Stephen Hemsley
About Stephen Hemsley
Stephen J. Hemsley is Non‑Executive Chair of UnitedHealth Group (UNH), serving as Chair since November 2019; previously Executive Chair (2017–2019), Chief Executive Officer (2006–2017), President (1999–2014), and Chief Operating Officer (1998–2006). He joined UNH in 1997 and has served on the Board since 2000; age 72 (as of the 2025 proxy). UNH separates the CEO and Chair roles; Hemsley is not an independent director under the company’s standards, with a Lead Independent Director in place to provide counterbalance. During and after his CEO tenure, UNH delivered strong performance: 2017 business results included 9% revenue growth and multi‑year TSR of 324% (2013–2017). More recently, for 2023 UNH reported revenues of $371.6B (+15% YoY) and a 5‑year TSR of 123% through 2023, underscoring continued value creation under the Board’s oversight.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| UnitedHealth Group | Chief Executive Officer | 2006–2017 | Led UNH through a multi‑year growth cycle; 2017 results included 9% revenue growth, 18% operating earnings growth, and TSR of 324% over 2013–2017. |
| UnitedHealth Group | Executive Chair | 2017–2019 | Oversaw CEO transition and continuity following succession planning process. |
| UnitedHealth Group | Non‑Executive Chair | 2019–present | Independent oversight of management with Lead Independent Director structure in place; Board refresh and strong governance practices. |
| UnitedHealth Group | President | 1999–2014 | Enterprise operations leadership supporting scale‑up. |
| UnitedHealth Group | Chief Operating Officer | 1998–2006 | Operational execution ahead of CEO tenure. |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Cargill, Inc. | Director | In past five years (ended prior to 2025) | Large private company governance exposure; brings risk oversight and global markets perspective to UNH Board. |
Fixed Compensation
- Hemsley currently serves as a non‑employee director (Chair). Director compensation consists of cash retainers (including an additional Chair retainer) and annual equity in deferred stock units (DSUs). In 2024 he elected to convert all cash retainers into DSUs.
2024 Director Compensation (Non‑Employee)
| Component | Amount (USD) |
|---|---|
| Fees Earned or Paid in Cash | — (converted to DSUs) |
| Stock Awards (fair value) | $571,141 |
| All Other Compensation | $285,077 (includes $260,000 HSR filing fee paid by company; no tax gross‑up; plus health care premiums and charitable match) |
| Total | $856,218 |
Director Compensation Program (Reference Values)
| Element | Program Value |
|---|---|
| Annual Cash Retainer (Director) | $125,000 |
| Annual Chair of the Board Cash Retainer | $220,000 |
| Annual Stock Compensation (DSUs) | $225,000 aggregate fair value (issued quarterly) |
Historical CEO Compensation (Select Years)
| Year | Salary | Stock Awards | Option Awards | Non‑Equity Incentive | All Other | Total |
|---|---|---|---|---|---|---|
| 2015 | $1,350,000 | $7,012,546 | $2,337,939 | $3,672,000 | $145,679 | $14,518,164 |
| 2016 | $1,300,000 | $7,012,640 | $2,337,015 | $4,908,500 | $137,358 | $15,843,911 |
| 2017 | $1,206,538 (partial year as CEO before moving to Executive Chair) | $8,325,219 | $2,775,462 | $5,745,600 | $170,481 | $18,454,153 |
Key observations:
- As Chair, Hemsley elected to take retainers in DSUs, reinforcing equity alignment.
- During CEO years, mix was heavily equity‑weighted with meaningful non‑equity incentive tied to enterprise goals per CD&A.
Performance Compensation
Current UNH incentive design (context for alignment; Hemsley does not participate as an executive officer today):
- Annual cash incentive metrics (company‑wide): revenue, operating income, cash flow, Net Promoter Score (absolute and relative), and employee experience index; payouts capped at 2x target, subject to pool and committee discretion.
- Long‑term incentives (2024 grant mix): 50% performance shares (PSUs), 25% RSUs, 25% non‑qualified stock options; PSUs measured over 3 years on cumulative Adjusted EPS and average ROE (0–200% payout), RSUs/Options typically vest ratably over 4 years; one‑year minimum vesting plan‑wide.
Performance Compensation Structure (Program Reference)
| Metric | Weighting | Target Horizon | Payout Range | Vesting |
|---|---|---|---|---|
| Cumulative AEPS (PSUs) | 50% (of PSU program) | 3‑year | 0–200% | Cliff at cycle end |
| Average ROE (PSUs) | 50% (of PSU program) | 3‑year | 0–200% | Cliff at cycle end |
| Annual: Revenue, Operating Income, Cash Flow, NPS (abs/relative), Employee Experience | N/A (program uses mix) | 1‑year | Up to 2x target (pool and discretion) | Cash (annual) |
Notes:
- UNH prohibits duplicative metrics across annual and long‑term plans; awards are subject to clawback policies.
