DEF 14A of Centene Corp
Filed Mar 12, 2021 · FY20200001071739-21-000053
Frederick H. Eppinger
Frederick H. Eppinger Principal Occupation: Director, President and Chief Executive Officer of Stewart Information Services Company First Became Director: April 2006 Age: 62 Mr. Eppinger has served as Director, President and Chief Executive Officer of Stewart Information Services Company since September 2019. He served as Director, President and Chief Executive Officer of The Hanover Insurance Group, Inc. (insurance and financial services industries) from 2003 to 2016. Mr. Eppinger serves as a director of QBE Insurance Group Limited. Qualifications: Mr. Eppinger's range of experience includes, in particular, his experience as a chief executive officer, as well as organizational development and insurance industry expertise.
Frederick H. Eppinger
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL ONE: ELECTION OF DIRECTORS |
Comprehensive Succession Planning Process
•reviewing and discussing with management the compensation, discussion and analysis section of the proxy statement; •reviewing the results of any advisory shareholder vote on executive compensation and considering whether to make or recommend adjustments to the Company's executive compensation as a result of such vote; and •retaining and terminating any compensation consultant to be used to assist the Compensation Committee in the evaluation of executive compensation. Members of management assist the Compensation Committee in its responsibilities by providing recommendations for the Compensation Committee's approval concerning the design of our compensation program for our executive officers other than our CEO, including our NEOs, as well as recommended award levels. The design of our compensation program for our CEO is recommended by the Compensation Committee and approved by the Board without any approval of the Chairman, who is the Company's CEO. The Compensation Committee considered information and data regarding executive compensation supplied by management and by Exequity, LLP, compensation consultants that were engaged directly by the Compensation Committee to provide advice with respect to base salaries, bonus targets and long-term incentives. The consultants analyzed the compensation levels of the NEOs of the industry peer group developed by Exequity, LLP for the most recently completed fiscal year. As discussed under the Compensation Discussion and Analysis (CD&A), the Compensation Committee considered this information, along with a variety of other factors, in reviewing executive compensation in 2020. The Compensation Committee has reviewed the independence of Exequity, LLP in light of SEC rules and NYSE listing standards, including the following factors: (1) other services provided to us by the consulting firm; (2) fees paid by us as a percentage of consulting firm's total revenue; (3) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the compensation consultant and a member of the Compensation Committee; (5) any company stock owned by the compensation consultant; and (6) any business or personal relationships between our executive officers and the senior advisor. The Compensation Committee discussed these considerations and concluded that the compensation consultant's work for the committee does not raise any conflict of interest. The Compensation Committee delegates to management the authority to grant certain stock options and restricted stock units under the 2012 Stock Incentive Plan. Our CEO is authorized to issue awards (other than to himself) of up to 60,000 shares to any newly hired executive and up to 24,000 shares to any one person during a calendar year, and is required to report any such grants to the Compensation Committee at the following Compensation Committee meeting. The delegation of authority may be terminated by the Compensation Committee at any time and for any reason. All internal promotions and equity grants to any “Executive Officer” (as defined by Rule 3b-7 under the Exchange Act) require Compensation Committee approval.
Comprehensive Succession Planning Process
| Director Compensation |
Comprehensive Succession Planning Process
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) 1 | Option Awards ($) 1 | All Other Compensation ($) 2 | Total ($) | | Orlando Ayala | $117,000 | $233,706 | $— | $— | $350,706 | | Jessica L. Blume | 110,000 | 233,706 | — | 27,020 | 370,726 | | H. James Dallas | 13,750 | 350,978 | 197,970 | 25,402 | 588,100 | | Robert K. Ditmore | 10,000 | 403,706 | — | 139,181 | 552,887 | | Frederick H. Eppinger | 10,000 | 358,706 | — | 27,020 | 395,726 | | Richard A. Gephardt | 123,000 | 233,706 | — | 27,020 | 383,726 | | John R. Roberts | 40,000 | 358,706 | — | 27,020 | 425,726 | | Lori J. Robinson | 110,000 | 233,706 | — | — | 343,706 | | David L. Steward | 8,000 | 373,706 | — | 31,078 | 412,784 | | Tommy G. Thompson | 8,000 | 373,706 | — | 27,020 | 408,726 | | William Trubeck | 10,000 | 350,978 | 197,970 | 25,402 | 584,350 |
Comprehensive Succession Planning Process
Non-employee directors currently receive a quarterly retainer fee of $31,250, provided that the director elects to receive 100% of the fee in Company stock and defers settlement of the fee until retirement or termination of the Board under the Company's Non-Employee Directors Deferred Stock Compensation Plan. Directors not making this election receive a quarterly cash retainer fee of $25,000. In addition, the Chairman of the Audit Committee receives a quarterly fee of $7,500, the Chairman of the Compensation Committee receives a quarterly fee of $5,000, and the Chairman of the Nominating and Governance Committee, Government and Regulatory Affairs Committee, Technology Committee, and Environmental, Social, Health and Governance Committee each receives a quarterly fee of $3,750. The Company also pays a quarterly fee of $6,250 to the Lead Independent Director of the Board. All fees are eligible for deferral under the Non-Employee Directors Deferred Stock Compensation