| PROPOSAL ONE Election of Directors You are being asked to vote for three Class I directors, Gov. Garrey E. Carruthers, Daniel Cooperman, and Richard M. Schapiro, each for a three-year term expiring in 2021. This proposal requires for each nominee the affirmative vote of a majority of votes cast at the annual meeting.
Governance Highlights
| | | | | | | Independence | •
7 of our 8 directors are independent.•
All of our Board committees are composed exclusively of independent directors. | Executive Sessions | •
The independent directors regularly meet in private without management. | Board Oversight of Risk Management | •
Our Board has principal responsibility for oversight of the Company’s risk management process and understanding of the overall risk profile of the Company. | Share Ownership Requirements | •
Our non-executive directors must hold shares of the Company’s common stock with a value of at least four times the aggregate annual cash retainer amounts payable to such directors, within five years of joining the Board.•
Our chief executive officer must hold shares of the Company’s common stock with a value of at least five times his annual base salary.•
Our chief financial officer must hold shares of the Company’s common stock with a value of at least four times his annual base salary.•
Our other named executive officers must hold shares of the Company’s common stock with a value of at least two times their annual base salaries. | Board Practices | •
Our Board annually reviews its effectiveness as a group, with the results of the annual review being reported to the Board.•
Nomination criteria are adjusted as needed to ensure that our Board as a whole continues to reflect the appropriate mix of skills and experience.•
We have a clawback policy that entitles the Company to seek recovery by the Company of incentive-based compensation from current and former executives in the event of any accounting restatement due to material noncompliance by the Company with any financial reporting requirement under applicable securities laws.•
Our insider trading policy prohibits all directors, executive officers, and vice presidents of the Company or subsidiary executive officers from engaging in short sales and hedging transactions relating to our common stock, as well as imposing limits on pledging of our common stock. | Accountability | •
Directors must be elected by a majority of votes cast.•
Submission of “proxy access” bylaw for approval of stockholders at this annual meeting, including the following key terms: 3% ownership for 3 years, 20% of Board, and up to 20 stockholders being able to aggregate. |
Molina Healthcare, Inc. 2018 Proxy Statement | 2
Proxy Statement
This proxy statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Molina Healthcare, Inc. (“Board” or “Board of Directors”) for the Annual Meeting to be held on Wednesday, May 2, 2018, at 10:00 a.m. Eastern Time. Please review this proxy statement in its entirety and the Company’s 2017 Annual Report on Form 10-K for year ended December 31, 2017 (“Annual Report”) before voting. In this proxy statement, we may refer to Molina Healthcare, Inc. as the “Company,” “Molina Healthcare,” “our” or “we”.
Proposal 1 - Election of Directors
Our Board of Directors is divided into three classes, designated as Class I, Class II, and Class III. Each class currently has three Board seats, and there is currently a vacancy in Class II. Only one class of directors is subject to election each year. For 2018, the Class I directors are subject to election. The Class II | | | | | | | | | | | | | | | All nine directors will be subject to electionelected for a one-year term expiring at the 2019next annual meeting and the Class IIIof stockholders. All directors will be subject to election at the 2020 annual meeting. The three directors to be elected as Class I directors at the 2018 annual meeting will serve a term of three years, to last until the 2021 annual meeting. All directors shall serve until the expiration of their respective terms and until their respective successors are elected and qualified, or until such director’s earlier resignation, removal from office, death, or incapacity.
Under our Bylaws,bylaws, each director nominee receiving a majority of the votes cast at the meeting at which a quorum is present will be elected as a director. If a nominee for director who is an incumbent director is not elected and no successor has been elected at the meeting, that director will continue to serve as a “holdover director” until a successor is qualified and elected. However, under our Bylawsbylaws the holdover director would be required to tender his or her offer to resign to our corporate secretary promptly following certification of the election results. Within 90 days following certification of the election results, (i) the corporate governance and nominating committee will consider, and make a recommendation to the Board, as to whether to accept or reject the resignation, or whether other action should be taken, and (ii) the Board will act on the committee’s recommendation and publicly disclose its decision and the rationale behind it. The holdover director would not participate in either the committee’s or the Board’s deliberations regarding that director’s offer to resign.
| | | | | | | Nominees for Election to Board of Directors Currently, the three incumbent Class I directors are Gov. Garrey E. Carruthers, •Barbara L. Brasier
•Daniel Cooperman and •Dr. Stephen H. Lockhart •Steven J. Orlando •Ronna E. Romney •Richard M. Schapiro. Schapiro •Dale B. Wolf •Richard C. Zoretic •Joseph M. Zubretsky | | | | | |
The nine incumbent directors, Barbara L. Brasier, Daniel Cooperman, Dr. Stephen H. Lockhart, Steven J. Orlando, Ronna E. Romney, Richard M. Schapiro, Dale B. Wolf, Richard C. Zoretic, and Joseph M. Zubretsky, have been nominated by the Board, upon recommendation of the corporate governance and nominating committee, for re-election as directors to serve for a one-year term expiring at the annual meeting of stockholders in 2025. The Board believes that each of the director nominees possesses the requisite qualifications, skills, experience, and expertise to oversee and to provide strategic counsel and advice to the Company. In addition, each of the director nominees, except Mr. Zubretsky, the Company’s president and chief executive officer, meets the independence standards contained in the New York Stock Exchange (“NYSE”) corporate governance rules and Molina Healthcare’s Corporate Governance Guidelines. For a summary of the director nominees, including their respective qualifications, skills, and experience, please see the information below provided under the captions, “Information About Director Nominees” and “Additional Information About Directors.” Proxies can only be voted for the nine named director nominees. In the event any nominee is unable or declines to serve as a director at the time of the meeting, the proxies will be voted for any nominee who may be designated by the Board of Directors to fill the vacancy or the Board of Directors may elect to reduce its size. As of the date of this proxy statement, the Board of Directors is not aware of any nominee who is unable or will decline to serve as a director. | | | | | | | | | | | | | | | | | | The Board of Directors upon recommendationunanimously recommends that the stockholders vote "FOR" the election of the corporate governance and nominating committee, has nominated for election each of the three incumbent Class I directors. The Board believes that each of the three Class I nominees has demonstrated the requisite skills and expertise needed to provide strategic counsel to, and to oversee the key risks facing, the Company. For a summary of the director nominees, including their respective skills and qualifications, please see the information below provided under the captions, “Business Experience” and “Skills and Qualifications,” next to each director nominee’s name.
Proxies can only be voted for the three named director nominees.
In the event any nominee is unable or declines to serve as a director at the time of the meeting, the proxies will be voted for any nominee who may be designated by the Board of Directors to fill the vacancy. As of the date of this proxy statement, the Board of Directors is not aware of any nominee who is unable or will decline to serve as a director. | | | ü | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF EACH DIRECTOR NOMINEE.Director nominee.
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| | | | | | | | | | 2 | Molina Healthcare, Inc. 2018 2024 Proxy Statement | 3 | | |
Information About Director Nominees Class I Director Nominees for 20182024
| | | | | | | | | | | | | | | | | Barbara L. Brasier BUSINESS EXPERIENCE •Has over 40 years of corporate finance and accounting experience •Served as Chief Financial Officer for Herc Rentals Inc., an equipment rental company, from 2015 to 2018 •Served as Senior Vice President, Tax and Treasury for Mondelez International, a multinational food and beverage company, (successor to Kraft Foods, Inc.) from 2012 to 2015 •Served as Senior Vice President and Treasurer of Kraft Foods, Inc. from 2011 to 2012 and from 2009 to 2010 and Senior Vice President, Finance of Kraft Foods Europe from 2010 to 2011 •Served as Vice President and Treasurer at Ingersoll Rand, a diversified industrial company, from 2004 to 2008 •Served in a variety of corporate and business unit roles at Mead Corporation from 1984 to 2002, starting as general accountant and progressing to Director of Audit, divisional Chief Financial Officer, and divisional President. From 2002 to 2004, served as Treasurer of MeadWestvaco Corporation (successor to Mead Corporation) •Began career in public accounting, working in audit and tax at Touche Ross & Co. (now Deloitte) •Member of the Board of Directors of John Bean Technologies Corporation since 2019 •Member of the Board of Directors of Lancaster Colony Corporation since 2019 •Member of the Board of Directors of Henny Penny Corporation since 2020 •Holds a B.S. in accounting (summa cum laude) from Bowling Green State University •Holds an MBA from University of Dayton •Certified Public Accountant (inactive) | | | | Former Chief Financial Officer, Herc Rentals Inc. | | | | | | AGE: 65 | | | | | | DIRECTOR SINCE: 2019 | | | | | | BOARD COMMITTEES: •Audit (Financial Expert) •Compensation | | | | | | EDUCATION: B.S. in Accounting (summa cum laude) from Bowling Green State University MBA from University of Dayton | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Ms. Brasier has been a leader for a diverse portfolio of international public companies over her 40-year career in corporate finance and accounting, and has a broad and deep skill set, built from working in every facet of finance, as well as leading business operations. Ms. Brasier has experience managing large-scale change brought about by mergers, acquisitions, and transformative reorganizations, and has managed exceptional business challenges, frequently building teams and processes from scratch. | | | | | | |
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 3 | | |
| | | | | | | | Gov. Garrey E. CarruthersINFORMATION ABOUT DIRECTOR NOMINEES | Business Experience
•
Chancellor of New Mexico State University since June 1, 2015 to present, and President since 2013•
Served as Dean of the College of Business of New Mexico State University from 2003 to 2013•
Served as New Mexico State University’s Vice President for Economic Development from 2006 to 2013•
Served as the Director of the University’s Pete V. Domenici Institute since 2009•
Was the President and Chief Executive Officer of Cimarron Health Plan in New Mexico from 1993 to 2003•
From 1987 to 1990, served a term as the Governor of the state of New Mexico•
From 1981 to 1984, served as Assistant Secretary of the U.S. Department of the Interior•
Holds a Ph.D. in economics from Iowa State UniversitySkills and Qualifications
In addition to being the former Governor of New Mexico, a former member of the Reagan Administration, and professor of economics, Gov. Carruthers also has extensive experience in the healthcare industry. Gov. Carruthers’ former service as the president and chief executive officer of Cimarron Health Plan, Inc., a managed care health plan in Albuquerque New Mexico, and the predecessor to Molina Healthcare of New Mexico, has given him broad exposure to the managed care industry. In addition, Gov. Carruthers currently serves as a Chancellor of the New Mexico State University system, which includes the main campus and four 2-year college campuses. Prior to becoming Chancellor, Gov. Carruthers simultaneously served as the dean of the College of Business of New Mexico State University and as its vice president for economic development. Gov. Carruthers’ prior experience makes him a highly valued Board member, particularly in his role as the chairman of the compliance and quality committee, and as a member of the corporate governance and nominating committee.
| | Chancellor of New Mexico State University | Age: 78
| Director Since: 2012 (Class I)
| Board Committees: | •
Compliance & Quality (Chair) |
Molina Healthcare, Inc. 2018 Proxy Statement | 4
| | | | | | | | | | | | | | | | | Mr. Daniel Cooperman | Business Experience
BUSINESS EXPERIENCE • Chairman of the audit committee and member of the Board of Directors of Zoox, Inc., a young robotics companysubsidiary of Amazon, Inc. developing a fully autonomous vehicle, sincevehicles, from 2015 until 2020, when it was acquired by Amazon• Member of the Board of Directors of LegalZoom.Com,Legalzoom.com, Inc. from 2012 until its change of control in 2014; member2014•Member, Board of Advisers, Text IQ, a private company utilizing artificial intelligence to identify sensitive information, since 2017 •Member of the Board of Directors of Nanoscale Components Inc., a lithium ion technology company, since 2012 • Ex-Chairman and member of the Board of Directors of Second Harvest Food Bank of Santa Clara and San Mateo Counties (California), sinceSilicon Valley, from 2010 to 2018• Member of the Board of Directors of Liffey Thames Group, LLC dba Discovia, a legal services company, from 2011 to 2017•Member, Board of Advisors, Markkula Center for Applied Ethics at Santa Clara University, since 2019 • Of Counsel, Bingham McCutchen, LLP (from 2010 to 2014) and Of Counsel, DLA Piper LLP a(from 2014 to 2016), both global law firm, from December 2014 to November 2016firms• Of Counsel, Bingham McCutchen, LLP, a global law firm, from 2010 to 2014•
Senior Vice President, Secretary, and General Counsel of Apple Inc. from 2007 to 2009• Senior Vice President, Secretary, and General Counsel of Oracle Corporation from 1997 to 2007• Partner, McCutchen, Doyle, Brown & Enersen, LLP from 1977 to 1997•
Distinguished Visiting Lecturer, Stanford Law School since 2010•
Fellow, Arthur and Toni Rembe Rock Center for Corporate Governance, Stanford Law School and Graduate School of Business since 2012• Juris Doctorate, Stanford Law School• MBA, Stanford Graduate School of Business• Graduated Dartmouth College, summa cum laude, with an A.B. in Economics with highest distinction | | | Former General Counsel, SkillsApple, Inc.
| | | | | | AGE: 73 | | | | | | DIRECTOR SINCE: 2013 | | | | | | BOARD COMMITTEES: •Compliance and QualificationsQuality (Chair) | | | | | | EDUCATION: Fellow, Arthur and Toni Rembe Rock Center for Corporate Governance, Stanford Law School and Graduate School of Business since 2012 Juris Doctorate, Stanford Law School MBA, Stanford Graduate School of Business Graduated Dartmouth College, summa cum laude, with an A.B. in Economics with highest distinction | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Mr. Cooperman has extensive legal and corporate governance experience, having served as general counsel senior vice president, and secretary of both Apple, Inc. and Oracle Corporation. Mr. Cooperman has also served as Of Counsel at two international law firms focusing on corporate and transactional matters, corporate governance, and board of director issues. Mr. Cooperman’s service as general counsel for two major US public technology companieslong legal career and his extensive legal, compliance and risk management experience provide an invaluable background for his service on the Board and as chairman of both the Company’s corporate governancecompliance and nominating committee, and the Company’s information technology and cybersecurity committee. Mr. Cooperman is also a member of the auditquality committee. Further, Mr. Cooperman has extensive past and current boardBoard experience, having advised and served on the boards of a number of companies and trade associations. | | | | | | |
| | | | | | | | | | 4 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Age: 67
| Director Since: 2013 (Class I)
| Board Committees:
| •
Corporate Governance & Nominating (Chair)•
Information Technology & Cybersecurity (Chair)
| |
Molina Healthcare, Inc. 2018 Proxy Statement | 5
| | | | | | | INFORMATION ABOUT DIRECTOR NOMINEES |
| | | | | | | | | | | | | | | Mr. Richard M. Schapiro | | Business ExperienceStephen H. Lockhart, M.D., Ph.D.
BUSINESS EXPERIENCE •Served as senior vice president and chief medical officer for Sutter Health Network, a not-for-profit system of hospitals, physician organizations and research institutions in Northern California, from 2015 to 2021 Since April•From 2010 to 2015, served as Chief Executive Officer of SchapiroCo LLC, a financial consultantSutter Health Network’s regional chief medical officer for the East Bay Region •From 2008 to healthcare companies •
Since January 2017,2010, served as an independentchief administrative officer at the St. Luke’s campus of Sutter’s California Pacific Medical Center (CPMC)•From 2003 to 2008, served as medical administrative director of surgical services at CPMC, where he had a practice for Transamerica Corporation,20 years •Serves on the board of West Pharmaceutical Services since 2022 •Serves on the board of directors of NRC Health since 2021 •Serves on the boards of the David and from AprilLucile Packard Foundation, and is chairman of Parks California – a nonprofit dedicated to supporting California's parks and public lands •From 2015 to January2021 served on the board of the ECRI Institute •From 2010 to 2021 served on the board of Recreational Equipment, Inc. •Named in 2017 servedto Governor Brown’s Advisory Committee on Precision Medicine as independent directorpart of California’s continued effort to use advanced computing and technology to better understand, treat, and prevent disease •Board-certified anesthesiologist •Holds a Master’s in economics from Oxford University, 1979 •Holds M.D. and Ph.D. degrees from Cornell University, 1984/1985 •Self identifies as African-American | | | | Former Chief Medical Officer, Sutter Health Network | | | | | | AGE: 65 | | | | | | DIRECTOR SINCE: 2021 | | | | | | BOARD COMMITTEES: •Compliance and Quality | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Dr. Lockhart has extensive healthcare industry experience, having held several leadership positions, including as chief medical officer and chief administrator officer, with responsibilities for Transamerica Financial Life Insurance Company •
From 1999 to 2014, served asquality, patient safety, research, and education. Dr. Lockhart has a Managing Directorpassion for furthering equitable health outcomes in the Corporatehealthcare system, and Investment Banking Divisionduring his career tenure he has spearheaded the design and implementation of Bank of America Merrill Lynch’s Health Care Group (retired)health equity programs. | | | | | | |
| | | | | | | | | | •
From 1997 to 1999, served as Managing Director and Head of Health Care Group for ING Baring Furman Selz•
From 1979 to 1997, held various positions at Salomon Brothers Inc, serving as Managing Director and Global Co-Head of the Health Care Group, Managing Director - Insurance Group, Managing Director and Head of Government Finance Group, and Managing Director and Head of Thrift Coverage Group•
Bachelor of Science Degree in Accounting from Case Western Reserve University•
Master’s Degree in Business Administration from Bernard M. Baruch College•
Juris Doctorate from New York Law SchoolSkills and Qualifications
Mr. Schapiro is a former investment and corporate banker with thirty-five years of experience covering the financial services and healthcare sectors. Mr. Schapiro’s past experience as a healthcare investment banker enables him to provide helpful insight to management in the matters related to capital structure, debt and equity financings and mergers and acquisitions. Mr. Schapiro also advised the Company in connection with its 2003 IPO and subsequent follow-on offering, giving him invaluable insight into the history and growth of the Company.Molina Healthcare, Inc. 2024 Proxy Statement | 5
| | | Chief Executive Officer, SchapiroCo LLC | Age: 62
| Director Since: 2015 (Class I)
| Board Committees: | •
Information Technology & Cybersecurity |
Molina Healthcare, Inc. 2018 Proxy Statement | 6
Information About Directors Continuing in Office
Directors Whose Terms Are Not Expiring In 2018
| | | | | | | | Joseph M. ZubretskyINFORMATION ABOUT DIRECTOR NOMINEES | Business Experience
•
Has served as President and Chief Executive Officer of Molina Healthcare, Inc. since November 6, 2017•
President and Chief Executive Officer of The Hanover Group from June 2016 to October 2017•
Chief Executive Officer and Senior Executive Vice President of Healthagen, LLC, a subsidiary of Aetna, Inc., from January 2015 to October 2015•
Senior Executive Vice President of National Businesses of Aetna, Inc. from February 2013 to December 2014, Senior Executive Vice President and Chief Financial Officer from November 2010 to February 2013, Executive Vice President and Chief Financial Officer from March 2007 to November 2010, and Chief Enterprise Risk Officer from April 2007 to February 2013•
Senior Executive Vice President of Finance, Investments and Corporate Development of Unum Group from 2005 to 2007 and Interim Chief Financial Officer from 2006 to 2007•
Special Partner, Chief Investment Officer, and Chief Financial Officer at Brera Capital Partners from 1999 to 2005•
Executive Vice President of Business Development and Chief Financial Officer of MassMutual Financial Group from 1997 to 1999•
Member of the Boards of Directors of several companies, including The Hanover Group from 2016 to October 2017•
Certified Public Accountant (inactive)•
Holds a B.S. in Business Administration from University of Hartford, West Hartford, CTSkills and Qualifications
Mr. Zubretsky has more than 35 years of experience as a senior executive in strategy, operating and finance roles in some of the world’s top insurance and financial companies including, most recently, The Hanover Group and Aetna, Inc. Mr. Zubretsky’s unique and extensive executive and managerial experience places him in an excellent position to assist the Company with significant operational improvements and growth.
| | President and Chief Executive Officer | Age: 61
| Director Since: 2017 (Class III)
| | |
| | | Mr. Charles Z. Fedak | Business Experience
•
Certified Public Accountant since 1975•
Founded Charles Z. Fedak & Co., Certified Public Accountants, in 1981•
Employed by KPMG from 1975 to 1980•
Employed by Ernst & Young LLP from 1973 to 1975•
Prior Chair of the Company’s audit committee from the time of the Company’s IPO in July 2003 through April 2014•
Holds MBA degree from California State University, Long BeachSkills and Qualifications
Mr. Fedak has significant accounting and finance experience, having been a certified public accountant since 1975. He is the founder of a successful full service accounting firm. Mr. Fedak served as the chair of the Company’s audit committee for 12 years. His background and experience affords Mr. Fedak the financial expertise and operational familiarity to effectively oversee the Company’s finance and accounting functions.
| | Founder, Charles Z. Fedak & Co., CPAs | Age: 66
| Director Since: 2002 (Class II)
| Board Committees: | •
Audit (Financial Expert) |
Molina Healthcare, Inc. 2018 Proxy Statement | 7
| | | | | | | | | | | | | | | | | Mr. Steven J. Orlando | Business Experience
BUSINESS EXPERIENCE • Has over 40 years of business and corporate finance experience• From 2000 to the present, has operated his own financial management and business consulting practice, Orlando Company• Served as Greater Sacramento Bancorp director and chairman of its audit committee from January 2009 to January 2015• Served on multiple corporate boards, including service as chairman of the audit committee for Pacific Crest Capital, Inc., once a Nasdaq-listed corporation, from 1995 until its acquisition in 2004• Served as Chief Financial Officer for various companies from 1978-1978 to 2000• Practiced as Certified Public Accountant with Coopers & Lybrand CPAs from 1974 to 1977• Holds a B.S. in accounting from the California State University, Sacramento• Certified Public Accountant (inactive) | | | | Founder, Orlando Company | | | | | | AGE: 72 | | | | | | DIRECTOR SINCE: 2005 | | | | | | BOARD COMMITTEES: Skills and Qualifications•Audit (Chair & Financial Expert)
•Corporate Governance & Nominating Finance •Finance | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Mr. Orlando’s extensive business, accounting, operations, and corporate finance experience with a wide range of companies gives him valuable and practical insights regarding the operational and financial issues confronting business enterprises. In addition, his service on multiple corporate boardsBoards and audit committees, including those of a publicly traded financial institution and a Nasdaq-listed corporation, renders him well qualified to serve as the chairman of the audit committee, and to serve on multipletwo other committees of the Board. | | | | | | | | | | |
| | | | | | | | | | 6 | Molina Healthcare, Inc. 2024 Proxy Statement | | | Founder, Orlando Company | Age: 66
| Director Since: 2005 (Class II)
| Board Committees: | •
Audit (Chair & Financial Expert)•
InformationTechnology & Cybersecurity |
| | | | | | | INFORMATION ABOUT DIRECTOR NOMINEES |
| | | | | | | | | | | | | | | | | Ms. Ronna E. Romney | Business Experience
BUSINESS EXPERIENCE • Has served as director for Park-Ohio Holdings Corp., a publicly traded logistics and manufacturing company, since 2001•Lead Director of Molina Healthcare, Inc. Board of Directors from 2003 to 2017 • Director of Molina Healthcare of Michigan from 1999 to 2004• Candidate for the United States Senate in 1996 for the state of Michigan in 1996• From 1989 to 1993, appointed by President George H. W. Bush to serve as Chairwoman of the President’s Commission on White House Fellowships• From 1984 to 1992, served on the Republican National Committee for the state of Michigan• From 1985 to 1989, appointed by President Ronald Reagan to serve as Chairwoman of the President’s Commission on White House Presidential Scholars• From 1982 to 1985, appointed by President Ronald Reagan to serve as Commissioner of the President’s National Advisory Council on Adult Education• Political and news commentator for radio and television from 1994 to 1996• Honored as one of the NACD (National Association of Corporate Directors) Top 100 Directors for 2015•Selected as one of WomenInc. Magazine’s 2023 and 2019 Most Influential Corporate Board Directors • Holds a B.A from the Oakland University, Rochester, Michigan | | | | Director, Park Ohio Holding Corporation | | | | | | AGE: 80 | | | | | | DIRECTOR SINCE: 2003; Vice-Chair of the Board | | | | | | BOARD COMMITTEES: Skills and Qualifications•Compensation
•Corporate Governance & Nominating (Chair) | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Ms. Romney’s political skills, along with her extensive boardBoard and corporate governance experience and knowledge, enable her to serve an invaluableimportant role as Vice-Chair of the Board’s lead independentBoard. Ms. Romney has been a director since the Company’s initial public offering, and to serve as an effective liaison between managementher familiarity with the Company’s business and the managed care sector are invaluable to the Board. In addition to servingMs. Romney played a critical role in the Board as lead independent director from 2003 to 2017, when that position was eliminated and she also sits on the compensation and corporate governance and nominating committees.became Vice-Chair. | | | | | | |
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 7 | | | Director, Park Ohio Holding Corporation | Age: 74
| Director Since: 1999 (Class III); Vice-Chair of the Board
| Board Committees: | •
Corporate Governance & Nominating |
Molina Healthcare, Inc. 2018 Proxy Statement | 8
| | | | | | | INFORMATION ABOUT DIRECTOR NOMINEES | |
| | | | | | | | | | | | | | | | | Mr. Richard M. Schapiro BUSINESS EXPERIENCE •In 2018, Mr. Schapiro achieved Board Leadership Fellow status, completed the NACD/ Carnegie Mellon Cyber-Security Course and was selected for inclusion in the 2018 NACD Directorship 100, recognizing individual directors who serve as role models promoting exemplary Board leadership, oversight, and courage in the boardroom •Since April 2015, served as Chief Executive Officer of SchapiroCo LLC •Since January 2017, served as an independent director for Transamerica Corporation, a wholly-owned subsidiary of Aegon NV, including as chair of its compensation committee since November 2018 and member of its audit committee since January 2017, and from April 2015 to January 2017, served as independent director for Transamerica Financial Life Insurance Company •JD/MBA with over 35 years of investment banking experience as a trusted advisor in the healthcare and financial services sectors principally at Salomon Brothers and Bank of America Merrill Lynch (retired 2014) •Bachelor of Science Degree in Accounting from Case Western Reserve University, 1977 •Master’s Degree in Business Administration from Bernard M. Baruch College, 1980 •Juris Doctorate from New York Law School, 1980 | | | | Chief Executive Officer, SchapiroCo LLC | | | | | | AGE: 68 | | | | | | DIRECTOR SINCE: 2015 | | | | | | BOARD COMMITTEES: •Audit •Finance (Chair) | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Mr. Schapiro is a former investment and corporate banker with over 35 years of experience covering the financial services and healthcare sectors. Mr. Schapiro’s experience provides an invaluable background for his service on the Board and as chair of the finance committee and a member of the audit committee. Mr. Schapiro offers valuable oversight regarding matters related to capital structure, debt and equity financings and mergers and acquisitions. Mr. Schapiro advised the Company in connection with its 2003 IPO and subsequent follow-on offering, which gives him invaluable insight into the history and growth of the Company. | | | | | | |
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| | | | | | | INFORMATION ABOUT DIRECTOR NOMINEES |
| | | | | | | | | | | | | | | | | Mr. Dale B. Wolf | Business Experience
BUSINESS EXPERIENCE • Has servedServed as President and Chief Executive Officer of Onecall Care Management, sincea healthcare network management company, from January 2016 to February 2019, and Executive Chairman from September 2015 to January 2016• President and CEO, DBW Healthcare, Inc. sincefrom January 2014 to June 2018• Executive Chairman, Correctional Healthcare Companies, Inc., a national provider of correctional healthcare solutions, from December 2012 to July 2014• Chief Executive Officer of Coventry Health Care, Inc. from 2005 to 2009• Executive Vice President, Chief Financial Officer, and Treasurer of Coventry Health Care, Inc. from 1996 to 2005•Member of the Board of Directors of EHealth, Inc., a Nasdaq listed company, since August 2019, and Chairperson of the Board of Directors of EHealth, Inc. since September 2021 •Member of the Board of Directors of Adapt Healthcare since October 2019 •Member of the Board of Directors of Correctional Healthcare Companies, Inc. from December 2012 to July 2014 • Member of the Board of Directors of Coventry Healthcare, Inc. from January 2005 to April 2009• Member of the Board of Directors of Catalyst Health Solutions, Inc. from 2003 to 2012• Graduated Eastern Nazarene College with a Bachelor of Arts degree in Mathematics, with honors• Completed MIT Sloan School Senior Executive Program• Fellow in the Society of Actuaries since 1979 | | | | Chairman of the Board, Molina Healthcare, Inc. | | | | | | AGE: 69 | | | | | | DIRECTOR SINCE: 2013 | | | | | | BOARD COMMITTEES: Skills and Qualifications•Compensation (Chair)
•Corporate Governance & Nominating •Finance | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Mr. Wolf is an experienced healthcare executive with visionary leadership skills. Mr. Wolf has served in multiple leadership roles, including chief executive officer and chief financial officer of Coventry Healthcare, a health insurer now owned by Aetna, and on the boards of several notable healthcare companies. Mr. Wolf’s extensive managerial and executive healthcare experience, as well as his familiarity with the managed care industry, render him an invaluable asset in helping to formulate and oversee the Company’s long-term business strategy. | | | | | | |
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| | | | | | | INFORMATION ABOUT DIRECTOR NOMINEES | |
| | | | | | | | | | | | | | | | | Mr. Richard C. Zoretic BUSINESS EXPERIENCE •Member of the board of directors of InnovAge Holding Corp., a leading healthcare delivery platform focused on providing all-inclusive, capitated care to high-cost, duel eligible seniors, since 2021 •Member of the Board of Directors of Aveanna Healthcare, a provider of pediatric care, since 2017 •Former member of the Board of Directors of Babel Health, a software company offering risk adjustment solutions for government sponsored health plan businesses, from 2018 to 2022 •Former member of the Board of Directors of Kepro, a medical management and cost containment solution provider, from 2018 to 2022 •Former member of the Board of Directors of Landmark Health from 2014 to 2018; HealthSun Health Plans from 2016 to 2017; and, Eastern Virginia Medical School from 2011 to 2014 •Executive Vice President, WellPoint, Inc. and President of WellPoint’s Government Business Division, from 2013 to 2014 •Various executive positions at Amerigroup Corporation, from 2003 to 2012, including: Chief Operating Officer from 2007 to 2012; Executive Vice President, Health Plan Operations & Healthcare Delivery from 2005 to 2007; and Chief Marketing Officer from 2003 to 2005 •Management Consultant at Healthcare Practice, Deloitte Consulting from 2001 - 2003 •Executive Vice President at iSolutions, Workscape, Inc. from 2000 - 2001 •Various executive positions at United Health Group, from 1994 to 2000, including: President, Commercial Middle Market Business Segment from 1999 to 2000; Senior Vice President, Mid-Atlantic Operations from 1996 to 1999; and Senior Vice President, Corporate Sales & Marketing from 1994 to 1996 •Graduated Pennsylvania State University, with a B.S. in Finance | | | | Former Senior Executive, WellPoint | | | | | | AGE: 65 | | | | | | DIRECTOR SINCE: 2018 | | | | | | BOARD COMMITTEES: •Audit •Compliance & Quality | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Mr. Zoretic has more than 30 years of experience in the healthcare business field, with responsibilities ranging from company operations to business structuring. He has also served in several Board of Director positions for healthcare and health technology companies. Mr. Zoretic’s comprehensive business background, and extensive past and current Board experiences, provide an invaluable knowledge base for his service on the Board and as a member of the compliance and quality committee, and the Company’s audit committee. | | | | | | |
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| | | | | | | INFORMATION ABOUT DIRECTOR NOMINEES |
| | | | | | | | | | | | | | | | | Joseph M. Zubretsky BUSINESS EXPERIENCE •Has served as President &and Chief Executive Officer Onecall Care Management | | of Molina Healthcare, Inc. since November 6, 2017 Age: 63•President and Chief Executive Officer of The Hanover Group from June 2016 to October 2017
•Chief Executive Officer and Senior Executive Vice President of Healthagen, LLC, a subsidiary of Aetna, Inc., from January 2015 to October 2015 •Senior Executive Vice President of National Businesses of Aetna, Inc. from February 2013 to December 2014, Senior Executive Vice President and Chief Financial Officer from November 2010 to February 2013, Executive Vice President and Chief Financial Officer from March 2007 to November 2010, and Chief Enterprise Risk Officer from April 2007 to February 2013 •Senior Executive Vice President of Finance, Investments and Corporate Development of Unum Group from 2005 to 2007 and Interim Chief Financial Officer from 2006 to 2007 •Special Partner, Chief Investment Officer, and Chief Financial Officer at Brera Capital Partners from 1999 to 2005 •Executive Vice President of Business Development and Chief Financial Officer of MassMutual Financial Group from 1997 to 1999 •Member of the Boards of Directors of several companies, including The Hanover Group from 2016 to October 2017 •Certified Public Accountant (inactive) •Holds a B.S. in Business Administration from University of Hartford, West Hartford, CT | | | | President and Chief Executive Officer, Molina Healthcare, Inc. | | | | | | Director Since: 2013 (Class III); ChairmanAGE: 67
| | | | | | DIRECTOR SINCE: 2017 | | | | | | | | | | | | | | | SKILLS AND QUALIFICATIONS Mr. Zubretsky has more than 35 years of experience as a senior executive in strategy, operating, and finance roles in some of the Boardworld’s top insurance and financial companies including Aetna, Inc. and The Hanover Group. Since joining the Company, Mr. Zubretsky has successfully led the Company in its turnaround and growth plans. | | | Board Committees: | | | |
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Corporate Governance & Nominating |
Molina Healthcare, Inc. 2018 Proxy Statement | 9
Additional Information About Directors Summary of Director Qualifications, Skills, orand Experience The following is a skills matrix for our Board of Directors. As indicated in the matrix, ourOur directors have a diverse array of expertise and skills in a broad range of substantive areas. The marklby a director’s name indicates that the category is a specific qualification, skill, or experience that the director contributes to the Board. The absence of the marklfor a particular category does not mean that the director does not have that qualification, skill, or experience.areas as highlighted below.
