On Friday afternoon May 21, WellPoint released the official tally for the voting from their contentions annual shareholders meeting on the 18th. Our resolution to return Wellpoint to non-profit status received over 30 million votes, 9.4% of the shares voted. That is a jaw dropping vote of no confidence in the management of this company.
The Anthem/WellPoint annual shareholders meeting used to be a yawn – carefully scripted, lightly attended, and mercifully brief. That is until Hoosiers for a Commonsense Health Plan butted in. I’m a simple country ER doctor, and along with other pesky activist shareholders, I’ve been intruding on these meetings for the past four years. The meeting on Tuesday, May 18 was far from boring.
WellPoint Inc is the largest health insurance company in the country, the product of a free market feeding frenzy in the healthcare marketplace during the 80’s and 90’s. Merger mania consumed traditional non-profit Blue Cross plans from Maine to California, and when the final deal was sealed in 2004, WellPoint covered 35 million American lives from their headquarters in Indianapolis.
Last year I set out to change that. With help from other activists and experts, I crafted a shareholder resolution to nudge the company back toward its Blue Cross charitable non-profit roots. The SEC guidelines for such proposals are daunting, but we succeeded in placing it on the proxy statement for the May 18 meeting.
2010 has been a tough year for the behemoth, as FDL readers know. Even though the reform bill was largely authored by former WellPoint VP Liz Fowler, they secretly funneled money to the Chamber of Commerce for attack adds on health care reform. While the media storm following the announcement of WellPoint’s 39% rate hikes was still growing, Congressional investigators revealed WellPoint had spent $27 million on lavish executive retreats for top brass.
WellPoint CEO Angela Braly’s grilling in front of Congress was another low point, but the bad news kept rolling in – gaming the medical loss ratio requirements in the reform bill, the breast cancer rescission scandal, and they just keep coming.
And then May 18. The meeting opened promptly at 8 AM at the Indianapolis Hilton. In a non-descript room on the 9th floor about 25 stockholders had no trouble finding seats. We were greatly outnumbered by the WellPoint Board, top executives, and security detail. The tone of the meeting changed when I approached the microphone to present our resolution, on which the WellPoint Board had recommended a no vote.
Standing near the microphone was a scowling WellPoint security woman with an ear bud, and as I presented the resolution (as required by SEC regulations) she hovered nearby. When I had been speaking for slightly over five minutes, she came up right behind me, literally breathing down my neck, and then leaned in front of me, commanding me to stop speaking, that my time was up, even though no time limits had been set. I replied matter of factly that I was not done yet and returned to my prepared statement. I read the remaining paragraphs, while she glowered.
From there the atmosphere in the room grew increasingly contentious. Three more hostile shareholder resolutions were presented, although none as bold as ours.
Then a brief respite, as the meeting turned to some feel-good corporate videos meant to soothe and reassure restless investors and a short, vacuous talk from CEO Angela, only notable for making no mention of any of the controversy engulfing the company.
Finally, the formal meeting was adjourned, and the traditional shareholder Q&A session began, which for several years now has been Angela’s least favorite part of the day. It immediately turned ugly as the security detail tried to cut off a lawyer from St Louis whose premiums on her small business health insurance policy had been jacked up 41%. After she complained and appealed, they had finally reduced the increase and claimed that they must have made “a fat finger mistake” when they figured her rate increase the first time. She was not mollified, and came to the meeting to press her case.
Not long after, while there were still a half dozen dissident shareholders waiting to speak, there was a sudden disturbance at the front of the room, and Angela’s tense voice announced a medical emergency and that the meeting was over. Someone appeared to have collapsed in the front row.
As the security detail started to clear the room, I went straight to the front. I reminded WellPoint’s chief security guy that I’m a practicing ER physician, but he pushed his chest into mine and wouldn’t let me through. I recognized one of WellPoint’s executives who is a retired physician kneeling by a man supine on the floor. I got his attention, and he gratefully called for me to come over and help. Security yielded.
It was then that I realized my “patient” was William “Bucky” Bush, WellPoint board member, brother to the first President Bush, and uncle to the second.