Plan. Expense recognized in conjunction with the deferred stock election is included in the “Stock Awards” column in the Director Compensation Table above. The Board receives additional variable compensation dependent on the number of meetings held annually. Once the number of full Board of Director meetings held exceeds six, non-employee directors receive $2,000 per meeting, not to exceed $20,000 annually. The variable compensation is included within Fees Earned or Paid in Cash in the table above. As part of non-employee director compensation and to recognize each member's stock holding requirement of 7.5 times the annual cash retainer, each director receives an annual stock grant valued at $200,000 based on the first quarter average stock price prior to the grant. In April 2020, each current member of the Board received a grant of 3,300 Restricted Stock Units (RSUs) of our common stock (target value of $200,000). The Restricted Stock Units vest on the April 2021 Annual Meeting of Stockholders, subject to meeting Board of Director meeting attendance conditions. In addition, each new non-employee director is granted an option under our 2012 Stock Incentive Plan to purchase 10,000 shares of our common stock, vesting in three equal annual installments commencing on the first anniversary of the grant date. Mr. Dallas and Mr. Trubeck both received a grant of an option to purchase 10,000 shares in February 2020, representing a grant date fair value of $197,970 as displayed in the table above.
Comprehensive Succession Planning Process
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Comprehensive Succession Planning Process
| Proposal Four: Approval of the Amendment to the 2012 Stock Incentive Plan, As Amended |
Comprehensive Succession Planning Process
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Comprehensive Succession Planning Process
In considering whether to approve the Amendment, the Committee considered a number of factors including the following: •the number of shares remaining for new awards under the 2012 Amended Plan, taking into account the number only available for awards to legacy WellCare employees and employees joining the Company after January 23, 2020; •the Company's desire to have what it expects to be sufficient capacity under the 2012 Amended Plan to grant equity awards for the next three years; •the Company's historical dilution (the sum of (x) the number of shares subject to equity awards outstanding at the end of the fiscal year and (y) the number of shares available for future grants, divided by the number of shares outstanding at the end of the fiscal year); •the restrictions on granting to all employees from the WellCare Pool; and •the remaining term of the 2012 Plan which prior to the Amendment, would have terminated on April 24, 2022. The Company attempts to manage the overall dilution resulting from our use of equity compensation while maintaining the ability to attract, motivate and retain talented employees and executive officers. For the three years 2018-2020, the Company’s average gross burn rate, equity overhang and dilution were 0.7%, 1.6%, and 4.0%, respectively. Average dilution for 2018-2020 excluding legacy WellCare shares that are restricted under the terms of the merger agreement was 3.3%. Based on its review of the relevant considerations, including the fact that the Company’s three-year average gross burn rate based on the 2020 Institutional Shareholder Services calculation was 1.47%, compared to the benchmark of 2.22% for our industry group, the Committee determined that the proposed share increase to the 2012 Amended Plan is in line with our peers as well as necessary to retain equity compensation as an important recruiting and retention tool. The Committee determined in light of these factors, among others including but not limited to those listed above, that it was appropriate to recommend that the Board adopt the Amendment. The increase in reserved shares under the 2012 Amended Plan will be effective subject to the approval of our stockholders. For a more complete description of the 2012 Amended Plan, as proposed, please see “Summary of the 2012 Amended Plan” below and the copy of the 2012 Amended Plan, included as Appendix B to this proxy statement.
Comprehensive Succession Planning Process
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Comprehensive Succession Planning Process
We use the 2012 Amended Plan to attract and retain talented employees in a highly competitive employment market. Our management carefully considers all proposed grants under the 2012 Amended Plan, and the Committee or Chairman, President and Chief Executive Officer, with authority delegated from our Board, approves all awards. Our Board believes that our future success depends, in large part, upon our ability to maintain a competitive position to: •attract new employees and executives with competitive compensation packages; •retain our existing executives who are attractive candidates to other companies in our industries; •motivate and recognize our high performing individuals; and •ensure the availability of stock incentives for employees we hire as a result of acquisitions. In considering the extension of the term of the 2012 Amended Plan, the Committee determined to extend for the maximum period (10 years) consistent with granting incentive stock options thereunder. The Committee also determined to include a cap on the number of incentive stock options, consistent with applicable law. Accordingly, our Board of Directors believes the 2012 Amended Plan is in our best interests and the best interests of our stockholders and recommends a vote “FOR” the Amendment. In the event the 2012 Amended Plan is not approved at the meeting, the Board will reconsider the alternatives available to help attract, retain and motivate key individuals who are currently our employees or who become employees as the result of any future acquisitions, and the 2012 Amended Plan would continue in effect in accordance with its existing terms.
