The WellPoint Inc. annual meeting on May 18 in Indianapolis was contentious and dramatic. The first story out was about the collapse of Board member William "Bucky" Bush, followed later by CEO Angela Braly's sudden adjournment of the meeting, while a line of concerned shareholders waited to have their questions answered.
That story went 'round the world, picked up by even the Singapore Straits Times, given legs by the irony of Mr. Bush getting assistance from the very doctor who had been regaling the board minutes before. That physician, of course, was me.
This was the fourth annual meeting of WellPoint that I have attended in my role as "a cheery thorn in [their] side," as the Indianapolis Business Journal called me in a May 29 article, "ER doc is affable WellPoint activist."
"As I approached the microphone to present the resolution, I noticed a WellPoint security woman with an ear bud lurking nearby, obviously there to keep a close eye on me."
This year there were four shareholder resolutions on the meeting proxy, and the WellPoint Board recommended a "No" vote on all of them. The first one -- and the boldest -- was ours, calling on the company to return to its Blue Cross, charitable, non-profit roots.
As I approached the microphone to present the resolution (SEC regulations require that I present it in person), I noticed a WellPoint security woman with an ear bud lurking nearby, obviously there to keep a close eye on me. How close became obvious as I read my prepared comments, and she gradually moved in behind me until she was literally breathing down my neck. When I was five minutes into my seven-minute statement, she tried to stop me from finishing. It was an outrageous attempt at intimidation and harassment, but I informed her firmly and politely that I would complete my remarks, which I did.
The meeting tone remained tense as the remaining three resolutions were presented, although the others kept their comments brief, and the menacing security woman only glowered at them from a respectful distance.
Finally, the formal meeting was adjourned, and the traditional shareholder Q&A session began, which for the last four years has been Angela's least favorite part of the day.
"When I was five minutes into my seven-minute statement, she tried to stop me from finishing."
It immediately turned ugly, as the security woman tried to cut off a lawyer from St. Louis, complaining how premiums on her small business health insurance policy had been jacked up 41 percent. After several appeals, WellPoint had finally admitted the increase was excessive, explaining they must have made "a fat-finger mistake" in their initial calculations. The lawyer was not mollified and came to Indianapolis to press her case.
After just a few more contentious questions, the meeting came to its dramatic and premature end.
Huffington Post blogger Ethan Rome informed readers about the one resolution that passed that day, "Shareholders Move to Curb Extravagant Pay for WellPoint CEO," but all he knew about our resolution when he wrote his piece on May 20 was that it had not passed.
The resolution that did pass is referred to as "Say on Pay," a concept that calls for a corporate board to put top management's compensation packages up for a non-binding vote of the shareholders every year as part of its annual meeting.
The Minneapolis Business Journal reported on May 24 that a similar proposal was voted down by another insurance behemoth, UnitedHealth. Although "Say on Pay" has been adopted by over 70 corporations, the fact that WellPoint investors passed it is significant.
"It was an outrageous attempt at intimidation and harassment."
But there may be an even more monumental story unfolding here. On Friday afternoon, May 21, WellPoint released the official tally for the voting from the meeting on the 18th. The resolution for returning to nonprofit status received over 30 million votes, 9.4 percent of the shares voted. That is a jaw-dropping vote of "no confidence" in the management of this company.
The story isn't over yet. The SEC has proposed a new regulation called "Proxy Access" that would allow shareholders to directly nominate corporate board members. If this goes into effect this fall as expected, I intend to run for the WellPoint board.
In its current draft form, the Proxy Access process for a large corporation like WellPoint would require 1 percent of the outstanding shares to nominate a director. With 430 million shares outstanding, I would need 4.3 million shares for the nomination. Thirty million shares just voted for our resolution. You do the math.
Dr. Rob Stone can be reached at email@example.com.