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WellPoint CEO choice surprises some

INDIANAPOLIS --WellPoint Inc. surprised some Wall Street analysts Monday when it announced that a relatively unknown executive will replace Chief Executive Larry Glasscock after he steps down in June.

Angela Braly, executive vice president and general counsel for the Indianapolis-based insurer, will become president and CEO after Glasscock steps down June 1. She will make WellPoint the biggest Fortune 500 company with a woman at the helm.

Glasscock announced his retirement Monday.

WellPoint's choice for successor comes as a "major shock," according to a report from CIBC World Markets analyst Carl McDonald.

"We want to emphasize that our issue is not with Braly herself, as she very well could be the perfect person for the role," McDonald wrote. "We just don't know her, and neither does the market."

WellPoint shares fell 37 cents to close at $81.13 in trading Monday on the New York Stock Exchange. They are still near the higher end of their 52-week range of $65.49 to $84.15.

Glasscock, 58, said he was retiring as president and CEO for family reasons but did not elaborate. He will remain non-executive chairman of the board.

His supplemental retirement plan calls for a lump sum payment of $31 million, according to Alexandra Higgins, a senior compensation analyst with The Corporate Library, a corporate governance research firm.

But WellPoint spokesman Jim Kappel said the total value of that pay won't be calculated until he retires.

Glasscock also has more than $55 million in unexercised stock options, but Kappel said not all of those vest upon retirement.

Braly, 45, joined the company in 2005. Before that, she was president and CEO of Blue Cross Blue Shield of Missouri. Glasscock cited the membership and profitability growth her company saw then as an attribute.

He also noted the importance of handling public policy, legislative and regulatory issues in the future.

"These are all areas that Angela is incredibly skilled at, in addition to knowing how to run a company, so that was a very important aspect of her selection as my successor," he said.

Braly joined Blue Cross Blue Shield in 1999 after being a partner with a St. Louis law firm. She earned her law degree from Southern Methodist University and her undergraduate degree from Texas Tech University.

She said the company will focus on expanding membership but also will continue to look for more merger and acquisition opportunities to drive future growth.

WellPoint ranks 38th in the 2006 Fortune 500 list of the biggest companies. The next largest company with a female leader is No. 56, Archer Daniels Midland Co., where Patricia A. Woertz serves as chairman, CEO and president.

Braly said she might bring "great perspective" to the new role because of her gender.

"What we know at WellPoint is that 70 percent of the health care decisions are made by women, so I think it's a very natural place for me to be, both as a businesswoman and as a consumer of health care for my family," said Braly, who is married and has three school-age children.

McDonald called company Chief Financial Officer David Colby the most logical candidate to replace Glasscock and questioned whether he would stay with the company now.

Colby said in a conference call that he was "very happy to work alongside" Braly.

JPMorgan analyst William D. Georges stated in a separate report that Braly was the logical choice due to her acquisitions and public policy experience.

Glasscock joined Anthem Insurance in 1998 and helped engineer the largest deal in company history. In 2004, WellPoint was formed when Indianapolis-based Anthem Inc. acquired Thousand Oaks, Calif.-based WellPoint Health Networks Inc. in a $16.5 billion deal. The combined company changed its name to WellPoint Inc.

Under Glasscock's leadership, WellPoint and its predecessor companies grew from 6 million medical members and $6 billion in revenue to more than 34 million medical members and more than $60 billion in revenue.

Braly will receive an annual base salary of $1.1 million, which doesn't count other compensation like bonuses and stock options.

In 2005, Glasscock earned $5.2 million in salary and bonus and received $3.1 million in restricted stock award, according to the company's latest proxy statement.