Types of Awards
Types of Awards The 2012 Amended Plan provides for the grant of: •incentive stock options intended to qualify under Section 422 of the Internal Revenue Code; •non-statutory stock options; •restricted stock and restricted stock units, collectively referred to herein as restricted stock awards; •stock appreciation rights; and •other stock based awards. Options. Optionees receive the right to purchase a specified number of shares of our common stock at a specified option price and are subject to such other terms and conditions as are specified in connection with the option grant. We may grant options only at an exercise price that is equal to or greater than the fair market value of our common stock on the date of grant. Under present law, incentive stock options and options intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code may not be granted at an exercise price less than the fair market value of our common stock on the date of grant or less than 110% of the fair market value in the case of incentive stock options granted to optionees holding more than 10% of the voting power of the Company. The 2012 Amended Plan permits the following forms of payment of the exercise price of options:
Types of Awards
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Types of Awards
•payment by cash, check or in connection with a "cashless exercise" through a broker; •surrender of shares of our common stock; •any other lawful means (other than promissory notes); or •any combination of these forms of payment. Restricted Stock. Awards of restricted stock entitle recipients to acquire shares of our common stock, subject to our right to repurchase all or part of such shares from the recipient at the issue price or other stated formula or price in the event that the conditions specified in the applicable award are not satisfied before the end of the applicable restriction period established for such award. Restricted Stock Units. Restricted stock unit awards entitle recipients to acquire shares of our common stock in the future, and we promise to complete the issuance of stock to the recipient promptly after the award vests. The right to acquire the stock will be subject to terms and conditions established by the Compensation Committee and the shares received may be subject to restrictions or repurchase. Stock Appreciation Rights. A stock appreciation right, or SAR, is an award entitling the holder upon exercise to receive an amount in common stock determined in whole or in part by reference to appreciation, from and after the date of grant, in the fair market value of a share of common stock. SARs may be based solely on appreciation in the fair market value of common stock or on a comparison of such appreciation with some other measure of market growth such as appreciation in a recognized market index. SARs may be issued in tandem with options or as stand-alone rights. We may grant SARs only at an exercise price that is equal to or greater than the fair market value of our common stock on the date of grant. Other Stock Based Awards. The Compensation Committee has discretion to issue other stock based awards that have a value based on the value of shares, including but not limited to grants of stock and grants of rights to receive stock in the future. The terms and conditions of other stock based awards, if any, will be determined by the Compensation Committee.
Performance Measures
Performance Measures With respect to restricted stock awards, the Compensation Committee may set performance measures designed to satisfy the requirements of Code Section 162(m) which will be set forth in the award agreement pertaining to the grant of the award. The time period during which the performance measures must be met is called the “performance period.” •net earnings or net income (before or after taxes); •net sales or revenue growth; •net operating profit (before and after taxes); •return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue); •cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment); •earnings before or after taxes, interest, depreciation, and/or amortization; •gross or operating margins; •productivity ratios; •share price (including, but not limited to, growth measures and total stockholder return); •expense targets; •margins; •operating efficiency; •market share;
Performance Measures
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Performance Measures
•customer satisfaction; •working capital targets; and •economic value added (net operating profit after tax minus (the sum of capital multiplied by the cost of capital). Any of the preceding performance measures that are financial metrics, may be determined in accordance with United States Generally Accepted Accounting Principles (GAAP) or may be adjusted when established (or to the extend permitted under Section 162(m) of the Code, at any time thereafter) to include or exclude any items otherwise includable or excludable under GAAP. The Compensation Committee may use these performance measure(s) to: •measure our performance, or the performance of any of our subsidiaries and/or affiliates, as a whole or measure the performance of any of our business units, or any of the business units of our subsidiaries and/or affiliates, or any combination thereof, as the Compensation Committee may deem appropriate; •compare any of the foregoing performance measures to the performance of a group of comparator companies, or a published or special index that the Compensation Committee deems appropriate; or •compare our share price (including, but not limited to, growth measures and total stockholder return) to various stock market indices. Performance measures may vary from performance period to performance period and from participant to participant and may be established on a stand-alone basis, in tandem or in the alternative. The Compensation Committee will have the discretion to adjust the amount payable on a corporation-wide or divisional basis or to reflect individual performance and/or unanticipated factors; however, awards that are designed to meet the performance-based criteria of Code Section 162(m) may not be adjusted upward. Stockholder approval of the 2012 Amended Plan will be deemed to include approval of the various performance award measures identified above. If applicable tax and/or securities laws change to permit Compensation Committee discretion to alter the governing performance measures without obtaining stockholder approval of such changes, then the Compensation Committee, in its sole discretion, may make such changes without obtaining stockholder approval, provided the exercise of such discretion does not violate Code Section 409A. In addition, if the Compensation Committee determines that it is advisable to grant awards that will not meet the performance-based criteria, then the Compensation Committee may make such grants without satisfying the requirements of Code Section 162(m).