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Independent Director Tenure | | | | | | | | Barbara L. Brasier | •Extensive financial and accounting experience, having held senior leadership positions in such areas at Herc Rentals, Inc. and Kraft Foods. •Valuable experience in identifying and mitigating enterprise risks in various leadership roles, including experience with mergers, acquisitions, and transformative reorganizations. •Audit committee financial expertise. | | | | | Daniel Cooperman | • Valuable knowledge of legal and governance matters, having held positions as general counsel of Apple, Inc. and Oracle Corporation, and having served as Of Counsel at international law firms focusing on corporate and transactional matters and corporate governance, and having served on boards of various companies. •Broad experience in information technology and cybersecurity. •Valuable experience in enterprise risk management programs in various senior leadership roles. | | | | | Dr. Stephen H. Lockhart | •Significant senior leadership experience in the healthcare industry, having held positions such as chief medical officer at Sutter Health Network and chief administrative officer at the St. Luke’s campus of Sutter’s California Pacific Medical Center, with responsibilities for quality, patient safety, research, and education. | | | | | Steven J.
Orlando | •Extensive corporate, finance, and accounting experience, having served as chief financial officer for various companies and having operated his own financial management and business consulting practice. •Audit committee financial expertise, including experience as audit committee chair. •Valuable knowledge of governance matters gained as serving as a director of various other companies. | | | | | Ronna E. Romney | •Valuable knowledge of governance matters gained as a director, including as the Company’s prior lead independent director and current Vice-Chair of the Board. •Valuable knowledge of executive compensation, including prior compensation committee chair role. •Extensive government affairs experience, having served in various political positions in presidential commissions, presidential national advisory council and the Republican state national committee for the State of Michigan. | | | | | Richard M. Schapiro | •Significant experience in finance, acquisitions, divestitures, and business restructuring, in the healthcare and financial services sectors, as former investment and corporate banker with various managing director positions with Bank of America Merrill Lynch’s Health Care Group, ING Baring Furman Selz, and Salomon Brothers Inc. •Valuable knowledge of executive compensation, including as former chair of the compensation committees of the Company and chair of the compensation committee of Transamerica Corporation. | | | | | Dale B. Wolf | •Significant senior leadership experience in healthcare industry, having held positions as chief executive officer, executive vice president, chief financial officer, and treasurer of Coventry Health Care, Inc., and president/chief executive officer of Onecall Care Management. •Valuable experience in identifying and mitigating enterprise risks in various senior leadership roles. •Significant board experience gained as serving as a director and former director of various other boards. | | | | | Richard C. Zoretic | •Significant senior leadership experience in the healthcare industry, having held senior leadership positions with operations responsibility at WellPoint, Inc., Amerigroup Corporation, and United Health Group. •Valuable experience in identifying and mitigating enterprise risks in various leadership roles. | | | | | Joseph W. Zubretsky | •Significant senior leadership experience in healthcare, insurance, and financial industries, as chief executive officer of the Company, The Hanover Group., and Healthagen, LLC, and chief financial officer, chief enterprise risk officer, and senior executive vice president of Aetna. •Valuable experience in identifying and mitigating enterprise risks in various leadership roles. •Significant financial experience, having held chief financial officer positions for various companies. | | |
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One of the main elements | | | | | | | ADDITIONAL INFORMATION ABOUT DIRECTORS |
A core component of the Company’s governance policies, designed to aid in maintainingthe maintenance of an effective Board, is an extensivea skills assessment. In that respect, theassessment of our directors. The Board developshas developed, and periodically updates, a skills matrix reflecting the Company’s strategic plan and the Board’s corporate governance and nominating committee’s determination of the appropriate balance of skills and characteristics required of Board members and maps our directors’ backgrounds and experience against these skills. The Board is being assessed periodically, and the Board undergoesconducts an annual evaluation.self-evaluation, overseen by the corporate governance and nominating committee. In addition, each year the corporate governance and nominating committee overseas a review of each Board committee’s performance and contribution to the Company. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Skills, Experiences
and Attributes | Brasier | Cooperman | Lockhart | Orlando | Romney | Schapiro | Wolf | Zoretic | Zubretsky | | | | | | | | | | | | Executive Leadership | ü | ü | ü | ü | ü | ü | ü | ü | ü | | Insurance / Healthcare Industry | ü | ü | ü | ü | ü | ü | ü | ü | ü | | Finance / Capital Markets | ü | ü | | ü | | ü | ü | ü | ü | | Technology/Cybersecurity | | ü | | ü | | ü | ü | ü | | | Regulatory / Public Policy | | ü | ü | | ü | ü | ü | ü | ü | | ESG and Community Involvement | | | ü | ü | ü | ü | ü | | ü | | Public Company Board and Governance | ü | ü | ü | ü | ü | ü | ü | ü | ü |
Executive Leadership: Demonstrated leadership in positions such as chief executive officer, chief financial officer, and other senior executives, with experience in development, implementation, and oversight of strategic outcomes and operational activities, and oversight of risk management. Insurance/Healthcare Industry: Extensive understanding of insurance/healthcare operations and services, including complex regulatory requirements and competitive environment. Finance/Capital Markets: Experience in public accounting, financial reporting and management, investment banking and financial services, and capital allocations. Technology/Cybersecurity: Experience implementing and overseeing technology and information systems strategies and managing cybersecurity and information security risks. Regulatory/Public Policy: Understanding of regulatory and public policy issues, including interactions with government and regulators. ESG and Community Involvement: Understanding of corporate governance practices and environmental and social sustainability initiatives. Public Company Board and Governance: Experience serving on public company boards and public company governance. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 13 | | |
| | | | | | | ADDITIONAL INFORMATION ABOUT DIRECTORS | |
Independent Director Tenure The tenure of our existing independent directors ranges from almost three3 years to nineteen years (including membership in the predecessor company prior to the Company’s IPO). Our independent directors contribute a wide range of knowledge, skills, qualifications, and experience as described in their individual biographies.21 years. We believe the tenuremix of tenures of our independent directors provides the appropriate balance of continuity, expertise, continuity, and perspective to our Board, making itand is a strategic asset of the Company, and a sourceall of continuous competitive advantage, and servingwhich serves the best interests of our stockholders. To facilitate the addition of new directors to the Board, the Board approved 12-year term limits for independent directors elected for the first time to the Board beginning with the Company’s 2020 annual meeting of stockholders. We believe providing our Boardthat the combination of the refreshment, insights, and skills that come with new perspectivesdirectors with the historical corporate knowledge of the longer-tenured directors has led to a Board that both is effective and ideas is a critical component to an effective board.works well together. In furtherance of that during the last seven yearsgoal, the corporate governance and nominating committee, with input from the entire Board, has performedperforms periodic strategic evaluations of our directors’ skills, qualifications, and experience. In connection with suchSuch evaluations fivehave helped inform the Board’s recent refreshment initiatives, resulting in four of our eightnine current directors have been added tojoining the Board since 2012, three of whom are acting as chairpersons of four of our Board’s standing committees. As the corporate governance and nominating committee and our Board consider potential new director candidates, they take into account a multitude of factors, including nominees that possess attributes that they believe will best complement the Company’s strategic plan and core business competencies, and further the Company’s mission and growth opportunities.late 2017. | | | | | | | | | | 14 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Corporate Governance and Board of Directors Matters Molina HealthcareThe Board continually strives to pursue sound corporate governance policies and practices, to maintain high standards of ethical conduct, to report itsthe Company’s financial results with accuracy and transparency, and to maintain full compliance with the laws, rules, and regulations that govern Molina Healthcare’sthe Company’s business.
The Board’s standing committees operate pursuant to their respective written charters. The current charters of the audit committee, the corporate governance and nominating committee, the compensation committee, the compliance and quality committee, and the information technology and cybersecurityfinance committee, as well as Molina Healthcare’sthe Company’s Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Policy and Procedures with Respect to Related Person Transaction PolicyTransactions, are available in the “Investors”“Investor Information” section of Molina Healthcare’sthe Company’s website, www.molinahealthcare.com,, under the link “Corporate Governance.“Governance.” Molina Healthcare stockholders may obtain printed copies of these documents free of charge by writing to Molina Healthcare, Inc., Ryan Kubota, Director of Investor Relations, 200 Oceangate,Jeff D. Barlow, Chief Legal Officer and Corporate Secretary, 2180 Harvard Street, Suite 100, Long Beach,400, Sacramento, California 90802.95815. Corporate Governance and Nominating Committee Responsibilities The corporate governance and nominating committee’s mandate is to reviewdevelop and shapemonitor corporate governance policies, and to identify qualified individuals for nomination to the Board of Directors. All of the members of the committee meet the independence standards contained in the New York Stock Exchange (“NYSE”)NYSE corporate governance rules and Molina Healthcare’sthe Company’s Corporate Governance Guidelines. The committee considers all qualified director candidates identifiedrecommended by members of the committee, by other members of the Board of Directors, by senior management, and by stockholders. Stockholders who would like to propose a director candidate for consideration by the committee may do so by submitting the candidate’s name, resume, and biographical information to the attention of the Corporate SecretarySecretary. Assuming that appropriate biographical and background material has been provided on a timely basis, the corporate governance and nominating committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as described below under “Questionsit follows for candidates submitted by others. Board Composition, Refreshment, and Answers About our Annual Meeting — How can I present a proposal for next year’s annualTerm Limits
Molina Healthcare, Inc. 2018 Proxy Statement | 11
meeting?” All proposals for nominations received by the Corporate Secretary will be presented to the committee for its consideration. If Proposal 3 is approved by the requisite vote at this year’s annual meeting of stockholders, eligible stockholders will also have the ability to submit director nominees for inclusion in our proxy statement at next year’s annual meeting. Additional details regarding the eligibility criteria and process are included in Proposal 3 in this proxy statement. The deadline for submitting the nominee is set forth below in “Questions and Answers About our Annual Meeting — How can I present a proposal for next year’s annual meeting?”
BoardCompositionandRefreshment
The Board and the corporate governance and nominating committee hashave made it a priority to ensure the Board is composed of directors who bring diverse viewpoints and perspectives, and who possess a multitudevariety of skills, professional experience, and backgrounds. To facilitate the addition of new directors to the Board, the Board approved 12-year term limits for independent directors elected for the first time to the Board beginning with the Company’s 2020 annual meeting of stockholders. The Board and the corporate governance and nominating committee believe that new perspectives and ideas are critical to a forward-looking and strategic boardBoard, as is the ability to benefit from the valuable experience and corporate familiarity that longer-serving directors bring. The corporate governance and nominating committee desires to maintain an appropriate balance of tenure, turnover, diversity, and skills on the Board. The corporate governance and nominating committee focuses on this through an ongoing, year-round process, which includes the annual Board evaluation process described below under “Corporate“Corporate Governance Guidelines - Board Evaluation Process.” BoardMembershipCriteria The Board and the corporate governance and nominating committee believe that, on the one hand, there are general qualifications that all directors must exhibit, and that, on the other hand, there are other key qualifications and experience that should be represented on the Board as a whole,in some capacity but not necessarily by each director. The Board and the corporate governance and nominating committee require that each director be a person of high integrity with a proven record of success in his or her field and have the ability to devote the time and effort necessary to fulfill his or her responsibilities to the Board and the Company. Each director must demonstrate innovative thinking and familiarity with and respect for corporate governance requirements and sound corporate governance practices. The committee reviews each candidate’s biographical information and assesses each candidate’s independence, skills, and expertise based on a variety of factors, including breadth of experience reflecting that the candidate will be able to make a meaningful contribution to the Board’s discussion of and decision-making regarding the array of complex issues facing the Company; understanding of the Company’s business environment; the possession of expertise that would complement the attributes of our existing directors; whether the candidate will | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 15 | | |
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appropriately balance the legitimate interests and concerns of all stockholders and other stakeholders in reaching decisions rather than advancing the interests of a particular constituency; and whether the candidate will be able to devote sufficient time and energy to the performance of his or her duties as a director. Application of these factors involves the exercise of judgment by the committee and the Board. Based on its assessment of each candidate’s independence, skills, and qualifications, the committee will make recommendations regarding potential director candidates to the Board. The committee follows the same process and uses the same criteria for evaluating candidates proposed by stockholders, members of the Board of Directors, and members of senior management. In 2017 the committee used the executive search firm of Russell Reynolds Associates, Inc. for purposes of identifying and evaluating potential director nominees. Russell Reynolds Associates, Inc. did not provide any other services to the Company. In 2017, the Company paid Russell Reynolds Associates, Inc. fees in the aggregate of approximately $109,000.
For the 2018 annual meeting, the Company did not receive notice of any director nominations from its stockholders.
Board Diversity Diversity is among the factors that the corporate governance and nominating committee considers when evaluating the composition of the Board. Among the criteria for Board membership as stated in the Company’s Corporate Governance Guidelines is a diversified membership: “The Board shall be committed to a diversified membership, in terms of the various experiences and areas of expertise of the individuals involved.” As set forth in our Corporate Governance Guidelines, diversity may reflect age, gender, ethnicity, industry focus, and tenure on the Board so as to enhance the Board’s ability to manage and direct the affairs and business of the Company, including, when applicable, to enhance the ability of the committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation, NYSENew York Stock Exchange listing standards, and the Company’s Bylawsbylaws and other corporate governance documents. When recommending director nominees for election by stockholders, the Board and the corporate governance and nominating committee evaluatesevaluate how the experience and skill set of each
Molina Healthcare, Inc. 2018 Proxy Statement | 12
director nominee complements those of the other director nominees and sitting Board members to create a balanced Board with diverse viewpoints and extensive expertise. Each director candidate contributes to the Board’s overall diversity by providing a variety of perspectives from his or her personal and professional experiences and backgrounds. The Board is satisfied that the current nominees reflect an appropriate diversity of gender, age, race, geographical background,has two women directors, Barbara L. Brasier and experience, andRonna E. Romney, as well as Dr. Stephen H. Lockhart, who self-identifies as African-American. The Board is committed to continuing to consider diversity issues in evaluating the composition of the Board.Board, and anticipates nominating additional women and persons from underrepresented communities as soon as reasonably practicable. Corporate Governance Guidelines The Company’s Corporate Governance Guidelines embody many of our practices, policies, and procedures, which are the foundation of our commitment to sound corporate governance practices. The guidelines are reviewed annually and revised as necessary. The guidelines outline the responsibilities, operations, qualifications, and composition of the Board. The guidelines provide that a majority of the members of the Board shall be independent. BoardCommittees The guidelines require that all members of the Company’s audit, corporate governance and nominating, and compensation committees be independent. Committee members and chairs are appointed by the Board upon recommendation of the corporate governance and nominating committee. Committee membership and chairs are rotated from time to time in accordance with the Board’s judgment. The Board and each committee have the power to hire and fire independent legal, financial, or other advisors, as they may deem necessary. Boardand CommitteeMeetings Meetings of the non-managementindependent directors are held as part of every regularly scheduled Board meeting and are presided over by the chairmanChairman of the Board. Directors have full and free access to senior management and other employees of Molina Healthcare. Directors are expected to prepare for, attend, and participate in all Board meetings and meetings of the committees on which they serve, and to attend the annual meeting of stockholders. All of the directors then in office attended in person or by telephone Molina Healthcare’s 20172023 annual meeting. BoardEvaluationProcess The Board recognizes that a robust and constructive evaluation process is a critical component of good corporate governance and Board effectiveness. Through this process, directors provide feedback andto assess Board committee and directorcommittee performance, including areas where the Board believes it is functioning effectively and areas where the Board believes it can improve. The corporate governance and nominating committee conducts ouroversees the annual Board evaluation process focused on three components:the performance of: (i) the Board, (ii) Board committees, and (iii) individual directors. As part of this process, the corporate governance and nominating committee reviewsestablishes the procedures, which may vary from year to year, in advance of each year’s evaluation process. In 2017,process, and which may also involve the corporate governance and nominating committee engaged aengagement of an independent third party to conduct a survey of the directors with regard to the evaluation and reported the survey results to the Board in February 2018.evaluation. In addition, each committee conducts its own self-evaluation. The results of these evaluations are reported to the Board. The self-evaluation process is designed to elicit candid feedback regarding the areas where the Board and its committees could improve their effectiveness. In addition, the corporate governance and nominating committee regularly discusses Board composition and effectiveness. | | | | | | | | | | 16 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | CORPORATE GOVERNANCE AND BOARD OF DIRECTORS MATTERS |
Succession Planning Reflecting the importance of succession planning, the Company’s Corporate Governance Guidelines provide that the Board in consultation with the chief executive officer shall analyze the current senior management, identify possible successors to management, and develop a succession plan. The succession plan includes policies and principles for chief executive officer selection and succession in the event of an emergency or the retirement of the chief executive officer. DirectorContinuingEducation New directors are provided with an orientation program to familiarize them with Molina Healthcare’s business, and its legal, compliance, and regulatory profile. New directors participate in introductory meetings with the Company’s executive management and are provided materials and presentations on the Company’s strategic plans, financial statements,plan and key business issues, policies, and practices. The Company makes available to the Board educational seminarscontinuing education information, materials, and opportunities on a variety of topics at its expense. These seminarsThe Company also provides to the Board membership to the National Association of Corporate Directors (NACD). Such continuing education information, materials, and opportunities are intended to allow directors to develop a deeper understanding of relevant health care, governmental, and business issues facing the Company, and to assist them in keeping pace with developments in corporate governance and critical issues relating to the operations of public company boards. The Board members also periodically participate in visits to the Company’s health plans.Boards. CompensationCommitteeMatters The Board reviews the compensation committee’s reportperiodic reports on the performance of Mr. Zubretsky, the Company’s current president and chief executive officer, in order to ensure that he is providing effectiveassess the effectiveness of his leadership for Molina Healthcare.of the Company. The Board also works with the compensation committee and the corporate governance and nominating committee with respect to matters of succession planning for the president and chief executive officer, the chief financial officer, and other senior executive officers of the Company.
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Director Independence The Board of Directors has determined that, except for Mr. Zubretsky (the Company’s Presidentpresident and Chief Executive Officer)chief executive officer), each of the directors of the Company includingand the threedirector nominees identified in this proxy statement, has no material relationship with the Company that would interfere with the exercise of his or her independent judgment as a director, and is otherwise “independent” in accordance with the applicable listing requirements of the NYSE, the applicable Securities and Exchange Commission (“SEC”) rules, and the Company’s Corporate Governance Guidelines. In making that determination, the Board of Directors considered all relevant facts and circumstances, including the director’s commercial, industrial, banking, consulting, legal, accounting, charitable, social, and familial relationships, among others. In addition, a director will not be considered independent if Section 303A.02(b) of the NYSE Listed Company Manual (or any applicable successor listing standard) otherwise disqualifies such director from being considered independent. The independence of directors and the materiality of any business relationships delineated above is determined by the Board in its discretion. In assessing the influence of director tenure in the context of the evaluation of director independence, the Board believes that it is notable that the longer tenured members of the Board all voted to terminate the senior management of the Company in 2017, and that the duration of Mr. Zubretsky’s tenure is only five years. Code of Business Conduct and Ethics The Board has adopted a Code of Business Conduct and Ethics governing all employees and directors of Molina Healthcare and its subsidiaries. A copy of the Code of Business Conduct and Ethics is available on our website at www.molinahealthcare.com.www.molinahealthcare.com. From the Molina home page, click on “About Molina,” then click on “Investors,“Investor Information,” and then click on “Corporate Governance.“Governance.” There were no waivers of our Code of Business Conduct and Ethics during 2017. We intend to disclose amendments to, or waivers of, our Code of Business Conduct and Ethics, if any, on our website. Compliance Hotline The Company encourages employees, consultants, vendors, and others to raise possible ethical issues.issues, instances of potential fraud, or other issues of concern. The Company offers several channels by which employees and others may report ethical concerns or incidents, including, without limitation, concerns about accounting, internal controls, auditing matters, or auditingHR matters. We provide a Compliance Hotline that is available 24 hours a day, seven days a week. Individuals may choose to remain anonymous.anonymous while reporting any issues. We prohibit retaliatory action against any individual for raising legitimate concerns or questions regarding ethical matters or for reporting suspected violations. Communications with the Board Stockholders or other interested parties who wish to communicate with a member or members of the Board of Directors, including the non-management directors as a group, may do so by addressing their correspondence to the individual Board member or Board members, c/o Corporate Secretary, Molina Healthcare, Inc., 200 Oceangate,2180 Harvard Street, Suite 100, Long Beach,400, Sacramento, California 90802.95815. The Board of Directors has | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 17 | | |
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approved a process pursuant to which the Corporate Secretary shall review and forward correspondence to the appropriate director or group of directors for response. Board Leadership Structure Until May 2, 2017, Dr. J. Mario Molina held the positions of chairman of the board and chief executive officer. In May 2017, upon termination of Dr. Molina’s employment with the Company, the Board decided to split theThe roles of chairman of the boardBoard and the chief executive officer withare split, and the chairman beingis an independent director, and to eliminate the position of lead independent director which was previously held by Ronna E. Romney. At that timedirector. Mr. Dale B. Wolf one ofhas been serving as the independent directors, was appointed chairman of the board, and Joseph W. White, the Company’s chief financial officer, was appointed interim president and chief executive officer. Also, effective as ofBoard since May 2, 2017,2017. Ms. Romney has been serving as the former lead independent director, was appointed vice-chair of the board. Subsequently, on November 6, 2017, Joseph M. Zubretsky joined the Company as its president and chief executive officer.Board since May 2017. The Board believes that the partnership between the chief executive officer and the chairman of the board, with an adjusted focus for each, will enableBoard enables both executives to apply their strongest skills to charting a successful course for our business and continuing the sustained growth of our business. Mr. Zubretsky, as president and chief executive officer, assumed accountabilityis accountable for the Company’s strategic direction and operations, and Mr. Wolf, as chairman of the board,Board, focuses on Board leadership and governance-related matters.
TheThe Board strongly supports having an independent director as the boardBoard chairman. Having an independent chairman enables non-management directors to raise issues and concerns for Board consideration without immediately involving management. Governance commentators, proxy advisory firms, and institutional stockholders
Molina Healthcare, Inc. 2018 Proxy Statement | 14
generally conclude the separation of the two roles is a “best practice.” We believe the non-executive chairman of the Board plays an important governance leadership role that enhances long-term stockholder value.
The authority and responsibilities of the chairman and the vice chair are detailed in the Company’s Corporate Governance Guidelines. The chairman shall preside at all meetings of the Board (including executive sessions) and of the stockholders, and serve as the liaison between the independent directors and the chief executive officer. In addition to any other responsibilities that the independent directors as a whole might designate from time to time, the chairman is also responsible for approving: (i) the quality, quantity, and timeliness of the information sent to the Board, and (ii) the meeting agenda, schedules, and materials for the Board. The chairman has the authority to call meetings of the independent directors and to set the agendas for such meetings. If requested by major stockholders of the Company, the chairman is responsible for ensuring that he or she is available, when appropriate, for consultation and direct communication in accordance with procedures developed by the Company and the chairman. Further, the chairman may perform such other duties, and exercise such powers, as prescribed in the Bylawsbylaws of the Company or by the Board from time to time. The vice-chair of the Board assists the chairman in performing his or her duties and responsibilities, and performs such other duties as may be prescribed by the Board from time to time. Involvement in Certain Legal ProceedingsProceedings There are no legal proceedings to which any director, officer, nominee, or principal stockholder, or any affiliate thereof, is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company.Company or any of its subsidiaries. Board’s Role in Risk Oversight While management is responsible for designing and implementing the Company’s risk management process, controls, and oversight, the Board, both as a whole and through its committees, has overall responsibility for oversight of the Company’s risk management. The audit committee is responsible for discussing our policies with respect to risk assessment and risk management, as well as overseeing enterprise risk management, cybersecurity and data security risks, and the Company’s financial risk exposures and the manner in which such risks are being monitored and controlled. The compliance committee is responsible for overseeing significant risk areas related to compliance and quality. The compensation committee is responsible for overseeing the management of risks relating to the Company’s executive compensation plans and arrangements. The corporate governance and nominating committee manages risks associated with the independence of the Board and with potential conflicts of interest. The finance committee manages risks associated with our capital structure, credit, liquidity and operations. The Board regularly receives reports from senior management with respect to the Company’s management of major risks, including efforts to identify, assess, manage, and mitigate risks that may affect the Company’s ability to execute on its corporate strategy and fulfill its business objectives. The Board’s role is to oversee this effort and to consult with management on the effectiveness of risk identification, measurement, monitoring and mitigation processes, and the adequacy of staffing and action plans, as needed. The Company has also instituted a management enterprise risk management committee to assess the risks of the Company. In addition, the compensation committee reviews compensation programs to ensure that they do not encourage unnecessary or excessive risk-taking. The compensation committee has concluded our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. Stock Ownership Guidelines for Directors The Board believes that individual directors should own and hold a reasonable number of shares of common stock of the Company to further align the director’s interests and actions with those of the Company’s stockholders, and also to demonstrate confidence in the long-term prospects of the Company. In February 2018, the Company revised itsWe maintain stock ownership guidelines for directors to increasewhich provide that the valuenon-executive directors must hold shares of the Company’s shares of common stock that directors shall own fromwith a value of at least three (3)five (5) times the aggregate annual cash retainer amounts payable to the director to four (4) times such retainer amounts.for directors. The value of a director’s holdings areis based on the average closing price of a share of the Company’s common stock for the previous calendar year. Shares that satisfy | | | | | | | | | | 18 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
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these guidelines may be those owned directly, through a trust, or by a spouse or children, and shall include shares purchased on the open market, vested or unvested shares of restricted stock, or exercised and retained option shares. Until a director’s stock ownership requirement is met, the director must retain at least 50% of all “net settled shares” received from the vesting, delivery, or exercise of equity awards granted under the Company’s equity award plans until the total value of all shares held equals or exceeds the director’s applicable ownership threshold. “Net settled shares” generally refers to those shares that remain after the payment of (i) the exercise price of stock options or purchase price of other awards, (ii) all applicable withholding taxes, and (iii) any applicable transaction costs. Shares that are pledged are not counted toward the director’s ownership requirements. Non-employee directors must comply with the stock ownership guidelines within five (5) years of their election to the Board. Each non-employee director of the Company satisfied the applicable stock ownership guidelines as of December 31, 2017.2023.
Governance Highlights | | | | | | | | | Independence | •Independent chairman. •Other than Joseph M. Zubretsky, our president and chief executive officer, all of our directors are independent. •All of our Board committees are composed exclusively of independent directors. | | | | | | Executive Sessions | •The independent directors regularly meet without management. | | | | | | Board Oversight of Risk Management | •While management is responsible for designing and implementing the Company’s risk management process, controls, and oversight, the Board, both as a whole and through its committees, has overall responsibility for oversight of the Company’s risk management. | | | | | | Share Ownership Requirements | •Our non-executive directors must hold shares of the Company’s common stock with a value of at least five times the aggregate annual cash retainer amounts payable to such directors, within five years of joining the Board. •Our chief executive officer must hold shares of the Company’s common stock with a value of at least five times his annual base salary. •Our chief financial officer must hold shares of the Company’s common stock with a value of at least four times his annual base salary. •Our other named executive officers must hold shares of the Company’s common stock with a value of at least two times their annual base salaries. | | | | | | Board Structure | •Board members are elected to one-year terms at each annual meeting of stockholders. •If a nominee for director who is an incumbent director is not elected and no successor has been elected at the annual meeting, that director will serve as a “holdover director” until a successor is qualified and elected, but such “holdover director” is required to tender his/her offer to resign promptly following certification of the election results. The Board will determine whether to accept or reject such resignation, or take other action. •The Board established 12-year term limits for independent directors elected for the first time to the Board beginning with the Company’s 2020 annual meeting of stockholders. | | | | | | Board Practices | •Our Board annually reviews its effectiveness as a group, with the results of the annual review being reported to the Board. •Nomination criteria are adjusted as needed to ensure that our Board as a whole continues to reflect the appropriate mix of skills and experience reflected in our strategic plan. •Our insider trading policy prohibits all directors, executive officers, and vice presidents of the Company or subsidiary executive officers from engaging in short sales, hedging transactions, and pledging of our common stock. | | | | | | Accountability | •Directors must be elected by a majority of votes cast in uncontested elections. •Bylaws provide for “proxy access,” subject to the following eligibility criteria: 3% ownership for 3 years, 20% of Board, and up to 20 stockholders being able to aggregate. | | |
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Environmental, Social, and Governance Initiatives (ESG) We have various environmental, social, and governance (ESG) initiatives, and have adopted and implemented programs with respect to social determinants of health, human capital management, compliance and integrity, community contributions, and sustainability programs. The corporate governance and nominating committee of the board assists the board in fulfilling its oversight responsibilities with regard to environmental, health and safety, corporate social responsibility, corporate governance, sustainability, and other public policy matters relevant to the Company. As a healthcare company whose membership consists largely of people receiving some form of government assistance, most of our ESG efforts are focused on providing or enhancing community-based healthcare services for those in need. We annually publish an Environmental, Social, and Governance Report (ESG Report) which provides information on our ESG practices and performance related to social initiatives, community contributions and health, workplace, governance, and the environment. Our 2023 ESG Report is posted on our website at https://investors.molinahealthcare.com/corporate-governance/esg-reports-and-resources. The contents of our website, including our 2023 ESG Report, are not incorporated by reference in this Proxy Statement | 15Statement. | | | | | | | | | | 20 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Information About the Board and its Committees Meetings of Non-Management Directors It is the customary practice of the Company’s non-managementindependent directors to meet in one or more executive sessionsessions without any management directors in attendance each time the full Board convenes for a regularly scheduled in-person Board meeting, which is usually four times each year, and, if the Board convenes a special meeting, the non-managementindependent directors may meet in executive session if the circumstances warrant. The chairman of the Board presides at each executive session of the non-managementindependent directors. Committees of the Board of Directors The five standing committees of the Board of Directors are: (i) the audit committee; (ii) the compensation committee; (iii) the corporate governance and nominating committee; (iii) the compensation committee; (iv) the compliance and quality committee; and (v) the information technology and cybersecurityfinance committee, each being composed of the individuals indicated below. Audit Committee
The audit committee performs a number On an annual basis, the Board evaluates the structure of functions, including: (i) reviewingits committees, and in the adequacy of the Company’s internal system of accounting controls, (ii) meeting with the independent auditors and management to review and discuss various matters pertainingfuture may make changes to the audit, includingdirector composition of its committees, and the Company’s financial statements, the report of the independent auditors on the results, scope and termsmandate of their work, and the recommendations of the independent auditors concerning the financial practices, controls, procedures, and policies employed by the Company, (iii) resolving disagreements between management and the independent auditors regarding financial reporting, (iv) reviewing the financial statements of the Company, (v) selecting, evaluating, and, when appropriate, replacing the independent auditors, (vi) reviewing and approving fees to be paid to the independent auditors, (vii) reviewing and approving all permitted non-audit services to be performed by the independent auditors, (viii) establishing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters, (ix) considering other appropriate matters regarding the financial affairs of the Company, and (x) fulfilling the other responsibilities set out in its charter, as adopted by the Board. The report of the audit committee required by the rules of the SEC is included in this proxy statement.non-required committees.
