Anthem CEO to receive $42.5 M

INDIANAPOLIS -- The top executive of Anthem Inc. is set to receive a $42.5 million stock and cash incentive package as a reward for the health insurer's rapid growth in the past three years.\nThe windfall Larry C. Glasscock is due to receive over the next two years comes as Anthem prepares to close a merger announced last October with WellPoint Health Networks Inc. that will create the nation's largest managed care company.\nIn a Securities and Exchange Commission filing late Tuesday, Anthem detailed the payout to Glasscock from a three-year incentive plan the Indianapolis-based Blue Cross Blue Shield licensee established in 2000 tied to company performance the following three years.\nAnthem exceeded the key goal established in the plan of 15 percent growth in the company's net income each of the three years, Anthem spokesman Ed West said. As it turned out, Anthem's profit grew an average of 41 percent per year during the three-year period.\n"Back when the company established the performance goals, it was considered such a wild stretch that it seemed almost unachievable," West said. "By anybody's measure, the growth has been extraordinary. So, therefore, the plan has provided this extraordinary reimbursement."\nThe incentive award to Glasscock, Anthem's 55-year-old president, chief executive and chairman, is in addition to the $1.04 million salary he received last year, a $2.3 million bonus and other 2003 compensation of $273,000.\nThe incentive package will grant Glasscock a cash bonus of $21.2 million this year, plus a restricted stock award totaling another $21.2 million. Half of the stock award will be vested next year and half in 2006, West said. The long-term compensation includes another $101,868 in other compensation.\nIf Glasscock's upcoming gain from the incentive package is spread equally over the past three years, his total compensation including salary and bonuses last year was $17.8 million, West said.\nGlasscock isn't the only Anthem executive due to receive a large incentive award as a result of the company's growth the past three years. According to the SEC filing, two others are due to receive $16 million each in long-term payouts and stock awards -- David R. Frick, Anthem's executive vice president and chief legal and administrative officer, and Michael L. Smith, executive vice president and chief financial and accounting officer. Keith R. Faller, president of Anthem Midwest, will get a total $11.8 million.\nIn trading Wednesday, Anthem shares were up 53 cents to close at $93.65 on the New York Stock Exchange. Anthem converted in late 2001 from a policyholder-owned company to a shareholder-owned corporation. The initial offering price for the stock was $36 each.\nGlasscock became Anthem's top officer in 1999, when the company operated only in Indiana. With 12 million members, Anthem now owns Blue Cross Blue Shield plans in eight other states -- Colorado, Connecticut, Kentucky, Maine, New Hampshire, Nevada, Ohio and part of Virginia.\nAnthem announced plans in October to buy larger WellPoint in a cash-and-stock deal valued at $16.4 billion at the time it was announced. The merger with Thousand Oaks, Calif.-based WellPoint would create the nation's largest managed-care provider with nearly 27 million members from Maine to California. The merger is subject to shareholder and regulatory approval and is expected to be close at midyear. Some regulatory hurdles already have been cleared.\nGlasscock would head the new company, which will be based in Indianapolis and renamed WellPoint Inc.