Health Net 2004 Annual Report Download - page 114

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
As a result of the $20 million (in 2004), $57 million (in 2003) and $66 million (in 2002) in realized and estimated benefits, our
total authority under our stock repurchase program through 2004 is estimated at $593 million based on the authorization we received
from our Board of Directors to repurchase up to an aggregate of up to $450 million (net of exercise proceeds and tax benefits from the
exercise of employee stock options) of our common stock. The remaining authorization under our stock repurchase program as of
December 31, 2004 was $57 million.
Note 9—Employee Benefit Plans
Defined Contribution Retirement Plans
We and certain of our subsidiaries sponsor defined contribution retirement plans intended to qualify under Section 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended (the Code). Participation in the plans is available to substantially all
employees who meet certain eligibility requirements and elect to participate. Employees may contribute up to the maximum limits
allowed by Sections 401(k) and 415 of the Code, with Company contributions based on matching or other formulas. Our expense
under these plans totaled $9.8 million, $9.1 million and $9.4 million for the years ended December 31, 2004, 2003 and 2002,
respectively.
Deferred Compensation Plans
Effective May 1, 1998, we adopted a deferred compensation plan pursuant to which certain management and highly
compensated employees are eligible to defer between 5% and 90% of their regular compensation and between 5% and 100% of their
bonuses, and non-employee Board members are eligible to defer up to 100% of their directors compensation. The compensation
deferred under this plan is credited with earnings or losses measured by the mirrored rate of return on investments elected by plan
participants. Each plan participant is fully vested in all deferred compensation and earnings credited to his or her account. Certain
employee deferrals were invested through a trust until November 2003. In January 2004, the Company adopted a new deferred
compensation plan for non-employee members of its Board of Directors. In connection therewith, the Company amended and restated
its existing deferred compensation plan to provide that, among other things, non-employee members of the Board are no longer
eligible participants under that plan.
Prior to May 1997, certain members of management, highly compensated employees and non-employee Board members were
permitted to defer payment of up to 90% of their compensation under a prior deferred compensation plan (the Prior Plan). The Prior
Plan was frozen in May 1997 at which time each participant’s account was credited with three times the 1996 Company match (or a
lesser amount for certain participants) and each participant became 100% vested in all such contributions. The current provisions with
respect to the form and timing of payments under the Prior Plan remain unchanged.
As of December 31, 2004 and 2003, the liability under these plans amounted to $37.6 million and $38.4 million, respectively.
These liabilities are included in other noncurrent liabilities on our consolidated balance sheets. The trust assets are not held in
investments elected by participants. Deferred compensation expense is recognized for the amount of earnings or losses credited to
participant accounts. Our expense under these plans totaled $3.4 million, $3.8 million and $1.6 million for the years ended December
31, 2004, 2003 and 2002, respectively.
Pension and Other Postretirement Benefit Plans
Retirement Plans—We have an unfunded non-qualified defined benefit pension plan, the Supplemental Executive Retirement
Plan (adopted in 1996 and amended in August 2004). This plan is noncontributory and
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