The audit committee consists of Mr. Orlando (Chair), Mr. Cooperman, Mr. Fedak, and Mr. Schapiro. Mr. Schapiro joined the audit committee effective July 26, 2017. The Board has determined that each of Mr. Orlando and Mr. Fedak qualify as an “audit committee financial expert” as defined by the SEC. In addition to being independent according to the Board’s independence standards as set out in its Corporate Governance Guidelines, each member of the audit committee is independent within the meaning of the corporate governance rules of the NYSE. Each
| | | | | | | | | | | | | | | | | | | | | | | Audit
Committee | Compensation Committee | Corporate Governance & Nominating Committee | Compliance & Quality Committee | Finance
Committee | | | | | | | | | Daniel Cooperman | | | | | | | | Richard M. Schapiro | | l | | | | | | Ronna E. Romney | | | l | | | | | Dale B. Wolf | | | | l | | l | | Barbara K, Brasier | | l | l | | | | | Steven J. Orlando | | | | l | | l | | Richard C. Zoretic | | l | | | l | | | Dr. Stephen Lockhart | | | | | l | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | l | Member | | Chairperson | | Chairman of the Board | | Financial Expert | | Vice-Chair of the Board | |
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member of the audit committee is also financially literate. The Audit Committee Charter is available for viewing in the “Investors” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Corporate Governance.” | | | | | | | | | | | | | | | | Audit Committee | | The audit committee performs a number of functions, including: •meeting with the independent auditors and management to review and discuss various matters pertaining to the audit, including the Company’s financial statements, the report of the independent auditors on the results, scope, and terms of their work, and the recommendations of the independent auditors concerning the financial practices, controls, procedures, and policies employed by the Company, •reviewing the adequacy of the Company’s internal system of accounting controls, •if necessary, resolving disagreements between management and the independent auditors regarding financial reporting, •selecting, evaluating, and, when appropriate, replacing the independent auditors, •reviewing and approving fees to be paid to the independent auditors, including reviewing and approving all permitted non-audit services to be performed by the independent auditors, •handling any complaints or inquiries received by the Company regarding accounting, internal accounting controls, or auditing matters, •assisting with the Board’s oversight of privacy, data security, and cybersecurity matters, including overseeing the Company’s activities related to cybersecurity risks, and in such respect reviewing and discussing with management (i) such risks and the potential impact of those exposures on the Company’s business, operations, and reputation, (ii) the steps management has taken to monitor and mitigate such exposures, (iii) the Company’s information governance policies and programs, and (iv) major legislative and regulatory developments that could materially impact the Company’s exposure regarding privacy, data security risk, and cybersecurity. •fulfilling the other responsibilities set out in its charter, as adopted by the Board. The report of the audit committee required by the rules of the SEC is included in this proxy statement. | | | | | | | | | | MEMBERS: Mr. Orlando (Chair) Ms. Brasier Mr. Schapiro Mr. Zoretic | | | | | | | | | | | | | | | The Board has determined that each of Mr. Orlando and Ms. Brasier qualify as an “audit committee financial expert” as defined by the SEC. The other two members, Messrs. Schapiro and Zoretic are financially literate. In addition to being independent according to the Board’s independence standards as set out in its Corporate Governance Guidelines, each member of the audit committee is independent within the meaning of the corporate governance rules of the NYSE. The Audit Committee Charter is available for viewing in the “Investor Information” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Governance.” | |
Corporate Governance and Nominating CommitteeThe corporate governance and nominating committee is responsible for identifying individuals qualified to become Board members and recommending to the Board the director nominees for the next annual meeting of stockholders. It leads the Board in its annual review of the Board’s performance and recommends to the Board members for each committee of the Board. The committee takes a leadership role in shaping corporate governance policies and practices, including recommending to the Board the Corporate Governance Guidelines and monitoring Molina Healthcare’s compliance with these guidelines. The committee is responsible for reviewing potential conflicts of interest involving directors, executive officers, or their immediate family members. Under the Company’s Related Person Transactions Policy, the corporate governance and nominating committee is charged with determining that any related person transaction is in, or is not inconsistent with, the best interests of the Company and its stockholders. The committee also reviews Molina Healthcare’s Code of Business Conduct and Ethics and other internal policies to help ensure that the principles contained in the Code of Business Conduct and Ethics are being incorporated into Molina Healthcare’s culture and business practices. | | | | | | | | | | 22 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
The corporate governance and nominating committee consists of Mr. Cooperman (Chair), Gov. Carruthers, Ms. Romney, and Mr. Wolf, each of whom is “independent” under the NYSE listing standards and the Company’s Corporate Governance Guidelines. The Corporate Governance and Nominating Committee Charter is available for viewing in the “Investors” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Corporate Governance.” | | | | | | | INFORMATION ABOUT THE BOARD AND ITS COMMITTEES |
Compensation Committee
The compensation committee is responsible for determining the compensation for Mr. Zubretsky, our president and chief executive officer, and also approves the compensation Mr. Zubretsky recommends as chief executive officer for the other named executive officers. The committee reviews and discusses with management the Compensation Discussion and Analysis, and, based on such review and discussion, recommends to the Board that the Compensation Discussion and Analysis be included in Molina Healthcare’s proxy statement. In addition, the committee administers Molina Healthcare’s 2011 Equity Incentive Plan.
The compensation committee consists of Mr. Schapiro (Chair), Mr. Fedak, Mr. Orlando, and Ms. Romney. The Board has determined that in addition to being independent according to the Board’s independence standards as set out in its Corporate Governance Guidelines, each of the members of the compensation committee is independent according to the corporate governance rules of the NYSE. In addition, each of the members of the committee is a “non-employee director” as defined in Section 16 of the Securities Exchange Act of 1934, as amended, and is also an “outside director” as defined by Section 162(m) of the Internal Revenue Code.
The Compensation Committee Charter is available for viewing in the “Investors” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Corporate Governance.” | | | | | | | | | | | | | | | | Compensation Committee | | The compensation committee performs a number of functions, including: •determining the compensation for Mr. Zubretsky, our president and chief executive officer, and also approving the compensation Mr. Zubretsky recommends for the other executive officers, •reviewing and discussing with management the Compensation Discussion and Analysis, and, based on such review and discussion, recommending to the Board that the Compensation Discussion and Analysis be included in Molina Healthcare’s proxy statement, •conducting periodic risk assessments and making recommendations to the Board regarding the Company’s incentive compensation and stock-based plans and programs, and •administering Molina Healthcare’s 2019 Equity Incentive Plan | | | | | | | | | | MEMBERS: Mr. Wolf (Chair) Ms. Brasier Ms. Romney | | | | | | | | | | | | | | | The Board has determined that, in addition to being independent according to the Board’s independence standards as set out in its Corporate Governance Guidelines, each of the members of the compensation committee is independent according to the corporate governance rules of the NYSE. In addition, each of the members of the committee is a “non-employee director” as defined in Section 16 of the Securities Exchange Act of 1934, as amended. The Compensation Committee Charter is available for viewing in the “Investor Information” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Governance.” | |
Each committee has the authority to retain special consultants or experts to advise the committee, as the committee may deem appropriate or necessary in its sole discretion. From time to time,Since May 2021, the compensation committee has retainedengaged Aon’s Human Capital Solutions practice, a compensation consultant to providedivision of Aon plc (“Aon”), as its advisor. Aon provides the committee with comparative data on executive compensation and advice on Molina Healthcare’sthe Company’s compensation programs for senior management. For this purpose, the compensation committee engaged Exequity, LLP (“Exequity”) as its advisor since 2016.management and outside directors, including relevant comparative data on pay levels and structures. Compliance and Quality Committee
The compliance and quality committee, together with the audit committee, assists the Board in its oversight of the Company’s compliance with applicable legal, regulatory, and quality requirements. Whereas the audit committee has oversight over matters of financial compliance (e.g., accounting, auditing, financial reporting, and investor disclosures), as to all other areas of compliance (“non-financial compliance”), the compliance and quality committee has oversight responsibility in the first instance. However, the two committees coordinate their review of major compliance matters, including the overall state of compliance, significant legal or regulatory compliance exposures, and material reports or inquiries from regulators. The compliance and quality committee also is responsible for overseeing the Company’s compliance and quality programs and assists the Board in the general oversight of the Company’s quality-related activities, policies, and practices that relate to promoting member health, providing access to cost-effective quality health care, and advancing safety and efficacy for members.
| | | | | | | | | | | | | | | | Corporate Governance and Nominating Committee | | The Corporate Governance and Nominating Committee performs a number of functions, including: •developing director criteria, identifying individuals qualified to become Board members and recommending to the Board the director nominees for the next annual meeting of stockholders, •developing and overseeing the Company’s corporate governance processes, including overseeing the evaluation of the Board, •making recommendations to the Board regarding its size and composition, as well as director appointments to committees of the Board and/or committee chair positions, •reviewing potential conflicts of interest involving directors or Section 16 officers, •reviewing related person transactions under the Company’s Policy and Procedures with Respect to Related Person Transactions, •assisting the Board in fulfilling its oversight responsibilities with regard to environmental, health and safety, corporate social responsibility, corporate governance, sustainability, and other public policy matters relevant to the Company, and •reviewing Molina Healthcare’s Code of Business Conduct and Ethics and other internal policies to help ensure that the principles contained in the Code of Business Conduct and Ethics are being incorporated into Molina Healthcare’s culture and business practices. | | | | | | | | | | MEMBERS: Ms. Romney (Chair) Mr. Orlando Mr. Wolf | | | | | | | | | | | | | | | All members of the corporate governance and nominating committee are “independent” under the NYSE listing standards and the Company’s Corporate Governance Guidelines. The Corporate Governance and Nominating Committee Charter is available for viewing in the “Investors” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Corporate Governance.” | |
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The compliance and quality committee consists of Gov. Carruthers (Chair), and Mr. Wolf. John C. Molina also served as a member of such committee until his resignation from the Board on February 23, 2018. | | | | | | | | | | | | | | | | Compliance and Quality Committee | | The compliance and quality committee performs a number of functions, including: •together with the audit committee, assisting the Board in its oversight of the Company’s compliance with applicable legal, regulatory, and quality requirements, •reviewing major compliance matters in coordination with the audit committee, including the overall state of compliance, significant legal or regulatory compliance exposures, and material reports or inquiries from regulators, •overseeing the Company’s compliance and quality programs, and •assisting the Board in the general oversight of the Company’s quality-related activities, policies, and practices that relate to promoting member health, providing access to cost-effective quality health care, and advancing safety and efficacy for members. | | | | | | | | | | MEMBERS: Mr. Cooperman (Chair) Dr. Lockhart Mr. Zoretic. | | | | | | | | | | | | | | | The Compliance and Quality Committee Charter is available for viewing in the “Investor Information” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Governance.” | |
The Compliance and Quality Committee Charter is available for viewing in the “Investors” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Corporate Governance.” | | | | | | | | | | | | | | | | Finance Committee | | The finance committee performs a number of functions, including: •assisting the Board in fulfilling its responsibilities to monitor and oversee the Company’s financial affairs with respect to the Company’s capital structure, investments, and potential mergers and acquisitions, as well as capital and financing plans, policies, and requirements, and •evaluating and approving certain financial proposals, strategies, transactions, and other initiatives as requested by the Board or the Company’s management. | | | | | | | | | | MEMBERS: Mr. Schapiro (Chair) Mr. Orlando Mr. Wolf | | | | | | | | | | | | | | | The Finance Committee’s Charter is available for viewing in the “Investor Information” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Governance.” | |
Information Technology and Cybersecurity Committee
The information technology and cybersecurity committee’s primary duties and responsibilities include but are not limited to the following: (i) enhancing the Board’s understanding and oversight of the systems (policies, controls, and procedure) that management has put in place to identify, manage, and mitigate risks related to cybersecurity, privacy, and disaster recovery, responding to incidents with respect thereto, and protecting critical infrastructure assets; (ii) providing a forum to review, evaluate, monitor, and provide feedback on technology related matters, including strategies, objectives, capabilities, initiatives, and policies; and (iii) performing such other tasks related to the oversight of the Company’s information technology cybersecurity functions as the Board may delegate to the committee from time to time. The committee has retained the services of independent experts to perform an evaluation of the security systems and present its report to the committee.
The information technology and cybersecurity committee consists of Mr. Cooperman (Chair), Mr. Orlando, and Mr. Schapiro, as well as the Company’s chief information officer and the Company’s chief security officer. Dr. Molina also served on the information technology and cybersecurity committee from July 26, 2017 to November 12, 2017.
The Information Technology and Cybersecurity Committee’s Charter is available for viewing in the “Investors” section of Molina Healthcare’s website, www.molinahealthcare.com, under the link, “Corporate Governance.”
Acquisitions and Capital Management Committee
The acquisitions and capital management committee (formerly the transaction committee) was disbanded in May 2017. During 2017 such committee consisted of Ms. Romney (Chair), Mr. Orlando, Mr. Wolf, and Mr. Schapiro. This committee was an advisory and oversight committee of the Board which was intended, among other things, to review and evaluate strategic acquisition opportunities of the Company and its subsidiaries, expansion/development projects, financings, refinancings, and other capital structure transactions identified by the Company’s management.
Meetings of the Board of Directors and Committees During 2017,2023, the Board of Directors met fifteenseven (7) times, the audit committee met teneight (8) times, the corporate governance and nominating committee met fivefour (4) times, the compensation committee met eightfive (5) times, the compliance and quality committee met four times, the information technology and cybersecurity committee met three(4) times, and the acquisitionsfinance committee met six (6) times. Each nominee for director at the 2023 annual meeting of stockholders and capital management committee which was disbandedeach director in office as of the 2023 annual meeting of stockholders attended such meeting held on May 2017 did not have any meetings. 3, 2023. Each current director attended at least 75% of the total number of meetings of the Board of Directors and the committees ofeach committee on which he or she was a memberserved in 2017, with the exception of Mr. Molina whose attendance was 74% of such meetings, and each director attended the 2017 annual meeting of stockholders held on May 10, 2017.
2023.
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Non-Employee Director Compensation 20172023 Director Compensation
The compensation committee makes recommendations to the Board with respect to the compensation level of directors, and the Board determines the directors’ compensation. During 2017,2023, the Company paid the non-employee directors the following cash compensation: | | | | | | | | Non-Executive Director FeeFees | Non-executive directors received an annual cash retainer in the amount of $100,000. | | | | | Non-Executive Chairman of the Board FeeFees | Effective as of the date theThe non-executive chairman of the Board was appointed to such position on May 2, 2017, the non-executive chairman received an additional proratedannual cash fee based on an annual fee of $175,000. | | Independent Lead Director Fee (until May 2, 2017) | Until May 2, 2017, when the position of independent lead director was eliminated, the independent lead director received an additional cash fee prorated for the period January 1, 2017 to May 2, 2017, based on an annual fee of $30,000. | | Vice Chair of the Board FeeFees | From May 2, 2017, when aThe vice-chair of the Board was appointed, to November 5, 2017, the vice-chair received an additional cash fee prorated for that period based on an annual fee of $60,000. Effective November 6, 2017, when the chief executive officer transition was completed, the vice-chair annual cash fee was reduced toof $30,000. | | | | | Audit Committee FeeFees | The chairperson of the audit committee received an additional annual cash fee of $27,500,$32,500, and each member received an additional annual cash fee of $15,000. | | | | | | Compensation Committee Fees | The chairperson of the compensation committee received an additional annual cash fee of $22,500, and each member received an additional annual cash fee of $12,500. | | | | | | Corporate Governance and Nominating Committee Fees | The chairperson of the corporate governance and nominating committee received an additional annual cash fee of $22,500, and each member received $12,500. | Compensation Committee Fees | The chairperson of the compensation committee received an additional annual cash fee of $22,500, and each member received $12,500. | | | | | | Compliance and Quality Committee Fees | The chairperson of the compliance and quality committee received an additional annual cash fee of $22,500, and each member received an additional annual cash fee of $12,500. | | Information Technology and Cybersecurity | | | | Finance Committee Fees | The chairperson of the information technologyfinance committee received $22,500, and cybersecurityeach member of the finance committee received an additional annual cash fee of $11,250, and each member received $6,250.$15,000. | | Acquisitions and Capital Management Committee Fees | The chairperson of the acquisitions and capital management committee received an additional prorated cash fee based on an annual fee of $26,000, and each member received an additional prorated cash fee based on an annual fee of $24,000. Such amounts were prorated for the period January 1, 2017 to May 3, 2017, when the committee was disbanded.
The Company also reimburses its Board members for travel, food, and lodging expenses incurred in attending Board and committee meetings or performing other services for the Company in their capacities as directors. The Company also compensates its non-employee Board members $1,000 per diem for non-ordinary course Board and committee activity, excluding any educational events. Directors who are employees of the Company or its subsidiaries do not receive any compensation for their services as directors. From January 1, 2017 to May 2, 2017, former director Dr. J. Mario Molina also served as ourJoseph M. Zubretsky, president and chief executive officer, and former director Mr. John C. Molinais also served as our chief financial officer. Joseph M. Zubretsky, our current president and chief executive officer, was appointed as a director effective November 6, 2017.member of the Board. In addition, to link the financial interests of the non-employee directors to the interests of the stockholders, encourage support of the Company’s long-term goals, and align director compensation to the Company’s performance, each non-employee director is granted an equity award with a total value of $220,000 for 2017-2018.2023-2024. One quarter of that amount, or $55,000 of restricted stock, was granted on the first day of each quarter (starting on July 1, 2017) based on the closing price of the Company’s stock on the grant date. The status of Dr. J. Mario Molinadate and Mr. John C. Molina changed from employee directors to non-employee directors on May 2, 2017, and as such, they each received a prorated equity grant on May 2, 2017, in addition to the quarterly grants thereafter.vested immediately. Such equity awards may be rounded up or down to account for fractional shares in the computation. Molina Healthcare, Inc. 2018 Proxy Statement | 19 | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 25 | | |
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20172023 Non-Employee Director Compensation | | | | | | | | | | | | | | | | | | Name | Fees Earned or Paid in Cash | | Stock Awards(1) | | All Other Compensation | | Total | | Garrey E. Carruthers, Ph.D. | $ | 138,125 |
| | $ | 220,019 |
| | $ | — |
| | $ | 358,144 |
| Daniel Cooperman (2) | $ | 151,751 |
| | $ | 222,019 |
| | $ | — |
| | $ | 373,770 |
| | Charles Z. Fedak | $ | 127,500 |
| | $ | 222,019 |
| | $ | — |
| | $ | 349,519 |
| John C. Molina(3) | $ | 74,688 |
| | $ | 146,035 |
| | $ | — |
| | $ | 220,723 |
| Joseph M. Molina(4) | $ | 69,090 |
| | $ | 146,035 |
| | $ | — |
| | $ | 215,125 |
| Frank E. Murray(5) | $ | 125,000 |
| | $ | 220,019 |
| | $ | — |
| | $ | 345,019 |
| | Steven J. Orlando | $ | 154,360 |
| | $ | 220,019 |
| | $ | — |
| | $ | 374,379 |
| | Ronna E. Romney | $ | 191,731 |
| | $ | 220,019 |
| | $ | — |
| | $ | 411,750 |
| | Richard M. Schapiro | $ | 149,432 |
| | $ | 220,019 |
| | $ | — |
| | $ | 369,451 |
| Dale B. Wolf (2) | $ | 249,456 |
| | $ | 220,019 |
| | $ | — |
| | $ | 469,475 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Fees Earned
or Paid in Cash
($) | Stock Awards(1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other
Compensation
($) | Total
($) | | | | | | | | | | | | Stephen H. Lockhart | 112,500 | | 220,462 | | — | | — | | — | | — | | 332,962 | | | | Daniel Cooperman | 122,500 | | 220,462 | | — | | — | | — | | — | | 342,962 | | | | Richard M. Schapiro | 137,500 | | 220,462 | | — | | — | | — | | — | | 357,962 | | | | Ronna E. Romney | 165,000 | | 220,462 | | — | | — | | — | | — | | 385,462 | | | | Dale B. Wolf | 325,000 | | 220,462 | | — | | — | | — | | — | | 545,462 | | | | Barbara L. Brasier | 127,500 | | 220,462 | | — | | — | | — | | — | | 347,962 | | | | Steven J. Orlando | 160,000 | | 220,462 | | — | | — | | — | | — | | 380,462 | | | | Richard C. Zoretic | 127,500 | | 220,462 | | — | | — | | — | | — | | 347,962 | | |
| | (1)(1)The amounts reported as Stock Awards reflect the grant date fair value of restricted stock awards granted under the Company’s 2019 Equity Incentive Plan, in accordance with Accounting Standards Codification Topic 718, “Compensation - Stock Compensation.” The non-employee directors’ compensation program described above provides for an annual equity award valued at $220,000 for each director, or $55,000 per quarter. | The amounts reported as Stock Awards reflect the grant date fair value of restricted stock awards under the Company’s 2011 Equity Incentive Plan, in accordance with Accounting Standards Codification Topic 718, “Compensation - Stock Compensation.” Beginning on July 1, 2015, the non-employee directors compensation program described above provided for an annual equity award valued at $220,000 for each director, or $55,000 per quarter. |
The amounts shown (other than for Dr. Molina and Mr. Molina) represent the aggregate grant date fair value of the awards, using the closing price of our common stock on January 1, 20172023 of $54.26,$330.22, April 1, 20172023 of $45.60,$267.49, July 1, 20172023 of $69.18,$301.24, and October 1, 20172023 of $68.76. For Dr. Molina and Mr. Molina,$327.89. In the amounts shown representevent that the aggregate grant date fair value of the awards, usingfalls on a weekend or market holiday, the closing price on the most recent trading day is used in calculating the number of shares awarded. None of our commonnon-employee directors held any stock on May 2, 2017 (the date on which their status changed from employee directors to non-employee directors)options or unvested stock awards as of $59.75, July 1, 2017 of $69.18, and October 1, 2017 of $68.76.December 31, 2023. | | | | | | | | | | 26 | Molina Healthcare, Inc. 2024 Proxy Statement | | (2) | Messrs. Cooperman and Wolf each have fully vested options to purchase 15,000 shares of our stock at an exercise price of $33.02 per share which expire on March 11, 2023. |
| | (3)
| Mr. Molina served as a non-employee director from May 2, 2017 to February 23, 2018. |
| | (4)
| Dr. Molina served as a non-employee director from May 2, 2017 to December 12, 2017. |
| | (5)
| Dr. Murray served as a director until his retirement on November 6, 2017. The fees reflected in the table include $19,022 of compensation for consulting services provided by Dr. Murray from his retirement date, November 6, 2017, through December 31, 2017. |
2018 Director Compensation
The compensation committee periodically reviews benchmarking assessments of director compensation at comparable companies. The compensation committee engaged Exequity as its compensation consultant to undertake the 2018 benchmarking assessment of director compensation. Exequity is the same compensation consultant that the committee engaged to perform the 2017 director and named executive officers compensation studies and the 2018 compensation study for the named executive officers.
The peer group used in the director compensation study was the same peer group used for the executive compensation study and consists of the following companies:
| | | | | | | | 1. Acadia Healthcare Company, Inc. | 8. Humana Inc. | 2. Aetna, Inc. | 9. Magellan Health, Inc. | 3. Anthem, Inc. | 10. Tenet Healthcare Corporation | 4. Centene Corporation | 11. Triple-S Management Corporation | 5. Cigna Corporation | 12. Universal Health Services, Inc. | 6. Community Health Systems, Inc. | 13. WellCare Health Plans, Inc. | 7. DaVita Inc. | |
The director compensation study concluded that the total fees for the directors were moderately above the peer group median. The compensation committee decided to leave the directors’ 2018 compensation unchanged from the 2017 levels.
Molina Healthcare, Inc. 2018 Proxy Statement | 20
Compensation Consultant Independence
The compensation committee used Exequity as its compensation consultant for the 2018 named executive officers’ and directors’ compensation studies. Exequity is the same compensation consultant that the compensation committee previously used for the 2017 named executive officers’ and directors’ compensation studies. The Company paid Exequity $157,814 for advisory compensation services provided to the Company during 2017. Other than the services provided to the Company by the consulting firm in connection with the compensation studies for the named executive officers and directors, the consulting firm does not provide any other services to the Company.
The compensation committee reviewed the independence of its compensation consultant in light of SEC rules and NYSE listing standards, including taking into account the following factors: (1) no other services being provided to the Company by the consulting firm; (2) fees paid by the Company as a percentage of the consulting firm’s total revenue; (3) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the consulting firm and a member of the compensation committee; (5) any Company stock owned by the consulting firm; and (6) any business or personal relationships between the Company’s executive officers and the senior advisor. In light of these considerations, the compensation committee concluded that Exequity’s work for the committee was rendered on a fully independent basis, and involved no conflict of interest.
Information About the Executive Officers of the Company The following persons wereare our executive officers at December 31, 2017.as of the date of this proxy statements. One of our directors, Mr. Joseph M. Zubretsky, was alsois also our chief executive officer during the year ended December 31, 2017.officer. See page 11 above on page 7.for a description of Mr. Zubretsky’s business experience and biographical information. Executive officers are appointed annually by the Board, subject to the terms of their employment agreements. SubsequentOnly Mr. Zubretsky and Mr. Barlow are parties to December 31, 2017, Ms. Bayer retired as chief operating officer ofemployment agreements with the Company and Ms. Rubino was terminated by the Company without cause.Company. Mr. Joseph W. White, 59, Mark L. Keim, 58, has served as our chief financial officer since May 2017. He alsoFebruary 2021. Mr. Keim has experience in the managed care and financial services fields. From 2016 to 2018, he served as our interimexecutive vice president of corporate development and strategy for The Hanover Insurance Group. From 2014 to 2016, Mr. Keim was co-founder and chief executivefinancial officer of HealthReveal. Prior to that, from May 20172008 to November 2017. He had formerly2014, Mr. Keim spent six years with Aetna where he led major strategic initiatives. Before Aetna, from 1999 to 2008 he was senior vice president of strategy and business development at GE Capital. Mr. Keim earned his Bachelor’s degree from Lehigh University and a Master of Business Administration degree from the Tuck School of Business at Dartmouth College. Mr. James E. Woys, 65, has served as our chief accountingoperating officer since May 2023, and prior to that he served as our executive vice president of accountinghealth plan services since 2007May 2018. Mr. Woys oversees the overall healthcare operations of the enterprise and 2003, respectively. In his rolethe enterprise’s health plan support functions such as information technology, claims processing, payment integrity, and contact centers, as well as the Company’s pharmacy operation, national network operations and a variety of clinical-oriented services such as quality, risk adjustment, and ancillary services. Mr. Woys has more than 40 years of health care experience. Mr. Woys previously spent 30 years at Health Net, Inc. from 1986 until 2016, where he served as executive vice president, chief financial officer, and chief operating officer, and managed general and administrative expenses across the Medicare, Medicaid, Commercial and Department of Defense and Department of Veterans Affairs operating segments. Mr. White is responsible for oversightWoys also served as Health Net’s president of the Company’s accounting, reporting, forecasting, budgeting, actuarial,government and treasury functions.specialty services. Mr. White has over 30 yearsWoys earned his Bachelor’s degree from Arizona State University and his Master of financial management experience in the health care industry. Prior to joining the Company in 2003, Mr. White worked for Maxicare Health Plans, Inc. from 1987 through 2002. Mr. White holds a Master’s degree in Business Administration and a Bachelor’s degree in Commerce from the University of Virginia. Mr. White is a Certified Public Accountant.Golden Gate University. Mr. Jeff D. Barlow, 5561, has served as our chief legal officer and secretary since 2010. Prior to that, Mr. Barlow had served as vice-president,vice president, assistant corporate secretary, and associate general counsel of Molina Healthcare since 2004. As chief legal officer, Mr. Barlow is responsible for setting the overall legal strategy for the Company and its subsidiaries, and for providing legal counsel to senior management and the boardBoard of directors.Directors. Mr. Barlow has over 2534 years of legal experience, including counseling clients regarding federal securities laws, corporate governance, mergers and acquisitions, and litigation. Mr. Barlow graduated from the University of Utah with a Bachelor of Arts degree in 1987 with a minor in Latin. Additionally, Mr. Barlow received his Juris Doctorate degree, cum laude,, from the University of Pittsburgh School of Law in 1990, and his Master of Public Health degree from the University of California, Berkeley in 1995. Mr. Barlow is a member of the American Bar Association, California State Bar Association, Arizona State Bar Association, the American Health Lawyers Association, and the American Academy for the Advancement of Science. FormerExecutiveOfficers
Ms. Terry P. Bayer, 67Debra J. Bacon, 57, served as our chief operating officer from November 2005 to February 2018. She had formerlyhas served as our executive vice president, health planMedicaid since October 2023, and was appointed by the Board as an executive officer in January 2024. Ms. Bacon oversees the overall Medicaid operations since January 2005.of the enterprise. Ms. BayerBacon joined Molina in 2021, and previously served as executive vice president, Medicare and Marketplace from April 2023 to October 2023, and as senior vice president, Marketplace from November 2021 to April 2023. Ms. Bacon has over 30 yearsextensive experience providing strategic, operational, and financial leadership of healthcare management experience, including staff model clinic administration, provider contracting, managed care operations, diseaseteams and programs. Prior to joining Molina, Ms. Bacon spent fourteen years at CVS/Aetna Medicaid, from 2007 to 2021, where she held various executive management positions, including as vice president, Medicaid chief operating officer from 2020 to 2021, regional vice president from 2018 to 2020, vice president, Medicaid chief financial officer from 2014 to 2018, and home care. Since March 2014,executive director, regional chief financial officer from 2007 to 2014. Ms. Bayer has served asBacon earned her Bachelor of Science degree in Business Administration, with emphasis in Accounting, and a director and member of the compensation and organization committee and since 2015 of the nominating and governance committee of California Water Service Group, the third largest investor-owned water utilityMaster’s degree in the United States. From 2006 to 2008 Ms. Bayer served on the board of Apria Healthcare Group Inc., a provider of home respiratory services and certain medical equipment. She holds a Juris Doctorate degree from Stanford University, a Master of Public Health degreeAccountancy from the University of California, Berkeley, and a Bachelor’s degree in Communications from Northwestern University.Nebraska – Lincoln.
Molina Healthcare, Inc. 2018 Proxy Statement | 21
Ms. Lisa A. Rubino, 60,Mr. Maurice S. Hebert, 61, has served as our senior vice president, Medicare & Duals Integrationchief accounting officer since September 2018 and was designated as our principal accounting officer for purposes of the Securities Exchange Act of 1934, as amended, effective as of February 19, 2019. He joined the Company from 2013 to March 2018. In her role, Ms. Rubino was responsible for the overall strategic direction and implementation enterprise wide of Medicare. Previously, from 2012 to 2013, Ms. RubinoTufts Health Plan, where he served as senior vice president of health plans - western region. From 2007finance from 2016 to 2012, Ms. Rubino was the president of the Company’s wholly-owned subsidiary, Molina Healthcare of California.2018. Prior to joiningthat, Mr. Hebert served as chief accounting officer at WellCare Health Plans from 2010 to 2016. Mr. Hebert holds a Bachelor of Science in Accounting and Business Administration from Louisiana State University.
