Summary
Centene Corporation (CNC) filed a Form 8-K on May 23, 2005, to report the entry into material definitive agreements. Specifically, on May 19, 2005, the company entered into executive severance and change in control agreements with nine key executive officers. These agreements are designed to provide financial and equity incentives to retain executives, particularly during periods of potential change in control. They outline specific compensation and benefits, including cash payments, continued medical coverage, and accelerated vesting of equity awards, upon termination of employment under certain conditions, both related and unrelated to a change in control. The agreements also include non-competition and non-solicitation clauses.
Key Highlights
- 1Centene Corporation entered into executive severance and change in control agreements with nine named executive officers on May 19, 2005.
- 2These agreements provide financial protection for executives in the event of termination following a change in control, including 24 months of salary, average of last two annual bonuses, and pro-rata bonus.
- 3In case of termination without a change in control (but for cause or good reason), executives are entitled to 12 months of salary continuation, a pro-rata bonus, and 12 months of continued equity vesting.
- 4Medical coverage continuation is provided for 18 months following a change in control termination and 12 months for non-change in control terminations.
- 5Existing equity awards will vest in full upon termination following a change in control.
- 6The agreements include non-competition and non-solicitation provisions for executives, extending one year post-termination.
- 7The filing includes the form of these agreements as Exhibit 10.1.
Frequently Asked Questions
The primary purpose is to provide financial security and incentives for key executives in the event of their termination of employment, especially under circumstances involving a change in control of Centene Corporation. This helps ensure executive retention during uncertain periods.
If terminated without cause or for good reason within 24 months following a change in control, an executive would receive a cash payment equal to 24 months of salary, the average of their last two annual bonuses, and a pro-rated bonus for the year of termination. They would also receive 18 months of medical coverage and full vesting of existing equity awards.
If an executive's employment is terminated by the company other than for cause, or by the executive for good reason, in the absence of a change in control, they would receive 12 months of salary continuation, a pro-rated bonus, 12 months of medical coverage, and 12 months of continued vesting of their equity awards.
Yes, the agreements include non-competition and non-solicitation clauses that remain in effect through the first anniversary of the executive's termination of employment, regardless of the reason for termination.