Eligibility to Receive Awards
Eligibility to Receive Awards Our employees, officers, directors, consultants and advisors are eligible to be granted awards under the 2012 Amended Plan. Under present law, however, incentive stock options may only be granted to employees of the Company or any of its subsidiaries. The maximum number of shares with respect to which awards may be granted, including options and stock appreciation rights, to any participant under the 2012 Amended Plan may not exceed 2,000,000 in any calendar year. Assuming the Amendment is adopted, the maximum number of shares that may be issued pursuant to the exercise of incentive stock options under the 2012 Amended Plan will be equal to 50,730,061, the total number of shares authorized to be issued under the 2012 Amended Plan.
Plan Benefits
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Administration
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Change In Control
Change In Control Unless otherwise provided in the award agreement, upon the occurrence of a Change in Control (as defined in the 2012 Amended Plan): •any and all outstanding stock options and stock appreciation rights will become immediately exercisable; and •any and all outstanding restricted stock awards that are not vested will vest and any restrictions will lapse. Notwithstanding the foregoing, in connection with certain types of Changes in Control, the Compensation Committee may instead provide that all outstanding options will terminate and each participant will receive, in exchange therefore, a cash payment equal to the amount (if any) by which (A) the acquisition price multiplied by the number of shares of common stock subject to such outstanding options (whether or not then exercisable), exceeds (B) the aggregate exercise price of such options and (ii) each participant awarded any other award which is denominated in shares of common stock will be paid in cash as determined by the Board in its sole discretion to be consistent with the treatment of options.
U.S. Federal Income Tax Consequences
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
U.S. Federal Income Tax Consequences
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Tax Consequences to Centene
Tax Consequences to Centene The grant of an award under the 2012 Amended Plan generally will have no tax consequences to us. Moreover, in general, neither the exercise of an incentive stock option nor the sale of any common stock acquired under the 2012 Amended Plan will have any tax consequences to us. We generally will be entitled to a business-expense deduction, however, with respect to any ordinary compensation income recognized by a participant under the 2012 Amended Plan, including in connection with a restricted stock award or SAR
Tax Consequences to Centene
| 2021 NOTICE OF MEETING AND PROXY STATEMENT | | PROPOSAL FOUR: APPROVAL OF THE AMENDMENT TO THE 2012 STOCK INCENTIVE PLAN, AS AMENDED |
Who We Engaged With Since our 2020 Annual Meeting
| We received stockholder feedback in the following areas: | Our Board responded with the following actions: | | Disclosure of Short-and Long-Term Incentive Program Structure | We have increased disclosure regarding the design and structure of our incentive programs, including additional disclosure of our target-setting process and the rigor of goals. For more details, refer to our Annual Cash Incentive Plan discussion. | | Eliminating Single-Trigger Equity Acceleration Provision | Beginning with our December 2020 grants, all equity grants will be subject to a double-trigger vesting acceleration in the event of a change-in-control. | | Transparency around Management Succession Planning | We have substantially expanded our disclosure of Centene's comprehensive succession planning processes, and have provided more detail on the role of the Nominating and Governance Committee in considering potential successors to the CEO. | | Environmental Sustainability Initiatives | In July 2020, we formed an Environmental and Social Responsibility committee comprised of independent directors, which is responsible for assisting management in the development of the Company's strategic plans related to issues of environmental and social importance. Additionally, in an effort to further enhance our disclosures, we