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 27 | | |
Related Person Transactions The Board has adopted a written policy regarding the review, approval, and monitoring of transactions involving the Company in 2007, Ms. Rubino was aand related persons (directors, director nominees, executive officers, beneficial holders of greater than 5% or more of our outstanding common stock, or any member of the Blue Shieldimmediate family of California (formerly CareAmerica Health Plans)any of the foregoing persons). Under this policy, the Company will enter into or ratify a transaction with a related person only when the Board of Directors or the corporate governance and nominating committee, as applicable, determines that the transaction in question is in, or is not inconsistent with, the best interests of the Company and its stockholders. On an annual basis, each director and executive leadership team from 1997officer must complete a Director & Officer Questionnaire that elicits information about various relationships. Directors and executive officers are expected to 2006. Ms. Rubino received her Master’s degreenotify the Legal Affairs Department of any updates to the information provided in Criminology from California State University, Long Beach, from where shethe questionnaire. Related person transactions that are identified as such prior to the consummation or amendment are consummated or amended only if (i) with respect to transactions involving executive officers of the Company, the corporate governance and nominating committee approves or ratifies such transaction in accordance with the policy, and (ii) with respect to transactions involving directors of the Company, the full Board approves or ratifies such transaction in accordance with the policy. At least annually the corporate governance and nominating committee reviews any previously approved or ratified related person transactions. Based on all relevant facts and circumstances, taking into consideration the Company’s contractual obligations, the Board or the committee as appropriate determines if it is in the best interests of the Company and its stockholders to continue, modify, or terminate the related person transaction. During 2023, the Company did not have any related person transactions, except with respect to Ronna E. Romney whose son, George Romney, is employed by the Company with an annual base salary of approximately $150,000. Pursuant to the Company’s related person transaction policy, a related person transaction includes an arrangement between the Company and a related person which the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year. As such, Mr. Romney’s employment with the Company is deemed a related person transaction. The Board evaluated and ratified such transaction pursuant to the policy. | | | | | | | | | | 28 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | | | | | | | | | | | PROPOSAL TWO Advisory Vote to Approve the Compensation of our Named Executive Officers | | | | | | | | | |
Consistent with the vote of stockholders at our 2023 annual meeting, our Board determined that the stockholder advisory vote to approve the Company's executive compensation (commonly referred to as "say-on-pay") would occur every year. At our 2023 annual meeting, our stockholders approved, on an advisory basis, the Company’s executive compensation for 2022. Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, we are again holding an advisory vote to approve the Company’s executive compensation for 2023 as described in this proxy statement. We expect that the next say-on-pay vote after the Annual Meeting will be held at our 2025 annual meeting of stockholders. You are voting on a proposal which gives our stockholders the opportunity to endorse or not endorse our named executive officer pay program and policies through the following resolution: “RESOLVED, that the compensation paid to the Company’s named executive officers for 2023, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED.” As discussed at length in the CD&A, we believe that our executive compensation program is reasonable, competitive, and strongly focused on pay-for-performance principles. We emphasize compensation opportunities that reward our executives for the Company’s financial and strategic achievements, as well as their individual performance achievements. The compensation of our named executive officers varies depending upon the achievement of pre-established performance goals, both corporate and individual. Through stock ownership requirements and equity incentives, we also received her Bachelor’s degreealign the interests of our executives with those of our stockholders and the long-term interests of the Company. Our executive compensation policies have enabled us to attract and retain talented and experienced senior executives. We believe that the compensation program for our named executive officers is appropriate and aligned with the Company’s financial results and position for growth in Criminology.future years. Because your vote is advisory, it will not be binding upon the Board of Directors. However, our Board of Directors values the opinions that our stockholders express in their votes and will take into account the outcome of the vote when considering future executive compensation arrangements as it deems appropriate. | | | | | | | | | | | | | | | | | | The Board of Directors recommends a vote “FOR” the proposal to approve, on a non-binding, advisory basis, the resolution approving the compensation of our named executive officers as described in this proxy statement. | | | | | |
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 29 | | |
Executive Compensation Compensation Discussion and Analysis ThisExecutive Summary - Why Vote “FOR” Our Say-On-Pay Proposal?
Before you vote on Proposal 2 – Advisory Vote to Approve the Compensation of our Named Executive Officers – the compensation committee encourages you to review this Executive Summary, as well as the additional detail provided in the Compensation Discussion and Analysis, (“CD&A”) describescompensation tables, and explains the elementsnarrative of thethis proxy statement. The Company’s executive compensation paid to our named executive officers for 2017. In addition, this CD&A describes the objectives of the Company’s compensation programs, including what each program is designed to reward,reflect pay-for-performance, with a focus on long-term performance in alignment with the Company’s long-term strategic business interests and why the Company chose to pay or not to pay a particular compensation element. stockholders’ interests. The compensation committee annually reviews the design of the Boardexecutive compensation program, and continues to support its design for 2023. Achievement of Directors has primary responsibility2023 Pay-for-Performance Metrics and Goals 2023 was a very successful year for overseeingthe Company. Management delivered strong financial performance as well as strong operating performance. With regard to our principal financial metric of adjusted net income per share (see reconciliation below in section titled “Annual Short-Term Performance-Based Cash Bonus Awards”), we achieved adjusted net income in 2023 of $1,213 million, an increase of 16% over 2022 performance. We also improved our operating metrics and reviewingcontinued to achieve both inorganic and organic growth. We generated premium revenue of $32.5 billion, an increase of 5% over 2022, reflecting the designimpact of acquisitions and structurenew request for proposal (RFP) wins, partially offset by Medicaid redeterminations. We are pleased with the continued success of our profitable growth strategy. We believe our performance on Medicaid state procurements in 2023 was exceptional. The acquisitions component of our growth strategy produced the My Choice Wisconsin acquisition that we closed on September 1, 2023. Collectively, these RFP successes and acquisitions represent $7 billion of incremental annual premium revenue, which was partially realized in 2023, is expected to be mostly realized in 2024 and is expected to be fully realized in 2025. For a summary of our management’s several accomplishments in 2023, please see “About Molina Healthcare - Key Developments” on the introduction to this proxy statement. Executive Pay is Aligned with Company Performance and Stockholders’ Interests •The Company adheres to a rigorous pay-for-performance philosophy, which is reflected in its short-term and long-term executive compensation programs. •We maintain a simplified compensation program, with only a few performance metrics, all of which are closely aligned with our stockholders’ interests. •The Company’s 2023 annual short-term performance-based cash bonus program combined both financial performance and individual performance elements, with 70% of the program based on a 2023 adjusted net income per diluted share measure, and 30% of the program based on an assessment of individual performance pursuant to the compensation committee’s discretion. As reported in the Company’s February 8, 2023 release, the Company issued its full year 2023 earnings guidance of adjusted net income of no less than $19.75 per diluted share. The compensation committee set the threshold, target, and maximum payout levels for the Company’s 2023 short-term incentive cash bonus program in reference to this initial 2023 earnings guidance of $19.75 per diluted share, representing a 2023 adjusted net income of $1,148 million. In fiscal year 2023, the Company achieved adjusted net income per diluted share of $20.88, representing a 2023 adjusted net income of $1,213 million, well in excess of the Company’s compensation programs.initial 2023 earnings guidance. The compensation committee is directly responsible for evaluatingNEOs also achieved many of the goals and objectives established in February 2023 with regard to the individual performance component of and determiningthe Company’s 2023 short-term incentive cash bonus program pursuant to the compensation paid to, our chief executive officer. In addition, prior tocommittee’s discretion. Based on the terminationCompany’s strong financial results, as well as the Company’s achievement of our former chief financial officer in May 2017, because he is the siblingmost of our former presidentits 2023 goals and chief executive officer,objectives, the compensation committee was also directly responsibleapproved a total payout factor for evaluating the performance of, and determining the compensation paid2023 short-term incentive bonus program to our former chief financial officer. The compensation committee also reviews and approves the compensation paid to our other senior executive officers as recommended by the chief executive officer, taking into consideration: (a) pre-established performance goals and objectives, (b) the Company’s performance, (c) strategic leadership in furtherance of the Company’s long term strategies, (d) market comparables of an appropriate peer group, and (e) the Company’s overall compensation objectives and policy. After considering feedback received last year from our stockholders about our compensation program, we responded by making several changes for 2018 to: (i) simplify the compensation program by reducing the number of performance metrics in our incentive plans, (ii) recalibrate target total compensation opportunities for our executives such that these are positioned more closely to median target total compensation opportunities among relevant peer executives (see “The Company’s Compensation Philosophy” below), and (iii) make our disclosure more transparent by more clearly delineating the difference between compensation opportunities and the amounts actually paid to our named executive officers.
This CD&A is focused on the compensation paid for 2017 to our current president and chief executive officer, our former interim president and chief executive officer and current chief financial officer, and our chief legal officer and secretary, as follows:
Joseph M. Zubretsky, president and chief executive officer;
Joseph W. White, chief financial officer, and former interim president and chief executive officer; and
Jeff D. Barlow, chief legal officer and secretary.
This CD&A also separately describes the compensation and severance benefits paid to four additional executive officers who are no longer employed by the Company, as follows:
Dr. J. Mario Molina, former president and chief executive officer;
John C. Molina, former chief financial officer;
Terry P. Bayer, former chief operating officer; and
Lisa A. Rubino, former senior vice president of Medicare & Duals Integration.
Collectively, these seven executive officers were our “named executive officers” in 2017. The employment of Ms. Bayer and Ms. Rubino terminated after December 31, 2017. The three named executive officers who are currently employed by the Company are referred to herein as our “current named executive officers,” and the four named executive officers who are no longer employed by the Company are referred to herein as our “former named executive officers.” Because the principal compensation paid to the former named executive officer founders relates to their severance benefits, we discuss their compensation herein separately.
Molina Healthcare, Inc. 2018 Proxy Statement | 22
Termination of Named Executive Officer Founders
On May 2, 2017, after several disappointing quarters in which the Company underperformed relative to internal financial metrics and to the managed care sector as a whole, the Board terminated the employment of Dr. J. Mario Molina, former president and chief executive officer, and John C. Molina, former chief financial officer. These terminations were without “cause” as such term is defined in their employment agreements. Our former chief accounting officer, Joseph W. White, was promoted to chief financial officer and interim president and chief executive officer, while the Board launched a search for a permanent president and chief executive officer. Effective as of November 6, 2017, Joseph M. Zubretsky was named president and chief executive officer of the Company. Since May 2017, the executive management team has been significantly restructured, with the employment of three of the five named executive officers having been terminated by the Company without cause, the retirement of one of the named executive officers and the appointmentat 147% of a new president and chief executive officer.target.
Dr. J. Mario Molina and John C. Molina are the sons•With regard to long-term equity-based incentive compensation, in 2023 60% of the Company’s founder, Dr. C. David Molina, and had served in their executive officer positions since beforeawards to the time of the Company’s initial public offering in July 2003 (the “IPO”). Dr. Molina andNEOs, except for Mr. Molina entered into their agreements with the Company in January 2002. Among other things, their employment agreements contained favorable severance provisions, including providingHebert for the acceleration of all equity compensationwhom such awards accounted for 50%, were granted in the eventform of their termination without cause. These employment agreements were amended and restated in December 2009 to address certain technical rules pertaining to deferred compensation under Section 409A of the Internal Revenue Code. Their employment agreements were again amended and restated in March 2016 in order to remove the tax gross-up provisions in the event of their termination without cause. However, as a condition to the relinquishment of their tax gross-up rights, Dr. Molina and Mr. Molina required that the base salary multiplier upon their termination without cause be increased to a multiple factor of 4X, and that the favorable equity compensation acceleration benefits as established in January 2002 remain in place until the time of their termination.
Upon the Board’s termination of Dr. Molina’s and John C. Molina’s employment on May 2, 2017, these severance provisions were triggered. Pursuant to the terms of Dr. Molina’s employment agreement, Dr. Molina received as severance: (i) $5,000,000, representing the amount equal to 400% of Dr. Molina’s base salary of $1,250,000 in effect as of his termination date, (ii) $625,000, representing Dr. Molina’s pro rata bonus, and (iii) $65,000, representing 18 months of health and welfare benefits. In addition, Dr. Molina received 100% vesting of all outstanding equity compensation previously granted to him, including all performance-based equity compensation awards, despite the non-achievement of most of those performance-based awards.
Pursuant to the terms of John C. Molina’s employment agreement, Mr. Molina received as severance: (i) $3,600,000, representing the amount equal to 400% of $900,000, which was Mr. Molina’s base salary in effect as of his termination date, (ii) $375,000, representing Mr. Molina’s pro rata bonus, and (iii) $65,000, representing 18 months of health and welfare benefits. In addition, Mr. Molina received 100% vesting of all outstanding equity compensation previously granted to him, including all performance-based equity compensation awards, despite the non-achievement of most of those performance-based awards.
The total value of the severance payments made in 2017 were: (i) in the case of Dr. J. Mario Molina, $22,962,073, and (ii) in the case of John C. Molina, $10,675,462.
Retirement of ChiefOperatingOfficer
On February 2, 2018, Terry P. Bayer retired from her position as the Company’s chief operating officer. In consideration of her years of service on behalf of the Company and her execution of a release of claims and covenant not to sue, Ms. Bayer’s retirement was deemed by the compensation committee to constitute a termination without cause for purposes of determining her eligibility to receive severance benefits pursuant to her employment agreement dated as of June 14, 2013. Accordingly, Ms. Bayer’s received as severance a cash payment equal to $808,333, subject to applicable withholding, which is the sum of (i) $700,000, representing an amount equal to 100% of $700,000, which was Ms. Bayer’s base salary in effect as of February 2, 2018, the date of her retirement, (ii) $58,333, representing Ms. Bayer’s pro rata termination bonus for one month, and (iii) $50,000 for health and welfare benefits. In addition, Ms. Bayer received 100% vesting of all outstanding time-based equity compensation previously granted to her (29,208 shares) and 100% vesting of the performance-based equity compensation previously granted to her where the performance conditions had actually been satisfied (10,596 shares). Pursuant to the terms of her employment agreement, all outstanding non-vested performance-based equity compensation previously granted to Ms. Bayer for which the relevant performance conditions had not been satisfied were forfeited.
Molina Healthcare, Inc. 2018 Proxy Statement | 23
Termination of Senior Vice President of Medicare & Duals Integration
On March 2, 2018, the Company terminated without cause the employment of Lisa A. Rubino, our former Senior Vice President of Medicare & Duals Integration. Upon termination, pursuant to her employment offer letter, upon delivery to the Company of a waiver and release in favor of the Company, Ms. Rubino is entitled to receive payments in the aggregate amount of $525,703 representing the sum of (i) $500,000, her annual base salary as of the date of her termination, and (ii) $25,703, representing 12 months of COBRA payments, multiplied by 1.5 to reflect a tax gross-up. All of Ms. Rubino’s restricted stock awards outstanding as of the date of her termination were forfeited.
Lack of Achievement of Most 2017 Pay-for-Performance Metrics
Given the Company’s poor financial performance prior to changes in executive management, most of the pay-for-performance compensation metrics established for 2017 were not achieved during the year. Based on our pay-for-performance compensation philosophy, the compensation paid to our named executive officers (other than for Dr. Molina and John C. Molina for whom vesting of performance-based stock awards was accelerated as required by the terms of their employment agreements) was negatively impacted by 2017 financial performance in the following ways:
No cash amounts were paid under the Company’s short-term cash incentive bonus program for 2017 that consisted 65% of a net income measure and 35% of a discretionary bonus;
No equity compensation vested in connection with the targets established in 2015 and 2016 for 2017 net profit margin of 1.5%;
No equity compensation vested in connection with the target established in 2015 for 2017 pre-tax income; and
No performance stock units vested in connection with the target established in 2017 for 2017 net profit margin of 0.5%.
Additionally, the equity compensation awards that were subject to vesting based on achievement of a single Company financial metric consisting of the quality metriccumulative adjusted earnings per share for the three fiscal years of achieving an improvement2023, 2024, and 2025, which if earned would be payable at the respective performance levels on March 1, 2026, and 40% of the awards for the NEOs, except for Mr. Hebert for whom such awards accounted for 50%, were based on time vesting in Star ratings of 0.5 Stars or greater for each of two separate health plansequal one-third increments over three years from the levelsgrant date.
•At our 2023 annual stockholders’ meeting, we received approval by our stockholders on our say-on-pay proposal, with 85% of the previous year, with no decline in the then-existing average Star rating across all remaining health plans, did not vest. The following equity compensation awards vested in 2018 for the specified metric achievements:
2017 annual premium revenues, net of acquisitions;
2015-2017 three-year TSR above the median ofshares voting (excluding broker non-votes) to approve our peer group; and
Expansion in 2017 into the states of Mississippi and Idaho.
For 2018 and future years, the Company intends to significantly reduce the number of its long-term equity compensation metrics and simplify the design of its long-term incentive programs.
The Company’s Compensation Philosophy
2017CompensationPhilosophy.(1)In 2017, the Company’s compensation philosophy was to endeavor to pay our management team competitively within the marketplace in a manner that would ensure personnel are properly motivated to increase profitability and stockholder value. To that end, the 2017 total compensation opportunities for the Company’s executives were generally targeted between median and 75th percentile relative to peer executives. Our strategy in setting 2017 executive compensation was to pay our named executive officers base salaries at competitive market rates as determined by peer group comparisons, and to use the majority of both short-term and long-term incentive compensation to pay for actual financial performance. In designing performance and equity compensation vesting metrics for both our 2017 short-term cash bonus and long-term equity based incentive compensation, the compensation committee focused particularly on the achievement of various elements of our three-year strategic plan.
(1) The compensation committee revised the Company’s compensation philosophy for 2018. Rather than targeting compensation between the median and 75th percentile relative to peer executives, we will now target compensation at or near the median, with actual compensation positioned below median when performance is below target, and closer to or even above 75th percentile when performance is strong. We believe that this approach is more consistent with our overarching pay-for-performance philosophy.
say-on-pay proposal.
Molina Healthcare, Inc. 2018 Proxy Statement | 24 | | | | | | | | | | 30 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
For 2017, the target total compensation opportunity for our named executive officers was reduced from the historical 75th percentile of our peer group objective to the level at or below the median compensation of our peer group. Actions taken by the compensation committee in 2017 have resulted in target total compensation opportunities that are now generally more comparable with peer benchmark median figures than had historically been the case, specifically:
The compensation committee recalibrated the Company’s executive compensation philosophy by generally increasing cash compensation, decreasing target long-term incentives value, and increasing potential long-term incentive upside opportunity when results are substantially in excess of targets; and
The Board restructured the senior management team, replacing two of the five named executive officers with executives whose target total compensation opportunities are positioned closer to relevant peer benchmark median opportunities.
Reflecting the recalibrated compensation philosophy, and subject to some variation by individual, target total compensation opportunities for the Company’s named executive officers in aggregate now rest close to peer median benchmarks. This relative positioning is reasonably consistent across all elements of pay.
Compensation Best Practices | | | | | | | ü | | | What We Do | What We Don’t Do | | | | ü | Align pay and performance. | | ü | Base majority of pay on business performance; such pay is not guaranteed. | | ü | Engage in rigorous target-setting process for incentive metrics, and set rigorous performance metrics which tie into both annual short-term performance-based cash bonus awards and long-term equity-based compensation awards. | | ü | Maintain stock ownership guidelines for directors and executive officers. In early 2018, such guidelines were revised to increase the ownership holdings to four (4) times the annual cash retainer for directors. | No guaranteed bonuses.officers (and directors). | | ü | Provide for “double trigger” change-in-control provisions in existing employment agreements and change of control severance plan. | | ü | Have an incentive compensation clawback policy. | No gross-ups on excise taxes. | | ü | Enforce restrictions on “pledges” of shares of Company stock by directorsexecutive officers and executive officers. | Do not grant discounted stock options.directors. | | ü | Restrict hedging transactions by directorsexecutive officers and executive officers. | Do not permit repricing of stock options without stockholder approval.directors. | | ü | Engage an independent compensation consultant. | Do not provide above-market earnings on deferred compensation. | | ü | Provide very limited perquisites. | | | ü | Provide for director equity award limits in our equity incentive plan. |
| | | | | | | û | What We Do Not Do | | | | û | Do not provide guaranteed bonuses. | | û | Do not provide excise tax gross-ups. | | û | Do not grant discounted stock options. | | û | Do not permit repricing of stock options without stockholder approval. | | û | No payment of above market interest on deferred compensation. | | û | No pledging of a significant amount of Company securities. | | û | No current payment of dividends/dividend equivalents on unvested equity awards. |
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 31 | | |
CD&A Overview This Compensation Discussion and Analysis (“CD&A”) describes and explains the elements of the compensation paid to our named executive officers for 2023. In addition, this CD&A describes the objectives of the Company’s executive compensation programs, including what each program is designed to reward, and why the Company chose to pay or not to pay a particular compensation element. The compensation committee of the Board of Directors has primary responsibility for overseeing and reviewing the design and structure of the Company’s compensation programs. The compensation committee is directly responsible for evaluating the performance of, and determining the compensation paid to, our chief executive officer. The compensation committee also reviews and approves the compensation paid to our other named executive officers as recommended by the chief executive officer, taking into consideration: (a) pre-established performance goals and objectives, (b) the Company’s performance, (c) strategic leadership in furtherance of the Company’s long term strategies, (d) market comparables of an appropriate peer group, and (e) the Company’s overall compensation philosophy. This CD&A is focused on the compensation paid for 2023 to our following current and former executives officers, collectively referred to as our “named executive officers” or “NEOs” in 2023. •Joseph M. Zubretsky, president and chief executive officer; •Mark L. Keim, chief financial officer; •James E. Woys, chief operating officer; •Jeff D. Barlow, chief legal officer and secretary; •Maurice S. Hebert, chief accounting officer; and •Marc S. Russo, former executive vice president of health plans (until October 25, 2023). In 2023, and in consideration of favorable say-on-pay vote outcomes, we maintained the same general compensation program structure as originally established in 2018, which was significantly simplified from the compensation programs for prior years under former management. The compensation program is based on target total compensation opportunities for our executives within a reasonable range of the median relative to peer executives, with actual compensation set below median when performance is below target, at median for median performance, and above median when warranted by strong performance (see “The Company’s Compensation Philosophy” below). Results of the May 2023 “Say-On-Pay” Vote At our 2023 annual stockholders’ meeting, the Company’s stockholders approved an annual advisory “say-on-pay” proposal. The compensation committee monitors the results of the Company’s annual advisory “say-on-pay” proposal and considers such results as one of many factors in connection with the discharge of its responsibilities. At our 2023 annual stockholders’ meeting, we received approval by the stockholders on our say-on-pay proposal, with 85% of the votes cast in approving our say-on-pay proposal (excluding broker non-votes) with regard to fiscal year 2022 executive compensation. The Company adheres to a rigorous pay-for-performance philosophy. Based on stockholders’ feedback from our outreach and the support reflected by past advisory votes on say-on-pay proposals, the compensation committee determined to maintain its compensation philosophy unchanged for 2023, with performance metrics which closely align with stockholders’ interests. The compensation committee will continue to take into consideration the outcome of the Company’s say-on-pay proposals, as well as stockholder feedback received through the course of outreach to stockholders, when making future compensation decisions for the NEOs. Further, the Company will continue to focus on aligning executive pay with building stockholder value and achievement of short-term and long-term financial and strategic objectives. | | | | | | | | | | 32 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Compensation Committee Decision-Making Process | | | | Role of the Compensation Committee The compensation committee annually evaluates the chief executive officer’s performance, and makes preliminary determinations about his base salary, annual short-term performance-based cash bonus award, and long-term equity-based compensation award. The compensation committee, in addition to providing feedback to the chief executive officer, discusses its compensation recommendations with the full Board, and then the compensation committee approves the final compensation decisions. | | | Role of the Chief Executive Officer For other NEOs, the chief executive officer considers their performance and makes individual recommendations to the compensation committee on base salary, annual short-term performance-based cash bonus awards, and long-term equity-based compensation awards. The compensation committee reviews and discusses such recommendations, makes any modifications it deems appropriate, and then determines and approves the compensation for the other NEOs. | | | Compensation Committee Resources The compensation committee retained an independent compensation consultant to help evaluate a number of factors, including competitive market information, and to provide other resources and tools for the committee to evaluate and quantify each of the compensation elements for the NEOs. In addition, members of the compensation committee avail themselves of educational resources that are directly related to Board and compensation committee matters so they can stay current on critical and topical compensation trends and practices. | |
When does the Compensation Committee make decisions regarding short-term and long-term incentives? We engage in a robust annual executive compensation decision-making process, as part of which we review and determine the executive compensation for our NEOs. When evaluating pay reported in the 2023 Summary Compensation Table against the Company’s performance, it is important to consider the timing of compensation decisions and which performance period informs each of the short-term and long-term incentive awards. •The bonus opportunities and metrics for the 2023 annual short-term performance-based cash bonus awards were approved in February 2023 based on the Company’s 2023 earnings guidance, but the actual payouts of such 2023 awards were determined in February 2024 based on evaluation of actual performance achievement over the course of the 2023 fiscal year against the previously established metrics consisting of the Company’s financial performance and the executives’ individual performance; and •Long-term incentive awards reported for 2023 in the 2023 Summary Compensation Table were granted in March 2023, with 60% to each of the NEOs, except for Mr. Hebert for whom such awards accounted for 50%, subject to vesting based on Company long-term performance (specifically, the cumulative adjusted earnings per share for the fiscal years of 2023, 2024, and 2025), and 40% to each of the NEOs, except for Mr. Hebert for whom such awards accounted for 50%, granted in the form of restricted stock awards, subject to vesting in equal one-third increments over three years from the grant date. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 33 | | |
The table below describes the schedule and progression of events considered by the compensation committee throughout the annual compensation cycle for determining the 2023 executive compensation for our NEOs, which commenced in early 2022 and was finalized in early 2023: | | | | | | | | | | | | | April to June | July to September | October to December | January to March | | | | | | | | | •Review and evaluate stockholders vote on say-on-pay. •Perform first among quarterly reviews (also completed in each subsequent quarter) of the Company’s performance. Such review provides transparency to the NEOs as to the likelihood of award achievement and provides some assurance to the Board that the metrics were sufficiently rigorous. | •Evaluate and determine peer group to be used for compensation decisions for the NEOs for upcoming year. •Review program design and align on changes to support the business strategy for the upcoming year. | •Benchmark compensation programs and pay opportunities for the NEOs against the established peer group. | •Full Board reviews and approves the business plan and financial forecast for the coming year. •Evaluate prior year Company performance, individual performance of the NEOs, and determine current year compensation for NEOs and CEO goals and objectives for current year. •After the Board has approved the Company's business plan and financial forecast for the coming year, hold a dedicated meeting for rigorous target-setting of performance metrics for the current year and target-setting for long-term performance metrics. | | | | |
The Company’s Compensation Philosophy Compensation Philosophy The Company endeavors to pay its management team competitively within the marketplace in a manner that would ensure personnel are properly motivated to increase profitability and stockholder value. To that end, consistent with our overarching pay-for-performance philosophy, we are targeting total compensation opportunities for the Company’s executives within a reasonable range of the median relative to peer executives, with actual compensation set below median when performance is below target, at median for median performance, and above median when warranted by strong performance. Our strategy in setting the 2023 executive compensation was to pay our NEOs base salaries at competitive market rates as determined by peer group comparisons, and to denominate the majority of NEOs’ target total compensation opportunities in both short-term and long-term incentive awards that can ultimately be earned based on both Company financial performance and the compensation committee’s assessment of each NEO’s individual performance. For the purposes of the annual short-term performance-based cash bonus awards, the compensation committee focused on the single-year achievement of adjusted net income per diluted share, which constituted 70% of the short-term cash incentive opportunity, as well as the achievement, in accordance with the discretion of the compensation committee, of a variety of strategic individual performance factors closely aligned with the chief executive officer’s 2023 goals and objectives, which constituted 30% of the short-term cash incentive opportunity. With respect to the 2023 long-term equity incentive program, performance is based on the Company’s cumulative three-year average adjusted earnings per share for the fiscal years 2023, 2024, and 2025. The compensation committee continues to assess external factors that are difficult to plan for in a rapidly changing environment, including, without limitation, rising interest rates and inflation, on the Company’s results and its executive compensation programs, and to consider appropriate adjustments to such programs. | | | | | | | | | | 34 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Elements of Compensation   | | | | Fixed cash compensation based on the market-competitive value of the skills and knowledge required for each position. Reviewed and adjusted as appropriate to maintain market competitiveness. No automatic or guaranteed increases. |
  | | | | Designed to reward annual results. Annual cash incentive was based 70% on Company financial metric of adjusted net income per diluted share achievement, and 30% on the compensation committee’s discretion with regard to individual performance. |
  | | | | Forward-looking equity awards intended to motivate and reward potential to drive future growth and align the interests of employees and stockholders. Grants in 2023 were awarded in the form of performance stock units based on the Company's cumulative adjusted earnings per share for the fiscal years 2023, 2024, and 2025 (60% of the award value to each of the NEOs, except for Mr. Hebert for whom such awards accounted for 50%), and in the form of restricted stock awards that vest in equal installments on each of the first three anniversaries of the date of grant (40% of the award value to each of the NEOs, except for Mr. Hebert for whom such awards accounted for 50%). |
Primary Elements of Compensation.Compensation. The Company’s compensation program consists of three primary elements: (i) base salary; (ii) annual short-term performance-based cash bonus awards; and (iii) long-term incentive compensation, including both a performance-based vesting component and a time-based vesting component. Additional compensation elements include various benefit plans, such as a 401(k) and deferred compensation plan, and severance and change in control benefits. In certain special instances, such as in the case of the recruitment of senior executives, like Mr. Zubretsky, the Company may be willing to offer a sign-on bonus and/or a substitutive equity award. Retirement Plans. The Company does not maintain a retirement pension plan. However, the named executive officersNEOs are eligible to participate in the Molina 401(k) Salary Savings Plan. The purpose of this program is to provide all Molina Healthcare employees with tax-advantaged savings opportunities and income after retirement. Eligible pay under the plans is limited to Internal Revenue Code annual limits. The Company makes a dollar-for-dollar match on the first four percent (4%) of salary electively deferred under the 401(k) Plan by all participants. Deferred Compensation Plan. Plan. The Company has established an unfunded non-qualified deferred compensation plan for certain key employees, including the named executed officers.NEOs. Under the deferred compensation plan, eligible participants can defer up to 100%75% of their base salary and up to100%to 85% of their cash bonus to provide for tax-deferred growth. Eligible participants under the deferral program may select from approximately fifteen14 investment options representing a broad array of asset classes, investment sectors, and spectrum of risk profiles.risk-based asset allocation portfolios. Employee Stock Purchase Plan. With the exception of our former chief executive officer and our former chief financial officer who were not eligible due to their possession of more than five percent of our voting common stock as determined under Section 424(d) of the Internal Revenue Code, the named executive officersPlan. The NEOs are eligible to participate in the Company’s 2011 Employee Stock Purchase Plan on an equal basis with all other employees. The
Molina Healthcare, Inc. 2018 Proxy Statement | 25
Employee Stock Purchase Plan allows eligible employees to purchase from the Company shares of its common stock at a 15% discount to the market price during the successive six-month offering periods under the plan. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 35 | | |
Health and Insurance Benefits. With limited exceptions, the Company supports providing benefits to named executive officers that are substantially the same as those offered to salaried employees generally.Benefits. The named executive officersNEOs are eligible to participate in Company-sponsored benefit programs on the same terms and conditions as those made available to salaried employees generally. Basic health benefits, life insurance, disability benefits, and similar programs are provided to ensure that employees have access to healthcare and income protection for themselves and their family members. Severance and Change in Control Benefits. Benefits. We have entered into employment agreements or offer letters with all but one of our named executive officersNEOs pursuant to which they are eligible under certain circumstances for severance and change in control benefits. The severance and change in control payments and benefits provided under the employment agreements are independent of other elements of compensation. Additionally, the named executive officersNEOs are eligible for certain benefits provided for in the event of termination of employment within 24twenty-four (24) months of a change in control under the Company’s Second Amended and Restated Change in Control Severance Plan established for employees of the Company with positions associate of vice-presidentsvice presidents and above. A description of the material terms of our severance and change in control arrangements can be found later in this proxy statement under “Potential“Potential Payments Upon Change in Control or Termination.”Termination”. The compensation committee believes that severance and change in control benefits are necessary to attract and retain senior management talent. Our agreements are designed to attract key employees, preserve executive morale and productivity, and encourage retention in the face of the potentially disruptive impact of an actual or potential change in control. We believe these benefits allow executives to assess potential takeover bids objectively without regard to the potential impact on their own job security. PerquisitesMr. Russo served as the Company’s Executive Vice President of Health Plans until October 25, 2023, when his employment with the Company terminated as part of management changes initiated by the Company. Mr. Russo’s termination was deemed to be a termination without cause under his offer letter. Following his execution of a waiver and Other Personal Benefits. release of claims agreement, he became entitled to a separation amount in the aggregate of $1,407,000 consisting of (i) $750,000 representing 12 months base salary, (ii) $625,000 representing the pro-rated annual short-term performance-based cash bonus at target, and (iii) $32,000 representing 12 months of COBRA coverage. Such separation amount is payable over one year in bi-weekly 26 installments.
