What is the primary reason for Mr. Schaeffer's departure?

Mr. Schaeffer's employment is terminating effective January 31, 2005, due to a 'Constructive Termination' as defined in his employment agreement. This classification is a result of the merger between WellPoint Health Networks Inc. and Anthem Holding Corp. that was consummated in November 2004.

What financial benefits will Mr. Schaeffer receive upon his departure?

Mr. Schaeffer is entitled to approximately $49.36 million in cash payments, which includes a guaranteed annual bonus, change-in-control severance benefits, and an additional amount for enhanced retirement plan benefits. Additionally, he will receive an immediate lump-sum distribution of his deferred compensation and retirement plan balances totaling approximately $69.21 million. All his unvested stock options and restricted stock will also vest.

Will the company incur additional costs related to excise taxes on these payments?

The filing states that the Corporation does not believe Mr. Schaeffer is subject to an excise tax under Internal Revenue Code Section 4999 for excess parachute payments. The employment agreement includes provisions for a tax gross-up, but it is not anticipated to be triggered.

What is the significance of the 'Constructive Termination' classification?

A 'Constructive Termination' means that while Mr. Schaeffer is choosing to leave, the circumstances are considered a termination by the company under the terms of his employment agreement. This classification allows him to receive benefits, such as severance and accelerated vesting, that he would have been entitled to if he had been involuntarily terminated.

ELV 8-K: Material Agreements

Summary

This 8-K filing from Elevance Health, Inc. (then WellPoint, Inc.) on January 21, 2005, details the termination of the employment of Leonard D. Schaeffer, the former Chairman and CEO, effective January 31, 2005. The termination is categorized as a 'Constructive Termination' under his employment agreement, triggered by the consummation of the WellPoint/Anthem merger in November 2004. Investors should note the significant financial implications of this departure. Mr. Schaeffer is entitled to substantial cash payments totaling approximately $49.36 million, comprising a guaranteed bonus, change-in-control severance benefits, and an additional amount related to enhanced retirement plan benefits. Furthermore, he will receive an immediate lump-sum distribution of his deferred compensation and retirement plan balances, estimated at $69.21 million, and his unvested stock options and restricted stock will vest immediately. The company does not anticipate excise taxes on these payments.

Key Highlights

1Leonard D. Schaeffer, former Chairman and CEO, to depart the company effective January 31, 2005.
2Termination classified as a 'Constructive Termination' following the November 2004 merger.
3Mr. Schaeffer is set to receive total cash payments of approximately $49.36 million.
4These payments include a guaranteed bonus, change-in-control severance, and enhanced retirement benefits.
5An additional lump-sum distribution of deferred compensation and retirement plan balances of approximately $69.21 million is also due.
6All of Mr. Schaeffer's unvested stock options and restricted stock will vest upon his termination.
7The company does not believe Mr. Schaeffer will be subject to excise taxes on these payments.

Elevance Health, Inc. 8-K Report, Agreement Terminated (Jan 21, 2005)

Summary

Key Highlights

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