Just a quick comment on Angela Braly’s resignation as chairman and chief executive of WellPoint Inc. (Indianapolis), which happened at the end of August when I was out on vacation.
First, the announcement was hardly a surprise. It came after years of lagging stock performance, management turmoil, embarrassing gaffes, financial miscues, and investor concerns over Braly’s failure to set a clear strategic direction for the company. It came despite a formal statement from the company’s board just two months ago that it is “supportive of the strategy and our management team.”
WellPoint has named general counsel John Cannon as interim chief executive and says it will begin a search of candidates to replace Braly. WellPoint director Jackie Ward has been named chairwoman. WellPoint shares jumped nearly 8% on the news.
Already industry observers are speculating over potential replacements like company chief financial officer Wayne DeVeydt; Ken Goulet, who oversees the company’s employer, Medicaid, individual and specialty lines; David Snow, former chief executive of Medco; Jim Carlson, chief executive of Amerigroup, which WellPoint is acquiring; and even Gail Boudreaux, executive vice president of UnitedHealth Group.
Justin Lake of J.P. Morgan says that the new CEO must be able to improve results in the company’s consumer business segment, which includes individual, Medicare and Medicaid. Lake also notes that WellPoint generates a third of its earnings from the individual and small group markets, which will experience dramatic changes under ObamaCare. Overall, two-thirds of WellPoint earnings come from the commercial risk market, Lake says.
Scott Fidel of Deutsche Bank stresses the need for a chief executive with strong operational experience and lists Carlson has his favored pick. “We would view a decision… to appoint another non-operator as the new permanent CEO as a major negative.” Braly, an attorney, was WellPoint’s general counsel prior to being named chief executive.
All of which sounds right to me. But as much as anything, what WellPoint needs is a leader who brings stability to the organization. It’s time to end all the drama and start delivering results.