Independent Compensation Consultant As noted above, the compensation committee has engaged Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), as its independent consultant since May 2021. Aon provides the committee with advice on the Company’s compensation programs for senior management and outside directors, including relevant comparative data on pay levels and structures. Compensation Consultant Duties •Attends meetings of the compensation committee, including executive sessions without management present. •Reviews the Company’s executive compensation strategy and programs to ensure appropriateness and market-competitiveness. •Provides research, data analyses, survey information, and design expertise in developing compensation programs for executives and incentive programs for eligible employees. •Regularly updates the compensation committee on market trends and practices, and legislation pertaining to executive compensation and benefits. •Advises the compensation committee on the appropriate peer group for compensation of NEOs. •Advises the compensation committee on director compensation. Compensation Consultant Independence The compensation committee reviewed the independence of its compensation consultant in light of SEC rules and NYSE listing standards, including taking into account the following factors: (1) other services being provided to the Company does not provide namedby the consulting firm; (2) fees paid by the Company as a percentage of the consulting firm’s total revenue; (3) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the consulting firm and a member of the compensation committee; (5) any Company stock owned by the consulting firm; and (6) any business or personal relationships between the Company’s executive officers with any material perquisites or other personal benefits.and the senior advisor. In light of these considerations, the compensation committee concluded that Aon’s work for the committee was rendered on a fully independent basis, and involved no conflict of interest. | | | | | | | | | | 36 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Executive Pay Study for 20172023 ToAs context for the purposes of setting each NEO’s 2023 target total compensation opportunity, Aon conducted a compensation benchmark study to evaluate the positioning of current target total compensation levels ofopportunities for the Company’s named executive officersNEOs in relation to those of peer companies (the “2023 Compensation Study”).
In the compensation levels of executives employed by2023 Compensation Study, Aon used the Company’s industry peers,following 13-company peer group for the compensation committee engaged Exequity, a compensation advisory services firm, to conduct a totalexecutive compensation study, with respect to the Company’s named executive officers for 2017 (the “2017 Compensation Study”). Exequity reports directly and exclusively to the compensation committee with respect to executive compensation matters. In its 2017 Compensation Study, Exequity used a 12-company peer group consisting of seven publicly traded managed carethe following publicly-traded companies, three health care facilities,which were selected based on the nature of their services, market capitalization, and two health care service companies, as follows:
| | | | | | | 1. Acadia Healthcare Company, Inc. | 8. HCA Healthcare, Inc. | | 2. Aflac Incorporated | 9. Humana, Inc. | 1.3. Elevance Health, Inc. | 10. Laboratory Corporation of America Holdings | | 4. Centene Corporation | 7. Team Health Holdings, Inc.11. Quest Diagnostics Incorporated | 2.5. Cigna Corporation | 8.12. Tenet Healthcare Corporation | 3.6. Community Health Systems, Inc. | 9. Triple-S Management Corporation | 4. DaVita HealthCare Partners Inc. | 10. Universal American Corp. | 5. Humana Inc. | 11.13. Universal Health Services, Inc. | 6. Magellan Health,7. DaVita Inc. | | 12. WellCare Health Plans, Inc.
Based on the findings ofmarket study, as well as a desire to continue to emphasize the 2017 Compensation Study,Company’s pay-for-performance philosophy, the compensation committee increaseddetermined to leave the named executive officers’ 2017NEOs’ 2023 base salaries and materially decreasedat the grant value ofsame levels as the long-term incentives granted in 2017, resulting in substantial reduction of target total compensation opportunities which are now close to peer median benchmarks2022 base salaries, except for the current named executive officers. The 2017 long-term incentive awards were set slightly above the median, with the exception of Dr. Molina (our former president and chief executive officer),Mr. Russo whose level2023 base salary was near the median.increased, as further discussed below. The compensation committee left unchanged fromalso determined to leave the 2016 levels the2023 target short-term performance-based cash bonus opportunity levels as a percent of salarybase salaries for all of the named executive officers, except for Mr. White. His target short-term cash bonus opportunity was increased from 90% to 100% of his base salary in May 2017 in connection with Mr. White’s change in position from chief accounting officer to chief financial officer. Additionally,NEOs unchanged. Further, based on the 2017 equity2023 Compensation Study and the compensation was made subject to multiple-year profit margin targets and achievement of certain business development targets that are consistent with the Company’s achievement of its long-term strategic plan.
Molina Healthcare, Inc. 2018 Proxy Statement | 26
SpecialCompensationin Connectionwith2017Recruitmentof Mr. Zubretskyas PresidentandChiefExecutiveOfficer
In late 2017, in order to induce Mr. Zubretsky to join the Company as its new president and chief executive officer,philosophy discussed above, the compensation committee agreed to pay Mr. Zubretskyset the 2023 long-term compensation for the NEOs by making modest adjustments as a sign-on bonus a lump sum cash amount of $4 million, less applicable withholding taxes. In the event that priorcompared to the second anniversary of his start date Mr. Zubretsky’s employment terminates by reason of a termination by the Company for “cause” (as defined in the employment agreement) or Mr. Zubretsky’s resignation without “good reason” (as defined in the employment agreement), Mr. Zubretsky will be required to repay the Company a prorated portion of the sign-on bonus payment. In addition, as a further inducement to join the Company, Mr. Zubretsky was granted an option to purchase 375,000 shares of the Company’s common stock. The stock option vests in equal annual installments over three years, on each of October 9, 2018, October 9, 2019, and October 9, 2020, subject to his continued employment with the Company on each vesting date. prior year long-term compensation levels.
Base Salary The objective of base salary is to reflect the executive’s fundamental job responsibilities. The base salary of our named executive officersNEOs is the only element of their compensation that is fixed and predetermined.fixed. In 2017,2023, the named executive officersNEOs were paid competitive base salaries determined by the evaluation of several factors, including the base salary levels of corresponding officers at peer companies as determined based on the 20172023 Compensation Study, experience, critical skills, job history, and unique roles or abilities of the executive. The 2017Based on peer group compensation levels and 2016considerations of the compensation philosophy discussed above, the compensation committee left unchanged the NEOs’ 2023 base salaries for the current named executive officers, as well as the changes in suchcompared to their 2022 base salaries, from the 2016 to the 2017 levels, areexcept for Mr. Russo whose 2023 base salary was increased effective as of January 1, 2023, as reflected in the table below. The base salaries | | | | | | | | | | | | | | | | | | | Base Salary | | | Named Executive Officer | 2023 | 2022 | Change
($) | Change
(%) | | | | | | | | Joseph M. Zubretsky President and Chief Executive Officer | 1,500,000 | | 1,500,000 | | — | | — | | | Mark L. Keim Chief Financial Officer | 850,000 | | 850,000 | | — | | — | | | James E. Woys Chief Operating Officer | 800,000 | | 800,000 | | — | | — | | | Jeff D. Barlow Chief Legal Officer and Secretary | 685,000 | | 685,000 | | — | | — | | | Maurice S. Hebert Chief Accounting Officer | 425,000 | | 425,000 | | — | | — | | | Marc S. Russo (1) Former Executive Vice President of Health Plans | 750,000 | | 700,000 | | 50,000 | | 7 | % | |
(1)Mr. Russo served as the Company’s Executive Vice President of Health Plans until October 25, 2023, when his employment with the named executive officers (other than Mr. Zubretsky) were increased in 2017 in light of the substantial reduction in the value of their long-term incentive awards.Company terminated. Base Salary - Current Named Executive Officers | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 37 | | |
| | | | | | | | | | | | | | | Base Salary | | Current Named Executive Officer | 2017 | 2016 | Change ($) | Change (%) | | Joseph M. Zubretsky, President and Chief Executive Officer | $ | 1,300,000 |
| N/A |
| N/A |
| N/A |
| Joseph W. White, Chief Financial Officer and Former Interim President and Chief Executive Officer(1) | $ | 650,000 |
| $ | 538,000 |
| $ | 112,000 |
| 20.82 | % | | Jeff D. Barlow, Chief Legal Officer and Secretary | $ | 550,000 |
| $ | 525,000 |
| $ | 25,000 |
| 4.76 | % |
(1) Mr. White held the position of chief accounting officer until May 2, 2017. Effective as of January 1, 2017, Mr. White’s annual base salary for such position was increased to $600,000 from his 2016 annual base salary of $538,000, representing an increase of 11.52%. Effective May 2, 2017, Mr. White was promoted to chief financial officer, and his annual base salary for such position was increased from $600,000 to $650,000, representing an increase of 8.33%. The Company and Mr. White entered into an amended and restated employment agreement in June 2017, effective as of May 2, 2017, pursuant to which Mr. White is entitled to an annual base salary of $650,000 as compensation for his role as chief financial officer and was entitled to an additional monthly special salary of $100,000 for his role as interim president and chief executive officer from May 2, 2017 to November 6, 2017.
The 2017 base salaries for the former named executive officers were increased as follows, in connection with the restructuring of their respective total compensation package, which included a substantial decrease of their respective long term-incentives:
Dr. Molina’s base salary was increased to $1,250,000 from the 2016 base salary of $1,170,000;
Mr. Molina’s base salary was increased to $900,000 from the 2016 base salary of $878,000;
Ms. Bayer’s base salary was increased to $700,000 from the 2016 base salary of $644,000; and
Ms. Rubino’s base salary was increased to $500,000 from the 2016 base salary of $476,826 (Ms. Rubino was not a named executive officer at the time of the 2017 Compensation Study, and thus her compensation was not part of that study).
Molina Healthcare, Inc. 2018 Proxy Statement | 27
Annual Short-Term Performance-Based Cash Bonus Awards Our compensation program provides for an annual short-term performance-based cash bonus award that is entirely performance linked. The objective of the program is to compensate executives based on the achievement of specific and objective annual goals that are intended to correlate closely with the growth of stockholder value. In February 2017,2023, the compensation committee established short-term cash bonus opportunity levels and measures for the current named executive officers (other than Mr. Zubretsky)NEOs’ annual short-term performance-based cash bonus awards as follows: | | | | | | | | | | Named Executive Officer | 2023 Target Cash Bonus Opportunity (% of Base Salary) | | | | | Joseph M. Zubretsky President and Chief Executive Officer | 200 | | | Mark L. Keim Chief Financial Officer | 100 | | | James E. Woys Chief Operating Officer | 100 | | | Jeff D. Barlow Chief Legal Officer and Secretary | 100 | | | Maurice S. Hebert Chief Accounting Officer | 50 | | | Marc S. Russo(1) Former Executive Vice President of Health Plans | 100 | | |
(1)Mr. White’s targetRusso served as the Company’s Executive Vice President of Health Plans until October 25, 2023, when his employment with the Company terminated. The 2023 annual short-term performance-based cash bonus performance measures for all of the NEOs were based 70% on a fiscal year 2023 adjusted net income per diluted share, and 30% on the discretionary evaluation of each NEO’s individual performance, as follows: •70% of the bonus opportunity was set at 90%based on the Company’s adjusted net income per diluted share achievement in 2023. As reported in the Company’s February 8, 2023 release, the Company issued its full year 2023 earnings guidance of his base salary in connection with his position as chief accounting officer (and later increasedno less than $19.75 per share, representing a 2023 adjusted net income of $1,148 million. In reference to 100% of his base salary in connection with his change in position to chief financial officer); and Mr. Barlow’s target bonus opportunity was set at 90% of his base salary.
The target bonus opportunities for the former named executive officers were as follows:
Dr. Molina’s target bonus opportunity was set at 150% of his base salary;
Mr. Molina’s target bonus opportunity was set at 125% of his base salary;
Ms. Bayer’s target bonus opportunity was set at 100% of her base salary; and
Ms. Rubino’s target bonus opportunity was set at 50% of her base salary (Ms. Rubino was not a named executive officer at the timethat baseline, the compensation committee established as the target for a 100% payout of the 2023 short-term performance-based cash bonus opportunity levels,the adjusted net income per diluted share of $20.25, with threshold for a 50% payout being $18.25 adjusted net income per diluted share, and thus herwith the maximum performance for a 200% payout being $22.25 adjusted net income per diluted share. In fiscal year 2023, the Company achieved adjusted net income per diluted share of $20.88, representing a 2023 adjusted net income of $1,213 million, well in excess of the Company’s initial 2023 earnings guidance and in excess of the target set by our compensation committee.
•30% of the bonus opportunity was notsubject to the discretionary evaluation of each executive's individual performance (for the chief executive officer as evaluated by the compensation committee). Mr. Zubretsky, who joinedcommittee, and for the Company as president and chief executive officer in November 2017, was not eligible to receive an annual short-term cash bonus for fiscal year 2017.
The 2017 bonus performance measures for Mr. White, Mr. Barlow, Dr. Molina, Mr. Molina, and Ms. Bayer were based 65% on a fiscal year 2017 net income metric, and 35% on the discretion of the compensation committee, as follows:
65% of the bonus opportunity shall beother NEOs based on the Company’schief executive officer’s evaluation and recommendation to the compensation committee). As with the adjusted net income achievement for its 2017 fiscal year. The fiscal year 2017 net incomeper share metric, payment of the individual performance bonus shall be based on the entry level achievement of at least $84 million in net income. The achievement of $84 million in net income in 2017 shall trigger the payout in cash of this bonus element at the 50% level; achievement of $120 million shall trigger payout at the 100% level; and achievement of $156 million shall trigger maximum payout at the 200% level. Under all circumstances payout shall bewas capped at the 200% level. The actual cash bonus payout amounts for achievement within the specified points along the net income range shall be interpolated linearly between the specified points.
35% of the bonus opportunity shall be subject to the discretion of the compensation committee, and shall beindividual performance evaluation was based upon the consideration by the committee ofon a wide variety of factors closely aligned with the chief executive officer’s 2023 goals and objectives, including for purposes of illustration (but not limited to),growth - such factors as: (1) completing the organizational development effortas continuing to win new contracts and filling key executive roles; (2) developing a long-term strategic plan for Medicarere-procure existing contracts, as well as participation in mergers and Direct Delivery; (3) increasing quality revenues from the state health plans; (4) improving our claims payment metricsacquisitions, increase in market share and overall claims systems; (5) improving our Star metrics;organic growth rate, operational improvements, continue to focus on workforce, organization and (6)talent, advancing ESG, and miscellaneous other factors as may be identified by the compensation committee in the exercise of its discretion.
◦As with the net income metric, payment5% of thesuch discretionary bonus shallopportunity, the compensation committee added a clinical performance metric tied to the reduction in the preterm birth rate for black mothers who are members of our Illinois health plan. Using the calendar year 2022 March of Dimes (MOD) preterm birth rate for black mothers in Illinois of 10.7% for calendar year 2023, the Company had established as an objective target the reduction in this preterm birth rate of 5%, representing a 2023 MOD target measure for pre-term births of no higher than 10.1%. A 4% reduction would serve as the 50% threshold, below which no bonus compensation for this metric would be cappedpaid. Achievement at the level of twice the Company’s target goal (i.e., a 10% reduction that reduce the rate to 9.6% overall), would represent maximum bonus compensation achievement at the 200% level. As result of initiatives implemented by the Company, the preterm births rate for black mothers who were members of our Illinois health plan was 9.6%, well below the target of 10.1%, resulting in achievement of this clinical performance metric at the 200% level. | | | | | | | | | | 38 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Based on the Company’s strong 2023 net income bonus metric andresults of $20.88 per diluted share, representing a 2023 adjusted net income of $1,213 million, plus the 35% discretionary bonus shall be determined and paid independently. Entry levelCompany’s achievement of most of its 2023 goals and objectives under the net income metric shall not serve as a condition for any partial or full paymentmanagement and direction of the discretionary bonus. Because the Company did not achieve the 2017 net income entry level of $84 million, no cash bonus was paid based on the net income metric. Additionally, due to the Company’s unsatisfactory financial performance in 2017,Mr. Zubretsky and his senior management team, the compensation committee decided notdetermined to award any portionto Mr. Zubretsky a performance-based cash bonus amount at 147% of his total target. This 147% total payout factor consisted of: (i) performance under the 70% financial component at 134% of target; and (ii) performance under the 30% individual discretionary component at 175% of the 35% discretionary bonus200% maximum. At Mr. Zubretsky’s recommendation, the compensation committee also awarded the same 147% payout factor with respect to the named executive officers.annual short-term performance-based cash bonus award to each of the other four NEOs, except for Mr. Hebert who was awarded at a 175% payout factor.
The following is a reconciliation from GAAP net income to adjusted net income. | | | | | | | | | | | | | | Amount | Per Diluted Share | | | | | | | | | GAAP Net Income | $ | 1,091 | | $ | 18.77 | | | | | Adjustments: | | | | | | Amortization of intangible assets | 85 | | 1.47 | | | | | Acquisition-related expenses | 7 | | 0.12 | | | | | Other | 68 | | 1.17 | | | | | Subtotal, adjustments | 160 | | 2.76 | | | | | Income tax effect | (38) | | (0.65) | | | | | Adjustments, net of tax | 122 | | 2.11 | | | | | Adjusted net income | $ | 1,213 | | $ | 20.88 | | | |
The following table sets forth the fiscal year 20172023 base salary levels for the NEOs, along with the tworespective levels of short-term performance-based cash bonus elements determined byopportunity amounts, and finally the compensation committee foractual amount of the 2023 annual short-term performance-based cash bonus awards paid to each NEO. | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | Base
Salary
($) | Target Bonus
Opportunity
(% of Base Salary) | Total Threshold Bonus Opportunity (50%)
($) | Total Target Bonus Opportunity
(100%)
($) | Total Maximum Bonus Opportunity
(200%)
($) | Bonus Paid
($) | | | | | | | | | | Joseph M. Zubretsky (1) President and Chief Executive Officer | 1,500,000 | | 200 | | 1,500,000 | | 3,000,000 | | 6,000,000 | | 4,410,000 | | | Mark L. Keim (1) Chief Financial Officer | 850,000 | | 100 | | 425,000 | | 850,000 | | 1,700,000 | | 1,249,500 | | | James E. Woys (1) Chief Operating Officer | 800,000 | | 100 | | 400,000 | | 800,000 | | 1,600,000 | | 1,176,000 | | | Jeff D. Barlow (1) Chief Legal Officer and Secretary | 685,000 | | 100 | | 342,500 | | 685,000 | | 1,370,000 | | 1,006,950 | | | Maurice S. Hebert (2) Chief Accounting Officer | 425,000 | | 50 | | 106,250 | | 212,500 | | 425,000 | | 371,875 | | | Marc S. Russo (3) Former Executive Vice President of Health Plans | 750,000 | | 100 | | 375,000 | | 750,000 | | 1,500,000 | | — | | |
(1)Bonus paid at 147% bonus opportunity. (2)Bonus paid at 175% bonus opportunity. (3)Mr. Russo served as the Company’s named executive officers who were eligible to receive a cash bonus in 2017.
Executive Vice President of Health Plans until October 25, 2023, when his employment with the Company terminated.
Molina Healthcare, Inc. 2018 Proxy Statement | 28
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 39 | | |
Bonus Opportunity - Current Named Executive Officers
| | | | | | | | | | | | | | | Current Named Executive Officer | Base Salary | Target Bonus Opportunity (% of Base Salary) | Target Net Income Bonus Opportunity (65% of Baseline Bonus Opportunity) | Discretionary Bonus Opportunity (35% of Target Bonus Opportunity) | Bonus Paid | | Joseph W. White | | | | | | Chief Financial Officer and Former Interim Chief Executive Officer (1) | $ | 650,000 |
| 100 | % | $ | 422,500 |
| $ | 227,500 |
| $0 | | Jeff D. Barlow | | | | | | | Chief Legal Officer and Secretary | $ | 550,000 |
| 90 | % | $ | 321,750 |
| $ | 173,250 |
| $0 |
| | | | | | (1)
EXECUTIVE COMPENSATION | The Company and Mr. White entered into an amended and restated employment agreement in June 2017, effective as of May 2, 2017, pursuant to which Mr. White is entitled to an annual base salary of $650,000 as compensation for his role as chief financial officer and was entitled to an additional monthly special salary of $100,000 for his role as interim president and chief executive officer. Further, effective as of May 2, 2017, in connection with his role as chief financial officer, Mr. White’s target bonus opportunity was increased from 90% of his base salary to 100% of his base salary. Mr. White served as interim president and chief executive officer from May 2, 2017 to November 6, 2017. |
Long-Term Equity-Based Incentive Compensation Awards In 2023, the NEOs were granted long-term incentive awards in the form of performance stock units (“PSUs”) and restricted stock. The majoritytarget number of PSUs and the number of shares of restricted stock granted to each NEO was determined by using the $273.80 closing price of the totalCompany’s common stock as of the March 1, 2023 grant date. The compensation packagecommittee believes that the mix of PSUs and restricted stock in the proportions described below achieve the desired balance between incentivizing long-term financial performance and retention of the NEOs. Sixty percent (60%) of the long-term equity-based incentive compensation awards granted to each NEO in 2023, except for Mr. Hebert for whom such awards accounted for fifty percent (50%), was in the form of PSUs, and is based on the Company's cumulative adjusted earnings per share for the named executive officers for 2017 was based on long-term incentives designedfiscal years 2023, 2024 and 2025, to align the financial interests of our named executive officersNEOs with the long-term financial interests of our stockholders. In those instances whereThe vesting and actual payout of such PSUs will be determined by the relevant long-termlevel of achievement of the cumulative adjusted earnings per share (between 0% and 200%) as measured against the adjusted earnings per share benchmarks established by the compensation committee and is subject to continued service through March 1, 2026. This performance metric is not achieved,aligns the equity-based compensation does not vest, and thuslong-term incentive awards of both the compensation is not realized by the executive officers. Our new president and chief executive officer Mr. Zubretsky, and the other NEOs with our former senior vice president, Medicare & Duals Integration, Ms. Rubino, were not named executive officers in 2016 aslong-term strategic plan and stated business goal of sustaining profitable growth.
A detailed schedule of the timeequity-based long-term incentive awards granted to each of the NEOs in 2023 is set forth in the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Stock Units | | Restricted Stock Awards | | | | | Named Executive Officer | PSUs
(#) | PSUs
($) | | RSAs Total
(#) | RSAs Total
($) | Total
(#) | Total
($) | | | | | | | | | | | | Joseph M. Zubretsky | 33,967 | | 9,300,165 | | | 22,644 | | 6,199,927 | | 56,611 | | 15,500,092 | | | | Mark L. Keim | 8,765 | | 2,399,857 | | | 5,844 | | 1,600,087 | | 14,609 | | 3,999,944 | | | | James E. Woys | 7,670 | | 2,100,046 | | | 5,113 | | 1,399,939 | | 12,783 | | 3,499,985 | | | | Jeff D. Barlow | 6,574 | | 1,799,961 | | | 4,383 | | 1,200,065 | | 10,957 | | 3,000,026 | | | | Maurice S. Hebert | 731 | | 200,148 | | | 730 | | 199,874 | | 1,461 | | 400,022 | | | Marc S. Russo (1) | 7,122 | | 1,950,004 | | | 4,748 | | 1,300,002 | | 11,870 | | 3,250,006 | | |
(1)Mr. Russo served as the Company’s annual long-term incentive award cycle, and their long-term incentives granted in 2017 were structured differently than for the other named executive officers. Mr. Zubretsky’sExecutive Vice President of Health Plans until October 25, 2023, when his employment with the Company commencedterminated.
At the time of grant on November 6, 2017. In connection with his employment, Mr. Zubretsky was granted an optionMarch 1, 2023, we believed that it would be marginally difficult for the Company to purchase 375,000 sharesachieve the threshold cumulative average adjusted earnings per share for the fiscal years 2023, 2024 and 2025 , which would result in vesting of the Company’s common stock with an exercise price per share of $67.33. The stock option vests in equal annual installments over three years, on each of October 9, 2018, October 9, 2019, and October 9, 2020, subject to his continued employment withawards at the Company on each vesting date. The Company does not generally grant options to executive officers, but it did so for Mr. Zubretsky as an inducement for him to accept employment with the Company, and to compensate him for the forgone value of options granted to him by his previous employer and to immediately enhance the alignment of Mr. Zubretsky’s interests with those of our stockholders. For 2017, Ms. Rubino’s long-term incentive consisted of a restricted stock award of 12,146 shares of the Company’s common stock subject to vesting in equal annual installments over four years, on each50% level. As of March 1, 2018,2023, we believed it would be difficult, but achievable to reach the target cumulative average adjusted earnings per share level, which would result in vesting at the 100% level. Further, as of March 1, 2019, March 1, 2020, and March 1, 2021.
For 2017, these long-term incentives for our named executive officers, excluding Mr. Zubretsky and Ms. Rubino, took2023, we believed it would be more difficult to achieve the form of a combination of performance stock units and restrictedmaximum cumulative average adjusted earnings per share, awards subject to timewhich would result in vesting withat the following grant date values:
CurrentNamedExecutiveOfficers
| | | | | | | | | | | | | 2017 Equity Compensation(1) | | | Target PSUs | Shares | | Current Named Executive Officer | Amount ($) | Number (#) | Amount ($) | Number (#) | | Joseph W. White, Chief Financial Officer and Former Interim President and Chief Executive Officer | $ | 1,216,030 |
| 24,616 | $ | 684,042 |
| 13,847 |
| | Jeff D. Barlow, Chief Legal Officer and Secretary | $ | 832,044 |
| 16,843 | $ | 468,016 |
| 9,474 |
|
Molina Healthcare, Inc. 2018 Proxy Statement | 29
Former NamedExecutiveOfficers
| | | | | | | | | | | | | | 2017 Equity Compensation(1) | | | Target PSUs | Shares | | Former Named Executive Officer | Amount ($) | Number (#) | Amount ($) | Number (#) | | Dr. J. Mario Molina, Former Chief Executive Officer | $ | 5,120,014 |
| 103,644 |
| $ | 2,880,020 |
| 58,300 |
| | John C. Molina, Former Chief Financial Officer | $ | 1,760,023 |
| 35,628 |
| $ | 990,025 |
| 20,041 |
| | Terry P. Bayer, Former Chief Operating Officer | $ | 1,408,048 |
| 28,503 |
| $ | 792,030 |
| 16,033 |
|
| | (1)
| Generally, the grant date fair value presented does not correspond to the actual value that the named executive officers will realize from the award. In particular, the actual value of performance stock awards (PSAs) received is different from the accounting expense because such awards depend on the Company’s performance. In accordance with SEC rules, the aggregate grant date fair value of the PSAs presented above is calculated based on the most probable outcome of the performance conditions as of the grant date, which, for the PSAs, was target performance. |
In order to better align management compensation with200% level, which represents the achievement of long-term strategic goals of the Company, the compensation committee agreed that 64% of the long-term incentive award shall be in the form of performance stock units (PSUs). Within that 64%, 44% of the total long-term incentive award (or approximately 69% of target PSUs value) was tied to net profit margin for each of the years 2017 through 2019, and 20% was tied to certain expansion metrics from 2017 through 2019. The balance of 36% of the total long-term incentive award consisted of time-vested restricted stock awards, vesting in equal tranches over three years.
A detailed schedule and graph of the equity awards granted in 2017 to each of the above-listed named executive officers is set forth below.
| | | | | | | | | | | | | | | | | Target Performance Stock Units (#) | | Restricted Stock Awards (#) | | | | Net Profit Margin | 2017-2019 Expansion Metric | | Time Vesting Over 3‑Years | | Named Executive Officer | Total | 2017(1) |
| 2018 |
| 2019 |
| | Joseph W. White(2) | 24,617 |
| 5,769 |
| 5,769 |
| 5,385 |
| 7,694 |
| | 13,847 |
| | Jeff D. Barlow | 16,844 |
| 3,948 |
| 3,948 |
| 3,684 |
| 5,264 |
| | 9,474 |
| J. Mario Molina(3) | 103,644 |
| 24,292 |
| 24,292 |
| 22,672 |
| 32,388 |
| | 58,300 |
| John C. Molina(3) | 35,628 |
| 8,350 |
| 8,350 |
| 7,794 |
| 11,134 |
| | 20,041 |
| | Terry P. Bayer | 28,503 |
| 6,680 |
| 6,680 |
| 6,235 |
| 8,908 |
| | 16,033 |
|
| | (1)
| The 2017 net profit margin was not achieved, and as a result the PSUs subject to this metric did not vest. |
| | (2)
| In addition to the restricted stock reflected in the table, on June 5, 2017, Mr. White received a restricted stock award of 15,008 shares vesting over three (3) years, on each of June 5, 2018, June 5, 2019, and June 5, 2020, as compensation for his role as interim president and chief executive officer from May 2, 2017 to November 7, 2017. |
| | (3)
| On May 2, 2017, Dr. Molina’s and Mr. Molina’s employment were terminated by the Company without “cause,” as such term is defined in their employment agreements. Under their respective amended and restated employment agreement, they were each entitled to receive full vesting of all equity compensation. Accordingly, all of the 2017 grants awarded to each of Dr. Molina and Mr. Molina vested in full. |
Molina Healthcare, Inc. 2018 Proxy Statement | 30
As described above, the 64% element of the long-term incentive awards consisting of PSUs was further broken down and allocated into four separate elements, each further described below, as follows:
15% element for a 2017 PSU metric related to net profit margin;
15% element for a 2018 PSU metric related to net profit margin;
14% element for a 2019 PSU metric related to net profit margin; and
20% element for a multi-part metric in any of 2017, 2018, or 2019 related to expansion/growth of the Company.
2017 Performance Units Compensation Metrics. The first 15% PSU element metric was related to the achievement of net profit margin in fiscal year 2017 of at least 0.5%. The entry point for the metric was at 0.5% net profit margin; target achievement was at 0.75% net profit margin; and full achievement was at 1.0% net profit margin.cap on achievement. Achievement of the entry point would have resulted in 50% vesting of the PSUs subject to this metric; target achievement would have resulted in 100% vesting of the PSUs; and full achievement would have resulted in 200% vesting of the PSU grant. Intermediate achievementfalling within the range would have resulted inthreshold level and the vesting of that number of PSUs as was proportional to themaximum level of achievement within the range; all amounts are interpolated linearly between the end points of the range. If the metric had been achieved to any degree, the PSUs would have vested on March 1, 2018. Performance of this first PSU metric was not achieved and thus the PSUs subject to this metric did not vest.
2018 Performance Units Compensation Metrics. The second 15% PSU metric was related to the achievement of net profit margin in fiscal year 2018 of at least 1.0%. The entry point for the metric is at 1.0% net profit margin; target achievement shall be at 1.25% net profit margin; and full achievement is at 1.5% net profit margin. Achievement of the entry point will result in 50% vesting of the PSUs subject to this metric; target achievement will result in 100% vesting of the PSUs; and full achievement will result in 200% vesting of the PSU grant. Intermediate achievement within the range will result in the vesting of that number of PSUs as is proportional to the level of achievement within the range; all amounts will be interpolated linearly betweento determine the end points of the range. If this second PSU metric is achieved to any degree, theappropriate PSUs will vest on March 1, 2019.
2019 Performance Units Compensation Metrics.payout. The third 14% PSU metric was related to the achievement of net profit margin in fiscal year 2019 of at least 1.5%. The entry point for the metric is at 1.5% net profit margin; target achievement is at 1.75% net profit margin; and full achievement is at 2.0% net profit margin. Achievement of the entry point will result in 50% vesting of the PSUs subject to this metric; target achievement will result in 100% vesting of the PSUs; and full achievement will result in 200% vesting of the PSU grant. Intermediate achievement within the range will result in the vesting of that number of PSUs as is proportional to the level of achievement within the range; all amounts will be interpolated linearly between the end points of the range. If this third PSU metric is achieved to any degree, the PSUs will vest on March 1, 2020.