- For directors, compensation is not performance‑based; equity is delivered as DSUs vesting immediately but subject to holding until service completion or ownership compliance.
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership (Hemsley) | 1,251,137 shares as of April 4, 2025; <1% of outstanding (910,223,791 shares). Includes 225,500 shares in charitable foundations, 318,200 in trusts, and 334.077 in 401(k). |
| Vested DSUs Counted Toward Director Ownership | 7,560 vested DSUs counted under guidelines. |
| DSUs Outstanding (12/31/2024) | 7,256 DSUs. |
| Ownership Guidelines (Directors) | 5x annual cash retainer; DSUs and vested RSUs count; options excluded. All directors have met or are within 5‑year window. |
| Ownership Guidelines (Executives) | CEO 8x salary; CEO direct reports/Optum & UHC CEOs 3x; others 2x; all NEOs compliant as of April 4, 2025. |
| Retention Policy | Directors must hold DSUs until service completion or until ownership requirements met; Section 16 officers must hold one‑third of net shares for at least one year after vest/exercise. |
| Hedging/Pledging | Hedging and pledging prohibited for directors and executive officers. |
Implications for selling pressure:
- Hemsley’s conversion of cash retainers into DSUs and the requirement to hold DSUs until service completion reduce near‑term selling pressure; pledging and hedging are prohibited. Post‑service DSU conversion to shares could create exit‑related liquidity events.
Employment Terms
Legacy CEO employment agreement (key terms; agreement auto‑renewed and later superseded by his transition to Executive Chair in 2017 and then Non‑Executive Chair in 2019):
- Base salary: $1,300,000 as CEO (later reduced to $1,000,000 upon appointment as Executive Chairman in 2017).
- Severance: If terminated without Cause or for Good Reason, lump sum equal to 12 months base salary.
- Death/Disability: Lump sum equal to two years’ total compensation (base plus average bonus of last two years, excluding special/one‑time).
- Supplemental Retirement Benefit: $12,773,328 payable in DSUs, paid six months and one day after termination.
- Equity Treatment/COC: Company policy includes double‑trigger change‑in‑control protection for equity grants (plan‑level standard).
- Clawbacks/Conduct: Company maintains Dodd‑Frank compliant and broader misconduct‑based clawbacks; breaches of non‑compete/non‑solicit/confidentiality can trigger recoupment/cancellation.
Current director status:
- Directors are not party to executive employment agreements; compensation is via director program (cash/DSUs), with deferral elections available under the Director Deferral Plan.
Board Governance
- Role and independence: UNH separates CEO and Chair; Hemsley serves as Non‑Executive Chair and is not independent. Lead Independent Director Michelle Hooper provides additional oversight.
- Committees: In 2025, Hemsley serves on no committees; in 2023, he was listed as a member of the Health and Clinical Practice Policies Committee.
- Board refresh/attendance: Four directors added since 2020; directors attended 97% of combined Board/committee meetings in 2024; all attended the 2024 Annual Meeting.
- Governance practices: Proxy access, one‑share‑one‑vote, no rights plan, independent committee chairs, executive sessions without management, stringent trading policies (no hedging/pledging).
- Say‑on‑Pay: 96% shareholder support at 2024 Annual Meeting.
Director Compensation (Program Mechanics and 2024 Detail)
| Program Feature | Description |
|---|---|
| DSU Grants | $225,000 per year in DSUs, issued quarterly; DSUs vest immediately and must be retained until Board service completion or until ownership requirements met; dividend equivalents paid as additional DSUs. |
| Cash Retainers | Payable quarterly; may be converted to DSUs or, if ownership met, to common stock; Hemsley converted $345,840 to 671 DSUs in 2024–2025 grants. |
| Director Deferral Plan | Directors may defer cash/stock compensation into investment‑measured accounts; no company match. |
| Perquisites | Limited: health care coverage, security services; charitable match up to $15,000; HSR filing fee of $260,000 paid on Hemsley’s behalf in 2024 (no tax gross‑up). |
2024 Director Compensation — Hemsley Detail
| Item | Amount/Units |
|---|---|
| DSUs outstanding at 12/31/2024 | 7,256 DSUs |
| DSUs received from cash conversions | 671 DSUs on $345,840 of cash converted |
| Stock awards (grant‑date fair value) | $571,141 |
| All other compensation | $285,077 (incl. HSR fee $260,000; health care premiums $13,963; charitable match $15,000) |
Compensation Structure Analysis
- Shift in mix: As Non‑Executive Chair, Hemsley’s compensation is predominantly equity (DSUs) with voluntary conversion of cash retainers to DSUs, enhancing alignment and reducing guaranteed cash.
