The high cost of CEO healthcare…

Every day there’s some new headline about the high cost of healthcare and even people who voraciously disagree on what should be done, usually agree that costs are out of control. The average family policy now costs over $13,000, according to this recent survey by the Kaiser Family Foundation. The problem with averages of course is that some numbers throw the whole thing out of whack.

We thought about that when we came across a footnote in this proxy filed by Allis-Chalmers Energy (ALY) last week that disclosed some pretty remarkable healthcare expenses for the company’s top executives:

  • Chairman and CEO Munawar H. Hidayatallah spent just over $72,000 on healthcare last year. That’s a 1.6 times increase from the $27,800 spent just two years ago.
  • CFO Victor Perez spent $42,647 on healthcare last year, up four-fold from the $10K spent in fiscal 2006
  • Senior vice President for Oilfield Services Terrence Keane also spent $42K on healthcare last year — up from $5,700 in 2006.

Since the filing provides no details on these expenses, other than they “represent actual health benefit premiums and expenses paid by Allis-Chalmers”, we had to wonder: could these executives really need that much care? Even annual trips for an executive physical don’t cost that much. Granted, Allis-Chalmers stock has fallen sharply over the past two years, but it’s still hard to justify this kind of healthcare inflation, especially since it seems to just be limited to the C-suite.


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