WellPoint adjusts to executive exodus

As the weather turned chillier this month in Indiana, former WellPoint Inc. executive David Helwig enjoyed sunshine, 70-degree
temperatures and ocean breezes on the alpaca ranch he and his wife operate in southern California.

"I have no regrets leaving," said Helwig, 51, who gave up 55- to 65-hour weeks and frequent travel when he retired
last year as CEO of the west region of Indianapolis-based WellPoint. He has used part of his WellPoint wealth, which included
more than $3 million in recent bonuses, as well as a pension, to buy two vineyards. He's thinking of starting a winery
in a few months.

"For me to stay on, I was either going to be spending a lot of time in Indianapolis or moving to Indianapolis,"
Helwig said. "I'd been in the Midwest before. I prefer the weather here."

Helwig's sentiments are shared by several of the 15 senior executives who have left WellPoint since November 2004, when
the giant health insurer formed through Indianapolis-based Anthem Inc.'s $16.5 billion acquisition of California-based
WellPoint Health Networks Inc. The merger made many of them rich, work at the larger WellPoint continued to be grueling, and
family and personal commitments called. So they moved on.

Few of the departures have been sudden or acrimonious. Former insiders say they even expected most of them. Analysts said
they do not sense turmoil inside the company pushing people out.

Even so, the exodus of management talent has concerned some investors, especially after a spate of departure announcements
this year.

The concern may be weighing down WellPoint shares. They've gained 6 percent in the last two years compared with a 25-percent
rise in the Standard & Poor's 500 Index. In the prior five-year span, the company's stock appreciated 312 percent.

WellPoint isn't alone in its recent underperformance. The torrid growth in profits and stock price that health insurers
enjoyed from 2000 to 2005 has slowed. And some competitors, particularly Minnesota-based UnitedHealth Group Inc., also have
experienced recent management turnover.

But lately, WellPoint has lagged most of its peers, such as Aetna Inc., Humana Inc. and Cigna Corp.

"Beyond the longer-term overhang from the cyclical slowdown that began in early 2006, the recent pressure on shares
appears to mostly reflect investor concern over implications from management changes and retirements," wrote Goldman
Sachs & Co. analyst Matthew Borsch in an investor note this month.

WellPoint spokesman Jim Kappel accentuated the positive when asked about WellPoint's recent performance. He noted that
the company has added 665,000 new patients in the first half of this year, bringing its already-industry-leading customer
base to 35 million.

"The company is also making a true difference in our members' lives by delivering more benefits than ever before
while helping to hold down the rising costs of health care," Kappel wrote in an e-mail.

Even so, WellPoint's customer growth has lagged its own stated expectations, as some of its existing clients have trimmed
their work forces.

Investors' concerns heightened, Borsch said, after WellPoint announced Oct. 2 that John Watts Jr., who had been a candidate
to succeed Larry Glasscock as CEO, would leave the company at year-end.

WellPoint announced at the same time that two other top executives will retire next year. Joan Herman, WellPoint's CEO
of consumer business, will leave in June. Chief Actuary Alice Rosenblatt plans to leave in the second half of the year.

When Herman and Rosenblatt depart, new CEO Angela Braly will have none of the top five officers who were running the company
as recently as May.

Glasscock retired June 1 for family reasons. He remains WellPoint's chairman. Chief Financial Officer and Vice Chairman
David Colby was forced to resign May 30 for unspecified conduct violations. After his exit, multiple women came forward claiming
they were having simultaneous romantic relationships with Colby. One, a former WellPoint employee, sued Colby alleging sexual
battery.

"The people who have left during the past few years, for the most part, have decided to retire due to age or service,
or to resign and begin a new phase of their career," Kappel wrote in an e-mail.

Braly in, Watts out

Since the company's February announcement that Braly would succeed Glasscock, she has drawn praise from Wall Street analysts
and former company executives.

Braly, 46, announced her first major change to the company this month, restructuring it into two main business units: consumer/individual
and commercial/group.

She said in a prepared statement that the new structure would help WellPoint "cross-sell" its specialty products,
such as its vision and dental benefits, to its traditional health plan customers, and vice versa.

"Angela Braly's excellent," said Keith Faller, 60, who retired from WellPoint in January after serving as central
region CEO. "The new organization that she just put in is much cleaner."