Patient confidentiality prevents further discussion of the details. Suffice it to say that Mr Bush was doing OK, and all I really did was stand by until the ambulance arrived.
It wasn’t until I found my way to the elevator lobby, and the reporters started pressing me with questions, that it dawned on my how ironic the situation was. I had gone to the meeting to cause the Board discomfort, and then attended to one of my adversaries. WellPoint’s Board is studded with high profile power players, but none with a name as powerful as Bush.
From there, the story went international. It was carried in my brother’s hometown newspaper in Singapore, the Straits Times. Indianapolis TV and The Star gave us good coverage. And the story goes on.
The Wall Street Journal piece “WellPoint CEO Is Grilled” reported on the meeting, but also more bad news for the company, most ominously how the stock dropped almost 10% on April 30 on the news that the company had made mathematical errors in its California rate filings. Institutional investors are restless:
“Jay Nogueira, vice president at one of the company’s top 10 shareholders, T. Rowe Price, said the stock won’t bounce back until investors were convinced that there isn’t another chapter in the hostility with the government. ‘These guys are not dealing well with the public limelight,’ said Mr. Noguiera.”
Bloomberg reported May 17 that Warren Buffett has sold his one million share stake in WellPoint. Could we be approaching some sort of tipping point? Could the health insurance industry be a bubble that will burst?
The story isn’t over yet. Our shareholder resolution for WellPoint to return to its non-profit Blue Cross roots will be back next year. And the SEC has proposed a new regulation that would allow shareholders to directly nominate corporate board members called "Proxy Access." 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% of the outstanding shares in order to nominate a director. With 430 million shares outstanding, I would need 4.3 million shares for the nomination. 30 million shares just voted for our resolution. You do the math.
Rob Stone M.D. practices emergency medicine in a community hospital in the Hoosier Heartland. A gardener, a grandfather, and a teacher, he is the Director of Hoosiers for a Commonsense Health Plan and on the board of Physicians for a National Health Program.



42 Comments

Yes I would look at Bucky Bush and any other Bush Family money leaving the stock. The Bush family is connected if they think Wellpoint is in the kind of trouble that the Bush family can’t fix they will sell.
As soon as Bushies sell then the stock is officially doomed.
How does Well Point make Stockholders money if its a non profit?
Any chance you guys can get Wellpoint to stop lobbying or giving campaign contributions?
Great post and keep up the good work
Can you get a list of Bush family stock holdings and individual Bush Family stock holdings? I wonder where Wellpoint ranks as an evil Bush investment.
Thank you, Dr Stone.
Never. Give. Up.
Great story. 9.4% of 430 is more like 40 million? Whatever…we need this change desperately.
Do you suppose Bucky was just faking it to disrupt the meeting?
wow – that was a hell of a meeting. Do they hold those right downtown in Indy, on the Circle?
If so, I’m just a ten-minute walk away, and would love to catch the next one.
Was there anything that was said that might have triggered Bucky’s attack? Things like less money for him? an audit of the companies books, less money spent on lobbying, dropping certain suppliers who Bucky has invested in?
Has the Bush Family investments, Bucky’s investments, other Bush family investments done any selling of Wellpoint since the shareholders meeting?
Are any of them now shorting the stock?
Very interesting. I commend your work, and hope it has an effect. As a one-time Hoosier myself, I’m proud that this is taking place in my old home. It may be a red state, but you demonstrate that there are still plenty of people there with brains and consciences.Good luck to you.
Well done!
Thanks so much for this Rob, this is incredible.
As time goes on I think more activist work has to be focused on the true power center, corporate activities. Politicians are more and more just puppets.
Excellent work!
Excellent work, Dr. Stone. This is how we are going to get it done – we the peeps take back control of the corporations.
**happy dance**
Hey, Jane!
Yeah, this is an eye-opener.
So we all buy a share of stock, and go vote! Who woulda thunk!
Standing ovation for good, caring doctors. Thanks for your post and your intentions to run for the board. Best of luck.
Rob, just an amazing, inspiring post.
Lovely Soul to have on the planet right now.
