Health Net 2015 Annual Report Download - page 205

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-44
Under the Plans, employees and non-employee directors may elect for the Company to withhold shares to satisfy
minimum statutory federal, state and local tax withholding and/or exercise price obligations, as applicable, arising from
the exercise of stock options. For certain other equity awards, the Company has the right to withhold shares to satisfy
any tax obligations that may be required to be withheld or paid in connection with such equity award, including any tax
obligation arising on the vesting date. During the year ended December 31, 2015, we withheld 0.3 million shares of
common stock to satisfy tax withholding and exercise price obligations arising from stock option exercises and the
vesting of RSUs and PSUs.
We become entitled to an income tax deduction in an amount equal to the taxable income reported by the holders
of the stock options, restricted shares, RSUs and PSUs when vesting occurs, the restrictions are released and the shares
are issued. Stock options, restricted common stock, RSUs and PSUs are forfeited if the employees terminate their
employment prior to vesting, other than in certain limited situations.
Note 9—Capital Stock
As of December 31, 2015, there were 153,776,000 shares of our common stock issued and 76,458,000 shares of
common stock held in treasury, resulting in 77,318,000 shares of our common stock outstanding.
Shareholder Rights Plan
On July 27, 2006, our Board of Directors adopted a shareholder rights plan pursuant to a Rights Agreement with
Wells Fargo Bank, N.A. (the "Rights Agent"), dated as of July 27, 2006 (the "Rights Agreement").
In connection with the Rights Agreement, on July 27, 2006, our Board of Directors declared a dividend
distribution of one right (a "Right") for each outstanding share of Common Stock to stockholders of record at the close
of business on August 7, 2006 (the "Record Date"). Our Board of Directors also authorized the issuance of one Right
for each share of common stock issued after the Record Date and prior to the earliest of the Distribution Date (as
defined below) the redemption of the Rights and the expiration of the Rights and, in certain circumstances, after the
Distribution Date. Subject to certain exceptions and adjustment as provided in the Rights Agreement, each Right
entitles the registered holder to purchase from us one one-thousandth (1/1000th ) of a share of Series A Junior
Participating Preferred Stock, par value of $0.001 per share, at a purchase price of $170.00 (the "Purchase Price"). The
terms of the Rights are set forth in the Rights Agreement.
Rights will attach to all Common Stock certificates representing shares outstanding and no separate certificates
evidencing the Rights will be distributed. Subject to certain exceptions contained in the Rights Agreement, the Rights
will separate from the Common Stock upon the earliest of (i) 10 days following the public announcement of any person,
together with its affiliates and associates (an Acquiring Person), becoming the beneficial owner of 15% or more of the
outstanding Common Stock, (ii) 10 business days following the commencement of a tender or exchange offer that
would result in any person, together with its affiliates and associates, becoming the beneficial owner of 15% or more of
the outstanding Common Stock or (iii) 10 business days following the determination by our Board of Directors that a
person, together with its affiliates and associates, has become the beneficial owner of 10% or more of the Common
Stock and that such person is an “Adverse Person,” as defined in the Rights Agreement (the earliest of such dates being
called the “Distribution Date”). The Rights Agreement provides that certain passive institutional investors that
beneficially own less than 20% of the outstanding shares of the Common Stock shall not be deemed to be Acquiring
Persons.
The Rights will first become exercisable on the Distribution Date and will expire at the close of business on
July 31, 2016 unless such date is extended or the Rights are earlier redeemed or exchanged by us as described below.
Subject to certain exceptions contained in the Rights Agreement, in the event that any person shall become an
Acquiring Person or be declared to be an Adverse Person, then the Rights will “flip-in” and entitle each holder of a
Right, other than any Acquiring Person or Adverse Person and such person’s affiliates and associates, to purchase, upon
exercise at the then-current exercise price of such Right, that number of shares of Common Stock having a market value
of two times such exercise price.