The company unveiled internal replacements for Watts and Rosenblatt in the same press release announcing their departures,
though it still needs a replacement for Herman. The release also announced the appointment of former Aetna executive Brad
Fluegel as chief strategy officer, a selection that drew praise from analysts.

Naming internal replacements for departing executives "shows their pool of management strength," said Shellie Stoddard,
a credit analyst at Standard & Poor's in New York. The ratings firm has delayed an upgrade it has been considering
for WellPoint's bonds because of the recent management turnover.

"I wouldn't have expected the high level of turnover," Stoddard said, though she added that the departures
have been orderly enough to make her comfortable there aren't deep issues. "They had to, after the merger, slim down
a bit."

Braly's restructuring might have been hastened by Watts' resignation. He was CEO over both consumer and commercial
business for nearly a year. Former executives said Watts was one of three candidates for the job Braly now holds. Since he
didn't get it, no one was surprised to see him move on.

WellPoint declined to make Watts available for comment.

"I'm not terribly surprised," said Helwig, a former mentor of Watts', about the latter's decision to
leave. "I think he probably wanted Angela's job."

Cultural issues

Before the merger, WellPoint Health Networks was larger than Anthem. So when the two were merged, neither company's culture
predominated, Faller said. Rather, they synthesized a new culture.

But that wasn't really the case at the highest level, Helwig said. With Glasscock still leading the senior executives,
the Anthem culture predominated.

"It was a slightly different culture," Helwig said. Speaking of the WellPoint Health Networks executives, he added,
"Some of them thought it was OK and some found it hard to get used to."

"When you bargain mergers of very large enterprises, it is invariably the case that there are two of everybody,"
said Mike Smith, the former CFO of Anthem, who designed the integration with WellPoint. "Most of the departures you have
seen could have been predicted as Larry and his leadership team developed a new organization structure."

Les Funtleyder, a health care stock analyst at Miller Tabak & Co. in New York, said the personal and lifestyle reasons
for the executive departures make sense. Still, he said, "The cynical side of me says, 'If you thought you could
make another $10 million very quickly, you might stick around.'"

Financial rewards

Many executives were given financial incentives to stay on after the WellPoint-Anthem merger.

WellPoint Health Networks' top 12 executives were given bonuses when the merger closed and another bonus if they stayed
on two years. That's why Helwig got a nice bonus upon his departure.

The 12 executives would have earned a total of $20 million if all had stayed on two years.

In addition, top executives from Anthem saw their restricted stock and stock options vest.

For example, Thomas Snead, former CEO of WellPoint's southeast region, left in early 2006. In the year of the Anthem-WellPoint
merger, Snead was awarded 95,000 stock options, valued then at $5 million, and another $4.8 million in restricted stock.

Snead also raked in more than $10 million in non-compete payments after Anthem bought his former company, Trigon Healthcare
Inc., in 2002. He also earned a load of stock options from the deal, which he cashed in during 2003 and 2004 for nearly $21
million.

"I had 20 years of my career there, enjoyed every minute, worked with some wonderful people," said Snead, 54, as
he enjoyed a lunch on a recent weekday at his father's house in Virginia. Of retirement, Snead said, "I highly recommend
it."

The Anthem executives already had received handsome salaries, bonuses and retirement packages beyond merger-related compensation.

Faller, for example, was due $12 million in deferred compensation and pension upon his retirement in January. The Carmel
resident said he retired to spend time with his wife and their two high-school-age children. He had been working 70- to 75-hour
weeks, and traveling regularly.

"I was surprised that more senior executives didn't leave right after the acquisition," Faller said.

Smith was one who did. He left barely a month after the merger closed. He had planned to retire at age 55, but the merger
kept him at Anthem until he was 57.

"Frankly, that was part of my life plan," said Smith, who is a trustee at DePauw University and a board member
of the Commission on Higher Education and several companies.

He also helps raise money for Shepherd Community Center, a poverty-fighting organization in Indianapolis.

"I have believed all along that there is a time to accumulate assets, and there is a time to return those assets to
the community," he said.

Several executives, such as Faller and Helwig, said they stayed around to make sure what they had achieved as managers survived
through the integration of WellPoint and Anthem.

"I wanted to make sure [the company] knew how to deal with California," said Helwig, noting that the aggressive
regulatory climate there is vastly different from that in Indiana. California accounts for about 20 percent of WellPoint's
earnings today.

Asked if WellPoint's leadership gained the understanding it needs, Helwig answered, "To an extent."