Blessing to you and others who’re doing all they can to help us get to that “tipping point” we’re soooo close to.
or get someone’s proxy…..
Welcome.
minimum | average | maximum
$ 44.72 | $ 54.99 | $ 68.06
Thursday, Oct 8, 2009 | | Tuesday, Jan 19, 2010
So for about $550 you can buy 10 votes. Yikes. And then it goes non-profit so you get your money back?
Maybe we should all buy a share and let Jayt handle our proxies at the meetings.
I could get behind that.
Blue Texan’s regularly scheduled post is ready: How Dare President Obama Skip Arlington on Memorial Day! Who Does He Think He Is, a Republican?
This is just a FASCINATING post, on several levels. I always wondered how shareholder meetings went — only 25 people? Is that the usual number at these things? (It has never occurred to me to try to attend one.)
I’ve only ever been to one that had more than ~50 people in attendance (not including company reps). That one meeting that had high attendance was during a hotly contested merger situation.
For the most part these things are as mundane and uninteresting as C-SPAN at 3am.
Dr. Stone, thank you for this post. I think you’re on the right path with your approach. Please keep us informed.
Great idea. Can it work?
x2
How’s the vertigo? Hope you are better today.
Dr. Stone, I hope you’ll notify us of when you put yourself up for Board election. Gaming the health insurance stocks during the HCR fiasco was mighty profitable, and I’d be more than happy to put the entirety of earnings temporarily back into WellPoint for the vote.
Nice work, great root-cause analysis, and excellent thinking outside the D.C. box.
What a brave person you are! Thank you so much for your post. Very inspirational.
Just from my own experience at a previous employer: these are usually dog and pony shows for the few shareholders that show up. However, there is a lot of prep and detailed scripting that goes on for the press releases that follow. There is also discussion about how to contain those troublesome questions that a shareholder might bring to the event. This is what I learned at an entertainment company.
I like the idea of buying stock- hell, I’m already paying Wellpoint $15,000 a year in premiums- what’s a few shares of stock on top of that? I hope Dr. Stone will keep us up to date- it might be a better investment for FDLers than giving money to politicians!
As of Feb 2010 Bucky Bush had sold all his WellPoint stock, but it’s hard to know what that means. Many of the company’s directors have sold a lot of stock, and a few have sold all, but the timing may have more to do with the terms on which they were granted the options they exercised and personal financial decisions, rather than rats leaving the sinking ship. Angela herself still owns over $16 million worth of stock, making her the largest individual shareholder in the company. It’s very hard to track other members of the family, as they may have large holdings, but are in “street name,” meaning that the holdings show up on official lists under the name of the brokerage firm. You can dig a lot out through something like Yahoo Finance. All insider trading is reported to the SEC. If you dig up anything juicy, please let me know!
They would still earn profits as a ‘non-profit’ just like ‘non-profit’ hospitals. No business can survive without being profitable.
This is a bullshit move pushing them towards back to ‘non-profit’ Nothing would change.
ME TOO!
Please count me in too!
I have a suggestion for next year. Your site is really complex and you have to dig into it to find the Wellpoint page.
Maybe someone could create a single site called “Wellpoint Watchdog” or something similar with Wellpoint in the title so Google will find it. Make it just information for shareholders, a little formal and not too scary, so it doesn’t look like the hippies are taking over the place. Make it a project to get information out about the site during the next year, through blogs like this one, your medical connections and any others that make sense, like Facebook and Twitter. I asked the audience who was on Facebook at a recent Dem convention and was stunned at how many middle-aged folks use it.
Give shareholders information about how they can give you their proxies, and/or how to vote “right” themselves. Have a sign-up function so they can give you their email addresses. Tell them you will use it only for providing information about their Wellpoint shares. Ask them to friend you on Facebook.
You might not get 216 million, but you never know.
Dr. Stone, thanks for telling the story like it happened and getting the important information. The mainstream media, if they reported on it all, really missed the story of this meeting!
Excellent post, Doctor Stone, courageous work, you honor your profession and life. Thank you.
Twain, you’ve a winner of an idea, and it seriously merits genuine consideration.
I’m in.
DW
Sorry to come so late to this post – but bravo!