An activist investor is pressing UnitedHealth Group to establish a board chair that's separate and independent from the office of the CEO.
A proposal submitted by the Accountability Board urges the board of directors to adopt a policy that would ensure the board chair is independent, including that if they should lose that independence by taking on a role at the company, they will be replaced.
The proposal allows for compliance to be waived if there is no independent director who is able and willing to serve in the role.
The Accountability Board notes in the document that the company had the chance to establish an independent board when former CEO Andrew Witty stepped down in May, however, board chair Stephen Hemsley was chosen as his replacement, and he maintains both roles for the time being.
"It’s an extremely precarious time for UnitedHealth, with sustained challenges in both performance and reputation—to put it mildly," the Accountability Board wrote in the proposal. "Yet rather than improving its governance structure by enhancing Board accountability during this tumultuous time, UnitedHealth instead decreased the Board’s checks and balances by consolidating power."
The document also notes that UnitedHealth Group's corporate governance principles call for an independent board chair, as it allows the board of directors to more effectively oversee management and frees up the company's CEO to focus on their duties.
In addition, in its annual proxy filing submitted just weeks before Hemsley took the CEO chair, the company again touted the separation of board chair and CEO, according to the Accountability Board.
UnitedHealth Group declined to comment on the shareholder proposal.
The Accountability Board notes that the company had a separate board chair and CEO during its most tumultuous period, and yet it still faced a massive data breach and financial challenges. That makes it more imperative for an independent board chair to be in place, the organization said.
"This would restore trust and enhance accountability by ensuring the Chair is best positioned to represent shareholder interests free from conflicts and provide objective oversight of management," the board wrote in the proposal. "It would strengthen the Board’s ability to challenge assumptions, safeguard against excessive risk, and ensure long-term strategy and governance aren’t compromised by an insider’s perspective."