- Risk controls: Robust clawbacks, prohibition on hedging/pledging, minimum vesting standards, no option repricing without shareholder approval.
- Shareholder sentiment: Say‑on‑Pay support at 96% in 2024 indicates broad investor approval of pay design and outcomes.
- Consultant independence: Compensation and Human Resources Committee retains Pay Governance as independent advisor.
Performance & Track Record
| Period | Indicator | Result |
|---|---|---|
| 2017 | Revenue growth | +9% YoY to $201.2B |
| 2017 | Operating earnings growth | +18% YoY to $15.2B |
| 2013–2017 | Total Shareholder Return | 324% |
| 2015–2017 | Total Shareholder Return | 125% |
| 2023 | Revenues | $371.6B (+15% YoY) |
| 2023 (5‑yr) | Total Shareholder Return | 123% (5‑year through 2023) |
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited for directors and officers (reduces misalignment/forced selling risk).
- Clawbacks: Dodd‑Frank compliant recovery policy plus broader misconduct‑based recoupment; strong governance feature.
- Option repricing: Prohibited without shareholder approval under equity plan.
- Related party/other: Company paid $260,000 HSR fee for Hemsley to maintain stock ownership levels due to his Chair role; imputed as income, no tax gross‑up; optics to monitor but governance‑compliant.
Say‑on‑Pay & Shareholder Feedback
| Year | Say‑on‑Pay Support | Notes |
|---|---|---|
| 2024 | 96% For | Board cites strong alignment of executive pay with performance; no changes recommended to director pay in 2024 review. |
Compensation Committee Analysis
- Oversight: Compensation and Human Resources Committee oversees executive pay design, goals, and risk; chaired by independent director (e.g., 2025 Chair: Timothy Flynn).
- Consultant: Pay Governance retained as independent advisor to the committee.
- Practices: Annual compensation risk assessment; no duplicative metrics across annual and long‑term plans.
Equity Ownership Details (Beneficial Ownership Table Extract)
| Holder | Shares Owned | Equity Awards Exercisable/Vesting in 60 Days | Total | % Outstanding |
|---|---|---|---|---|
| Stephen Hemsley | 1,251,137 (incl. 225,500 via charitable foundations; 318,200 via trusts; 334.077 via 401(k)) | — | 1,251,137 | <1% (of 910,223,791) |
Employment & Contracts (Historic CEO Agreement Terms)
| Term | Provision |
|---|---|
| Base Salary (CEO) | $1,300,000; reduced to $1,000,000 when appointed Executive Chairman in 2017. |
| Severance (No Cause/Good Reason) | Lump sum equal to 12 months base salary. |
| Death/Disability | Lump sum equal to two years’ total comp (base + average bonus last two years). |
| Supplemental Retirement (SERP/DSU) | $12,773,328 payable in DSUs, paid six months and one day after termination. |
| Equity on COC | Double‑trigger standard under plan; no option repricing without shareholder approval. |
Board Service History, Committee Roles, and Dual‑Role Implications
- Service history: Director since 2000; Non‑Executive Chair since 2019; previously Executive Chair and CEO.
- Current committees: None (2025); prior listing (2023) shows Hemsley as a member of Health and Clinical Practice Policies Committee.
- Independence: Chair and CEO are the only non‑independent directors; eight of ten director nominees are independent; Lead Independent Director role formalized with robust duties.
- Implications: Separation of Chair/CEO mitigates dual‑role concerns; Lead Independent Director structure, strong committee independence, and executive sessions without management help address independence and oversight quality.
Investment Implications
- Alignment and retention: Large beneficial ownership, prohibition on hedging/pledging, and conversion of cash retainers to DSUs point to strong alignment and limited near‑term selling pressure; DSUs convert to shares upon service completion, creating potential exit‑timed liquidity events to monitor.
- Pay‑for‑performance: Historical CEO pay was equity‑heavy with robust performance linkage; current program continues to emphasize multi‑year AEPS/ROE and diversified annual metrics with strong clawbacks—supportive of durable TSR outcomes.
- Governance quality: Non‑independent Chair offset by Lead Independent Director and high board independence, strong risk controls (no hedging/pledging; clawbacks; no option repricing), and high Say‑on‑Pay support—reduces governance discount risk.
- Watch items: Any future changes to Hemsley’s role, material Form 4 activity, or Board policy shifts (e.g., director pay structure or ownership/retention rules) could alter selling pressure and alignment signals; the one‑time HSR fee payment (no gross‑up) is governance‑compliant but should be monitored for precedent.