2017-2019 Performance Units Compensation Metrics. The final 20% of the total 64% PSU number is conditioned upon the Company’s closing on a Board-approved acquisition in a new state, winning an RFP in a new
Molina Healthcare, Inc. 2018 Proxy Statement | 31
state (including winning an RFP for Molina Medicaid Solutions, or winning an RFP for a new Medicaid product line in an existing state), or achieving a 10% year-over-year annual growth in Medicare enrollment (including enrollees in Medicare-Medicaid duals programs). However, the next two expansion achievements from and after March 1, 2017 were subject to the expansion targets previously identified as target metrics in the 2016 compensation cycle (meaning the second and third such achievements after the Today’s Options of New York, Inc. acquisition, which represented the first such achievement; thus, this metric shall first be triggered with the fourth such achievement after 2016). SNP or Marketplace/Exchange entry, or a capabilities-based acquisition, do not count towards satisfaction of this performance metric. In the event the Company achieves this metric in fiscal years 2017, 2018, or 2019, upon the first such achievement (meaning the fourth such achievement after 2016), 50% of the PSUs subject to this metric will vest. Upon the second such achievement (meaning the fifth such achievement after 2016), 100% of the PSUs subject to this metric will vest. Upon the third such achievement (meaning the sixth such achievement after 2016), 200% of the PSUs subject to this metric will vest. All PSU awards will be settled by the issuance of shares of common stock of the Company equal to the number of PSUs as described herein. Partial vestingAny payout of the PSUs, if earned, will occur when we report 2025 financial results in early 2026, and are able to calculate the cumulative three-year average adjusted earnings per share for this PSU award may be made on March 1stmetric.
The compensation committee determined that the balance of each of 2018, 2019, or 2020, as applicable, following the relevant level of achievement, whether entry, target, or full. No PSUs subject to this final PSU metric shall vest sooner than March 1, 2018. Time Vested Equity Compensation. As described above, 36%40% of the total long-term incentive awards were granted as sharesto the NEOs, except for Mr. Hebert for whom such awards accounted to 50%, shall be in the form of time-vested restricted stock subject to time vesting. The number of time-vesting sharesawards (“RSAs”). These awards were fixed as of the date of determination of March 1, 2017, and were not subject to increase to the 200% level as with the PSUs. These shares of restricted stock were granted on March 1, 2017,made subject to vesting in equal one-third increments over three years from the grant date, on each of March 1, 2018,2024, March 1, 2019,2025, and March 1, 2020.2026, subject to continued employment through the applicable vesting date.
| | | | | | | | | | 40 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
2021 Long-Term Incentive Awards Achievement Status The following provides a status summary with respect to the portionsAs part of the 2021 long-term incentive awards, the NEOs were granted performance stock awards made tounits (2021 PSUs) as indicated in the named executive officers in 2015 and 2016, with vesting based on the achievement or non-achievement of performance metrics determined for the respective period ended December 31, 2017. If the respective metric was not achieved, the portion of the stock awards based on that metric did not vest, and such portion was forfeited, further reflecting the Company’s pay-for-performance compensation philosophy.
2015EquityCompensation
In 2015, our named executive officers received potential equity compensation opportunities, a portion of which wastable below. Such 2021 PSUs were subject to vesting based on 2017the Company's average adjusted earnings per share over the three fiscal years of 2021, 2022, and 2023.
| | | | | | | | | | | | | | | | Adjusted Earnings Per Share Performance Metrics for 2021 PSUs | 2021
($) | 2022
($) | 2023
($) | | | | | | | | Threshold | 11.00 | | 15.75 | | 18.25 | | | | Target | 12.50 | | 17.25 | | 20.25 | | | | Maximum | 14.00 | | 18.75 | | 22.25 | | |
As result of sustained strong financial performance metrics as reflected in 2021, 2022, and 2023, the table below. | | | | | | | | | | | | | | | Named Executive Officer | 2015 Target # of Performance Shares Subject to Vesting Based on 2017 Metrics | 2017 Annual Premium Revenue | 2017 Net Profit Margin | 2017 Pre-Tax Income | Three-Year TSR | | | TOTAL | VESTED | VESTED | NOT VESTED | NOT VESTED | VESTED | | Joseph W. White, Chief Financial Officer | 9,048 |
| 4,524 |
| 2,262 |
| 2,262 |
| 2,262 |
| 2,262 |
| | Jeff D. Barlow, Chief Legal Officer and Secretary | 7,540 |
| 3,770 |
| 1,885 |
| 1,885 |
| 1,885 |
| 1,885 |
| | Terry P. Bayer, Former Chief Operating Officer | 11,460 |
| 5,730 |
| 2,865 |
| 2,865 |
| 2,865 |
| 2,865 |
|
The 2015 equity awards were divided into eight (8) separate elements, four (4) of which, representing 40%Company achieved three-year average adjusted earnings per share at the 170% vesting level for the 2021 PSUs (representing achievement for 2021 at the 200% level, achievement for 2022 at the 178% level, and achievement for 2023 at the 132% level). Settlement of the awards, were not determinable until the end2021 PSUs vesting was made by issuance of the three-year period ended December 31, 2017.
10%shares of the 2015common stock awards was based on the Company’s 2017 annual premium revenue achievement, with an entry point of $15.0 billion in annual premium revenues, excluding acquisitions after April 1, 2015, and full achievement at $16 billion in annual premium revenues, excluding acquisitions after April 1, 2015. This performance metric was fully achieved in 2017 and the stock vested.
The second fiscal year 2017 10% performance metric of the 2015 stock awards was based on the Company’s fiscal year 2017 net profit margin, with an entry point at 1.5% net profit margin, and the third fiscal year 2017 10% performance metric of the 2015 stock awards was based on the Company’s pre-tax income in fiscal year 2017, with an entry point at $500 million in pre-tax income. Neither the 2017 net profit margin metric nor the 2017 pre-tax income metric was achieved and, accordingly, the portions of the stock awards based on these performance metrics did not vest.
Molina Healthcare, Inc. 2018 Proxy Statement | 32
Another 10% of the 2015 stock award was conditioned upon the Company’s achieving a three-year TSR for the three-year period ended December 31, 2017 as determined by ISS calculations that is greater than the median TSR achieved by the Company’s 2015 ISS peer group. The Company’s three-year TSR for the three-year period ending December 31, 2017 was 13.5% compared to the median of 3.8% for the Company’s 2015 ISS peer group. Since this metric was achieved, the portion of the stock awards based on this performance metric vested.
2016EquityCompensation
In 2016, our named executive officers received potential equity compensation opportunities, a portion of which was subject to vesting based on 2017 performance metrics as reflected in the table below.
| | | | | | | | | | | | | | | Named Executive Officer | 2016 Target # of Performance Shares Subject to Vesting Based on 2017 Metrics | 2017 Net Profit Margin | Star Ratings | Expansion (MS) | Expansion (ID) | | | TOTAL | VESTED | NOT VESTED | NOT VESTED | VESTED | VESTED | | Joseph W. White, Chief Financial Officer | 15,110 |
| 6,476 |
| 4,317 |
| 4,317 |
| 2,159 |
| 4,317 |
| | Jeff D. Barlow, Chief Legal Officer and Secretary | 10,962 |
| 4,698 |
| 3,132 |
| 3,132 |
| 1,566 |
| 3,132 |
| | Terry P. Bayer, Former Chief Operating Officer | 18,039 |
| 7,731 |
| 5,154 |
| 5,154 |
| 2,577 |
| 5,154 |
|
The 2016 equity awards were divided into eight (8) separate elements, two (2) of which were not determinable until the end of the two-year period ended December 31, 2017.
The first 2017 10% performance metric was related to the achievement of a net profit margin in fiscal year 2017 of at least 1.5%. Performance was not met under this metric and thus these awards did not vest.
The second fiscal year 2017 10% performance metric was related to the Company achieving an improvement in Star ratings of 0.5 Stars or greater for each of two separate health plans from the levels of the previous year, with no decline in the then existing average Star rating across all remaining health plans. Performance was not met under this metric and thus these awards did not vest.
The final 20% metric was conditioned upon the Company’s either closing on a Board-approved acquisition in a new state, or winning a Request For Proposal (“RFP”) in a new state, or winning an RFP for a new Medicaid product line in an existing state during the 2016-2018 period. Special Needs Plan (“SNP”) or marketplace entry, or a capabilities-based acquisition, do not count towards satisfaction of this performance metric. Upon the first such achievement of this metric in 2016, 2017, or 2018, 5% of the restricted stock grant shall vest. Upon the second such achievement, a further 5% of the restricted stock grant shall vest. Upon the third such achievement, the final 10% of the restricted stock grant shall vest.
The first such achievement of this goal was met in 2016 as a result of the closing of the New York Medicaid acquisition.
The second such achievement of this goal was met in 2017 related to winning of an RFP in Mississippi for a Medicaid Coordinated Care Contract for the statewide administration of the Mississippi Coordinated Access Network (MississippiCAN), by the Company’s wholly owned subsidiary, Molina Healthcare of Mississippi, Inc. The operational start date for the program is currently scheduled for July 1, 2018, pending the completion of a readiness review with the Mississippi Division of Medicaid.
The third such achievement of this goal was also met in 2017 related to the expansion of the Company into Idaho, throughon March 1, 2024 in the Company’s wholly owned subsidiary, Molina Healthcare of Utah, Inc., dba Molina Healthcare of Idaho. As of January 1, 2018, the plan launched a so-called Fully Integrated Dual Eligible Special Needs Plan (or FIDE SNP) Medicare-Medicaid Coordinated Plan (MMCP) and Medicare Advantage HMO (MAPD) Plan. As part of this launch, we have signed both a MMCP contract with Idaho Department of Health and Welfare and a FIDE SNP contract with CMS. The product’s specific name is Molina Medicare Options Plus. An FIDE SNP enrolls individuals over the age of 21 who are eligible for both Medicare and Medicaid.following amounts:
Molina Healthcare, Inc. 2018 Proxy Statement | 33
As a result, the entire 20% of the restricted stock grant subject to this metric has vested (5% vested in 2017 based on the first achievement of the goal in 2016, and 15% vested in 2018 based on the achievement of the additional two goals in 2017). | | | | | | | | | | | | | Named Executive Officer | Performance Stock Units
2021 PSUs Granted (at “Target”)
(#) | Shares Issued Upon Vesting
(#) | | | | | | | Joseph M. Zubretsky | 40,497 | | 68,844 | | | | Mark L. Keim | 9,449 | | 16,063 | | | | James E. Woys | 6,749 | | 11,473 | | | | Jeff D. Barlow | 6,749 | | 11,473 | | | | Maurice S. Hebert | 900 | | 1,530 | | |
Stock Ownership Guidelines for Named Executive OfficersNEOs The Board of Directors believes that executive officers should own and hold a reasonable number of shares of common stock of the Company to further align such officers’ interests and actions with those of the Company’s stockholders, and also to demonstrate confidence in the long-term prospects of the Company. The Company’s guidelines with respect to stock ownership by executive officers provide that executive officers of the Company shall own the minimum number of shares of the Company’s common stock with such value listed next to each such officer’s title below, calculated as a multiple of annual base salary. | | | | | | | | | Executive Officer | Value of Shares | | | | Chief Executive Officer | 5X Annual Base Salary | | Chief Financial Officer | 4X Annual Base Salary | Chief Operating OfficerOther NEOs | 3X Annual Base Salary | Other Named Executive Officers | 2X Annual Base Salary |
•The value of an executive officer’s holdings is based on the average closing price of a share of the Company’s stock for the previous calendar year. •Shares that satisfy these guidelines may be those owned directly, through a trust, or by a spouse or child, and include shares purchased on the open market, vested or unvested shares of restricted stock, or exercised and retained option shares. Unexercised options and equity securities that are pledged are not counted toward the executive officer ownership requirements. Until an executive officer’s stock ownership requirement is met, the executive officer must retain at least 50% of all “net settled shares” (as defined above under “Stock“Stock Ownership Guidelines for Directors”) received from the vesting, delivery or exercise of equity awards granted under our equity award plans until the total value of all shares held equals or exceeds the executive officer’s applicable ownership threshold. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 41 | | |
•Executive officers are expected to achieve the recommended ownership guidelines within five (5) years of assuming their positions. Once achieved, ownership of the guideline amount must be maintained for as long as the individual is subject to these guidelines. In addition, there may be certain instances where these guidelines would place an undue hardship on an executive officer. The compensation committee may therefore make exceptions to these guidelines as it deems appropriate. Each of the named executive officersNEOs of the Company satisfied the stock ownership guidelines as of December 31, 2017, except Mr. Zubretsky whose employment with the Company started November 2017 and who pursuant to the guidelines has five (5) years from the start of his employment to comply with the policy.2023. ClawbackPolicy The Company has a Clawback Policy addressing the recovery by the Company of incentive-based compensation (cash and equity) from current and former executivesexecutive officers of the Company in the event of anythe Company is required to prepare an accounting restatement due to correct the Company’s material noncompliance by the Company with any financial reporting requirement under the applicable securities laws, (“Accounting Restatement”). Accordingincluding restatements that correct an error in previously issued financial statements (a) that is material to the previously issued financial statements or (b) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Under the Clawback Policy, in the event of such an Accounting Restatement,accounting restatement, the Company will use reasonable efforts toshall recover reasonably promptly from any current or former executive officer of the Company who received incentive-based compensation from the Company after October 2, 2023 and during the three (3)-year period preceding the date on which the Company is required to prepare an Accounting Restatement, based onaccounting restatement, the erroneous data,portion of any incentive-based compensation that was erroneously awarded compensation, unless the excesscompensation committee has determined that recovery would be impracticable. Recovery is required regardless of what would have been paid towhether the executive officer under the Accounting Restatement. In addition, the Clawback Policy further provides that the Company will use reasonable efforts to recover from current and former executive officers, up to 100% (as determined by the Boardengaged in misconduct or a duly established committee of the Board in its sole discretion as appropriate based on the conduct involved) of such incentive-based compensation from the Company during the three (3)-year period preceding the date on which the Company is required to prepare an Accounting Restatement, if the Boardotherwise caused or a committee thereof, in its sole discretion, determines that an executive officer’s act or omission that contributed to the circumstances requiringrequirement for the Accounting Restatement involved: (i) willful, knowingaccounting restatement and regardless of whether or intentional misconduct or a willful, knowing or intentional violation of any of the Company’s rules or any applicable legal or regulatory requirements in the course of the executive officer’s employmentwhen restated financial statements are filed by or otherwise in connection with, the Company or (ii) fraud in the course of the executive officer’s employment by, or otherwise in connection with, the Company.
Molina Healthcare, Inc. 2018 Proxy Statement | 34
Restrictionson Pledgesof Sharesby DirectorsandExecutiveOfficers
The Company’s insider trading policy prohibits our directors and executive officers from, directly or indirectly, pledging a significant number of shares of the Company’s common stock. For these purposes, “pledging” includes the intentional creation of any form of pledge, security interest, deposit, or lien, including the holding of shares in a margin account, that entitles a third-party to foreclose against, or otherwise sell, any shares, whether with or without notice, consent, or default. “Significant” means the least of: (i) 1% of the Company’s total outstanding shares of common stock; (ii) 20% of the common stock of the Company then held by the executive officer or director; and (iii) 50% of the Company’s average daily trading volume for the three months prior to the pledge date. The shares of common stock attributable to a director or executive officer for these purposes include shares attributable to the director or executive officer under either Section 13 or Section 16 of the Securities Exchange Act of 1934, as amended. Further, any shares that are pledged shall not be counted toward the executive officer or director stock ownership requirements.
As of the date of this proxy statement, noneNone of the directors andor executive officers of the Company had any pledge of shares of the Company’s common stock.
HedgingRestrictions As part of the Company’s insider trading policy, directors, executive officers (including the named executive officers)NEOs), and vice presidents of the Company or subsidiary executive officers (collectively, “Controlling Insiders”) are prohibited from engaging in “hedging” with respect to the Company’s securities. For these purposes, “hedging” includes any instrument or transaction, including put options and forward-sale contracts, through which a Controlling Insider offsets or reduces exposure to the risk of price fluctuations in a corresponding equity security. Speculative trading, short-swing trading, or short selling of stock of the Company by Controlling Insiders is expressly prohibited at all times, as is the buying or selling of any publicly traded option on stock of the Company and the establishment or use of margin accounts with a broker-dealer for the purpose of buying or selling stock of the Company. Results of the May 2017 “Say On Pay” Vote
At our May 10, 2017 annual stockholders’ meeting, the Company’s stockholders approved an annual advisory “say-on-pay” vote. The compensation committee monitors the results of the Company’s annual advisory “say-on-pay” proposal and considers such results as one of many factors in connection with the discharge of its responsibilities. At our May 10, 2017 annual stockholders’ meeting, the compensation of our named executive officers was approved, on an advisory basis, by a 78.5% majority vote. The actions taken by the Board to restructure management and recalibrate the compensation program are, in many ways, a response to the say-on-pay proposals and address the concern among stockholders that compensation programs must have incentive features that (a) provide a proper measure of accountability and reward, and (b) correlate incentive compensation with the achievement of our long-term strategic objectives. Additionally, the compensation committee also simplified the compensation program with fewer performance metrics. At the May 2017 annual meeting, the stockholders also voted on an advisory basis to change the frequency on the say-on-pay vote from every three years to every year. The Company is including a “say-on-pay” proposal in this year’s proxy statement. The compensation committee will continue to take into consideration the outcome of the Company’s “say-on-pay” votes when making future compensation decisions for the named executive officers. Further, the Company will continue to focus on aligning executive pay with building stockholder value and the achievement of short-term and long-term financial and strategic objectives.
Compliance with Internal Revenue Code Section 162(m)
Effective through December 31, 2017, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to public corporations for compensation over $1 million paid for any fiscal year to the corporation’s chief executive officer and four other most highly compensated executive officers as of the end of the fiscal year. The Affordable Care Act (ACA) amended the Internal Revenue Code, in part, by adding Section 162(m)(6), which limits the amount that covered health insurance providers such as the Company may deduct in any taxable year for compensation to any employee in excess of $500,000. This legislation did not create any exceptions for performance-based compensation. Commencing with the Company’s fiscal year 2016, the compensation limitation pursuant to Section 162(m)(6) as amended by the ACA applied to the Company and the Company was not able to deduct compensation to its executive officers in excess of $500,000. Accordingly, while the compensation committee continued to adhere to its pay-for-performance philosophy, the Company derived no tax benefit in 2017 from structuring its compensation determinations based on the requirements for the performance based compensation exception of Internal Revenue Code Section 162(m).
Molina Healthcare, Inc. 2018 Proxy Statement | 35
The Tax Cuts and Job Act of 2017 (TCJA) amended Internal Revenue Code Section 162(m). Effective for years beginning after December 31, 2017, Internal Revenue Code Section 162(m) will generally disallow a tax deduction to public corporations for compensation over $1 million paid to a corporation’s principal executive officer, principal financial officer, three other most highly compensated executive officers, and any employees who served in such capacities. Further, the exception to the $1 million limitation for performance-based compensation has generally been eliminated. TCJA did not amend the Section 162(m)(6) limitation applicable to the Company as described above.
Compensation Committee Report The compensation committee has reviewed and discussed the CD&A with the members of management of the Company. Based on its review and discussions, the compensation committee recommended to the Board of Directors that the CD&A be included in this proxy statement and incorporated by reference into the Form 10-K.
Compensation Committee Richard M. Schapiro,Dale B. Wolf, Chairman
Charles Z. Fedak
Steven J. OrlandoBarbara Brasier
Ronna E. Romney
March 5, 2018
11, 2024
Molina Healthcare, Inc. 2018 Proxy Statement | 36 | | | | | | | | | | 42 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Compensation Tables 2023 Summary Compensation Table The following table provides information concerning total compensation earned or paid to (a)our NEOs for the presidentfiscal years ended December 31, 2023, 2022 and chief executive officer, (b)2021. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary
($) | Bonus ($) | Stock Awards(1) ($) | Option Awards
($) | Non-Equity Incentive Plan Comp.(2) ($) | Change in
Nonqualified
Deferred Comp.
Earnings
($) | All Other Comp.(3) ($) | Total
($) | | | | | | | | | | | | | Joseph M. Zubretsky President and Chief Executive Officer | 2023 | 1,500,000 | | — | | 15,500,092 | | — | | 4,410,000 | | — | | 81,631 | | 21,491,723 | | | | 2022 | 1,500,000 | | — | | 14,999,868 | | — | | 5,550,000 | | — | | 81,388 | | 22,131,256 | | | | 2021 | 1,500,000 | | — | | 15,000,089 | | — | | 3,375,000 | | — | | 86,609 | | 19,961,698 | | | Mark L. Keim Chief Financial Officer | 2023 | 850,000 | | — | | 3,999,944 | | — | | 1,249,500 | | — | | 302,605 | | 6,402,049 | | | | 2022 | 850,000 | | — | | 3,750,045 | | — | | 1,572,500 | | — | | 302,429 | | 6,474,974 | | | | 2021 | 850,000 | | — | | 3,500,058 | | — | | 1,275,000 | | — | | 301,847 | | 5,926,905 | | | James E. Woys Chief Operating Officer | 2023 | 800,000 | | — | | 3,499,985 | | — | | 1,176,000 | | — | | 61,116 | | 5,537,101 | | | | 2022 | 800,000 | | — | | 3,250,102 | | — | | 1,480,000 | | — | | 53,986 | | 5,584,088 | | | | 2021 | 750,000 | | — | | 2,499,978 | | — | | 1,125,000 | | — | | 141,382 | | 4,516,360 | | | Jeff D. Barlow Chief Legal Officer and Secretary | 2023 | 685,000 | | — | | 3,000,026 | | — | | 1,006,950 | | 147,009 | | 50,117 | | 4,889,102 | | | | 2022 | 685,000 | | — | | 2,749,846 | | — | | 1,267,250 | | — | | 47,349 | | 4,749,445 | | | | 2021 | 650,000 | | — | | 2,499,978 | | — | | 975,000 | | 151,038 | | 45,541 | | 4,321,557 | | | Maurice S. Hebert(4) Chief Accounting Officer | 2023 | 425,000 | | — | | 400,022 | | — | | 371,875 | | 35,959 | | 38,821 | | 1,271,677 | | | Marc S. Russo(5) Former Executive Vice President of Health Plans | 2023 | 641,347 | | — | | 3,250,006 | | — | | — | | — | | 1,545,199 | | 5,436,552 | | | | 2022 | 700,000 | | — | | 2,749,846 | | — | | 1,295,000 | | — | | 17,457 | | 4,762,303 | | | | 2021 | 700,000 | | — | | 2,249,958 | | — | | 1,050,000 | | — | | 16,875 | | 4,016,833 | | |
(1)This column shows the chief financial officer,aggregate grant date fair value of performance stock units (“PSUs”) and (c)restricted stock awards (“RSAs”) granted under the three other most highly compensated executive officersCompany’s 2019 Equity Incentive Plan in the years shown, computed in accordance with FASB ASC Topic 718 based on the closing price of our Common Stock on the date of grant. The aggregate grant date fair value is the amount the Company who servedexpects to expense for accounting purposes over the award’s vesting schedule. See the 2023 Grants of Plan-Based Awards Table for additional information, including the performance conditions, for PSUs and RSAs granted in such capacities as of December 31, 2017, in each case for services rendered to the Company during the last year. In addition, the table provides information concerning total compensation earned or paid to our former chief executive officer and former chief financial officer who served in such capacities during 2017, in each case for services rendered to the Company during the last year. These seven officers are referred to as the “named executive officers” in this proxy statement.
2017Summary Compensation Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards | Non-Equity Incentive Plan Comp.(2) | Change in Nonqualified Deferred Comp. Earnings(3) | All Other Comp.(4) | Total | Joseph M. Zubretsky(5)(8)(9)(10) | 2017 | $ | 175,000 |
| $ | 4,000,000 |
| $ | — |
| $ | 15,536,250 |
| $ | — |
| $ | — |
| $ | 27,858 |
| $ | 19,739,108 |
| | President and Chief Executive Officer | | | | | | | | | | Joseph W. White(6) | 2017 | $ | 1,248,167 |
| $ | — |
| $ | 3,361,920 |
| $ | — |
| $ | — |
| $ | 2,821 |
| $ | 40,232 |
| $ | 4,653,140 |
| | Chief Financial Officer and former Interim Chief Executive Officer | 2016 | $ | 538,000 |
| $ | — |
| $ | 2,786,018 |
| $ | — |
| $ | 80,000 |
| $ | 1,377 |
| $ | 15,033 |
| $ | 3,420,428 |
| | | 2015 | $ | 515,000 |
| $ | — |
| $ | 1,461,882 |
| $ | — |
| $ | 384,432 |
| $ | 136 |
| $ | 15,064 |
| $ | 2,376,514 |
| | Jeff D. Barlow | 2017 | $ | 550,000 |
| $ | — |
| $ | 1,616,103 |
| $ | — |
| $ | — |
| $ | 27,041 |
| $ | 33,681 |
| $ | 2,226,825 |
| | Chief Legal Officer and Secretary | 2016 | $ | 525,000 |
| $ | — |
| $ | 2,021,015 |
| $ | — |
| $ | 75,000 |
| $ | 8,395 |
| $ | 33,545 |
| $ | 2,662,955 |
| | | 2015 | $ | 475,000 |
| $ | — |
| $ | 1,218,191 |
| $ | — |
| $ | 354,574 |
| $ | 146 |
| $ | 31,654 |
| $ | 2,079,565 |
| Dr. J. Mario Molina(7) | 2017 | $ | 440,770 |
| $ | — |
| $ | 9,944,395 |
| $ | — |
| $ | — |
| $ | 708,440 |
| $ | 5,904,399 |
| $ | 16,998,004 |
| | Former President and Chief Executive Officer | 2016 | $ | 1,170,000 |
| $ | — |
| $ | 8,442,976 |
| $ | — |
| $ | 255,000 |
| $ | 165,449 |
| $ | 15,443 |
| $ | 10,048,868 |
| | | 2015 | $ | 1,050,000 |
| $ | — |
| $ | 7,893,843 |
| $ | — |
| $ | 1,306,324 |
| $ | — |
| $ | 15,490 |
| $ | 10,265,657 |
| John C. Molina(7) | 2017 | $ | 318,038 |
| $ | — |
| $ | 3,418,430 |
| $ | — |
| $ | — |
| $ | 79,908 |
| $ | 4,197,577 |
| $ | 8,013,953 |
| | Former Chief Financial Officer | 2016 | $ | 878,000 |
| $ | — |
| $ | 4,258,980 |
| $ | — |
| $ | 180,000 |
| $ | 50,025 |
| $ | 16,090 |
| $ | 5,383,095 |
| | | 2015 | $ | 878,000 |
| $ | — |
| $ | 2,606,918 |
| $ | — |
| $ | 910,279 |
| $ | — |
| $ | 15,277 |
| $ | 4,410,474 |
| Terry P. Bayer(11) | 2017 | $ | 700,000 |
| $ | — |
| $ | 2,734,795 |
| $ | — |
| $ | — |
| $ | 176,253 |
| $ | 22,698 |
| $ | 3,633,746 |
| | Former Chief Operating Officer | 2016 | $ | 644,000 |
| $ | — |
| $ | 3,326,005 |
| $ | — |
| $ | 110,000 |
| $ | 74,991 |
| $ | 22,499 |
| $ | 4,177,495 |
| | | 2015 | $ | 644,000 |
| $ | — |
| $ | 1,851,686 |
| $ | — |
| $ | 534,141 |
| $ | — |
| $ | 17,798 |
| $ | 3,047,625 |
| Lisa A. Rubino(5)(12) | 2017 | $ | 500,000 |
| $ | — |
| $ | 600,012 |
| $ | — |
| $ | — |
| $ | 42,545 |
| $ | 33,906 |
| $ | 1,176,463 |
| Former Sr. Vice President of Medicare & Duals Integration
| | | | | | | | | |
| | (1)
| This column shows the aggregate grant date fair value of performance stock awards (“PSAs”), performance stock units (“PSUs”) and restricted stock awards (“RSAs”) granted under the Company’s 2011 Equity Incentive Plan in the years shown. The aggregate grant date fair value is the amount the Company expects to expense for accounting purposes over the award’s vesting schedule. See the 2017 Grants of Plan-Based Awards Table for additional information, including the performance conditions and valuation assumptions as applicable, for PSAs, PSUs, and RSAs granted in 2017. |
2023. Generally, the grant date fair value presented does not correspond to the actual value that the named executive officersNEOs will realize from the award. In particular, the actual value of PSAs and PSUs received is different from the accounting expensefair value because such awards depend on the Company’s performance. In accordance with SEC rules,FASB ASC Topic 718, the aggregate grant date fair value of the PSAs and PSUs presented above is calculated based on the most probable outcome of the performance conditions as of the grant date, which, for the PSAs and PSUs, was target performance. If the maximum performance metrics are achieved for the PSUs, the grant date fair value of the 20172023 PSUs would be $5,039,746$18,600,330 for Mr. White, $2,764,122Zubretsky, $4,799,714 for Mr. Keim, $4,200,092 for Mr. Woys, $3,599,922 for Mr. Barlow, $14,801,204 for Dr. Molina, $5,087,941$400,296 for Mr. MolinaHebert, and $4,677,559$3,900,008 for Ms. Bayer.Mr. Russo. (2)This column shows the amounts earned under the Company’s performance-based short-term cash incentive plan. (4)Mr. Hebert became a NEO for the first time in 2023, thus his compensation is only provided for 2023. (5)Mr. Russo served as the Company’s Executive Vice President of Health Plans until October 25, 2023, when his employment with the Company terminated. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 43 | | (2) | This column shows the amounts earned under the Company’s performance-based short-term cash incentive plan. |
Molina Healthcare, Inc. 2018 Proxy Statement | 37
| | | | | | (3)
| Ms. Bayer’s change in non-qualified deferred compensation earnings for the year 2015 was ($6,924); Dr. J. Mario Molina’s change in non-qualified deferred compensation earnings for the year 2015 was ($188,966); and Mr. Molina’s change in non-qualified deferred compensation earnings for the year 2015 was ($7,487). |
| | (4)
EXECUTIVE COMPENSATION | |
| | (5)
| Compensation for Mr. Zubretsky and Ms. Rubino is provided only for 2017 because they were not named executive officers prior to 2017. Mr. Zubretsky’s employment with the Company started on November 6, 2017. Since Ms. Rubino was not a named executive officer prior to 2017, the compensation committee was not involved in the determination of her salary or bonus opportunity. |
| | (6)
| Mr. White’s annual salary was increased from $600,000 to $650,000 effective as of May 2, 2017 in connection with his appointment as chief financial officer. In addition, Mr. White received a monthly special salary of $100,000 for his service as interim president and chief executive officer from May 2, 2017 to November 6, 2017. The amount of $1,248,167 represents the sum of (i) his salary as chief accounting officer and chief financial officer of $631,500 received in 2017 and (ii) the special salary of $616,667 for serving as interim president and chief executive officer. Additionally, in connection with his service as interim president and chief executive officer, on June 5, 2017 the Company awarded Mr. White a restricted stock award of 15,008 shares subject to time-based vesting in equal increments over three years on each of June 5, 2018, June, 2019, and June 2020. |
| | (7)
| Dr. Molina’s and Mr. John C. Molina’s employment was terminated by the Company without cause on May 2, 2017. See also Note 2 to the 2017 All Other Compensation Table below. |
| | (8)
| Mr. Zubretsky’s employment with the Company commenced on November 6, 2017, and as a result the salary amount reflected in the table is the amount paid for the period November 6, 2017 to December 31, 2017, at an annualized salary of $1,300,000. Mr. Zubretsky’s bonus amount consists of his sign-on bonus. In the event that prior to the second anniversary of his start date Mr. Zubretsky’s employment terminates by reason of a termination for the Company for “cause” (as defined in the employment agreement) or Mr. Zubretsky’s resignation without “good reason” (as defined in the employment agreement), Mr. Zubretsky will be required to repay the Company a prorated portion of the sign-on bonus payment. |
| | (9)
| For 2017, Mr. Zubretsky was not eligible to receive any non-equity incentive plan compensation (short-term incentive cash bonus) and was not eligible to participate in the Company’s non-qualified deferred compensation plan. |
| | (10)
| Pursuant to Mr. Zubretsky’s employment agreement, the Company granted him an option to purchase 375,000 shares of our common stock at an exercise price of $67.33 per share which expires October 8, 2027. These options are subject to time-based vesting in equal increments over three years on each of October 9, 2018, October 9, 2019, and October 9, 2020. The Company granted Mr. Zubretsky such option to compensate him for forgone compensation benefits from his previous employer. |
| | (11)
| Ms. Bayer retired from her position as chief operating officer of the Company on February 2, 2018. |
| | (12)
| Ms. Rubino’s employment was terminated by the Company without cause on March 2, 2018. |
20172023 All Other Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Lodging Allowance
($) | Group Term Life Premiums
($) | 401(k) Matching Contribution(1) ($) | Liquidated Amounts for
Paid Time-off
($) | Severance(2) ($) | Other(3) ($) | All Other Compensation
($) | | | | | | | | | | | | Joseph M. Zubretsky | — | | 9,144 | | 13,200 | | 57,692 | | — | | 1,595 | | 81,631 | | | | Mark L. Keim | 250,000 | | 4,902 | | 13,200 | | 32,692 | | — | | 1,811 | | 302,605 | | | | James E. Woys | — | | 14,478 | | 13,200 | | 30,769 | | — | | 2,669 | | 61,116 | | | | Jeff D. Barlow | — | | 7,524 | | 13,200 | | 26,346 | | — | | 3,047 | | 50,117 | | | | Maurice S. Hebert | — | | 6,336 | | 13,200 | | 16,346 | | — | | 2,939 | | 38,821 | | | | Marc S. Russo | — | | 2,320 | | 13,200 | | 121,154 | | 1,407,000 | | 1,525 | | 1,545,199 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Long-term Disability Premiums | Group Term Life Premiums | Executive Disability Premiums | 401(k) Matching Contribution (1) | Liquidated Amounts for Paid Time-off | Severance (2) | Relocation Expense/Remote Stipend(3) | Imputed Tax Benefit | All Other Compensation | | Joseph M. Zubretsky | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 27,858 |
| $ | — |
| $ | 27,858 |
| | Joseph W. White | $ | 820 |
| $ | 3,612 |
| $ | — |
| $ | 10,800 |
| $ | 25,000 |
| $ | — |
| $ | — |
| $ | — |
| $ | 40,232 |
| | Jeff D. Barlow | $ | 820 |
| $ | 1,932 |
| $ | — |
| $ | 10,800 |
| $ | 20,129 |
| $ | — |
| $ | — |
| $ | — |
| $ | 33,681 |
| | Dr. J. Mario Molina | $ | 426 |
| $ | 1,250 |
| $ | — |
| $ | 10,800 |
| $ | 201,923 |
| $ | 5,690,000 |
| $ | — |
| $ | — |
| $ | 5,904,399 |
| | John C. Molina | $ | 378 |
| $ | 669 |
| $ | 345 |
| $ | 10,800 |
| $ | 145,385 |
| $ | 4,040,000 |
| $ | — |
| $ | — |
| $ | 4,197,577 |
| | Terry P. Bayer | $ | 1,230 |
| $ | 10,668 |
| $ | — |
| $ | 10,800 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 22,698 |
| | Lisa A. Rubino | $ | 820 |
| $ | 5,544 |
| $ | — |
| $ | 9,539 |
| $ | 9,615 |
| $ | — |
| $ | — |
| $ | 8,388 |
| $ | 33,906 |
|
| | (1)
| (1)The Company has a 401(k) plan that is available to all employees. The plan allows pretax deferral, for which the Company matches dollar-for-dollar of the first 4% of salary electively deferred under the plan. |
| | (2)
| Dr. Molina and Mr. Molina were terminated by the Company without cause on May 2, 2017, and received severance payments and benefits pursuant to their employment agreements with the Company. The severance amount reflected in the table consists of the cash severance received in connection with the termination of employment. Ms. Bayer retired on February 2, 2018, and received severance payments and benefits pursuant to her employment agreement with the |
Molina Healthcare, Inc. 2018 Proxy Statement | 38
Company, but since her retirement occurred in 2018, such payments and benefits are not reflected in this table. Ms. Rubino’s employment was terminated by the Company without cause on March 2, 2018. For more information onmatches dollar-for-dollar of the severance payments and benefits for such former executive officers, see discussion above in “Executive Compensation - Terminationfirst 4% of Namedsalary electively deferred under the plan.
