(Bloomberg) — Three of WellPoint Inc.’s 11 board members have stepped down, citing personal reasons for their decision to depart about six weeks after a new chief executive officer took over at the second-largest U.S. health insurer.
Lenox Baker, Sheila Burke and Susan Bayh resigned from the board effective immediately, Indianapolis-based WellPoint said yesterday in a regulatory filing. “Each of the directors resigned for personal reasons and there were no disagreements or disputes between the company and any of the named directors which led to their resignation,” WellPoint said in the filing.
WellPoint ousted Angela Braly as CEO last August amid shareholder complaints about declining enrollment and the insurer’s disappointing stock performance. Joseph R. Swedish, a former hospital administrator, was hired to replace her and began March 25. The insurer last month reported first-quarter earnings that topped analysts’ estimates and yesterday affirmed its annual profit forecast of at least $7.75 a share including investment losses of 5 cents a share.
“This is normal and it’s probably good for the company to clean out a few of the board members, especially given how long it took the board to come to the decision that it was time to remove the prior CEO,” says Erik Gordon, a business professor at the University of Michigan in Ann Arbor. “A new CEO always wants the full support of the board.”
The resignations are “fortuitous for CEO Swedish as it allows him the opportunity to upgrade the talent of his board,” says Brian Wright, a Monness Crespi Hardt & Co. analyst in New York, in a note to clients today. “We believe investors will view this favorably, as well.”
The insurer rose 1.5% to $77.12 at 9:53 a.m. New York time today. Through yesterday, the shares had gained 25% for the year.
Baker, a retired cardiac surgeon; Burke, a lecturer at the Kennedy School of Government at Harvard University in Cambridge, Massachusetts, and Georgetown University in Washington; and Bayh, a lawyer and wife of former Democratic U.S. Senator Evan Bayh of Indiana, had served on the board since December 2004, according to data compiled by Bloomberg.
WellPoint “has benefited from their knowledge, leadership and many contributions,” the company said in a statement. “Health care is transforming and that transformation is accelerating rapidly.”
Asked when new board members might be chosen, Kristin Binns, a WellPoint spokeswoman, didn’t give a timeline. “The board constantly evaluates qualified individuals,” she says. “They remain committed to this on-going process.”
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