Health Net 2015 Annual Report Download - page 119

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Element Form Objectives and Basis
Retirement Plans 401(k) Plan, Nonqualified Deferred
Compensation Plan, Nonqualified
Defined Benefit Pension Plan
• Provide tax-deferred methods for general savings,
including for retirement
• Provide supplemental retirement income and
measure of financial stability and security while
building participant’s long-term commitment to us
Severance and
Change in Control
Benefits
Employment Agreements, Equity
Award Agreements, Severance
Plans
• Preserve productivity and retention in potentially
disruptive restructure and/or change in control
situations involving executive’s termination of
employment
Limited
Perquisites and
Other Benefits
Financial Counseling Allowance,
Relocation Benefits, Limited
Housing Benefits, Group Life
Insurance, Limited Car Allowances
• Help executives to manage time and minimize
distractions in order to maintain focus on business
results
Our use of each of these compensation elements varies among our executive officers, as described in detail in this
CD&A. We use each element of compensation to satisfy one or more of our compensation objectives, and each element
is an integral part of and supports our overall compensation program. Consistent with our performance-based philosophy,
we reserve the largest potential compensation awards for performance-based programs. Our long-term equity
compensation program rewards sustained performance and financial growth while aligning the interests of our executive
officers with those of our stockholders. Our annual performance-based incentive cash award program rewards short-term
financial performance. Taken together, all of the elements of our compensation program help us to attract and retain
qualified and capable executive officers. The specific purposes of each element are identified in the descriptions that
follow in this CD&A.
Base Salary
Base salaries provide our named executive officers with a degree of financial certainty and stability, compensating
them for performing their core job duties and recognizing individual achievements and contributions. The base salary for
each of our named executive officers is set forth in their respective employment agreements and is subject to adjustment
by the Board or the Compensation Committee (depending on the executive’s level). Further discussion regarding 2015
base salary is presented below under “—How do we determine the amount for each element of executive officer
compensation?,” including details on 2015 base salaries for our named executive officers under “—Analysis of
Compensation During Fiscal 2015.” For 2015, the Compensation Committee and the Board, as applicable, considered
market data, among other things, when determining the amount of the merit increase, if any, to the base salaries of our
named executive officers.
Annual Performance-Based Incentive Cash Awards
Annual performance-based incentive cash awards help to motivate our named executive officers to meet or exceed
our short-term performance objectives. Each named executive officer is eligible to participate in our annual cash
incentive program, the MIP, and has a target bonus amount expressed as a percentage of base salary. Each such executive
officer has a maximum bonus opportunity under our annual cash incentive program equal to 200% of his or her
individual target bonus amount. In determining the target bonus amount for each named executive officer, the
Compensation Committee and Board of Directors, as applicable, considers multiple factors, including market data
provided by its independent compensation consultant, as described under “—How do we determine the amount for each
element of executive officer compensation?”
The Compensation Committee approved an original program framework for the 2015 MIP that provided for a
financial funding measure, 2015 PTI, in combination with a qualitative determination of the Company’s performance
based on, among other things, the following three strategic initiatives (the “Strategic Initiatives”):
(i) reposition the Health Net organization;
(ii) grow the business; and
(iii) strengthen enterprise capabilities for the future.