
- 2024 design: Mix of PSUs, stock options, and RSUs; options weighted at 25% of annual award value; awards typically granted on March 1 .
- PSU performance metrics: Three-year cumulative Adjusted Net Income (60%) and cumulative Operating Revenue (40%); 0–200% payout range; 2022–2024 PSU cycle approved at 95.1% of target; 2025 LTIP changes metric to three-year cumulative Adjusted Diluted EPS (replacing Adjusted Net Income) .
| 2024 LTIP Grant (Kendrick) | Units/Shares | Grant-Date Fair Value | Key Terms |
|---|---|---|---|
| PSUs (2024–2026 target) | 4,308 | $2,150,166 | 60% 3-yr ANI + 40% 3-yr Operating Revenue; 0–200% payout; vests 3rd anniversary . |
| RSUs | 2,154 | $1,075,083 | Time-vest in three equal annual installments . |
| Stock Options | 8,312 | $1,074,825 | Exercise price $499.11; 10-year term; vest in three equal annual installments beginning 3/1/2025 . |
| 2022–2024 PSU Results | Weight | Actual vs Targets | Payout |
|---|---|---|---|
| Cumulative Adjusted Net Income | 60% | Actual $22,620m vs target $23,073m | 34.1% component contribution . |
| Cumulative Operating Revenue | 40% | Actual ~$501bn vs target $486bn | 61.0% component contribution . |
| Total PSU Payout | — | — | 95.1% of target . |
Equity Vesting Calendar (forward visibility)
| Award Type | Vesting Dates | Shares |
|---|---|---|
| RSUs | 3/1/2025; 3/1/2026; 3/1/2027 | 2,039; 1,394; 718 . |
| PSUs (earned 2022 grant) | 3/1/2025 | 3,686 . |
| PSUs (2023 grant, target) | 3/1/2026 | 4,051 . |
| PSUs (2024 grant, target) | 3/1/2027 | 4,308 . |
| Stock Options (exp. 3/1/32) | 3/1/2025 | Remaining unexercisable become vested . |
| Stock Options (exp. 3/1/33) | 3/1/2025; 3/1/2026 | Equal installments . |
| Stock Options (exp. 3/1/34) | 3/1/2025; 3/1/2026; 3/1/2027 | Equal installments . |
Equity Ownership & Alignment
| Ownership Snapshot (as of Feb 1, 2025) | Shares/Units | Notes |
|---|---|---|
| Common Shares Owned (includes options exercisable within 60 days) | 26,340 | Includes 21,204 options exercisable within 60 days . |
| Supplementally Owned (vesting within 60 days) | 5,725 | Includes 2,039 unvested RSUs and 3,686 unvested PSUs vesting within 60 days . |
| Total Beneficial Ownership | 32,065 | <1% of shares outstanding; none of the NEOs individually owned ≥1% . |
| Shares Outstanding | 238,430,367 | As of Feb 1, 2025 . |
Alignment policies and status:
- Executive stock ownership guideline: Executive Vice Presidents at 3.0x salary; five years to comply; sale restrictions until met; RSUs count, options and unvested PSUs do not; all NEOs meet guidelines as of filing .
- Hedging/pledging: Prohibited for directors and designated associates, including all NEOs; margin accounts also prohibited .
Employment Terms
| Scenario (Kendrick) | Cash Severance | AIP for Year of Termination | Equity Acceleration/Continuation | Exec Benefits | Health & Life Coverage | Outplacement | Total |
|---|---|---|---|---|---|---|---|
| Termination Without Cause/Good Reason post-Change-in-Control (double trigger) | $5,890,500 | $1,020,000 | $6,044,795 | $90,000 | $39,264 | $7,750 | $13,092,309 . |
| Termination Without Cause/Good Reason | $3,740,000 | $510,000 | $4,417,209 | $60,000 | $26,176 | $7,750 | $8,761,135 . |
| Retirement (LTIP retirement-eligible) | — | $510,000 | $4,417,209 | — | — | — | $4,927,209 . |
| Resignation | — | $510,000 | $4,417,209 | — | — | — | $4,927,209 . |
| Death or Long-Term Disability | — | $510,000 | $6,044,795 | — | — | — | $6,554,795 . |
Key terms and policies:
- Change-in-control equity: Unvested equity vests upon termination following a change-in-control (PSUs at 100% of target); retirement eligibility allows continued vesting per plan; Kendrick is currently retirement-eligible under the LTIP .
- Clawback: Policy covers executive officers’ incentive compensation, including reputational harm .
- No option/SAR repricing without shareholder approval; double-trigger change-in-control provisions; no change-in-control excise tax gross-ups .
- Directed Executive Compensation Program (perquisites): Other NEOs receive up to $30,000 annually (50% cash credits; 50% core credits) for financial/tax/estate services; Kendrick’s 2024 DEC usage totaled $30,000 .
- Pension (frozen plan): Only Kendrick among NEOs participates; present value $180,071, credited service 8.75 years (accruals frozen; interest credited) .
Additional Governance and Compensation Context
- Comparator groups and pay positioning: Committee targets total compensation at the median of two comparator groups (industry and Fortune 50 general industry); independent consultant WTW advises the Committee; no conflicts determined; 2024 consultant fees disclosed .
- Say-on-Pay: Conducted annually; Board recommended “FOR” in 2025 proxy .
Investment Implications
- Pay-for-performance alignment: Heavy equity weighting (2024 LTIP grant value $4.30m, split across PSUs, options, RSUs) with PSU metrics tied to multi-year profitability and revenue growth supports alignment; 2022–2024 PSUs paid at 95.1% (near target), signaling balanced targets and execution across cycles .
- Retention and selling dynamics: Kendrick is retirement-eligible under LTIP with significant RSU/PSU and option tranches vesting 2025–2027, which increases flexibility (and potential event timing considerations) but also maintains performance linkage for PSUs; anti-hedging/pledging and ownership guidelines mitigate misalignment risk .
- Cash incentives and near-term operating focus: 2024 AIP outcomes reflect mixed enterprise performance, but individual modifier to 50% of target for Kendrick recognizes pricing discipline and Individual-market growth (~275k consumers), indicating traction in Commercial segment recovery; watch AIP redesign for 2025 adding Strategic Initiatives for transformation focus .
- Governance safeguards: Robust clawback, no option repricing, no excise tax gross-ups, and double-trigger CIC provisions reduce shareholder risk of unfavorable pay practices .
- Ownership and dilution: Kendrick’s beneficial ownership is below 1% (consistent across NEOs), but policy-driven holding requirements and continued vesting obligations maintain “skin in the game” without leverage risks from pledging .