Health Net 2015 Annual Report Download - page 127

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Details concerning the surveys used are summarized below:
Type of Survey Group/Data Companies in Group/Data
Modeled Peer Group-General industry survey data
adjusted for the historical relationship with our
Traditional Peer Group (which is detailed below) over the
last five years and using regressions to establish scope
consistent with our revenue
Towers Watson General Industry Survey-All participants.
Managed Care and General Industry- Survey data
developed by Mercer and Towers Watson, which includes
both public and private managed care companies.
Aetna, Inc.; AFLAC, Inc.; Blue Cross/Blue Shield of NC
and TN, respectively; Blue Shield of CA; Cambia Health
Solutions, CareFirst Blue Cross Blue Shield, Centene
Corp., CIGNA Corp.; CNO Financial Group Inc.;
Coventry Health Care, Inc.; Emblem Health, Florida
Blue, Health Care Service Corp.; HealthSpring, Inc.,
Highmark, Inc.; Horizon Blue Cross Blue Shield of New
Jersey; Humana, Inc.; Kaiser Foundation Health Plan;
Principal Financial Group, Inc.; UnitedHealth Group,
Inc.; Wellcare Health Plans; and WellPoint, Inc.
Cost of Management Analysis-Provides information
about what other companies are paying by rank and in the
aggregate for their top positions
Towers Watson General Industry Survey-All participants.
Traditional Peer Group-Proxy data from competitor
companies in the healthcare industry Aetna, Inc.; Centene Corporation; CIGNA Corp.; Humana, Inc.; Magellan Health Inc.; Molina Healthcare
Inc.; UnitedHealth Group, Inc.; Universal American
Corp.; Wellcare Health Plans; and WellPoint, Inc.
Management involvement in compensation decisions
In addition to market and other factors, the Board and the Compensation Committee consider input from our Chief
Executive Officer, Chief Financial and Operating Officer and/or Senior Vice President, Organization Effectiveness and
Chief People Officer, as applicable, in making their respective decisions regarding the compensation of the other named
executive officers.
In the first quarter following the performance year, our Chief Executive Officer, Chief Financial and Operating
Officer and our Senior Vice President, Organization Effectiveness and Chief People Officer, conduct a formal assessment
(including obtaining individual self-assessments) of each named executive officer’s performance, including with respect
to the performance factors developed for use in connection with our annual incentive cash award program. For additional
detail on how our annual performance-based incentive cash awards are determined, see below under “—Analysis of
Compensation During Fiscal 2015—Annual Performance-Based Incentive Cash Awards.” Our Chief Executive Officer
then provides the Compensation Committee with his assessment of the Company’s performance during the performance
year and our Chief Executive Officer and Chief Financial and Operating Officer, as applicable, provide the results of the
formal assessment of the other named executive officers, and provide recommendations for each of the other named
executive officer’s compensation, including salary adjustments, bonus payouts and equity grants, based on these
assessments. The Compensation Committee uses these assessments and recommendations as a basis for its compensation
decisions regarding our named executive officers and for its recommendation with regard to the compensation of our
Chief Executive Officer and second-highest paid executive, which then must be approved by the independent members
of the Board. The compensation recommendations for the second-highest paid executive also include input from our
Chief Executive Officer.
The evaluation of our Chief Executive Officer is a formal process whereby all members of our Board have the
opportunity to provide input on our Chief Executive Officer’s performance, including with regard to applicable
performance factors. Our Chief Executive Officer provides a self-assessment to the independent members of the Board
each year, and each such Board member is then asked to evaluate our Chief Executive Officer’s achievements. The
individual independent Board members’ evaluations are consolidated and sent back to each independent Board member.
The Compensation Committee uses this consolidated feedback as a basis for its recommendation with regard to the
compensation of our Chief Executive Officer, including salary adjustments, bonus payouts and equity grants, which then
must be approved by the independent members of the Board.