Bright Health CEO's bonus grew to $1.95M amid slashed workforce

Bright Health's CEO got a bigger bonus last year as the company completed itswithdrawal from the health insurance business that once drove meteoric growth at Minnesota's largest-ever IPO.

In the process, Bright Health — which in January announced it had decamped its headquarters from Bloomington to Florida and changed its name to NeueHealth — slashed employment nearly in half. At the end of 2023, it had 1,252 employees, down from 2,840 workers the year before.

Chief executive Mike Mikan saw bonus pay of $1.95 million, up from $1.69 million the previous year, according to a regulatory filing Monday.

The bulk of Mikan's overall compensation of about $9.9 million came in the form of stock-based pay. This type of compensation hasn't paid well over the years for Bright Health executives given the poor performance of the company's stock.

According to the proxy, all of Mikan's previously issued stock options are underwater, meaning the exercise price is higher than where the stock currently trades.

"A participant's incentive award takes into consideration individual, team and company performance results...," NeueHealth said in its disclosure. "For 2023, the compensation committee evaluated the company's overall execution against performance metrics and approved a performance factor of 100% of target."

NeueHealth did not immediately respond to questions from the Star Tribune.

Bright Health was founded as a health insurer in 2015 and grew to cover more than 1 million people through individual market health plans — policies that typically are sold through "Obamacare" health exchanges. At its peak, the company also covered about 125,000 seniors in Medicare Advantage plans.

In September, Bright Health disclosed that it hadn't made full payment on its risk adjustment obligations to the federal government and entered into a repayment plan with health insurance regulators. The company still owes money under the agreement, where the federal government will redistribute funds to other health insurers, noted Ari Gottlieb, a health care strategist.

"[The] board continues to pay for failure," Gottlieb said.

In January, the company closed on the sale of its last Medicare Advantage health plan holdings, marking a full exit from selling insurance, which had previously been its primary business. It's now focused on its much smaller NeueHealth division, which owns and manages medical clinics in Florida and elsewhere.

Employment at Bright Health peaked at just over 3,200 people at the end of 2021.

NeueHealth disclosed its most recent headcount figures on Thursday in an annual report to shareholders. Over the past year, the company has provided only limited comments about how the winding down of its health insurance business was affecting employment.

Bright Health said in February 2023 it was eliminating 68 jobs at its then-headquarters office in Bloomington.

Bright Health Group was funded in June 2021 with $924 million in the largest-ever initial public offering of stock for a Minnesota company. It stumbled badly in health insurance markets by failing to accurately pay claims and calculate risk adjustment payments.

This is a developing story. Check back for updates.