The proposal from a nonprofit advocacy group called the Accountability Board, if approved by shareholders, would ask the board to amend the company’s bylaws to codify an independent board chair.
“We were very disturbed to see recently that at such a trying time for UnitedHealth, the company chose to go backward and combine the CEO and chair roles,” said Matt Prescott, president of the Accountability Board. “We think the company needs a stronger leadership structure.”
He declined to disclose the size of the group’s stake in UnitedHealth, beyond saying it meets the minimum required to file a shareholder proposal.
UnitedHealth, which operates the largest US health insurer, is trying to regain investors’ confidence. The company drastically cut its earnings outlook, cast doubt on long-term growth targets, replaced its CEO and finance chief, and disclosed federal criminal and civil probes in the past year. It was also grappling with the fallout from a catastrophic cyberattack that breached data on 190 million Americans. The killing of top executive Brian Thompson in December was followed by widespread consumer backlash over insurance denials.
UnitedHealth representatives didn’t immediately have a comment on the proposal or say whether the company would try to block it.
The company’s most recent annual meeting was in June. Investor proposals have to meet strict criteria to go to a vote for shareholders, and it’s not clear yet whether the Accountability Board’s resolution would be placed on the ballot.
Hemsley served as UnitedHealth CEO for more than a decade before becoming executive chair in 2017. When the company reappointed him to replace Andrew Witty as chief executive in May, Hemsley held on to the board chair role.
That contradicted UnitedHealth’s principles of governance, posted on its website and updated in November. The policy states: “the Board believes that the roles of the Chair and Chief Executive Officer should be separate as an aid in the Board’s oversight of management and to allow the Chief Executive Officer to focus primarily on management responsibilities.”
In a statement supporting the resolution, the Accountability Board said combining the roles “is as far as it gets from the independent oversight shareholders so critically need.”
It cited UnitedHealth’s most recent proxy statement, which touts the separate chair and CEO roles as an example of effective corporate governance.
The Accountability Board invests in about 200 companies and advocates on issues ranging from greenhouse gas emissions and the treatment of animals to shareholder rights, Prescott said. This week it filed a similar proposal seeking an independent chair at Target Corp.
UnitedHealth’s board formed a public responsibility committee in August to oversee “financial, regulatory, and reputational risks,” and shuffled some board roles. The company got a lift earlier this year when Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake of 5 million shares. Still, its shares have lost more than 30% so far this year through Thursday’s close.
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