Exhibit 10.12




Exhibit 10.12

 



Coventry Health Care, Inc. (“Coventry”)


 


Summary of Director Compensation


 


Non-employee directors of Coventry are compensated pursuant to  the 2006 Directors Compensation Program for non-employee directors, previously filed as Exhibit 10.13 to Coventry Current Report on Form 8-K, filed on November 10, 2005 (the “Program”), which authorizes Coventry to make certain compensatory awards to non-employee directors pursuant to Coventry’s 2004 Incentive Plan and allows non-employee directors to defer portions of their compensation in accordance with Coventry’s Deferred Compensation Plan for Non-Employee Directors.  The following table summarizes the components and amounts of the compensation package paid offered to eligible non-employee directors in 2006 and 2007.


 





	
            Compensation Components
 	
            Board or Committee
 	
            Compensation
  
	
            Annual Compensation for Attendance at Regular Board Meetings1 (paid/vested/deferred quarterly in arrears in accordance with the Program and includes compensation for five regularly scheduled Board meetings)
 	
            Board
 	
            $                   225,000
 
	
            Annual Committee Chair Retainer 
 (Paid annually in arrears)                                    
 	
            Lead Director
 	
            $                     10,000
 
	
             
 	
            Chair of Audit Committee
 	
            10,000
 
	
             
 	
            Chair of Comp Committee
 	
            10,000
 
	
             
 	
            Chair of N/CG Committee
 	
            5,000
 
	
            Attendance at In-Person Special Meeting   
 	
            Board
 	
            $                       3,000
 
	
             
 	
            Audit Committee
 	
            3,000
 
	
             
 	
            Comp Committee
 	
            3,000
 
	
             
 	
            N/CG Committee
 	
            1,500
 
	
            Participation in a Special Telephonic Meeting                             
 	
            Board
 	
            $                       1,000
 
	
             
 	
            Audit Committee
 	
            1,000
 
	
             
 	
            Comp Committee
 	
            1,000
 
	
             
 	
            N/CG Committee
 	
            500
 
	
            Reimbursement of Reasonable Travel Expenses                                       
 	
            All Directors
 	
            Actual Costs
 
	
            New Director Stock Option Grant            
 	
            New Director
 	
            10,000 options to acquire shares which vest in equal amounts over four years
 
	
            Health and Basic Life Insurance Coverage                              
 	
            All Non-employee Directors
 	
                                                                                                                              
 
	
             
 	
            (voluntary participation)
 	
                                                                                                                              
 





 


Subject to the terms of the Program, non-employee directors may elect the form and the timing of their compensation on an individual basis as summarized in the table below. All elections of the form of payment must be made in multiples of 25%.  The table below summarizes the forms of compensation each individual non-employee director may select as well as certain material terms related to those forms of compensation. 


 


 





	
            Payment

“Form” 2
 	
            Maximum Allocation
 	
            Payment

“Current”
 	
            Payment

“Deferred”
 	
            Vesting
 
	
            Cash
 	
            50%3
 	
            Paid at the end of each quarter
 	
            Credited at the end of each quarter4
 	
            None
 





 


_________________________


1 Any non-employee directors who become eligible to participate in the Program after January 1 will receive a pro rata portion of the Annual Compensation.  


2   Value of stock options, restricted stock awards and stock units determined in accordance with SFAS 123R.


3 Percentage limit may be waived with the approval of the Chairman of the Compensation Committee


4 Deferred cash will be credited quarterly with interest based on the Company’s borrowing rate set at the beginning of each year (2005 rate is approximately 5%)


 








 





	
            Restricted Stock/
 Stock Units
 	
            100%
 	
            Granted at beginning of year
 	
            Stock Units deferred until termination of service or unforeseeable emergency

 
 	
            Quarterly over the year of service
 
	
            Stock Options
 	
            100%
 	
            Granted at beginning of year
 	
            Exercisable when vested and subject to a 10 year term
 	
            Quarterly over the year of service