Back to Form 8-K [form8-k.htm]
Exhibit 10.7
 

WELLCARE HEALTH PLANS, INC.
LONG TERM INCENTIVE CASH BONUS PLAN

LONG TERM INCENTIVE CASH BONUS PLAN AWARD AGREEMENT

               This LONG TERM INCENTIVE CASH BONUS PLAN AWARD AGREEMENT (the
“Award Agreement”) is made and entered into effective as of [•] (the “Grant
Date”), by and between WellCare Health Plans, Inc., a Delaware corporation
(“WellCare”), and [•] (the “Grantee”).

RECITALS

In consideration of services to be rendered by the Grantee as an employee of
WellCare and its Subsidiaries and to provide incentive to the Grantee to remain
with WellCare and its Subsidiaries, it is in the best interests of WellCare to
make an Award grant to the Grantee in accordance with the terms of this Award
Agreement; and

               The Award is granted pursuant to the WellCare Health Plans, Inc.
Long Term Incentive Cash Bonus Plan (the “Plan”), the terms of which are
incorporated herein for all purposes.  Unless otherwise provided herein, terms
used herein that are defined in the Plan and not defined herein shall have the
meanings attributable thereto in the Plan.

                NOW, THEREFORE, for and in consideration of the mutual premises,
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

               1.            Award.  WellCare hereby grants on the Grant Date to
the Grantee $[•] (the “Award”), subject to the terms, provisions and
restrictions set forth in this Award Agreement and in the Plan.  $[•] is the
“Target Award”.  Each Award is a cash award calculated in accordance with the
terms set forth below.  The minimum Award is zero; the maximum amount of the
Award is equal to $[•] (the “Maximum Award”).  The amount that is to be paid in
respect of an Award shall be calculated in accordance with any and all of the
financial and performance criteria set forth Schedule 1.  Notwithstanding the
foregoing or as a limitation of Section 6, the Committee in its sole discretion,
shall be permitted at any time prior to payment in respect of an Award to reduce
or otherwise amend the Award (including determining that zero dollars should be
paid), regardless of whether the financial and performance criteria set forth in
Schedule 1 have been achieved.

2.           Payment of Awards.  Except as provided in Section 3 hereof, a
Grantee shall be paid an amount in cash with respect to an Award as soon as
practicable following the end of the Performance Period, but in no event later
than March 15 of the year following the year in which the end of the Performance
Period occurs; provided, than any applicable performance goals have

 
 

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been achieved and the Grantee satisfies the other requirements set forth in this
Award Agreement, in each case as determined in the Committee’s sole
discretion.  The Performance Period begins on [•] and ends on [•].

3.           Termination of Employment.  Upon the termination or cessation of
Grantee’s employment with WellCare and its Subsidiaries for any reason
whatsoever, if payment has not been made in respect of an Award, the Award shall
automatically and without notice terminate, be forfeited and become null and
void.

4.           Change in Control.  In the event of any merger, consolidation or
other reorganization in which WellCare is not the surviving or continuing
company or in which a Change in Control is to occur, all of WellCare’s
obligations with respect to the Award shall, on such terms as may be approved by
the Committee prior to such event, be assumed by the surviving or continuing
company or canceled in exchange for cash.

5.           Miscellaneous.

(a)           Tax Withholding.  Any payments paid pursuant to this Award
Agreement will be subject to any Federal, State or local taxes required by law
to be withheld.

(b)           Section 409A.  This Award Agreement shall be interpreted,
administered and construed in a manner so as to avoid the imposition of
interest, taxes and penalties on the Grantee pursuant to Section 409A of the
Code.  It is intended that the Award is exempt from the requirements of Section
409A of the Code pursuant to the “short-term deferral” exception under Treasury
Regulation Section 1.409A-1(b)(4).

(c)           No Limit on Other Compensation Arrangements.  Nothing contained in
this Agreement shall preclude the Company and its Subsidiaries from adopting or
continuing in effect other or additional compensation plans, agreements or
arrangements, and any such plans, agreements and arrangements may be either
generally applicable or applicable only in specific cases or to specific
persons.

(d)           Severability.  If any term or provision of this Award Agreement is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or under any applicable law, rule or regulation, then such
provision shall be construed or deemed amended to conform to applicable law (or
if such provision cannot be so construed or deemed amended without materially
altering the purpose or intent of this Award Agreement or an Award hereunder,
such provision shall be stricken as to such jurisdiction and the remainder of
this Award Agreement and the award hereunder shall remain in full force and
effect).
 