published a 2020 Report to the Community on ESHG topics. | | Board Refreshment | We have added three new independent directors to the Board within the last 18 months, and our Board is now 42% diverse by gender or ethnicity. | | Political Contributions | We posted the revised political contributions policy on our website to highlight a political activity report that will be reviewed by the Government and Affairs Committee. | | COVID-19 Response | We demonstrated our commitment to our members and the communities we serve, employees, providers and government partners. For more details, refer to our ESHG and Corporate Sustainability section. |
Who We Engaged With Since our 2020 Annual Meeting
| Base Pay | + | Cash Awards Under Our Annual Incentive Plan | + | Long-Term Incentives | | | | | | Performance-Based RSUs Time-Based RSUs Stock Options Cash LTIP |
Who We Engaged With Since our 2020 Annual Meeting
| Annual Incentive Plan | | | Performance Measure | % Weight | | Adjusted Diluted EPS Target | 70% | | General and Administrative Expense Management | 15% | | Individual Performance Objectives | 15% | | Bonus pool is not funded unless EPS objective is achieved. | |
Who We Engaged With Since our 2020 Annual Meeting
| Long-Term Incentive Plan | | | | | Three-Year Performance-Based RSUs (60% of equity) | | Service-Based RSUs (40% of equity) | | | Pre-tax Margin (60%) | | Ratable vesting over three-year period | | | Compound Annual Revenue Growth (40%) | | | | | Three-Year Cash LTIP | | | | | Three-year Relative TSR vs. HCI Peer Group (50%) | Pre-tax Margin (30%) | | Compound Annual Revenue Growth (20%) | | Increased pre-tax margin target for 2021-2023 Cash LTIP and PSUs. New goal is significantly higher than the prior target and the actual level of achievement during the most recently completed performance cycle. | | | | | Aggressive and rigorous goals require strong performance to earn target payout and extraordinary performance to earn maximum payout. | | | |
Who We Engaged With Since our 2020 Annual Meeting
| Annual Cash Incentive Plan |
Who We Engaged With Since our 2020 Annual Meeting
| Annual Cash Incentive Performance |
Who We Engaged With Since our 2020 Annual Meeting
| Name | Individual Performance | 2020 Annual Cash Incentive Paid ($) | % of Target Paid | | Michael F. Neidorff | •Drove total revenues up 49% to $111 billion and increased Adjusted Diluted EPS to $5.00, an increase of 13% over 2019, while achieving a Return on Equity of 9%, Return on Invested Capital of 5% and Return on Assets of 3% for 2020 and an overall three year average of 10%, 6% and 4%, respectively. •Completed the successful closing and integration of the acquisition of WellCare, which was announced in March 2019 and closed in early 2020, creating a premier healthcare enterprise focused on government sponsored health care programs covering more than 25 million members in all 50 states. •In continuing to enhance our people priorities, named to Bloomberg's 2021 Gender-Equality Index, named one of the Best Places to Work by the Human Rights Foundation, and joined the United Nations Global Compact and adopted the Women's Empowerment Principles to Advance Equity. •Supported the business, as well as its members, providers, and employees, through an effective response to COVID-19 that led the company to a placement of 14th in Forbes Top 100 Corporate Responders rankings. | $2,700,000 | 100% | | Jeffrey A. Schwaneke | •Exceeded consolidated financial performance targets for 2020, including Total Revenues, Adjusted Diluted EPS, and SG&A Ratio. •Successfully executed the closing and integration of WellCare, including the integration of key finance systems, leading the Company to the achievement of projected cost synergies in 2020. •Reduced the Company's overall leverage by more than 150 basis points prior to new acquisitions in the fourth quarter, and refinanced $4.2 billion of senior notes at Company-low interest rates, leading to significant annual savings. | $925,000 | 100% | | Mark J. Brooks | •Effectively maintained and improved the company's IT infrastructure as the entire organization moved to a work from home disposition and achieved a 98% work from home customer satisfaction rating. •Improved member experience through the implementation of next generation case