Despite a complete exit from the ACA market and a major scaling back of Medicare Advantage plans last year, Bright Health Group has awarded its top executives $3.77 million in cash bonuses for their performances in 2022.
In addition to his base salary and bonus, President and CEO Mike Mikan also received an additional $121,000 for personal transport on the company's leased aircraft, according to regulatory documents filed March 16.
President and CEO Mike Mikan
2022 salary: $1.3 million
Bonus: $1.69 million
CFO Cathy Smith
2022 salary: $650,000
COO Jeff Cook
2022 salary: 600,000
General Counsel Jeff Craig
2022 salary: 425,000
Former Bright Healthcare CEO Michael Carson
2022 salary: NA
"Paying cash bonuses at 100 percent of target when the company is basically bankrupt and cannot meet its obligations in regulated subsidiaries is an affront to [Bright] employees' hard work, individual investors' confidence and savings, and members' trust that claims will be paid," Ari Gottlieb wrote on LinkedIn March 19.
Mr. Gottlieb is a consultant and principal at A2 Strategy Corp., and previously was director of payer strategy at Strategy&, a part of PwC. He also follows the insurtech industry closely.
"It's beyond egregious. It's reckless. And it's actually making a mockery of being under supervision," he told Becker's.
Last fall, Florida placed Minneapolis-based Bright Health's finances under its direct supervision and plans to continue until at least May 1, according to an order extension made public by Florida's insurance office on March 1.
The supervision includes a ban on any pay increase or bonuses for executives without permission and does not allow Bright to spend more than $10,000 on anything without the state's approval. The company also has to pay for an on-site state employee to monitor its finances and provide them with an office.
The supervisor is allowed "complete and unrestricted" access to the insurtech's financial records, bank accounts, and physical assets.
Florida's actions come after a period of extreme operational challenges for Bright over the last year, with the company reporting a net loss of $1.4 billion in 2022. Bright has also initiated several rounds of layoffs in the past year, laying off at least 300 employees since March 2022.
In its fourth quarter earnings report published March 1, Bright said it had "substantial doubt" around the company's ability to continue operating as a "going concern" within the next 15 days. The company breached its minimum liquidity requirement in the first quarter of 2023.
Mr. Mikan told investors on an earnings call the company needs to raise around $300 million to stay afloat after the business overdrafted its credit.
Despite the major financial challenges, Bright said in its March 16 filing that it may have been justified to pay executives even larger bonuses for 2022 performance.
"Although performance against the metrics as a whole suggested a performance factor of 130 percent of target, in light of the company’s significant transition in 2022, its failure to meet certain performance metrics, and the need to continue to implement our restructuring plan and align expenses with our updated business model, the compensation committee approved a performance factor of 100 percent of target."
Bright ended 2022 with 1 million commercial members, 125,000 Medicare Advantage members and 530,000 value-based care consumers.
"Who would ever think that a company that was forced to exit markets, that is running businesses that are under supervision by state departments of insurance, that is out of capital, and has seen a stock price decline to 26 cents, deserves 100 percent of target performance bonuses?" Mr. Gottlieb said. "I'm in favor of pay-for-performance, but not pay-for-failure."