form8-k.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): September 2,
2008
WELLCARE
HEALTH PLANS, INC.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32209
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47-0937650
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
incorporation)
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Identification
No.)
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8725
Henderson Road, Renaissance One
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Tampa,
Florida
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33634
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code:
(813) 290-6200
Not
Applicable
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
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Appointment of Rex M.
Adams as Chief Operating Officer of the
Company
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On
September 2, 2008, WellCare Health Plans, Inc. (the “Company”) announced that the
Board of Directors of the Company (the “Board”) had elected Mr. Rex M.
Adams as the Company’s new Chief Operating Officer, effective
immediately.
Prior to
joining the Company, Mr. Adams, age 47, was the President and Chief Executive
Officer of AT&T Incorporated’s East Region, from January 2007 to March 30,
2008. In such capacity, Mr. Adams was responsible for consumer and
business sales and service, network operations, profit and loss accountability,
and the management of over 5,000 employees. For the period prior to
AT&T’s acquisition of BellSouth, Mr. Adams was an elected officer of
BellSouth Corporation from July 2001 to December 2006, serving in various
leadership positions. During the merger transition period from February 2006 to
December 2006, Mr. Adams was assigned as Web Development Officer. From December
2004 to January 2006, Mr. Adams was the President of BellSouth Wholesale
Services, and had similar responsibilities as President and Chief Executive
Officer of AT&T East Region. From January 2004 to November 2004,
Mr. Adams was Vice-President, Product Development and Management of BellSouth
Corporation, where he was responsible for product profitability, development and
commercialization. From July 2001 to November 2004, Mr. Adams was President of
BellSouth Long Distance Services, where he was responsible for profit and loss
and all areas of BellSouth’s long distance business. From September
2007 to the present, Mr. Adams has served on the board of trustees for Yale-New
Haven Hospital, a premier teaching and research hospital, and as a member of its
Finance and Audit Committee. Mr. Adams holds a B.S. in economics from the United
States Military Academy at West Point and a MBA in business administration from
the Harvard Business School.
In
connection with Mr. Adams’ election as Chief Operating Officer of the Company,
Mr. Adams, the Company and Comprehensive Health Management, Inc., a subsidiary
of the Company, have entered into an employment agreement, and the Company and
Mr. Adams have entered into an indemnification agreement, a restricted stock
agreement and a stock option agreement. Copies of the employment
agreement, indemnification agreement, restricted stock agreement and stock
option agreement are attached to this report (or are incorporated by
reference from a prior filing) as Exhibits
10.1, 10.2, 10.3 and 10.4, respectively, and are incorporated herein by
reference. The summaries set forth below of Mr. Adams’ employment
agreement, restricted stock agreement and stock option agreement are qualified
in their entirety by reference to the text of such agreements.
Summary of Employment Agreement
Mr.
Adams’ employment agreement commenced on September 2, 2008 and has an initial
term of four years. Effective as of the expiration of the initial
four-year term, the employment agreement automatically extends for additional
one-year periods unless either party gives notice of non-renewal at least 90
days before the expiration of the term.
Mr. Adams
will receive a minimum base salary of $425,000. Mr. Adams also will
be entitled to receive an annual cash bonus based on his achievement of
performance objectives set by the Compensation Committee of the Board with a
targeted bonus of 100% of his annual salary for each fiscal year. As
described in more detail below, on the date Mr. Adams commences employment, he
will receive 55,000 restricted shares (the “Restricted Shares”) of the
Company’s common stock, par value $.01 per share (the “Common Stock”) and 100,000
options to purchase shares of common stock, each under the Company’s 2004 Equity
Incentive plan (the “2004
Plan”). In addition, Mr. Adams will be entitled to earn equity
compensation awards granted under and subject to the terms and conditions of the
Company’s 2004 Plan based upon Mr. Adams’ achievement of specified performance
objectives, with an annual equity compensation award target of 200% of Mr.
Adams’ annual salary for each fiscal year. During the term of the
employment agreement, Mr. Adams will be entitled to receive the same benefits
accorded to other senior executives of the Company.
If Mr.
