Health Net 2002 Annual Report Download - page 73

HEALTH NET, INC. | 71
Stock Repurchase Program
In April 2002, our Board of Directors authorized us to
repurchase up to $250 million (net of exercise proceeds and
tax benefits from the exercise of employee stock options) of
our Class A Common Stock. As of December 31, 2002, we
had repurchased an aggregate of 6,669,600 shares of our
Class A Common Stock under this repurchase program for
aggregate consideration of approximately $163.7 million.
Share repurchases are made under this repurchase program
from time to time through open market purchases or
through privately negotiated transactions.
NOTE 9—Employee Benefit Plans
Defined Contribution Retirement Plans
We and certain of our subsidiaries sponsor defined contri-
bution 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 avail-
able to substantially all employees who meet certain eligi-
bility 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 $9.4 million, $8.4 million and $8.6
million for the years ended December 31, 2002, 2001 and
2000, respectively.
Deferred Compensation Plans
Effective May 1, 1998, we adopted a deferred compensa-
tion 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. The employee deferrals are invested
through a trust.
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 contribu-
tions. The current provisions with respect to the form and
timing of payments under the Prior Plan remain unchanged.
As of December 31, 2002 and 2001, the liability
under these plans amounted to $24.9 million and $23.1
million, respectively. These liabilities are included in other
noncurrent liabilities on our consolidated balance sheets.
Our expense under these plans totaled $2.4 million, $2.3
million and $2.8 million for the years ended December 31,
2002, 2001 and 2000, 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). This plan covers key
executives, as selected by the Board of Directors, and non-
employee directors. Benefits under the plan are based on
years of service and level of compensation.
Postretirement Health and Life Plans— Certain of our
subsidiaries sponsor postretirement defined benefit health
care plans that provide postretirement medical benefits to
directors, key executives, employees and dependents who
meet certain eligibility requirements. Under these plans, we
pay a percentage of the costs of medical, dental and vision
benefits during retirement. The plans include certain cost-
sharing features such as deductibles, co-insurance and
maximum annual benefit amounts which vary based prin-
cipally on years of credited service.
SFAS No. 132 “Employers’ Disclosures about Pension
and Other Postretirement Benefits” (SFAS No. 132),
revised and standardized employers’ disclosures about
pension and other postretirement benefit plans. We
disclosed the information required by SFAS No. 132 by
aggregating retirement plans into the “Pension Benefits”
category and postretirement plans into the “Other
Benefits” category.