(2)Mr. Russo served as the Company’s Executive Officer Founders,”“Executive Compensation - Retirement of Chief Operating Officer,” and “Executive Compensation - Termination of our Senior Vice President of Medicare & Duals Integration.”Health Plans until October 25, 2023, when his employment with the Company terminated. Following his execution of a waiver and release of claims agreement, he became entitled to a separation amount in the aggregate of $1,407,000 consisting of (i) $750,000 representing 12 months base salary, (ii) $625,000 representing the pro-rated annual short-term performance-based cash bonus at target, and (iii) $32,000 representing 12 months of COBRA coverage. Such separation amount is payable over one year in 26 bi-weekly installments. (3)Other includes compensation for remote stipends, bring-your-own-device stipends, and basic group life insurance premiums. | | | | | | | | | | 44 | Molina Healthcare, Inc. 2024 Proxy Statement | | (3) | Consists of $27,708 relocation expense and $150 remote stipend. |
Realized Compensation
The SEC’s calculation of total compensation, as shown in the 2017 Summary Compensation Table, includes several items driven by accounting assumptions. As a result, total compensation as defined by the SEC differs substantially from the compensation actually realized by our named executive officers in a particular year. To supplement the SEC-required disclosure, the table below shows compensation realized by each named executive, as reported on his or her IRS W-2 form. These amounts are not a substitute for the amounts reported as SEC total compensation. Information on how realized compensation is calculated is included below the table.Further, the potential compensation of the named executive officers is an aspirational amount, dependent on the achievement of several financial goals. As a result of the Company falling short of its financial targets, management failed to achieve their target compensation in years 2015, 2016, and 2017 as reflected in the 2017 Realized Compensation Table below.
2017 Realized Compensation Table
| | | | | | | | | | | | | | | Realized Compensation | | Name | 2015 | | 2016 | | 2017 | Joseph M. Zubretsky(1) | $ | — |
| | $ | — |
| | $ | 4,202,858 |
| | Joseph W. White | $ | 2,238,488 |
| | $ | 1,630,426 |
| | $ | 2,309,774 |
| | Jeff D. Barlow | $ | 1,901,409 |
| | $ | 1,462,354 |
| | $ | 1,319,559 |
| Dr. J. Mario Molina(2) | $ | 9,490,297 |
| | $ | 5,572,952 |
| | $ | 30,528,257 |
| John C. Molina(2) | $ | 3,667,891 |
| | $ | 3,068,059 |
| | $ | 15,458,294 |
| | Terry P. Bayer | $ | 4,016,653 |
| | $ | 2,262,426 |
| | $ | 2,066,115 |
| Lisa A. Rubino(1) | $ | — |
| | $ | — |
| | $ | 752,910 |
|
| | | | | | | Realized Compensation for Mr. Zubretsky and Ms. Rubino is provided only for 2017 because they were not named executive officers prior to 2017.EXECUTIVE COMPENSATION |
| | (2)
| Dr. Molina’s and Mr. Molina’s 2017 realized compensation includes the severance payments and benefits received in connection with termination of their employment without cause on May 2, 2017. For more information on the severance payments and benefits received by such former executive officers, see discussion above in “Executive Compensation - Termination of Named Executive Officer Founders.”
|
To calculate realized compensation for 2017, which represents taxable W-2 income for 2017, we started with the amounts shown in the SEC Total column in the 2017 Summary Compensation Table and made the following adjustments:Subtractions from SEC Total:
Bonus earned for 2017 (reflected in Bonus and Non-equity Incentive Plan Compensation columns), which was paid in 2018;
Aggregate grant date fair value of equity awards (reflected in Stock Awards and Option Awards columns);
Year over year change in nonqualified deferred compensation earnings (reflected in the Change in Nonqualified Deferred Comp. Earnings column);
Contributions to 401(k) and medical premiums that are deducted from income on a pre-tax basis; and
The Company’s 401(k) match (reflected in All Other Comp. column).
Additions to SEC Total:
Bonus earned for 2016 (reflected in Bonus and Non-equity Incentive Plan Compensation columns for 2016) which was paid in 2017;
Molina Healthcare, Inc. 2018 Proxy Statement | 39
2023 Grants of Plan-Based Awards Table The following table provides information about plan-based awards granted to the named executive officersNEOs in 2017.2023. The “Non-EquityNon-Equity Incentive Plan Awards”Awards were granted under the Company’s 2023 Short-Term Incentive Compensation Plan. The “EquityEquity Incentive Plan Awards”Awards and “AllAll Other Stock Awards”Awards were granted under the Company’s 20112019 Equity Incentive Plan. 2017Grants of Plan-Based Awards Table | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Grant Date | Grant Type * | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock(3) (#) | Grant Date Fair Value of Stock and Option Awards (4) (#) | | Threshold
($) | Target
($) | Maximum
($) | | Threshold
(#) | Target
(#) | Maximum
(#) | | | | | | | | | | | | | | | | Joseph M. Zubretsky | 2/27/2023 | STI Cash | 1,500,000 | | 3,000,000 | | 6,000,000 | | | — | | — | | — | | — | | — | | | | 3/1/2023 | PSU | — | | — | | — | | | 16,984 | | 33,967 | | 67,934 | | — | | 9,300,165 | | | | 3/1/2023 | RSA | — | | — | | — | | | — | | — | | — | | 22,644 | | 6,199,927 | | | | Mark L. Keim | 2/14/2023 | STI Cash | 425,000 | | 850,000 | | 1,700,000 | | | — | | — | | — | | — | | — | | | | 3/1/2023 | PSU | — | | — | | — | | | 4,383 | | 8,765 | | 17,530 | | — | | 2,399,857 | | | | 3/1/2023 | RSA | — | | — | | — | | | — | | — | | — | | 5,844 | | 1,600,087 | | | | James E. Woys | 2/14/2023 | STI Cash | 400,000 | | 800,000 | | 1,600,000 | | | — | | — | | — | | — | | — | | | | 3/1/2023 | PSU | — | | — | | — | | | 3,835 | | 7,670 | | 15,340 | | — | | 2,100,046 | | | | 3/1/2023 | RSA | — | | — | | — | | | — | | — | | — | | 5,113 | | 1,399,939 | | | | Jeff D. Barlow | 2/14/2023 | STI Cash | 342,500 | | 685,000 | | 1,370,000 | | | — | | — | | — | | — | | — | | | | 3/1/2023 | PSU | — | | — | | — | | | 3,287 | | 6,574 | | 13,148 | | — | | 1,799,961 | | | | 3/1/2023 | RSA | — | | — | | — | | | — | | — | | — | | 4,383 | | 1,200,065 | | | | Maurice S. Hebert | 2/14/2023 | STI Cash | 106,250 | | 212,500 | | 425,000 | | | — | | — | | — | | — | | — | | | | 3/1/2023 | PSU | — | | — | | — | | | 366 | | 731 | | 1,462 | | — | | 200,148 | | | | 3/1/2023 | RSA | — | | — | | — | | | — | | — | | — | | 730 | | 199,874 | | | Marc S. Russo(5) | 2/14/2023 | STI Cash | 375,000 | | 750,000 | | 1,500,000 | | | — | | — | | — | | — | | — | | | | 3/1/2023 | PSU | — | | — | | — | | | 3,561 | | 7,122 | | 14,244 | | — | | 1,950,004 | | | | 3/1/2023 | RSA | — | | — | | — | | | — | | — | | — | | 4,748 | | 1,300,002 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock | All Other Option Awards: Number of Securities Underlying Options (8) | | Grant Date Fair Value of Stock and Option Awards (9) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | Joseph M. Zubretsky | 11/6/2017 | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| — |
| 375,000 |
| | $ | 15,536,250 |
| | Joseph W. White | 3/1/2017 | $ | 211,250 |
| $ | 422,500 |
| $ | 845,000 |
| — |
| — |
| — |
| 13,847 |
| — |
| (3 | ) | $ | 684,042 |
| | | 5/10/2017 | $ | — |
| $ | — |
| $ | — |
| 12,309 |
| 24,617 |
| 49,233 |
| — |
| — |
| | $ | 1,677,895 |
| | | 6/5/2017 | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 15,008 |
| — |
| (4 | ) | $ | 999,983 |
| | Jeff D. Barlow | 3/1/2017 | $ | 160,875 |
| $ | 321,750 |
| $ | 643,500 |
| — |
| — |
| — |
| 9,474 |
| — |
| (3 | ) | $ | 468,016 |
| | | 5/10/2017 | $ | — |
| $ | — |
| $ | — |
| 8,422 |
| 16,844 |
| 33,687 |
| — |
| — |
| | $ | 1,148,087 |
| J. Mario Molina (5) | 3/1/2017 | $ | 609,375 |
| $ | 1,218,750 |
| $ | 2,437,500 |
| — |
| — |
| — |
| 58,300 |
| — |
| (3 | ) | $ | 2,880,020 |
| | | 5/10/2017 | $ | — |
| $ | — |
| $ | — |
| 68,016 |
| 103,644 |
| 174,900 |
| — |
| — |
| | $ | 7,064,375 |
| John C. Molina (6) | 3/1/2017 | $ | 365,625 |
| $ | 731,250 |
| $ | 1,462,500 |
| — |
| — |
| — |
| 20,041 |
| — |
| (3 | ) | $ | 990,025 |
| | | 5/10/2017 | $ | — |
| $ | — |
| $ | — |
| 23,381 |
| 35,628 |
| 60,122 |
| — |
| — |
| | $ | 2,428,405 |
| Terry P. Bayer (7) | 3/1/2017 | $ | 227,500 |
| $ | 455,000 |
| $ | 910,000 |
| — |
| — |
| — |
| 16,033 |
| — |
| (3 | ) | $ | 792,030 |
| | | 5/10/2017 | $ | — |
| $ | — |
| $ | — |
| 14,252 |
| 28,503 |
| 57,006 |
| — |
| — |
| | $ | 1,942,765 |
| | Lisa A. Rubino | 3/1/2017 | $ | 81,250 |
| $ | 162,500 |
| $ | 325,000 |
| — |
| — |
| — |
| 12,146 |
| — |
| (3 | ) | $ | 600,012 |
|
| | (1)
| (1)These columns show the possible payouts under the Company’s performance-based short-term cash incentive plan. The discretionary portion of the performance-based short-term cash incentive bonus is excluded from the table above. Under this plan, Mr. White’s bonus opportunity is 100% of his base salary; Ms. Bayer’s bonus opportunity is 100% of her base salary; Mr. Barlow’s bonus opportunity is 90% of his base salary, and Ms. Rubino’s bonus opportunity is 50% of her base salary. For each of the named executives, 65% of the bonus opportunity relates to a net income performance measure and 35% is subject to the discretion of the compensation committee, based on consideration of such factors as completing the organization development effort and filling key executive roles; developing a long-term strategic plan for Medicare and Direct Delivery; increasing quality revenues from the state health plans; improving our claims payment metrics and overall claims systems; improving our Star metrics; and various other factors, with the net income and discretionary component determined and paid independently. Achievement of the threshold of $84 million in net income results in payout at the threshold level of 50%; achievement of $120 million in net income results in payout at the target level of 100%; and achievement of $156 million in net income results in payout at the maximum level of 200%. The actual cash bonus payout amounts for achievement within specified points along the net income range (as specified under the performance metric) are interpolated linearly between those points. The maximum payout is 200%. See further discussion regarding these metrics at “Compensation Discussion and Analysis—Elements of Compensation.” The actual amounts earned and paid to the named executive officers under the 2017 plan are presented in the “2017 Summary Compensation Table—Non-Equity Incentive Plan Comp.” |
| | (2)
| These columns show the estimated future payouts of PSUs under the awards granted in 2017. For each of the named executives, with respect to the 2017 net profit margin performance metric, (i) achievement of the entry point of the metric results in 50% or first share vesting of the PSUs, (ii) target achievement results in 100% vesting of the PSUs, and (iii) full achievement results in 200% vesting of the awards. Intermediate achievement within the range results in the vesting of that number of shares proportional to the level of achievement within the range; all amounts shall be interpolated linearly between the end points of the range. |
For the 2017-2019 performance metrics, achievement is conditioned upon the Company’s closingannual short-term performance-based cash bonus plan. Under this plan, for fiscal year 2023, Mr. Zubretsky’s bonus opportunity was 200% of his base salary; the bonus opportunity for each of Messrs. Keim, Woys, and Barlow was 100% of such executive’s base salary; and the bonus opportunity for Mr. Hebert was 50% of his base salary. For each of the named executive officers, 70% of the bonus opportunity related to an adjusted net income per diluted share performance measure and 30% was subject to the compensation committee’s evaluation of each executive’s individual performance. The target bonus level was based on a Board-approved acquisition in a new state, winning an RFP in a new state (including winning an RFP for Molina Medicaid Solutions, or winning an RFP for a new Medicaid product line in an existing state), or achieving a 10% year-over-year annual growth in
Molina Healthcare, Inc. 2018 Proxy Statement | 40
Medicare enrollment (including enrollees in Medicare-Medicaid duals programs). However, this metric is further conditioned onthe achievement of adjusted net income per share in 2023 above the expansion targets previously identified as targetCompany’s 2023 earnings guidance. See further discussion regarding these metrics pursuantat “Compensation Discussion and Analysis-Elements of Compensation.” The actual amounts earned and paid to grants madethe NEOs under the Company’s annual short-term performance-based cash bonus plan for 2023 are presented in 2016; thus, the metric will first be triggered aftersection titled “2023 Summary Compensation Table-Non-Equity Incentive Plan Compensation.”(2)These columns show the fourth suchestimated future payouts of PSUs under the awards granted in 2023. For each of the NEOs, with respect to the PSUs granted in 2023, the vesting of the PSUs is based entirely on the achievement after 2016. SNP or Marketplace/Exchange entry, orof a capabilities-based acquisition, do not count towards satisfactionsingle financial metric: the Company’s three-year average adjusted earnings per share for each of the three fiscal years 2023, 2024, and 2025 and is subject to continued service through March 1, 2026. (3)Includes the RSAs granted to NEOs on March 1, 2023. These awards are subject to time-based vesting in equal increments over three years on each of March 1, 2024, March 1, 2025, and March 1, 2026 subject to continued employment. (4)This column shows the aggregate grant date fair value of the PSUs and the RSAs computed in accordance with FASB ASC Topic 718 based on the closing price of our Common Stock on the date of grant. In accordance with FASB ASC Topic 718, the aggregate grant date fair value of the PSUs presented above is calculated based on the most probable outcome of the performance metric. In the event the Company achieves the metric in 2017, 2018, or 2019, upon the first such achievement (meaning the fourth such achievement after 2016), 50%conditions as of the PSUs subject to this metric shall vest (threshold). Upon the second such achievement (meaning the fifth such achievement after 2016), 100% ofgrant date, which, for the PSUs, subject to this metric shall vest (target). Upon the third such achievement (meaning the sixth such achievement after 2016), 200%was target performance. (5)The unvested RSAs and PSUs were forfeited as of the PSUs subject to this metric shall vest (maximum). Partial vesting of this PSU award may be made on March 1st of each of 2018, 2019 or 2020, as applicable, following the relevant level of achievement, whether entry, target or full. No PSUs subject to this metric were to vest sooner than March 1, 2018. For more information on the specific metrics and vesting schedules, see October 15, 2023, his employment termination date. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 45 | | |
2023 Outstanding Equity Awards. | | (3)
| Includes the RSAs granted to named executive officers on March 1, 2017. These awards are subject to time-based vesting in equal increments over three years on each of March 1, 2018, March 1, 2019, and March 1, 2020. |
| | (4)
| Includes RSAs granted to Mr. White on June 5, 2017, which awards are subject to time-based vesting in equal increments over three years on each of June 5, 2018, June 5, 2019, and June 5, 2020. |
| | (5)
| Dr. Molina’s employment was terminated on May 2, 2017. Pursuant to his employment agreement, all outstanding equity awards were immediately vested at the target level. For more information on the severance payments and benefits received by Dr. Molina, see discussion above in “Executive Compensation - Termination of Named Executive Officer Founders.”
|
| | (6)
| Mr. Molina’s employment was terminated on May 2, 2017. Pursuant to his employment agreement, all outstanding equity awards were immediately vested at the target level. For more information on the severance payments and benefits received by Mr. Molina, see discussion above in “Executive Compensation - Termination of Named Executive Officer Founders.”
|
| | (7)
| Ms. Bayer retired from the Company on February 2, 2018, and received severance payments and benefits pursuant to her employment agreement with the Company, including acceleration of vesting of certain outstanding equity awards previously granted to her. For more information on such severance payments and benefits, see discussion above in “Executive Compensation - Retirement of Chief Operating Officer.”
|
| | (8)
| Pursuant to Mr. Zubretsky’s employment agreement, the Company granted him an option to purchase 375,000 shares of our common stock at an exercise price of $67.33 per share which expires October 8, 2027. These options are subject to time-based vesting in equal increments over three years on each of October 9, 2018, October 9, 2019, and October 9, 2020. |
| | (9)
| This column shows the grant date fair value of the PSUs, RSAs and Options. Generally, the grant date fair value is the amount that the Company expects to expense in its financial statements over the awards’ or options’ vesting schedule. As described above, the amounts in this column do not reflect compensation actually received by the named executive officers. |
Molina Healthcare, Inc. 2018 Proxy Statement | 41
Outstanding Equity Awards
The following table provides information on the named executive officers’NEOs’ holdings of stock and option grants as of year-end. It includes unexercised stock options (vested and unvested), and PSAs and RSAs for which time-based vesting conditions were not yet satisfied as of December 31, 2017.2023, and PSUs for which time-based and performance-based vesting conditions were not yet satisfied as of December 31, 2023, based on performance achievement at target levels. The vesting schedule for each outstanding award is shown following this table. 2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock and Stock Unit Awards | | | Name | | | | | | | | Stock
Award
Grant
Date | Number of
Shares of
Stock That
Have Not
Vested
(#) | Market Value of Shares of Stock That Have Not Vested(1) ($) | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares
That Have
Not Vested
(#) | Equity Incentive Plan Awards: Market or Pay-Out Value of Unearned Shares That Have Not Vested(1) ($) | | | | | | | | | | | | | | | | | Joseph M. Zubretsky | | | | | | | | 3/1/2021 | 8,999 | | 3,251,429 | | 40,497 | | 14,631,971 | | | | | | | | | | 3/1/2022 | 12,825 | | 4,633,801 | | 28,857 | | 10,426,322 | | | | | | | | | | 3/1/2023 | 22,644 | | 8,181,503 | | 33,967 | | 12,272,617 | | | | Total | | | | | | | | | 44,468 | | 16,066,733 | | 103,321 | | 37,330,910 | | | | Mark L. Keim | | | | | | | | 3/1/2021 | 2,100 | | 758,751 | | 9,449 | | 3,414,018 | | | | | | | | | | 3/1/2022 | 3,206 | | 1,158,360 | | 7,214 | | 2,606,490 | | | | | | | | | | 3/1/2023 | 5,844 | | 2,111,496 | | 8,765 | | 3,166,882 | | | | Total | | | | | | | | | 11,150 | | 4,028,607 | | 25,428 | | 9,187,390 | | | | James E. Woys | | | | | | | | 3/1/2021 | 1,500 | | 541,965 | | 6,749 | | 2,438,481 | | | | | | | | | | 3/1/2022 | 2,778 | | 1,003,719 | | 6,253 | | 2,259,271 | | | | | | | | | | 3/1/2023 | 5,113 | | 1,847,378 | | 7,670 | | 2,771,248 | | | | Total | | | | | | | | | 9,391 | | 3,393,062 | | 20,672 | | 7,469,000 | | | | Jeff D. Barlow | | | | | | | | 3/1/2021 | 1,500 | | 541,965 | | 6,749 | | 2,438,481 | | | | | | | | | | 3/1/2022 | 2,351 | | 849,440 | | 5,290 | | 1,911,330 | | | | | | | | | | 3/1/2023 | 4,383 | | 1,583,621 | | 6,574 | | 2,375,252 | | | | Total | | | | | | | | | 8,234 | | 2,975,026 | | 18,613 | | 6,725,063 | | | | Maurice S. Hebert | | | | | | | | 3/1/2020 | 331 | | 119,594 | | — | | — | | | | | | | | | | 3/1/2021 | 300 | | 108,393 | | 900 | | 325,179 | | | | | | | | | | 3/1/2022 | 801 | | 289,409 | | 1,203 | | 434,656 | | | | | | | | | | 3/1/2023 | 730 | | 263,756 | | 731 | | 264,118 | | | | Total | | | | | | | | | 2,162 | | 781,152 | | 2,834 | | 1,023,953 | | |
(1)The market value of the unvested RSAs and PSUs represents the product of the closing price of the Company’s stock as of December 29, 2023, the last trading day of our fiscal year, which was $361.31, and the number of shares underlying such award and, with respect to PSUs, assumes satisfaction of the applicable performance conditions at the target level. See the table on the next page for more information regarding vesting of these awards.
| | | | | | | | | | 46 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Outstanding Equity Awards Vesting Schedule Table | | | | | | | | | | | | | | | | | | | | | | | | Name of
Executive Officer | Grant Date | Stock Awards Vesting Schedule(1) | | | Vested in 2024 | | Subject to Vesting following 2024 | | | PSUs | RSAs | | PSUs | RSAs | | | | | | | | | | | Joseph M. Zubretsky | 3/1/2021 | 40,497 PSUs vested 3/1/2024 at 170%(2) | 8,999 RSAs vested 3/1/2024 | | | | | | 3/1/2022 | | 6,413 RSAs vested 3/1/2024 | | 28,857 PSUs vest 3/1/2025,
subject to performance condition | 6,412 RSAs vest 3/1/2025 | | | 3/1/2023 | | 7,548 RSAs vested 3/1/2024 | | 33,967 PSUs vest 3/1/2026,
subject to performance condition | 7,548 RSAs vest 3/1/2025;
7,548 RSAs vest 3/1/2026 | | | Mark L. Keim | 3/1/2021 | 9,449 PSUs vested 3/1/2024 at 170%(2) | 2,100 RSAs vested 3/1/2024 | | | | | | 3/1/2022 | | 1,603 RSAs vested 3/1/2024 | | 7,214 PSUs vest 3/1/2025,
subject to performance condition | 1,603 RSAs vest 3/1/2025 | | | 3/1/2023 | | 1,948 RSAs vested 3/1/2024 | | 8,765 PSUs vest 3/1/2026,
subject to performance condition | 1,948 RSAs vest 3/1/2025;
1,948 RSAs vest 3/1/2026 | | | James E. Woys | 3/1/2021 | 6,749 PSUs vested 3/1/2024 at 170%(2) | 1,500 RSAs vested 3/1/2024 | | | | | | 3/1/2022 | | 1,389 RSAs vested 3/1/2024 | | 6,253 PSUs vest 3/1/2025,
subject to performance condition | 1,389 RSAs vest 3/1/2025 | | | 3/1/2023 | | 1,705 RSAs vested 3/1/2024 | | 7,670 PSUs vest 3/1/2026,
subject to performance condition | 1,704 RSAs vest 3/1/2025;
1,704 RSAs vest 3/1/2026 | | | Jeff D. Barlow | 3/1/2021 | 6,749 PSUs vested in 2024 at 170%(2) | 1,500 RSAs vested 3/1/2024 | | | | | | 3/1/2022 | | 1,176 RSAs vested 3/1/2024 | | 5,290 PSUs vest 3/1/2025,
subject to performance condition | 1,175 RSAs vest 3/1/2025 | | | 3/1/2023 | | 1,461 RSAs vested 3/1/2024 | | 6,574 PSUs vest 3/1/2026,
subject to performance condition | 1,461 RSAs vest 3/1/2025;
1,461 RSAs vest 3/1/2026 | | | Maurice S. Hebert | 3/1/2020 | | 331 RSAs vested 3/1/2024 | | | | | | 3/1/2021 | 900 PSUs vested 3/1/2024 at 170%(2) | 300 RSAs vested 3/1/2024 | | | | | | 3/1/2022 | | 401 RSAs vested 3/1/2024 | | 1,203 PSUs vest 3/1/2025,
subject to performance condition | 400 RSAs vest 3/1/2025 | | | 3/1/2023 | | 244 RSAs vested 3/1/2024 | | 731 PSUs vest 3/1/2026, subject to performance condition | 243 RSAs vest 3/1/2025;
243 RSAs vest 3/1/2026 | |
(1)This column shows the vesting schedule for unvested or unearned stock awards reported in the “Number of Shares of Stock That Have Not Vested,” and “Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested” columns of the 2023 Outstanding Equity Awards at Fiscal Year End Table. RSAs vest on the dates indicated above. PSUs vest subject to the achievement of performance conditions, on such date as determined by the certification by the compensation committee of the achievement of such performance conditions. See the section titled, “Compensation Discussion and Analysis — Long-Term Equity-Based Incentive Compensation Awards” for more information on these awards. (2)The PSUs vested at 170% and were settled by the issuance of shares of the Company’s common stock in the following amounts: 68,844 shares to Mr. Zubretsky, 16,063 shares to Mr. Keim, 11,473 shares to Mr. Woys, 11,473 shares to Mr. Barlow, and 1,530 shares to Mr. Hebert. | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock and Stock Unit Awards | | Name | Option Grant Date | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (Unexercisable) |
| Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Options (Unearned) |
| Option Exercise Price |
| Option Expiration Date | | Stock Award Grant Date | Number of Shares of Stock That Have Not Vested |
| Market Value of Shares of Stock That Have Not Vested(1) |
| Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested |
| Equity Incentive Plan Awards: Market or Pay- Out Value of Unearned Shares That Have Not Vested(1) |
| | Joseph M. Zubretsky | 11/6/2017 | | 375,000 |
| — |
| $ | 67.33 |
| 10/8/2027 | | | — |
| $ | — |
| — |
| $ | — |
| | Joseph W. White | | | — |
| — |
| | �� | | 4/1/2015 | 2,262 |
| $ | 173,450 |
| 4,524 |
| $ | 346,900 |
| | | | | | | | | | 3/7/2016 | 8,636 |
| $ | 662,208 |
| 10,793 |
| $ | 827,607 |
| | | | | | | | | | 3/1/2017 | 13,847 |
| $ | 1,061,788 |
| — |
| $ | — |
| | | | | | | | | | 5/10/2017 | — |
| $ | — |
| 18,848 |
| $ | 1,445,265 |
| | | | | | | | | | 6/5/2017 | 15,008 |
| $ | 1,150,813 |
| — |
| $ | — |
| | Total | | | — |
| — |
| | | | | 39,753 |
| $ | 3,048,259 |
| 34,165 |
| $ | 2,619,772 |
| | Jeff D. Barlow | | | — |
| — |
| | | | 4/1/2015 | 1,885 |
| $ | 144,542 |
| 3,770 |
| $ | 289,084 |
| | | | | | | | | | 3/7/2016 | 6,263 |
| $ | 480,247 |
| 7,830 |
| $ | 600,404 |
| | | | | | | | | | 3/1/2017 | 9,474 |
| $ | 726,466 |
| — |
| $ | — |
| | | | | | | | | | 5/10/2017 | — |
| $ | — |
| 12,896 |
| $ | 988,865 |
| | Total | |
| — |
| — |
| | | | | 17,622 |
| $ | 1,351,255 |
| 24,496 |
| $ | 1,878,353 |
| Terry P. Bayer(2) | | | — |
| — |
| | | | 4/1/2015 | 2,866 |
| $ | 219,765 |
| 5,730 |
| $ | 439,376 |
| | | | | | | | | | 3/7/2016 | 10,309 |
| $ | 790,494 |
| 12,885 |
| $ | 988,022 |
| | | | | | | | | | 3/1/2017 | 16,033 |
| $ | 1,229,411 |
| — |
| $ | — |
| | | | | | | | | | 5/10/2017 | — |
| $ | — |
| 21,823 |
| $ | 1,673,388 |
| | Total | | | — |
| — |
| | | | | 29,208 |
| $ | 2,239,670 |
| 40,438 |
| $ | 3,100,786 |
| | Lisa A. Rubino | | | — |
| — |
| | | | 3/1/2014 | 3,981 |
| $ | 305,263 |
| — |
| $ | — |
| | | | | | | | | | 3/1/2015 | 4,710 |
| $ | 361,163 |
| — |
| $ | — |
| | | | | | | | | | 3/1/2016 | 7,059 |
| $ | 541,284 |
| — |
| $ | — |
| | | | | | | | | | 3/1/2017 | 12,146 |
| $ | 931,355 |
| — |
| $ | — |
| | Total | | | — |
| — |
| | | | | 27,896 |
| $ | 2,139,065 |
| — |
| $ | — |
|
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 47 | | (1)
| The market value of the unvested RSAs, PSAs, and PSUs represents the product of the closing price of the Company’s stock as of December 29, 2017, the last trading day of our fiscal year, which was $76.68, and the number of shares underlying such award and, with respect to PSAs and PSUs, assumes satisfaction of the applicable performance conditions. See the Outstanding Equity Awards Vesting Schedule Table on the next page for more information regarding vesting of these awards. |
| | (2)
| Ms. Bayer retired from the Company on February 2, 2018, and received severance payments and benefits pursuant to her employment agreement with the Company. For more information on such severance payments and benefits, see discussion above in “Executive Compensation - Retirement of Chief Operating Officer.”