Adams’ employment is terminated without “cause” or by Mr. Adams for “good
reason” (as defined in his employment agreement), he will be entitled to
severance benefits that include: (i) a lump sum cash payment equal to one times
the sum of Mr. Adams’ annual salary as in effect on the termination date and the
average of the two highest cash bonuses earned by Mr. Adams over the three prior
years or, if Mr. Adams has not been employed for three years, the target cash
bonus for the year in which the termination occurs, and (ii) for the duration of
the applicable COBRA period (generally 18 months, but under certain
circumstances up to 36 months following termination), reimbursement on an
after-tax basis for the cost of continued participation in the medical, dental
and vision care and life insurance benefits in which Mr. Adams and his family
participated prior to the termination date, provided Mr. Adams elects to
continue health insurance coverage pursuant to COBRA. Mr. Adams’
employment agreement also provides for certain benefits upon Mr. Adams’ death or
disability.
The
employment agreement requires that to the extent that any payment or benefit
received or to be received by Mr. Adams would be subject to an excise tax under
the Internal Revenue Code of 1986, as amended (the “Code”), the Company will pay
to Mr. Adams an additional amount such that the net amount received by Mr. Adams
is equal to what he would have received if none of his payments or benefits were
subject to an excise tax, provided that if the amount of payments subject to an
excise tax exceeds the safe harbor under Section 280G of the Code by less than
ten percent of Mr. Adams’ base salary, then Mr. Adams’ payment will be reduced
so that no amounts are subject to an excise tax.
The
employment agreement also includes confidentiality and non-competition
provisions, including a requirement that Mr. Adams not seek employment with, or
ownership in, a company in direct competition with the Company and its
subsidiaries for a period of one-year after the termination of his
employment.
Summary of Restricted Stock Award
The
employment agreement provides that Mr. Adams will receive 55,000 Restricted
Shares under the 2004 Plan. On September 2, 2008, the Company and Mr.
Adams entered into a restricted stock agreement setting forth the terms of such
grant. Pursuant to the terms the restricted stock agreement, 25% of
the Restricted Shares will become vested on each anniversary of the date of
grant (i.e., the date on which Mr. Adams commences his employment with the
Company). In addition, if Mr. Adams is terminated by the Company
without “cause” or he terminates employment for “good reason” (each as defined
in his employment agreement), in either case, within twenty-four months of a
change in control of the Company (as defined in the 2004 Plan), or if his
employment is terminated because of his death or disability, then any unvested
Restricted Shares will immediately vest on the date of Mr. Adams’
termination.
Summary Non-Qualified Stock Option Award
The
employment agreement provides that Mr. Adams will receive 100,000 Options to
purchase shares of Common Stock under the 2004 Plan. On September 2,
2008, the Company and Mr. Adams entered into a stock option agreement, setting
forth the terms of such grant. Pursuant to the terms of the
stock option agreement, 25% of the Options will become vested on each
anniversary of the date of grant (i.e., the date on which Mr. Adams commences
his employment with the Company), and have an exercise price equal to the
closing price of one share of the Common Stock on the New York Stock Exchange on
the date of grant. In addition, if Mr. Adams is terminated by the
Company without “cause” or terminates employment for “good reason” (each as
defined in his employment agreement), in either case, within twenty-four months
of a change in control of the Company (as defined in the 2004 Plan), or if his
employment is terminated because of his death or disability, then any unvested
Options will immediately vest on the date of Mr. Adams’
termination.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
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10.2 |
Indemnification
Agreement between Rex M. Adams and WellCare Health Plans, Inc. (incorporated
by reference to the Company’s form indemnification
agreement
filed as Exhibit 10.24 to the Company’s Form S-1/A filed on June 8,
2004)
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Date: September
2, 2008
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WELLCARE
HEALTH PLANS, INC.
/s/ Heath
Schiesser
Heath
Schiesser
President
and Chief Executive Officer
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Exhibit
Index
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Exhibit
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Document
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10.2
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Indemnification
Agreement between Rex M. Adams and WellCare Health Plans, Inc.
(incorporated by reference to the Company’s form indemnification agreement
filed as Exhibit 10.24 to the Company’s Form S-1/A filed on June 8,
2004)
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