management software and the successful migration of call center platforms. •Accommodated all new growth, including Marketplace and Medicare expansion, and integration activities by completing all new market plan implementations and expansions timely and within budget, while improving overall systems availability. | $700,000 | 100% | | Brandy L. Burkhalter | •Successfully led the infrastructure builds for both Health Insurance Marketplace expansion into more than 400 additional counties and two new branded states, as well as Medicare expansion into more than 250 additional counties and two new states. •Achieved all organization synergies and Centene Forward targets for 2020 and placed the Company in a position to deliver significant run rate savings for 2021. •Enhanced the member and provider experience through the improvement of first call resolution rates and established an operational discipline around reducing claims rework, leading to 2020 rework rates that were approximately 20% lower than historical averages. | $825,045 | 100% | | Jesse N. Hunter | •Led and executed multiple M&A transactions consistent with our strategy and investment criteria in 2020, including the closing of WellCare for $19.6 billion, the related divestiture of three subsidiaries, and the acquisitions of Apixio and PANTHERx in the fourth quarter. •Launched the Company's 2025 strategic plan, which aims to continue expansion into the next generation of healthcare, while further enhancing the service provided to members, providers, and communities. •Successfully executed multiple innovation programs, including SPARK and rural health transformation. | $785,000 | 100% | | Kenneth A. Burdick | •Advanced the effective integration of WellCare, helping bring the benefits of the strategic combination to our members, communities, employees, and shareholders. •Provided oversight and guidance that helped optimize the performance of the Medicare Advantage product and position the Company for significant product growth in 2021. •Maintained health plan oversight for the Company's growing portfolio, which added more than 30 products in 12 markets and expanded prescription drug coverage to all 50 states during 2020. | $2,100,000 | 100% |
Who We Engaged With Since our 2020 Annual Meeting
| Long-Term Incentive Awards |
Who We Engaged With Since our 2020 Annual Meeting
| 2018-2020 Performance-Based Restricted Stock Unit Award Results |
Who We Engaged With Since our 2020 Annual Meeting
| | Metric Criteria | | | Weight | 2018 - 2020 Actual | Metric Payout of Target | Weighted Payout | | | Threshold | Target | Maximum | | | | | | Pre-tax Margin (As Adjusted) | 2.75% | 3.25% | 4.25% | 60% | 3.45% | 120% | 72.0% | | Compound Annual Revenue Growth Rate | 7.5% | 10.0% | 15.0% | 40% | 23.3% | 200% | 80.0% | | | | | | 100% | | | 152.0% |
Who We Engaged With Since our 2020 Annual Meeting
| 2018-2020 Cash Long-Term Incentive Plan Award Results |
Who We Engaged With Since our 2020 Annual Meeting
| | Metric Criteria | | | Weight | 2018 - 2020 Actual | Metric Payout of Target | Weighted Payout | | | Threshold | Target | Maximum | | | | | | Pre-tax Margin (As Adjusted) | 2.75% | 3.25% | 4.25% | 30% | 3.45% | 120.0% | 36.0% | | Compound Annual Revenue Growth Rate | 7.5% | 10.0% | 15.0% | 20% | 23.3% | 200.0% | 40.0% | | HCI Peer Group Relative Total Shareholder Return Percentile Rank | 25th | 50th | 90th | 50% | 27th | 31.6% | 15.8% | | | | | | 100% | | | 91.8% |
Who We Engaged With Since our 2020 Annual Meeting
| Name | Target ($) | Payout ($) | | Michael F. Neidorff | $2,250,000 | $2,065,500 | | Jeffrey A. Schwaneke | 725,000 | 665,550 | | Mark J. Brooks | 500,000 | 459,000 | | Brandy L. Burkhalter | 475,000 | 436,050 | | Jesse N. Hunter | 675,000 | 619,650 | | Kenneth A. Burdick1 | — | — | | 1 Mr. Burdick did not have a payout under this performance cycle as he did not join the Company until 2020. | | |
Who We Engaged With Since our 2020 Annual Meeting
| Competitive Pay Philosophy |
Who We Engaged With Since our 2020 Annual Meeting
| A. Healthcare Industry Peer Group |
Who We Engaged With Since our 2020 Annual Meeting
| Benchmarking Methodology |
Who We Engaged With Since our 2020 Annual Meeting
| 2021 Annual Cash Incentive |
Who We Engaged With Since our 2020 Annual Meeting
