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): May 14, 2013
CENTENE CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Delaware
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001-31826
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42-1406317
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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7700 Forsyth Blvd.
St. Louis, Missouri
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63105
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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: (314) 725-4477
(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))
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
(e) On May 14, 2013, Centene Corporation (the “Company”) entered into an amendment to the executive employment agreement (the “Amendment”) with Michael F. Neidorff, its chairman, president and chief executive officer (the “Executive”), which:
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eliminates the 'single trigger' for severance payment following a change of control;
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reduces severance amount from three times base salary and bonus to two times or less;
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eliminates tax gross-up benefits for excise taxes payable upon severance;
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extends the term of the employment agreement for an additional three years; and
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provides for the grant of 30,000 restricted stock units.
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The Board of Directors and Mr. Neidorff agreed to extend the contract beyond the previous termination date in 2014 to December 31, 2017 to ensure continuity in the business and an orderly transition of leadership in 2017.
The Amendment eliminates the 'single trigger' for severance payment following a change of control by amending the definition of “good reason” to eliminate the Executive's ability to terminate his employment for any reason during the one month period beginning on the six-month anniversary of a change in control of the Company.
Severance benefits were reduced from three times (3x) to two times (2x) the sum of his base salary plus the amount the Executive could have earned as a target bonus for the year of termination if the date of termination of the Executive's employment occurs on or before December 31, 2016 and one times (1x) such amount pro rated for the remaining term of the employment agreement (but not less than six months) if the date of termination of the Executive's employment occurs on or after January 1, 2017 and on or before December 31, 2017.
The Executive will no longer be eligible for a gross-up payment if any parts or amounts payable under his employment agreement are deemed to be “excess parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended. If the payments to be received by the Executive in connection with a change in control constitute “excess parachute payments,” the Executive's payments and benefits will be reduced to the extent necessary such that no amount paid or payable to the Executive shall be deemed “excess parachute payments” (unless the Executive would be in a better net after-tax position without any such reduction, in which case payments and benefits will not be reduced).
Finally, as part of the Amendment, the Executive was awarded 30,000 restricted stock units payable in shares of the Company's common stock. These units will vest in full on the later of May 14, 2016 or the date the Executive has identified a successor who has been approved by the Company's Board of Directors. Subject to such vesting, the related shares of common stock shall be distributed to the Executive on certain dates following termination of employment.
The Amendment is filed as Exhibit 10.1 to this Form 8-K and the description of the Amendment is qualified in its entirety by reference to such exhibit, which is incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
10.1 Amendment No. 4 to Executive Employment Agreement between Centene Corporation and Michael F. Neidorff
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CENTENE CORPORATION
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Date:
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May 16, 2013
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By:
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/s/ William N. Scheffel
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William N. Scheffel
Executive Vice President & Chief Financial Officer
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EXHIBIT INDEX
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Exhibit Number
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Description
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10.1
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Amendment No. 4 to Executive Employment Agreement between Centene Corporation and Michael F. Neidorff
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Exhibit 10.1
AMENDMENT OF EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment of Executive Employment Agreement is entered into as of May 14, 2013 by and between Centene Corporation, a Delaware corporation, together with its successors and assigns permitted under this Agreement (“Employer”), and Michael F. Neidorff (the “Executive”).
WHEREAS, the parties entered into that certain Executive Employment Agreement dated as of November 8, 2004 (“Agreement”); and
WHEREAS, the parties desire to amend the Agreement in order to extend the current term of the Agreement and to make various related changes to the Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1.
Section 1(a) is amended so that the first sentence thereof reads as follows:
Subject to earlier termination as provided herein, Employer hereby agrees to employ and continue in its employ the Executive, and the Executive hereby accepts such employment and agrees to remain in the employ of Employer, for the period commencing on the date hereof and ending on December 31, 2017.
2.
