8-KLeadership ChangesExhibits & Filings

CENTENE CORP 8-K Report, Executive Changes (May 16, 2013)

Filed May 16, 2013For Securities:CNC

Summary

Centene Corporation (CNC) has filed an 8-K detailing significant amendments to the executive employment agreement of its Chairman, President, and CEO, Michael F. Neidorff. Key changes include a reduction in severance multiples following a change of control from three times to two times base salary and bonus (or less), elimination of 'single trigger' severance, and removal of tax gross-up benefits for excise taxes. These modifications aim to reduce potential costs to the company and align executive compensation more closely with shareholder interests in change-of-control scenarios. Further strengthening the alignment and ensuring leadership continuity, the agreement has been extended by three years, now through December 31, 2017. Mr. Neidorff has also been granted 30,000 restricted stock units, which will vest based on the identification of a successor approved by the board and are subject to distribution following his termination. These changes reflect a strategic adjustment in executive compensation and succession planning.

Key Highlights

  • 1Michael F. Neidorff's executive employment agreement amended, impacting change-of-control provisions and extending his tenure.
  • 2Severance multiple reduced from 3x to 2x (or less) base salary and bonus following a change of control.
  • 3Eliminated 'single trigger' severance, requiring a more specific definition of 'good reason' for termination after a change of control.
  • 4Removed tax gross-up benefits for excise taxes related to severance payments.
  • 5Employment agreement term extended by three years, through December 31, 2017, to ensure business continuity and orderly leadership transition.
  • 6Granted 30,000 restricted stock units to Mr. Neidorff, vesting upon identification of an approved successor and payable post-termination.
  • 7These amendments are intended to reduce potential financial liabilities for the company and enhance alignment with shareholder interests.

Frequently Asked Questions

The severance multiple following a change of control has been reduced from three times (3x) base salary and bonus to two times (2x) or less. Additionally, the 'single trigger' for severance payment (allowing termination for 'good reason' shortly after a change of control) has been eliminated, and tax gross-up benefits for excise taxes upon severance have been removed.

The amendments appear to be aimed at reducing potential financial obligations for Centene in the event of a change of control, thereby better aligning executive compensation with shareholder interests. The extension of the agreement also ensures leadership stability and facilitates an orderly succession plan.

The grant of 30,000 restricted stock units is intended to incentivize Mr. Neidorff and align his interests with long-term shareholder value. These units will vest upon the identification and board approval of his successor, and their distribution is tied to his termination of employment, reinforcing a focus on transition and succession.

The 'single trigger' previously allowed Mr. Neidorff to terminate his employment for 'any reason' during a specific period following a change of control and still receive severance. By eliminating this, severance is now contingent on a more stringent definition of 'good reason' related to significant adverse changes post-change of control, making severance less automatic.