(e)           No Trust or Fund Created.  Neither this Award Agreement nor the
grant of the Award  hereunder shall create or be construed to create a trust or
separate fund of any kind or a fiduciary relationship between the Company and
its Subsidiaries and the Grantee or any other person.  To the extent that the
Grantee or any other person acquires a right to receive payments from the
Company and its Subsidiaries pursuant to this Award Agreement, such right shall
be no greater than the right of any unsecured general creditor of the Company.

 
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(f)           Electronic Delivery and Signature.  Grantee hereby consents and
agrees to electronic delivery of the Plan and any related documents.  If the
Company establishes procedures for an electronic signature system for delivery
and acceptance of the Plan and any related documents, Grantee hereby consents to
such procedures and agrees that his or her electronic signature is the same as,
and shall have the same force and effect as, his or her manual
signature.  Grantee consents and agrees that any such procedures and delivery
may be effected by a third party engaged by the Company to provide
administrative services related to the Plan.

(g)           Headings.  Section, paragraph and other headings and captions are
provided solely as a convenience to facilitate reference.  Such headings and
captions shall not be deemed in any way material or relevant to the
construction, meaning or interpretation of this Award Agreement or any term or
provision hereof.

(h)           Governing Law.  This Award Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware (without reference to the conflict of laws rules or principles
thereof).

(i)            Counterparts.  This Award Agreement may be executed in two or
more separate counterparts, each of which shall be an original, and all of which
together shall constitute one and the same agreement.

6.           Forfeiture and Repayment of Award.  If, at any time, the Board or
the Committee, as the case may be, in its sole discretion determines that any
action or omission by the Grantee constituted (a) wrongdoing that contributed to
(i) any material misstatement in or omission from any report or statement filed
by the Company with the U.S. Securities and Exchange Commission or (ii) a
statement, certification, cost report, claim for payment, or other filing made
under Medicare or Medicaid that was false, fraudulent, or for an item or service
not provided as claimed, (b) intentional or gross misconduct, (c) a breach of a
fiduciary duty to the Company or a Subsidiary or (d) fraud, then in each such
case, commencing with the first fiscal year of the Company during which such
action or omission occurred, the Grantee shall forfeit (without any payment
therefore) up to 100% of the Award that has not been paid out and shall repay to
the Company, upon notice to the Grantee by the Company, up to 100% of the
pre-tax amount received in respect of the Award during and after such fiscal
year.  The Board or the Committee, as the case may be, shall determine in its
sole discretion the date of occurrence of such action or omission, the
percentage of the Award that shall be forfeited and the percentage of the
pre-tax amount received pursuant to the Award that must be repaid to the
Company.

*  *  *  *  *

 
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Award Agreement as of the date first written above.

WELLCARE HEALTH PLANS, INC.

By: ______________________________
Name: Alec Cunningham
Title: Chief Executive Officer

Grantee acknowledges receipt of a copy of the Plan and represents that he or she
is familiar with the terms and provisions thereof, and hereby accepts this Award
Agreement subject to all of the terms and provisions thereof.  Grantee has
reviewed the Plan and this Award Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Award
Agreement, and fully understands all provisions of this Award Agreement and the
Plan.

GRANTEE:

By: __________________________________
[•]

 
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SCHEDULE 1
 
CRITERIA FOR PAYMENT OF AWARD
 

All terms used in the chart below shall be defined and interpreted in the
Committee’s sole discretion.

METRIC
WEIGHT
THRESHOLD   
(50% payout)
TARGET     
(100% payout)
 
MAXIMUM
(150% payout)
 
FINANCIAL
 
50%
     
Return on Equity
25%
Below Peer Median (Discretion)
Peer Median
Above Peer Median (Discretion)
Operating Margin
25%
Below Peer Median (Discretion)
Peer Median
Above Peer Median (Discretion)
 
QUALITY
 
50%
     
 
Medicare STARS Report
 
 
Discretion
3.0
Discretion
 
Medicaid HEDIS/Quality Results
 
 
Discretion
Meeting contract standard
Discretion
 
Accreditation Achievement
 
 
Discretion
Meeting contract standard
Discretion

 
Regardless of whether any criteria set forth in Schedule 1 have been achieved,
in making a determination as to whether or not an Award will be paid, and the
amounts of Award payments, if any, the Committee will take into consideration
other factors, including, but not limited to, unanticipated events, acquisition
and expansion costs, non-recurring and extraordinary items, and other equitable
factors, as determined by the Committee in its sole discretion, if such factors
occur.

                Notwithstanding the foregoing or as a limitation of Section 6,
the Committee, in its sole discretion, shall be permitted at any time prior to
payment in respect of an Award to reduce or otherwise amend the Award (including
determining that zero dollars should be paid), regardless of whether any
criteria set forth in Schedule 1 have been achieved.

 
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