Aetna Chairman and CEO Mark T. Bertolini will reap approximately $500 million when he exits the company if its proposed deal with CVS Health closes, according to The Wall Street Journal.
The Wall Street Journal determined his exit payment based on discussions with people familiar with the matter, a review of Aetna filings, and analysis from Equilar, a compensation firm.
At the CVS deal's $207 per share price, Mr. Bertolini's already-vested stock appreciation rights for Aetna shares are expected to account for more than $230 million of the exit payment. Aetna common stock Mr. Bertolini owns would be valued at $190 million at the deal price, according to WSJ.
The proposed transaction between CVS and Aetna was structured as 70 percent in cash and 30 percent in stock. Therefore, some of Mr. Bertolini's exit payment will be in shares of CVS, and fluctuation in the value of CVS shares could change the value of his payout.
Mr. Bertolini will also receive a payment of between $60 million and $85 million under his change-in-control package, which is triggered when Aetna sells itself and he is let go. Mr. Bertolini will not have an executive role with the combined company, but he will join the company's board of directors. If the deal closes, CVS President and CEO Larry Merlo will lead the combined organization.
"Because of a combination of the length of his tenure, large equity grants early on a lower stock price, and [Aetna's] current stock price, he's accrued quite a bit of equity that makes his total walkaway value much larger than what we've seen in other cases," Courtney Yu, Equilar's director of research, told WSJ.
Mr. Bertolini was appointed CEO of Aetna in 2010. Under his leadership, the company's stock value has increased nearly six-fold, according to WSJ.
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