Health Net 2015 Annual Report Download - page 141

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Narrative to Summary Compensation Table and Plan-Based Awards Table
Material Terms of Agreements and Plans
Employment Agreements with Named Executive Officers in General. We have entered into employment
agreements with all of the named executive officers. In general, the named executive officers’ employment agreements
entitle the officer to a minimum base salary and the ability to participate in various incentive compensation, equity,
insurance and employee benefit plans, including paid time off, holidays, health and welfare insurance, 401(k) Plan,
deferred compensation, financial counseling and tuition reimbursement plans, if the executive officer meets the
applicable participation requirements. The named executive officers are all eligible to participate in the MIP, which
provides them the opportunity each plan year to earn a specified target percentage of his or her base salary as additional
compensation in accordance with the terms of the MIP. The employment agreements of all of the named executive
officers provide that actual bonus payments under the MIP are capped at 200% of target. Accordingly, actual bonus
payments range from 0% to 200% of target depending on the actual results achieved. Any future equity grants will be
made to the named executive officers at the discretion of the Compensation Committee and, in the case of the Chief
Executive Officer and the second most highly compensated executive, the independent members of the Board of
Directors, and may be restricted by the terms of the Merger Agreement.
The named executive officers’ employment agreements also provide for certain severance payment arrangements,
which are detailed in the “Potential Payments Upon Change in Control or Termination” table and the accompanying
narrative herein.
Below is a brief summary of additional material terms contained in each named executive officer’s employment
agreement with us. Each of these agreements is filed with the Securities and Exchange Commission and the following
summaries are qualified in their entirety by reference to those agreements. Under these employment agreements, the
executive’s employment relationship with Health Net is at-will, meaning that the executive and Health Net may
terminate the employment relationship at any time, with or without advance notice and with or without Cause (as defined
below under “Executive Compensation- Severance and Change in Control Arrangements”).
Employment Agreement with Mr. Gellert. On December 3, 2008, Health Net, Inc. and Mr. Gellert entered into an
Amended and Restated Employment Agreement (the “Gellert Agreement”), which amended and restated all prior
employment agreements between Mr. Gellert and us. In accordance with the Gellert Agreement, Mr. Gellert’s annual
base salary as of December 31, 2015 was $1,230,000 (with such adjustments as may be made from time to time), and he
is currently eligible to receive an annual cash bonus under the MIP with a target equal to 135% of his annual base salary.
The Gellert Agreement provides Mr. Gellert with housing in Woodland Hills, California at a reasonable monthly cost and
reimbursement for Mr. Gellert’s weekend trips to his residence in Northern California. In addition, if Mr. Gellert decides
to relocate to Southern California, he is entitled to specific relocation benefits. We provide Mr. Gellert with the use of a
corporate car, and he reports his personal use of the car as a taxable benefit. The Gellert Agreement provides for
Mr. Gellert’s participation in the SERP in which Mr. Gellert is vested at 100% based on his current tenure with us.
Employment Agreement with Mr. Woys. On December 3, 2008, Health Net, Inc. and Mr. Woys entered into an
Amended and Restated Employment Agreement (the “Woys Agreement”), which amended and restated all prior
employment agreements between Mr. Woys and us. In accordance with the Woys Agreement, Mr. Woys’ annual base
salary as of December 31, 2015 was $787,838 (with such adjustments as may be made from time to time), and he is
currently eligible to receive an annual cash bonus under the MIP with a target equal to 100% of his annual base salary.
The Woys Agreement provides Mr. Woys with a “grandfathered” car allowance of $1,000 per month since he was
eligible for this benefit prior to our termination of the car allowance program. Further, the Woys Agreement provides for
Mr. Woys’ participation in the SERP in which Mr. Woys is vested at 100% based on his current tenure with us.
Employment Agreement with Ms. Hefner. On February 7, 2012, Health Net, Inc. and Ms. Hefner entered into an
employment agreement (the “Hefner Agreement”) which amended and restated all prior agreements between Ms. Hefner
and us. In accordance with the Hefner Agreement, Ms. Hefner’s annual base salary as of December 31, 2015 was
$546,351 (with such adjustments as may be made from time to time), and she is currently eligible to receive an annual
cash bonus under the MIP with a target equal to 80% of her annual base salary. The Hefner Agreement provides
Ms. Hefner with a “grandfathered” car allowance of $1,000 per month since she was eligible for this benefit prior to our
termination of the car allowance program. In February 2015, Health Net, Inc. and Ms. Hefner entered into an amended
and restated employment agreement (the “Restated Hefner Agreement”), which was effective as of October 9, 2014 and
provides for more favorable change in control severance benefits than the Hefner Agreement and which are in line with
market practices.
Employment Agreement with Mr. Sell. On February 22, 2010, Health Net, Inc. and Mr. Sell entered into an
employment agreement (the “Sell Agreement”) which amended and restated all prior agreements between Mr. Sell and