Exhibit 10.5

 

MAGELLAN HEALTH SERVICES, INC.

 

2011 MANAGEMENT INCENTIVE PLAN

 

NOTICE OF PERFORMANCE-BASED, CASH DENOMINATED AWARD

 

(REFERENCE NO. 2011-MARCH, 2013)

 

	
Name of Grantee:
    	
 
    	
René Lerer, M.D.
    
	
 
    	
 
    	
 
    
	
Date of Grant:
    	
 
    	
March 5, 2013
    
	
 
    	
 
    	
 
    
	
Type of Award:
    	
 
    	
Performance-Based, Cash Denominated Award (“Award”).
    
	
 
    	
 
    	
 
    
	
Amount of Cash   Award:
    	
 
    	
Four Million Two Hundred Thousand   Dollars ($4,200,000) .
    
	
 
    	
 
    	
 
    
	
Vesting :
    	
 
    	
This Award shall vest in accordance   with the vesting schedule set forth below, provided that the Grantee’s   Service with the Company, a Subsidiary or a Parent company has not been   terminated: (i) by the Company for “cause” as defined in a certain   employment agreement between the Company and Grantee dated December 10,   2012 during the term of such Employment Agreement, or (ii) by Grantee   without “good reason” as defined in such Employment Agreement prior to the   relevant vesting date and provided that   (i) 50% of the portion of the Award which vests on March 5, 2014   shall not vest unless the Company has earnings per share for the year ended   December 31, 2013 of at least $3.03 (“2013 EPS Target”), if the Company   does not achieve the 2013 EPS Target in 2013, this tranche will vest if the   Company achieves earnings per share of at least $3.03 in any subsequent year up   to and including 2018, and 50% of the portion of the Award which vests on   March 5, 2014 shall not vest unless the Company’s return on equity for   the year ended December 31, 2013 equals at least 7% (“2013 ROE Target”),   if the ROE Target is not met in 2013, this tranche will vest if the Company   achieves return on equity of at least 7% in any subsequent year up to and   including 2018; (ii) 50% of the portion of the Award which vests on   March 5, 2015 shall not vest unless the Company has earnings per share   for the year ended December 31, 2014 of at least $3.18 per share (the   “2014 EPS Target”), if the Company does not achieve the 2014 EPS Target in   2014, this tranche will vest if the Company achieves earnings per share of at   least $3.18 in any subsequent year up to and including 2019, and 50% of the   portion of the Award which vests on March 5, 2015 shall not vest unless   the Company’s return on equity for the year ended December 31, 2014   equals at least 7% (“2014 ROE Target”), if the 2014 ROE Target is not met in   2014, this tranche will vest if the Company achieves return on equity of at   least 7% in any subsequent year up to and including 2019; and (iii) 50%   of the portion of the Award which vests on March 5, 2016 shall not vest   unless the Company has earnings per share for the year ended   December 31, 2015 of at least $3.34 per share (the “2015 EPS Target”),   if the Company does not achieve the 2015 EPS Target in 2015, this tranche   will vest if the Company achieves at least $3.34 in earnings per share in any   subsequent year up to and including 2020, and 50% of the portion of the Award   which vests on March 5, 2016 shall not vest unless the Company’s return   on equity for the year ended December 31, 2015 equals at least 7% (“2015   ROE Target”), if the 2015 ROE Target is not met in 2015, this tranche will   vest if the Company achieves return on equity of at least 7% in any   subsequent year up to and including
    


 











 

	
 
    	
 
    	
2020.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Vesting Date
    	
 
    	
Vesting Percentage
    
	
 
    	
 
    	
1st anniversary of the Date of   Grant (March 5, 2014)
    	
 
    	
33.4%
    
	
 
    	
 
    	
2nd anniversary of the Date of   Grant (March 5, 2015)
    	
 
    	
66.7%
   (i.e., an additional 33.3%)
    
	
 
    	
 
    	
3rd anniversary of the Date of   Grant (March 5, 2016)
    	
 
    	
100%
   (i.e., an additional 33.3%)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding the preceding paragraph regarding   vesting, this Award shall continue to vest in accordance with the vesting   schedule contained in this Notice of Performance-Based, Cash Denominated   Award: (i) as provided in Section 6 (c) (iii),   Section 6(d) (iii), and Section 6 (f) (ii)  of   Grantee’s Employment Agreement, and as provided in any other relevant section   of the Employment Agreement that provides for continued vesting , of equity   awards held by Grantee or (ii) upon the expiration of the term of the   Employment Agreement in accordance with Section 1 thereof.
    
	
 
    	
 
    	
 
    
	
Settlement of   Award:
    	
 
    	
This Award shall be settled entirely in cash net of   applicable federal and state income tax withholding.
    
	
 
    	
 
    	
 
    
	
Other Terms
    	
 
    	
This Award is made in lieu of an option and   restricted stock unit award provided for in Grantee’s Employment Agreement.   This Award is made pursuant to and is subject to the terms and conditions of   the Magellan Health Services, Inc. 2011 Management Incentive Plan.
    


 

By signing your name below, you acknowledge and agree that this Award is governed by the terms and conditions of the Magellan Health Services, Inc. 2011 Management Incentive Plan (“Plan”) which is hereby made a part of this document.  Capitalized terms used but not defined in this Notice of Performance-Based, Cash Denominated Award shall have the meanings assigned to them in the Plan.

 

 

	
 
    	
 
    	
MAGELLAN HEALTH SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Barry M. Smith
    
	
 
    	
 
    	
Title: Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
GRANTEE:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    


 

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