Health Net 2011 Annual Report Download - page 141

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In addition, and subject to certain exceptions contained in the Rights Agreement, in the event that we are
acquired in a merger or other business combination in which the Common Stock does not remain outstanding or
is changed or 50% of the assets, cash flow or earning power of the Company is sold or otherwise transferred to
any other person, the Rights will “flip-over” and entitle each holder of a Right, other than an Acquiring Person or
an Adverse Person and such person’s affiliates and associates, to purchase, upon exercise at the then current
exercise price of such Right, such number of shares of Common Stock of the acquiring company which at the
time of such transaction would have a market value of two times such exercise price.
We may redeem the Rights at a price of $.01 per Right at any time until the earlier of (i) 10 days following
the date that any Acquiring Person becomes the beneficial owner of 15% or more of the outstanding Common
Stock and (ii) the date the Rights expire. In addition, at any time after a person becomes an Acquiring Person or
is determined to be an Adverse Person and prior to such person becoming (together with such person’s affiliates
and associates) the beneficial owner of 50% or more of the outstanding Common Stock, at the election of our
Board of Directors, the outstanding Rights (other than those beneficially owned by an Acquiring Person, Adverse
Person or an affiliate or associate of an Acquiring Person or Adverse Person) may be exchanged, in whole or in
part, for shares of Common Stock, or shares of preferred stock of the Company having essentially the same value
or economic rights as such shares.
Stock Repurchase Program
On March 18, 2010, our Board of Directors authorized our 2010 stock repurchase program pursuant to
which a total of $300 million of our common stock could be repurchased. We completed our 2010 stock
repurchase program in April 2011. During the year ended December 31, 2011, we repurchased 4.9 million shares
of our common stock for aggregate consideration of approximately $149.8 million under our 2010 stock
repurchase program. As of December 31, 2011, we had repurchased an aggregate of 10.8 million shares of our
common stock under our 2010 stock repurchase program since its inception at an average price of $27.80 per
share for aggregate consideration of $300 million.
On May 4, 2011, our Board of Directors authorized our 2011 stock repurchase program pursuant to which a
total of $300 million of our outstanding common stock could be repurchased. Subject to Board approval, we may
repurchase our common stock under our 2011 stock repurchase program from time to time in privately negotiated
transactions, through accelerated stock repurchase programs or open market transactions, including pursuant to a
trading plan in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended.
The timing of any repurchases and the actual number of stock repurchases will depend on a variety of factors,
including the stock price, corporate and regulatory requirements, restrictions under the Company’s debt
obligations, and other market and economic conditions. Our 2011 stock repurchase program may be suspended or
discontinued at any time.
During the year ended December 31, 2011, we repurchased 8.7 million shares of our common stock for
aggregate consideration of approximately $223.7 million under our 2011 stock repurchase program. The
remaining authorization under our 2011 stock repurchase program as of December 31, 2011 was $76.3 million.
Note 10—Employee Benefit Plans
Defined Contribution Retirement Plans
We and certain of our subsidiaries sponsor defined contribution retirement plans intended to qualify under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the Code). The plans were
amended and restated effective January 1, 2008 to comply with, among other things, Section 415 of the Code. In
2009, 2010 and 2011, various administrative amendments were made to the plans.
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