8-KLeadership Changes

CENTENE CORP 8-K Report, Executive Changes (May 2, 2022)

Filed May 2, 2022For Securities:CNC

Summary

Centene Corp. (CNC) filed an 8-K on May 2, 2022, reporting on executive employment agreements entered into on April 27 and April 28, 2022, with its President & COO, Brent Layton, and CFO, Andrew Asher, respectively. These agreements outline the base salaries, annual cash incentive bonus targets, and significant long-term incentive compensation (equity and cash awards) for 2022, 2023, and in Asher's case, 2024. The agreements aim to retain key executive talent by providing competitive compensation packages and severance benefits under specific termination conditions. Investors should note the substantial equity grants, particularly for the CFO, which are designed to align executive interests with long-term shareholder value. The structure of these awards, including performance-based and time-based units, indicates a focus on both achieving strategic goals and sustained commitment to the company.

Key Highlights

  • 1New employment agreements established for Brent Layton (President & COO) and Andrew Asher (CFO) on April 27-28, 2022.
  • 2Brent Layton's agreement includes a base salary of $1,100,000, with bonus targets and substantial equity awards ($2.6M for 2022 and $2.6M for 2023).
  • 3Andrew Asher's agreement features a base salary of $1,025,000, with bonus targets and significant equity awards for 2022 ($6M), 2023 (minimum $8.9M total compensation), and 2024 (minimum $8.9M total compensation).
  • 4Long-term incentive compensation includes a mix of performance-based and time-based restricted stock units (RSUs) for both executives.
  • 5Layton's 2022 RSUs and 2023 RSUs are structured to vest if he remains employed through December 31, 2024.
  • 6Both executives are eligible for severance benefits upon certain termination events (e.g., termination without cause, resignation for good reason, death, or disability), subject to a release of claims and adherence to restrictive covenants.
  • 7The agreements signify a commitment to retaining key leadership through competitive compensation and performance-aligned incentives.

Frequently Asked Questions

The primary purpose of these agreements is to formalize and detail the compensation packages, including base salary, annual bonuses, and long-term incentives (equity and cash awards), for key executives Brent Layton and Andrew Asher. This also serves to retain these crucial leaders by providing competitive remuneration and outlining severance benefits.

The compensation includes significant long-term incentive awards, particularly equity awards in the form of performance-based and time-based restricted stock units (RSUs). These are designed to reward sustained employment (time-based RSUs) and the achievement of company performance goals (performance-based RSUs), aligning executive interests with those of shareholders over the long term.

The agreements represent a significant commitment of company resources towards executive compensation, especially in the form of equity awards. Investors should consider these as substantial operating expenses and potential future dilution if equity awards are settled through new share issuances. The severance clauses also indicate potential future liabilities depending on employment termination scenarios.

For Mr. Asher, the agreements specify that the equity awards for 2023 and 2024 will consist of performance-based and time-based restricted stock units, with allocation percentages to be determined by the Compensation Committee. While the total target compensation is outlined, the specific performance metrics for the performance-based RSUs are not detailed in this 8-K filing and would typically be found in the award agreements themselves or discussed in proxy statements.