| A. Must meet Adjusted EPS Objective (Funding of Bonus) |
Who We Engaged With Since our 2020 Annual Meeting
| B. Allocation of Bonus Payout for 2021 |
Who We Engaged With Since our 2020 Annual Meeting
| | | | | | | Annual Cash Incentive Award | | Target Incentive Opportunity | | Performance | | | | | | Base Salaryx | Individual Target Award %x | Adjusted Diluted EPS Performance Pool Range: 0% to 200% | + | Business Objectives, Budget Controls and Individual Objectives Pool Range: 0% to 200% | = | | | | | | | | | (Maximum Pool @ 200% of Target) | | | | Multiplied by 35% Weight | | Multiplied by 65% Weight | | |
Who We Engaged With Since our 2020 Annual Meeting
| 2021-2023 Long-Term Incentives |
Who We Engaged With Since our 2020 Annual Meeting
| | Metric Criteria | | | Weight | Metric Payout of Target | | | Threshold | Target | Maximum | | | | Pre-tax Margin (As Adjusted) | * | * | * | 30% | 0%-200% | | Compound Annual Revenue Growth Rate | * | * | * | 20% | 0%-200% | | HCI Peer Group Relative Total Shareholder Return Percentile Rank | 25th | 50th | 90th | 50% | 0%-200% | | | | | | 100% | | | * While we consider the disclosure of the 2021-2023 metrics proprietary and have excluded them from the table above, the Compensation Committee increased the Pre-Tax Margin (As Adjusted) target from the previous years cycle (2020-2022), recognizing the continuing effort to improve the business. | | | | | |
Who We Engaged With Since our 2020 Annual Meeting
| Employment Contracts, Termination of Employment Arrangements, Change in Control Arrangements, and Retirement Provisions |
Who We Engaged With Since our 2020 Annual Meeting
| CEO Employment Agreement |
Who We Engaged With Since our 2020 Annual Meeting
| Severance and Change in Control Agreements |
Who We Engaged With Since our 2020 Annual Meeting
| Equity Compensation Plan Information |
Who We Engaged With Since our 2020 Annual Meeting
| Summary Compensation Table |
Who We Engaged With Since our 2020 Annual Meeting
| Name & Principal Position | Year | Salary ($) | Stock Awards | | | Option Awards ($) 1 | Non-Equity Incentive Plan Compensation ($) 2 | All Other Compensation ($) | | Total ($) | | | | | Performance Based | Service Based ($) | Total ($) 1 | | | | | | | Michael F. Neidorff | 2020 | $1,800,000 | $8,959,500 | $5,973,000 | $14,932,500 | $2,941,500 | $4,765,500 | $517,277 | 3 | $24,956,777 | | Chairman, President and Chief Executive Officer | 2019 | 1,500,000 | 10,199,968 | 6,800,019 | 16,999,987 | 380,360 | 7,065,000 | 493,078 | | 26,438,425 | | | 2018 | 1,500,000 | 10,200,784 | 6,800,478 | 17,001,262 | — | 7,039,800 | 581,352 | | 26,122,414 | | Jeffrey A. Schwaneke | 2020 | 925,000 | 3,225,420 | 2,150,280 | 5,375,700 | — | 1,590,550 | 115,463 | 4 | 8,006,713 | | Executive Vice President, Chief Financial Officer | 2019 | 860,000 | 3,550,200 | 2,366,800 | 5,917,000 | — | 2,489,500 | 167,784 | | 9,434,284 | | | 2018 | 800,000 | 3,973,800 | 2,649,200 | 6,623,000 | — | 2,446,600 | 91,354 | | 9,960,954 | | Mark Brooks | 2020 | 700,000 | 895,950 | 1,508,300 | 2,404,250 | — | 1,159,000 | 79,667 | 4 | 4,342,917 | | Executive Vice President , Chief Information Officer | 2019 | 600,000 | 1,420,080 | 946,720 | 2,366,800 | — | 1,346,500 | 96,705 | | 4,410,005 | | | 2018 | 550,000 | 1,271,616 | 847,744 | 2,119,360 | — | 1,317,475 | 48,837 | | 4,035,672 | | Brandy L. Burkhalter | 2020 | 825,000 | 2,867,040 | 2,822,360 | 5,689,400 | — | 1,261,095 | 31,618 | 4 | 7,807,113 | | Executive Vice President, Chief Operating Officer | 2019 | 750,000 | 3,550,200 | 2,366,800 | 5,917,000 | — | 1,893,000 | 77,416 | | 8,637,416 | | | 2018 | 675,000 | 2,384,280 | 2,532,720 | 4,917,000 | — | 1,934,950 | 46,288 | | 7,573,238 | | Jesse N. Hunter | 2020 | 785,000 | 3,225,420 | 2,150,280 | 5,375,700 | — | 1,404,650 | 114,052 | 4 | 7,679,402 | | Executive Vice President and Chief Strategy Officer | 2019 | 750,000 | 1,775,100 | 1,183,400 | 2,958,500 | — | 2,271,000 | 139,469 | | 6,118,969 | | | 2018 | 725,000 | 1,920,048 | 1,280,032 | 3,200,080 | — | 2,138,930 | 100,134 | | 6,164,144 | | Kenneth A. Burdick | 2020 | 1,400,000 | 4,199,979 | 7,200,004 | 11,399,983 | — | 2,100,000 | 142,243 | 4 | 15,042,226 | | Former Executive Vice President, Markets & Products | | | | | | | | | | |
Who We Engaged With Since our 2020 Annual Meeting
| Grants of Plan-Based Awards Table |