Section 3 is amended to add a new subsection (i) to read as follows:
(i)
Extension Grant
. On the date hereof, Executive shall be granted 30,000 restricted stock units of the Employer (“Extension RSU Grant”), payable only in shares of Employer's stock. The Extension RSU Grant will vest and become non-forfeitable on later of (I) the third anniversary of the date of grant or (II) the date that the Executive has identified a successor Chief Executive Officer of the Employer who has been approved by the Board (which approval shall not be unreasonably withheld). Vested RSUs shall be converted into shares of Employer's stock and distributed to Executive on the later of (i) the January 15 following the year in which the Executive's Date of Termination occurs, or (ii) the date which is six (6) months after the Executive's Date of Termination.
3.
Section 4(c)(i) is amended to delete subsection (8) thereof.
4.
Section 5(d)(ii) is amended to read as follows:
(ii) If the Date of Termination occurs on or before December 31, 2016, the Executive shall be entitled to receive the product of (A) two (2) times (B) the sum of his (I) then-current Base Salary plus (II) the maximum amount the Executive could have earned as a Target Bonus for the year of termination if all goals and targets for payment were achieved (the “Severance Amount”), payable in cash in substantially equal installments pursuant to Employer's payroll practices as in effect from time to time over 24 months. If the Date of Termination occurs on or after January 1, 2017 and on or before December 31, 2017, the Severance Amount will be the product of (A) one (1) times (B) the sum of his (I) then-current Base Salary plus (II) the maximum amount the Executive could have earned as a Target Bonus for the year of termination if all goals and targets for payment were achieved, which product will be multiplied by a fraction, the numerator of which is the number of full and fractional months remaining until December 31, 2017 (but not less than six (6), and the denominator of which is twelve (12). The amount determined in the preceding sentence shall be payable in cash in substantially equal installments pursuant to the Employer's payroll practices as in effect from time to time over the number of months used in the numerator in the preceding sentence. Notwithstanding the foregoing, to the extent delay in payments under this Section 5(d)(ii) is determined to be necessary to prevent the application of and/or adverse tax consequences under Code Section 409A, then such payments shall not commence until the date which is six (6) months after the date of the Executive's “separation from service” as that term is defined in regulations or other guidance issued under Code Section 409A;
5.
Section 6(c) is amended to read as follows:
(c) If, for any reason, any part or all of the amounts payable to Executive under this Agreement (or otherwise, if such amounts are in the nature of compensation paid or payable by the Employer or any of its subsidiaries after there has been a Change in Control) (collectively “Total Payments”) are deemed to be “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code or any successor or similar provision, and would be subject to the excise tax imposed by Section 4999 of the Code or any successor or similar provision, such Total Payments shall be reduced to the extent necessary such that no amounts paid or payable to Executive shall be deemed excess parachute payments subject to excise tax under Section 4999 of the Code; provided, however, that no such reduction shall occur if (i) the net amount of such Total Payments as so reduced (and after subtracting the net amount of federal, state and local income taxes on such reduced Total Payments) is less than (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income taxes on such unreduced Total Payments and the amount of excise taxes to which the Executive would be subject in respect of such unreduced Total Payments). All determinations required to be made under this Section 6(c) and the assumptions to be utilized in arriving at such determination shall be made by an independent, nationally recognized accounting firm designated by the Employer (the “
Auditor
”). The Auditor shall provide detailed supporting calculations to both the Employer and the Executive within fifteen (15) business days of the receipt of notice from the Executive or the Employer that there has been a Payment, or such earlier time as is requested by the Employer. All fees and expenses of the Auditor shall be paid by the Employer. All determinations made by the Auditor shall be binding upon the Employer and the Executive.
6.
The Agreement is affirmed, ratified and continued, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first written above.
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MICHAEL F. NEIDORFF
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CENTENE CORPORATION
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/s/ Michael F. Neidorff
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By: /s/ Robert K. Ditmore
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Its: Lead Director, Chairman Compensation Committee
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