Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(c)The Board of Directors (the “Board”) of Magellan Health, Inc. (the “Company”) has appointed James E. Murray, 66, as President and Chief Operating Officer of the Company, effective as of December 9, 2019. In connection with his appointment as President and Chief Operating Officer, on December 3, 2019, Mr. Murray and the Company entered into an employment agreement described below.
Mr. Murray will join the Company after serving as president of PrimeWest Health in 2019. In addition, he served as chief executive officer of LifeCare HealthPartners from 2017-2019. Prior to these roles, Mr. Murray held significant leadership roles at Humana over a career spanning nearly three decades. As executive vice president and chief operating officer for 10 years, Mr. Murray served on Humana’s executive team and was responsible for all business segments, service operations and information technology functions.
(e)
Employment Agreement with Mr. Murray
On December 3, 2019, the Company entered into an employment agreement with Mr. Murray (the “Employment Agreement”), effective as of December 9, 2019 (the “Commencement Date”), for a one-year term, with automatic annual renewals, unless sooner terminated by either party. Mr. Murray’s annual base salary will be $750,000, and his annual target bonus opportunity under the Company’s Incentive Compensation Plan is 85% of his base salary, with the ability to earn up to 200% of such target bonus based on achieving specified performance goals.
Mr. Murray will receive a grant of stock options (“Options”) with a value of $750,000 on the date of grant, a grant of restricted stock units (“RSUs”) with a value of $750,000 on the date of grant, and performance-based restricted stock units (“PSUs”) with a value of $1,500,000 on the date of grant, on the first business day of the month following the month of commencement of his employment. Beginning with calendar year 2020, Mr. Murray will also be entitled to receive equity awards under the Company’s incentive plan on terms at least as favorable as other similarly situated senior level executives, and his annual target value for 2020 for his equity award shall be 350% of his base salary.
If the Company terminates Mr. Murray’s employment without cause, or Mr. Murray terminates his employment for good reason, then, subject to the execution of a release of claims in favor of the Company: (i) the Company will pay him an amount equal to 1.0 times his base salary, payable over a period of 12 months following termination, (ii) a pro-rated bonus for the year of termination based on actual performance, (iii) the Company will reimburse him for a portion of premiums for continued health plan coverage for 12 months, and (iv) the Options and the RSUs will automatically vest in full upon termination and the PSUs will become vested and settle when they otherwise would have if Mr. Murray had remained employed for the term of the PSUs. In addition, if Mr. Murray’s employment is terminated by the Company without cause or if he resigns for good reason on or prior to and in connection with a change in control of the Company (as defined in the agreement) that occurs eighteen months after the Commencement Date, or within two years after such change in control, then in addition to the severance described above and subject to the execution of a release of claims in favor of the Company the Company will pay him (x) a lump sum payment equal to the sum of (a) 1.0 times his base salary plus (b) 2.0 times his target bonus, and (y) reimbursement for a portion of premiums for continued health plan coverage for an additional six months.
The foregoing description of the Employment Agreement is qualified in its entirety by reference to the complete text of the Employment Agreement, which is attached hereto as Exhibit 10.1 to this Current Report on Form 8-K.