Angela F. Braly, the president and CEO of WellPoint, Inc. (NYSE:WLP), resigned yesterday amid rising pressure from the shareholders. The second-largest health insurer in the United States has appointed the general counsel and executive vice president, John Cannon, as its interim CEO, and lead director Jackie Ward is the new non-executive chairman.

WellPoint Braly

The investors in Indianapolis-based company are looking for a CEO who can bring the company’s financial performance back on the track and successfully integrate the recent acquisitions into the company. Last month, WellPoint announced plans to acquire the Medicaid insurer, AMERIGROUP Corporation (NYSE:AGP) for $4.46 billion and vision company 1-800-Contacts Inc. for approximately $900 million. WellPoint, Inc. (NYSE:WLP) has reportedly hired Heidrick & Struggles International Inc., an executive search firm, to find the new CEO. Shareholders believe that the acquisition of AMERIGROUP Corporation(NYSE:AGP) will still go ahead.

Many shareholders have publicly criticized Braly’s management approach. So, Jacky Ward, the lead director at WellPoint, Inc. (NYSE:WLP), discussed their concerns with the shareholders. Finally, the company board decided yesterday that Braly should resign from the job.

“There’s a nice set of assets there. Now hopefully the board can find a candidate who can bring these assets home.” Robert Medway, a partner in Royal Capital Management LLC and investor in WellPoint, told Bloomberg. Medway believes that WellPoint shares are worth 10 percent more if the company has the right leadership.

Investors started criticizing Braly in 2010 during Barack Obama’s healthcare overhaul. Recently, they have fired verbal attacks on her after the insurer missed Wall Street expectations for the second quarter and lowered earning forecast twice in the past four months. The shareholders have also criticized her for failing to forecast the medical costs and setting premium prices.

Many shareholders have been discontent with her decision to buyback shares that didn’t gain any value. WellPoint bought shares worth $493.7 million during the second quarter at an average price of $68.53.

“I have spoken with our board, and we have agreed this is the right action for WellPoint at this time,” Braly said while addressing the company employees. “The board and I feel, though, that the company will benefit from getting a fresh perspective on ways we can improve execution across the company.”

Investors have been looking for the potential CEO even before the resignation of Braly. They are considering people from inside as well as outside of the company. There are three outside candidates – James Carlson, the CEO of Amerigroup, David Snow Jr., ex-CEO of Medco Health Solutions, and Gail Boudreaux who runs the health plan division of UnitedHealth Group Inc. (NYSE:UNH). The inside candidates are – Wayne Deveydt, CFO and Kenneth Goulet, executive vice president. The interim CEO John Cannon is out of the race for the post of permanent CEO.

The CEO of Omega Advisors Leon Cooperman, who runs a value oriented hedge fund, has stated that Braly is “the wrong CEO to lead the business.”

Deutsche Bank research stated that ‘the desire for a CEO change was nearly universal among WLP shareholders.’

Jefferies lists some of the following mistakes under Braly’s tenor; the company made mistakes in pricing, attempting to force through California rate hikes as high as 39% in 2010 (which spurred public outrage and fueled the ACA). It followed that with a mispriced Medicare Advantage product in California in 2011 (costing them $0.30), and then delivered a 4% guidance cut on the 2Q12 update attributing the hit to higher medical costs.

WellPoint shares jumped 4.2 percent in extended trading after the announcement of Braly’s resignation.