Who We Engaged With Since our 2020 Annual Meeting
| Outstanding Equity Awards at Fiscal Year-End Table |
Who We Engaged With Since our 2020 Annual Meeting
| Option Exercises and Stock Vested Table |
Who We Engaged With Since our 2020 Annual Meeting
| Nonqualified Deferred Compensation Table |
Who We Engaged With Since our 2020 Annual Meeting
| Potential Payments Upon Termination or Change in Control |
Who We Engaged With Since our 2020 Annual Meeting
| Executive Benefits and Payments Upon Terminations | Voluntary Termination/Retirement | Involuntary Not for Cause or Voluntary with Good Reason Termination | For Cause Termination | Death | Disability | Change in Control | | Severance | $— | $2,250,000 | $— | $— | $— | $2,250,000 | | Pro rata Bonus Payment | 270,000 | 270,000 | — | 270,000 | 270,000 | 270,000 | | Unvested Stock Option Spread | 110,000 | 110,000 | — | 110,000 | 110,000 | 110,000 | | Unvested RSUs and PSUs | 48,314,005 | 48,314,005 | — | 48,314,005 | 48,314,005 | 53,845,649 | | Cash LTIP | 5,285,250 | 5,285,250 | — | 5,285,250 | 5,285,250 | 5,285,250 | | Welfare Benefits Values | 23,696 | 23,696 | — | 6,524,533 | 23,696 | 35,544 |
Who We Engaged With Since our 2020 Annual Meeting
| Executive Benefits and Payments Upon Terminations | Voluntary Termination | Involuntary Not for Cause Termination | For Cause Termination | Death | Disability | Change in Control | | Severance | $— | $925,000 | $— | $— | $— | $4,067,500 | | Pro rata Bonus Payment | — | 92,500 | — | — | — | 92,500 | | Unvested RSUs and PSUs | — | 2,321,180 | — | 3,601,800 | 3,601,800 | 17,197,454 | | Cash LTIP | — | 108,025 | — | 1,789,500 | 1,789,500 | 1,833,025 | | Welfare Benefits Values | — | 32,456 | — | 1,608,000 | — | 48,684 | | Outplacement | — | 10,000 | — | — | — | 10,000 |
Who We Engaged With Since our 2020 Annual Meeting
| Executive Benefits and Payments Upon Terminations | Voluntary Termination | Involuntary Not for Cause Termination | For Cause Termination | Death | Disability | Change in Control | | Severance | $— | $700,000 | $— | $— | $— | $2,770,000 | | Pro rata Bonus Payment | — | 70,000 | — | — | — | 70,000 | | Unvested RSUs and PSUs | — | 1,176,528 | — | 1,548,774 | 1,548,774 | 6,891,900 | | Cash LTIP | — | 41,000 | — | 641,000 | 641,000 | 1,291,000 | | Welfare Benefits Values | — | 32,456 | — | 548,000 | — | 48,684 | | Outplacement | — | 10,000 | — | — | — | 10,000 |
Who We Engaged With Since our 2020 Annual Meeting
| Executive Benefits and Payments Upon Terminations | Voluntary Termination | Involuntary Not for Cause Termination | For Cause Termination | Death | Disability | Change in Control | | Severance | $— | $825,000 | $— | $— | $— | $3,407,500 | | Pro rata Bonus Payment | — | 82,500 | — | — | — | 82,500 | | Unvested RSUs and PSUs | — | 2,621,290 | — | 3,091,545 | 3,091,545 | 15,461,027 | | Cash LTIP | — | 70,775 | — | 795,775 | 795,775 | 1,570,775 | | Welfare Benefits Values | — | 10,827 | — | 1,698,000 | — | 16,240 | | Outplacement | — | 10,000 | — | — | — | 10,000 |
Who We Engaged With Since our 2020 Annual Meeting
| Executive Benefits and Payments Upon Terminations | Voluntary Termination | Involuntary Not for Cause Termination | For Cause Termination | Death | Disability | Change in Control | | Severance | $— | $785,000 | $— | $— | $— | $3,383,500 | | Pro rata Bonus Payment | — | 78,500 | — | — | — | 78,500 | | Unvested RSUs and PSUs | — | 1,520,860 | — | 1,800,900 | 1,800,900 | 11,300,167 | | Cash LTIP | — | 100,575 | — | 845,575 | 845,575 | 1,610,575 | | Welfare Benefits Values | — | 32,456 | — | 3,450,000 | — | 48,684 | | Outplacement | — | 10,000 | — | — | — | 10,000 |
Who We Engaged With Since our 2020 Annual Meeting
| Executive Benefits and Payments Upon Terminations | Voluntary Termination/Retirement | Involuntary Not for Cause Termination | For Cause Termination | Death | Disability | Change in Control | | Severance | $13,954,500 | $— | $— | $— | $— | $— | | Pro rata Bonus Payment | — | — | — | — | — | — | | Unvested RSUs and PSUs | 11,881,918 | — | — | — | — | — | | Cash LTIP | 1,400,000 | — | — | — | — | — | | Welfare Benefits Values | 28,706 | — | — | — | — | — | | Outplacement | 10,000 | — | — | — | — | — |
Who We Engaged With Since our 2020 Annual Meeting
| CEO to Median Employee Pay Ratio Information |