|
Molina Healthcare, Inc. 2018 Proxy Statement | 42
Outstanding Equity Awards Vesting Schedule Table | | | | | | | | | | | | | | Name of Executive Officer | | Grant Date | EXECUTIVE COMPENSATION | | | | Vested | Subject to Vesting | | | PSAs | PSAs/PSUs | Joseph W. White | | 4/1/2015 | | 4,524 PSAs vested in 2018 | | | 2,262 RSAs vest 4/1/2018 | | | 3/7/2016 | | 6,476 PSAs vested in 2018 | 4,318 RSAs vested in 2018 | 4,317 PSAs vest 3/7/2019, subject to performance conditions | 4,318 RSAs vest 3/7/2019 | | | 3/1/2017 | | | 4,616 RSAs vested in 2018 | | 4,616 RSAs vest 3/1/2019; 4,615 RSAs vest 3/1/2020 | | | 5/10/2017 | | | | 5,769 PSUs vest 3/1/2019, subject to achievement of performance conditions; 5,385 PSUs vest 3/1/2020, subject to performance conditions; 7,694 PSUs vest either on 3/1/2019 or 3/1/2020 subject to performance conditions | | | | 6/5/2017 | | | | | 5,003 RSAs vest 6/5/2018; 5,003 RSAs vest 6/5/2019; 5,002 RSAs vest 6/5/2020 | Jeff D. Barlow | | 4/1/2015 | | 3,770 PSAs vested in 2018 | 1,885 RSAs vested in 2018 | | | | | 3/7/2016 | | 4,698 PSAs vested in 2018 | 3,132 RSAs vested in 2018 | 3,132 PSAs vest 3/7/2019, subject to achievement of performance conditions | 3,131 RSAs vest 3/7/2019 | | | 3/1/2017 | | | 3,158 RSAs vested in 2018 | | 3,158 RSAs vest 3/1/2019;
3,158 RSAs vest 3/1/2020
| | | 5/10/2017 | | | | 3,948 PSUs vest 3/1/2019, subject to achievement of performance conditions; 3,684 PSUs vest 3/1/2020, subject to performance conditions; 5,264 PSUs vest either on 3/1/2019 or 3/1/2020 subject to performance conditions | | Terry P. Bayer(2)
| | 4/1/2015 | | 5,730 PSAs vested in 2018 | 2,866 RSAs vested in 2018 | | | | | 3/7/2016 | | 7,731 PSAs vested in 2018 | 10,309 RSAs vested in 2018 | | | | | 3/1/2017 | | | 16,033 RSAs vested in 2018 | | | Lisa A. Rubino(3)
| | 3/1/2014 | | | 3,981 RSAs vested in 2018 | | | | | 3/1/2015 | | | 2,355 RSAs vested in 2018 | | | | | 3/1/2016 | | | 2,353 RSAs vested in 2018 | | | | | 3/1/2017 | | | 3,037 RSAs vested in 2018 | | |
| | (1)
| This column shows the vesting schedule for unvested or unearned stock awards reported in the “Number of Shares of Stock That Have Not Vested,” and “Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested” columns of the 2017 Outstanding Equity Awards at Fiscal Year End Table. RSAs vest on the dates indicated above. PSAs and PSUs vest subject to the achievement of performance conditions, on the date the compensation committee certifies the achievement of such performance conditions. See the Outstanding Performance-Based Equity Awards Table for more information on these awards. |
| | (2)
| Ms. Bayer retired as chief operating officer of the Company on February 2, 2018. Her retirement was deemed a termination without cause for purposes of determining her eligibility to receive severance benefits pursuant to her employment agreement. As part of such benefits, she was entitled to acceleration of all of her time-based restricted stock awards (29,208 RSAs) and acceleration of the performance-based equity compensation for which the performance conditions were satisfied (10,596 PSAs). For more information on such severance payments and benefits, see discussion above in “Executive Compensation - Retirement of Chief Operating Officer.”
|
| | (3)
| Ms. Rubino’s employment with the Company was terminated on March 2, 2018, and as result all of her RSAs with vesting dates after March 2, 2018 were forfeited. |
Molina Healthcare, Inc. 2018 Proxy Statement | 43
Outstanding Performance-Based Equity Awards at Fiscal Year End
| | | | | | | | | | | | | | | | Performance Goals | | Name | Performance Period: Fiscal Year(s) | | Metric | Entry Point | Target Achievement | Full Achievement | Grant Date | Joseph W. White | | Jeff D. Barlow | | Terry P. Bayer | Annual Premium Revenue (1) | $15.0 billion | | $16.0 billion | 4/1/2015 | 2,262 |
| | 1,885 |
| | 2,865 |
| 2017 | Net Profit Margin (after-tax) (2) | 1.5% | | 2.0% | 4/1/2015 | 2,262 |
| | 1,885 |
| | 2,865 |
| 2017 | Pre-Tax Income (2) | $500 million | | $650 million | 4/1/2015 | 2,262 |
| | 1,885 |
| | 2,865 |
| 2017 | 3-year TSR (3) | | | | 4/1/2015 | 2,262 |
| | 1,885 |
| | 2,865 |
| 2015-2017 | Net Profit Margin (after-tax) (2) | 1.5% | | 2.0% | 3/7/2016 | 4,317 |
| | 3,132 |
| | 5,154 |
| 2017 | Stars Rating (2) | | | | 3/7/2016 | 4,317 |
| | 3,132 |
| | 5,154 |
| 2017 | Net Profit Margin (after-tax) (4) | 1.5% | | 2.0% | 3/7/2016 | 4,317 |
| | 3,132 |
| | 5,154 |
| 2018 | RFP/Acquisition (5) | | | | 3/7/2016 | 6,476 |
| | 4,698 |
| | 7,731 |
| 2016-2018 | Net Profit Margin (after-tax) (2) | 0.5% | 0.75% | 1.0% | 5/10/2017 | 5,769 |
| | 3,948 |
| | 6,680 |
| 2017 | Net Profit Margin (after-tax) (6) | 1.0% | 1.25% | 1.5% | 5/10/2017 | 5,769 |
| | 3,948 |
| | 6,680 |
| 2018 | Net Profit Margin (after-tax) (7) | 1.5% | 1.75% | 2.0% | 5/10/2017 | 5,385 |
| | 3,684 |
| | 6,235 |
| 2019 | RFP/Acquisition (8) | | | | 5/10/2017 | 7,694 |
| | 5,264 |
| | 8,908 |
| 2017-2019 | | Total | | | | | 53,092 |
| | 38,478 |
| | 63,156 |
| |
| | (1)
| Awards vested on March 1, 2018. |
| | (2)
| Awards forfeited in 2018 because the performance metrics were not met. |
| | (3)
| Awards vested on January 19, 2018. |
| | (4)
| Net profit margin is based on the Company’s reported income from continuing operations, divided by total revenue. Achievement of the entry point shall result in 25% of first share vesting of the restricted stock grant, with full achievement resulting in 100% vesting of the grant. Intermediate achievement within the range shall result in the vesting of that number of shares as is proportional to the level of achievement within the range; all amounts shall be interpolated linearly between the end points of the range. If achieved, the awards, in the table above, subject to this metric will vest on March 7, 2019. |
| | (5)
| This metric is conditioned on the Company’s closing on a Board-approved acquisition in a new state, winning an RFP in a new state, or winning an RFP for a new Medicaid product line in an existing state. SNP or marketplace entry, or a capabilities-based acquisition, does not count towards satisfaction of the performance metric. In the event the Company achieves the metric in 2016, 2017, or 2018, upon the first such achievement, 25% of the restricted stock grant shall vest, which occurred on March 7, 2017. Upon the second such achievement, a further 25% of the restricted stock grant share vest. Upon the third achievement the final 50% of the restricted stock grant shall vest. The second and third such achievements occurred in 2017, and as a result, the final 75% of the restricted stock grants, in the table above, vested on March 7, 2018. |
| | (6)
| Net profit margin is based on the Company’s reported income from continuing operations, divided by total revenue. Achievement of the entry point shall result in 50% of the PSUs subject to this metric; target achievement shall result in 100% vesting of the PSUs; and full achievement shall result in 200% vesting of the PSU grant. Intermediate achievement within the range shall result in the vesting of that number of shares as is proportional to the level of achievement within the range; all amounts shall be interpolated linearly between the end points of the range. If achieved, the awards, in the table above, subject to this metric will vest on March 1, 2019. |
| | (7)
| Net profit margin is based on the Company’s reported income from continuing operations, divided by total revenue. Achievement of the entry point shall result in 50% of the PSUs subject to this metric; target achievement shall result in 100% vesting of the PSUs; and full achievement shall result in 200% vesting of the PSU grant. Intermediate achievement within the range shall result in the vesting of that number of shares as is proportional to the level of achievement within the range; all amounts shall be interpolated linearly between the end points of the range. If achieved, the awards, in the table above, subject to this metric will vest on March 1, 2020. |
| | (8)
| This metric is conditioned on the Company’s closing on a Board-approved acquisition in a new state, winning an RFP in a new state (including winning an RFP for Molina Medicaid Solutions, or winning an RFP for a new Medicaid product line in an existing state), or achieving a 10% year-over-year annual growth in Medicare enrollment (including enrollees in Medicare-Medicaid duals programs). However, this metric is further conditioned on achievement of the expansion targets previously identified as target metrics pursuant to grants made in 2016; thus, the metric will first be triggered after the fourth such achievement after 2016. SNP or Marketplace/Exchange entry, or a capabilities-based acquisition, do not count towards satisfaction of the performance metric. In the event the Company achieves the metric in 2017, 2018, or 2019, upon the first such achievement (meaning the fourth such achievement after 2016), 50% of the PSUs subject to this metric shall vest. Upon the second such achievement (meaning the fifth such achievement after 2016), 100% of the PSUs subject to this metric shall vest. Upon the third such achievement (meaning the sixth such achievement after 2016), 200% of the PSUs subject to this metric shall vest. Partial vesting of this PSU award may be made on March 1st of each of 2018, 2019 or 2020, as applicable, following the relevant level of achievement, whether entry, target or full. No PSUs subject to this metric will |
Molina Healthcare, Inc. 2018 Proxy Statement | 44
vest sooner than March 1, 2018. Refer “Executive Compensation - Compensation Discussion and Analysis - Long-Term Equity-Based Compensation Awards” for further details.
2023 Option Exercises and Stock Vested Table The following table provides information with respect to stock options exercised and restricted stock awards vested for the named executive officersNEOs during fiscal year 2017.2023. 2017 Option Exercises | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | Number of Shares
Acquired on Exercise
(#) | Value Realized on Exercise
($) | | Number of Shares
Acquired on Vesting
(#) | Value Realized on Vesting
($) | | | | | | | | | | Joseph M. Zubretsky | — | | — | | | 165,010 | | 45,179,738 | | (1) | | Mark L. Keim | — | | — | | | 30,904 | | 8,461,515 | | (1) | | James E. Woys | — | | — | | | 24,650 | | 6,749,170 | | (1) | | Jeff D. Barlow | — | | — | | | 27,632 | | 7,565,642 | | (1) | | Maurice S. Hebert | — | | — | | | 3,955 | | 1,082,879 | | (1) | | Marc S. Russo | — | | — | | | 44,840 | | 12,277,192 | | (1) | | — | | — | | | 4,701 | | 1,257,470 | | (2) |
(1)On March 1, 2023, RSAs vested in accordance with the terms of the awards and, Stock Vested Tabledue to satisfaction of the underlying performance metric, PSUs vested. The market value of our stock on March 1, 2023 was $273.80. (2)On April 1, 2023, RSAs vested in accordance with the terms of the awards. The market value of our stock on April 1, 2023 was $267.49. | | | | | | | | | | 48 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | Number of Shares Acquired on Exercise |
| | Value Realized on Exercise |
| | Number of Shares Acquired on Vesting |
| | Value Realized on Vesting |
| | | Joseph W. White | — |
| | $ | — |
| | 2,654 |
| | $ | 155,179 |
| (2) | | | — |
| | $ | — |
| | 4,916 |
| | $ | 242,851 |
| (3) | | | — |
| | $ | — |
| | 10,794 |
| | $ | 523,725 |
| (4) | | | — |
| | $ | — |
| | 2,263 |
| | $ | 103,193 |
| (5) | | Jeff D. Barlow | — |
| | $ | — |
| | 2,123 |
| | $ | 124,132 |
| (2) | | | — |
| | $ | — |
| | 4,008 |
| | $ | 197,995 |
| (3) | | | — |
| | $ | — |
| | 7,830 |
| | $ | 379,911 |
| (4) | | | — |
| | $ | — |
| | 1,885 |
| | $ | 85,956 |
| (5) | | J. Mario Molina | — |
| | $ | — |
| | 19,108 |
| | $ | 1,117,245 |
| (2) | | | — |
| | $ | — |
| | 31,323 |
| | $ | 1,547,356 |
| (3) | | | — |
| | $ | — |
| | 32,710 |
| | $ | 1,587,089 |
| (4) | | | — |
| | $ | — |
| | 12,216 |
| | $ | 557,050 |
| (5) | | | — |
| | $ | — |
| | 204,420 |
| | $ | 12,214,095 |
| (6) | | | — |
| | $ | — |
| | 103,644 |
| | $ | 7,064,375 |
| (7) | | John C. Molina | 54,000 |
| | $ | 1,492,020 |
| (1) | 7,099 |
| | $ | 415,079 |
| (2) | | | — |
| | $ | — |
| | 11,133 |
| | $ | 549,971 |
| (3) | | | — |
| | $ | — |
| | 16,500 |
| | $ | 800,580 |
| (4) | | | — |
| | $ | — |
| | 4,034 |
| | $ | 183,950 |
| (5) | | | — |
| | $ | — |
| | 83,111 |
| | $ | 4,965,882 |
| (6) | | | — |
| | $ | — |
| | 35,628 |
| | $ | 2,428,404 |
| (7) | | Terry P. Bayer | — |
| | $ | — |
| | 4,644 |
| | $ | 271,535 |
| (2) | | | — |
| | $ | — |
| | 7,509 |
| | $ | 370,945 |
| (3) | | | — |
| | $ | — |
| | 12,886 |
| | $ | 625,228 |
| (4) | | | — |
| | $ | — |
| | 2,866 |
| | $ | 130,690 |
| (5) | | Lisa A. Rubino | — |
| | $ | — |
| | 8,690 |
| | $ | 429,286 |
| (3) |
| | | | | | | On February 28, 2017, Mr. Molina exercised 54,000 stock options, with an exercise price of $20.88 per share, compared with a weighted average market value of $48.51 per share.EXECUTIVE COMPENSATION |
| | (2)
| These awards vested on January 16, 2017, on the date that the compensation committee of the Board of Directors certified the performance metric as met. The market value of our stock on January 13, 2017, the last trading day prior to the vesting date, was $58.47 per share. |
| | (3)
| On March 1, 2017, RSAs vested in accordance with the terms of the awards and, due to satisfaction of the underlying performance metric, PSAs vested. The market value of our stock on March 1, 2017 was $49.40. |
| | (4)
| On March 7, 2017, RSAs vested in accordance with the terms of the awards and, due to satisfaction of the underlying performance metric, PSAs vested. The market value of our stock on March 7, 2017 was $48.52. |
| | (5)
| On April 1, 2017, RSAs vested at a closing market price of $45.60. |
| | (6)
| These awards vested on May 2, 2017, due to Dr. Molina and Mr. Molina’s termination, in accordance with the terms of their employment agreements. The market value of our stock on May 2, 2017, was $59.75 per share. |
Molina Healthcare, Inc. 2018 Proxy Statement | 45
| | (7)
| These awards vested on May 10, 2017, due to Dr. Molina and Mr. Molina’s termination, in accordance with the terms of their employment agreements. The market value of our stock on May 2, 2017, was $68.16 per share. |
NonqualifiedNon-Qualified Deferred Compensation for 2023
Pursuant to the Company’s unfunded and non-qualified Amended and Restated Deferred Compensation Plan, (2013) as amended to date, eligible participants canmay defer up to 100%75% of their base salary and 100%up to 85% of their bonus so that it can grow on a tax deferred basis. The investment options available to an executive under the deferral program consist of approximately fifteen14 investment options representing a broad array of asset classes, investment sectors, and spectrum of risk profiles.risk-based asset allocation portfolios. The following table provides information for each named executive officerNEO regarding such individual’s accounts in the Amended and Restated Deferred Compensation Plan, (2013) as amended to date, as of December 31, 2017.2023. Non-Qualified Deferred Compensation for 2017 | | | | | | | | | | | | | | | | | | | | Name | Executive
Contributions in
the Last FY
($) | Registrant
Contributions in
Last FY
($) | Aggregate
Earnings (Losses)
in Last FY
($) | Aggregate
Withdrawals/
Distributions
($) | Aggregate
Balance at
Last FYE
($) | | | | | | | | | | Joseph M. Zubretsky | — | | — | | — | | — | | — | | | | Mark L. Keim | — | | — | | — | | — | | — | | | | James E. Woys | — | | — | | — | | — | | — | | | | Jeff D. Barlow | — | | — | | 147,009 | | — | | 708,631 | | | | Maurice S. Hebert | 129,135 | | — | | 35,959 | | — | | 288,043 | | | | Marc S. Russo | — | | — | | — | | — | | — | | |
| | | | | | | | | | | | | | | | | | | | | | Name | Executive Contributions in the Last FY ($) |
| | Registrant Contributions in Last FY ($) |
| | Aggregate Earnings (Losses) in Last FY ($) |
| | Aggregate Withdrawals/ Distributions(2) ($) |
| | Aggregate Balance at Last FYE ($) |
| Joseph M. Zubretsky(1) | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | Joseph W. White | $ | 13,113 |
| | $ | — |
| | $ | 2,821 |
| | $ | — |
| | $ | 15,934 |
| | Jeff D. Barlow | $ | 103,657 |
| | $ | 45,577 |
| | $ | 27,041 |
| | $ | — |
| | $ | 176,274 |
| | J. Mario Molina | $ | 5,286,431 |
| | $ | — |
| | $ | 708,440 |
| | $ | (5,994,871 | ) | | $ | — |
| | John C. Molina | $ | 455,007 |
| | $ | — |
| | $ | 79,908 |
| | $ | (49,659 | ) | | $ | 485,256 |
| | Terry P. Bayer | $ | 1,032,143 |
| | $ | 69,892 |
| | $ | 176,253 |
| | $ | — |
| | $ | 1,278,289 |
| | Lisa A. Rubino | $ | 178,512 |
| | $ | 178,365 |
| | $ | 42,545 |
| | $ | — |
| | $ | 399,422 |
|
(1) Since Mr. Zubretsky’s employment with the Company started on November 6, 2017, Mr. Zubretsky was not eligible to participate in the non-qualified deferred compensation plan in 2017.
(2) Represents the amount distributed in connection with termination of executive’s employment with the Company.
Potential Payments Upon Change in Control or Termination We have entered into certain employment and change in control agreements with our named executive officersNEOs that may require the Company to provide compensation to applicable named executive officersNEOs in the event of a termination of employment or a change of control of the Company. Payment of severance benefits to the named executive officersNEOs is contingent upon the executive signing a release agreement waiving claims against the Company. Basis for Potential Payments—Annual Salary and Target Short-Term Bonus Opportunity During 2017, Mr. Zubretsky’s annual salary was $1,300,000, with no eligibility for short-term bonus; Mr. White’s annual salary was $650,000, with a baseline target short-term bonus opportunity of up to 100% of his base salary; Mr. Barlow’s annual salary was $550,000, with a target short-term bonus opportunity of up to 90% of his base salary; Ms. Bayer’s annual salary was $700,000, with a target short-term bonus opportunity of up to 100% of her base salary; and Ms. Rubino’s annual salary was $500,000, with a target short-term bonus opportunity of up to 50% of her base salary. | | | | | | | | | | | | | | | | Named Executive Officer | Base Salary
($) | | Target Short-Term Bonus Opportunity
(% of Base Salary) | | | | | | | Joseph M. Zubretsky President and Chief Executive Officer | 1,500,000 | | | 200 | | | Mark L. Keim Chief Financial Officer | 850,000 | | | 100 | | | James E. Woys Chief Operating Officer | 800,000 | | | 100 | | | Jeff D. Barlow Chief Legal Officer and Secretary | 685,000 | | | 100 | | | Maurice S. Hebert Chief Accounting Officer | 425,000 | | | 50 | | |
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 49 | | |
Employment and Change in Control Agreements The Company entered into employment agreements with each of Mr. Zubretsky Mr. White, Ms. Bayer, and Mr. Barlow, which provide that such executives’ employment will continue until terminated by the Company, or the executive resigns. Although Ms. Rubino didMessrs. Keim, Woys, and Hebert do not have an employment agreementagreements with the Company, she hadthey each have an employment offer letter that providedprovides for a severance payment for termination of hersuch executive’s employment by the Company without cause (including any such termination by the Company or its successor following a change of control of the Company).cause. Ms. Bayer retired on February 2, 2018, and received severance payments and benefits pursuant to her employment agreement with the Company as described above in “Executive Compensation - Retirement of Chief Operating Officer.” Ms. Rubino’s employment was terminated by the Company without cause on March 2, 2018, and upon
Molina Healthcare, Inc. 2018 Proxy Statement | 46
delivery to the Company of a waiver and release in favor of the Company, is entitled to receive certain payments as described in “Executive Compensation - Termination of Senior Vice President of Medicare & Duals Integration.”
Terminationof EmploymentWithoutCause,Retirement,Disability, or Death
As described below, the employment agreements (or, with respect to Ms. Rubino, heror employment offer letter)letters with our executives provide such executives with certain benefits in the event their employment is terminated by us without cause or the executive resigns for good reason, or if their employment is terminated by us without cause within a certain period of time following a change of control, subject to the executive executing a release in favor of the Company. Additionally, Mr. Zubretsky’s employment agreement also provides for certain benefits which he would be entitled to receive in case of retirement, disability, or death. The employment agreement with Mr. Zubretsky provides that if he is terminated by us without cause or he resigns for good reason, he will be entitled to receive a cash payment equal to the sum of 150% of his base salary then in effect and 150% of his annual bonus then in effect,effect. Additionally, he would be entitled to, accelerated vesting of all time-based equity compensation and, accelerated vesting of all unvested equity-based awards that are subject to performance-based vesting conditions, on a prorated basis, subject to the achievement then-to-date of the identified performance metrics at or above the specified threshold level for vesting. Such proration shall be based on the number of fiscal quarters that have elapsed over the relevant performance measurement period (typically 12 fiscal quarters) through the fiscal quarter in which termination occurs, multiplied by the projected final achievement level of the relevant metric based on straight-line extrapolation to the end of the full measurement period. Further, he would also be entitled to extension of the exercise period for the vested portion of any stock option to three years following his last day of employment. The employment agreement includes confidentiality, non-solicitation, non-competition, and non-disparagement obligations. The non-solicitation and non-competition obligations by their terms expire 18 months after Mr. Zubretsky’s last day of employment with the Company. Further, pursuant to the employment agreement, if Mr. Zubretsky voluntarily retires at or after age 65, and provided that he gives the Company one year advance notice of his retirement and executes a release of claims in the Company’s favor, upon his retirement he will be entitled to receive accelerated vesting of all time-based equity compensation; accelerated vesting at the greater of target leveland projected final achievement of any then outstanding awards that are subject to performance-based vesting conditions, and extension of the exercise period for the vested portion of any stock option to three years following his last day of employment. In the event the Company were to give Mr. Zubretsky 90 days advance written notice of his termination by the Company without “Cause,” Mr. Zubretsky may elect to exercise his retirement rights within such 90-day period. If Mr. Zubretsky’s services are terminated by reason of his death or disability (as defined in his employment agreement), he will be entitled to receive accelerated vesting of all time-based equity compensation and accelerated vesting at the greater of target leveland projected final achievement of any then outstanding awards that are subject to performance-based conditions. The employment agreementsagreement with Mr. White, Ms. Bayer, and Mr. Barlow provideprovides that if the executive’shis employment is terminated by us without cause or the executivehe resigns for good reason, the executivehe will be entitled to receive one year’s (1x) base salary, a prorated termination bonus for the year of the employment termination, a cash payment of $50,000 for health and welfare benefits, and accelerated vesting of all time-based equity compensation. The employment agreements defineagreement defines “termination bonus” as 100% of such executive’sMr. Barlow’s base salary then in effect. The employment agreements includeagreement includes confidentiality, non-solicitation, and non-disparagement obligations. The non-solicitation obligations by their terms expire 12 months after the executive’s last day of employment with the Company. Ms. Rubino’sIf the employment offer letter provides that if her employmentof Messrs. Keim and Woys is terminated by the Company without cause, (including any such termination by the Company or its successor following a change of control of the Company) and she delivers to the Company a general release in favor of the Company, she isthey will be entitled to receive an amount equal to her annual base salary as of the date of termination, plus a severance payment equal to 12 times the respective executive officer’s monthly base salary then in effect. If the employment of Mr. Hebert is terminated by the Company without cause, he will be entitled to receive a severance payment equal to 6 times the respective executive officer’s monthly base salary then in effect.
Mr. Russo served as the Company’s Executive Vice President of Health Plans until October 25, 2023, when his employment with the Company terminated as part of management changes initiated by the Company. Mr. Russo’s termination was deemed to be a termination without cause under his offer letter. Following his execution of a waiver and release of claims agreement, he became entitled to a separation amount in the aggregate of $1,407,000 consisting of (i) $750,000 representing 12 months base salary, (ii) $625,000 representing the pro-rated annual short-term performance-based cash bonus at target, and (iii) $32,000 representing 12 months of COBRA payments, multiplied by 1.5 to reflect a tax gross-up.coverage. Such separation amount is payable over one year in bi-weekly 26 installments. | | | | | | | | | | 50 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Terminationof EmploymentWithoutCause Following a Change of Control The employment agreement with Mr. Zubretsky further provides that if termination occurs within 24 months following a change of control, he will be entitled to receive a severance payment equal to the sum of 200% of his annual base salary then in effect and 200% of his target annual bonus then in effect, accelerated vesting of all time-based equity compensation, accelerated vesting at the target level of any then outstanding awards that are subject to performance-based vesting conditions based on the greater of: (i) target performance, and (ii) the projected final achievement of the performance metric through the measurement period based on the straight-line extrapolation of actual achievement through the end of the relevant performance measurement period, and extension of the exercise period for the vested portion of any stock option to three years following his last day of employment. The employment agreementsagreement with Mr. White and Mr. Barlow provideprovides that if termination occurs within one year following a change in control, the executiveshe will receive all of the benefits such executives arehe is entitled to receive under theirhis change in control agreementsagreement with us. Under the change in control agreementsagreement with Mr. White and Mr. Barlow, if the executive’shis employment is terminated by the Company without cause or is terminated by the executivehim for good reason within 12 months of a change in control, we will provide the executivehim with a severance payment equal to two times (2x) the executive’shis annual base salary then in effect, plus with respect to Mr. White, a pro rata portion of such executive’s termination bonus (40% of Mr. White’s annual base salary) and, with respect to Mr. Barlow, a pro rata portion of such executive’shis target bonus for the year of termination (100%(his target bonus being 100% of Mr. Barlow’shis annual base salary), full vesting of all unvested equity compensation and 401(k) employer contributions, and a cash payment for all the Company’s group health benefits of $43,500 for Mr. White and $50,000 for Mr. Barlow.$50,000.
Molina Healthcare, Inc. 2018 Proxy Statement | 47
In 2017, theThe Company has adopted a change in control severance plan, as amended to date (the “Change in Control Severance Plan”) pursuant to which all employees with positions of associate vice president and above are entitled to receive certain separation benefits in the event of a termination of employment within two years following a change in control of the Company. The named executive officersNEOs are entitled to receive such separation benefits under the plan only to the extent that such separation benefits would be in addition to or in excess of the benefits provided under their employment/change of control agreements. Pursuant to such plan, senior vice presidents and above would be entitled to receive two times (2x) their base salary, payment of their annual short-term incentive cash bonus (equal to the fiscal year target bonus opportunity) on a prorated basis based on the date of termination, and full vesting of all unvested equity-based compensation.
The Change in Control Severance Plan provides that a participant’s performance-based equity compensation andwill vest based upon the greater of: (1) target performance, based on the assumption that such target performance had been achieved, or (2) the projected final achievement of the performance metric through the measurement period, provided that where applicable, such projected final achievement shall be based on straight-line extrapolation of actual achievement (as of the termination date) through the end of the respective performance metric period; except to the extent vesting is determined by reference to any completed fiscal year, then actual performance for such completed fiscal year shall be used. The Change in Control Severance Plan also provides that if the participant elects continued health care, dental, and life insurance benefitshealthcare coverage under COBRA, the Company’s applicable benefits programsCompany will, for 24a period of up to eighteen (18) months following the dateparticipant’s termination of termination.employment, subsidize a portion of the participant’s COBRA premiums in an amount equal to the difference between the full cost for such COBRA coverage and the amount that the participant would be required to pay for such coverage as an active employee. Change in Control A “change in control” generally means a merger or other change in corporate structure after which the majority of our stockholders are no longer stockholders, a sale of substantially all of our assets, or our approved dissolution or liquidation. “Cause” is generally defined as the occurrence of one or more acts of unlawful actions involving moral turpitude or gross negligence or willful failure to perform duties or intentional breach of obligations under the employment agreement. “Good reason” generally means the occurrence of one or more events that have an adverse effect on the executive’s terms and conditions of employment, including any reduction in the executive’s base salary, a material reduction of the executive’s benefits or substantial diminution of the executive’s incentive awards or fringe benefits, a material adverse change in the executive’s position, duties, reporting relationship, responsibilities or status with us, a material relocation of the executive’s principal place of employment from his or her prior place of employment (as set forth in the agreements), or an uncured breach of the employment agreement. However, no reduction of salary or benefits will be good reason if the reduction applies to all executives proportionately.
Molina Healthcare, Inc. 2018 Proxy Statement | 48
Potential Payments upon Change in Control or Termination The table below reflects the approximate amount of compensation payable to each of the named executive officersNEOs of the Company in the event of termination of such executive’s employment under the following scenarios: voluntary termination, retirement, involuntary not-for-cause termination, for cause termination, and involuntary for good reason termination following a change in control, disability, or death. The amounts shown assume that such termination was effective as of December 31, 2017,2023, and exclude ordinary course amounts earned or benefits accrued as a result of prior service during the year. The named executive officersNEOs would receive other payments and benefits to which they were already entitled or vested on such date, including amounts under the Deferred Compensation Plan under the Nonqualified Deferred Compensation Table. The various amounts listed are estimates only. The actual amounts to be paid can only be determined at the time of such executive’s separation from the Company. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 51 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Name & Principal Position | Compensation Components | Voluntary Termination ($) | Retirement ($) | Involuntary Not for Cause Termination ($) | For Cause Termination ($) | Involuntary Not for Cause or for Good Reason Termination (Change-in-Control) ($) | Disability ($) | Death ($) | | Joseph M. Zubretsky | Cash Severance(1) | $ | — |
| $ | — |
| $ | 1,950,000 |
| $ | — |
| $ | 2,600,000 |
| $ | — |
| $ | — |
| | President and Chief Executive Officer | Stock Awards | — |
| $ | 3,506,250 |
| $ | 3,506,250 |
| — |
| $ | 3,506,250 |
| $ | 3,506,250 |
| $ | 3,506,250 |
| | | Health Benefits(3) | — |
| — |
| — |
| — |
| $ | 23,212 |
| — |
| — |
| | | Disability Income | — |
| — |
| — |
| — |
| — |
| $ | 1,080,000 |
| — |
| | | Life Insurance Benefits(4) | — |
| — |
| — |
| — |
| $ | 1,968 |
| — |
| — |
| | | Total Value | $ | — |
| $ | 3,506,250 |
| $ | 5,456,250 |
| $ | — |
| $ | 6,131,430 |
| $ | 4,586,250 |
| $ | 3,506,250 |
| | Joseph W. White | Cash Severance(1)(2) | $ | — |
| $ | — |
| $ | 1,300,000 |
| $ | — |
| $ | 1,950,000 |
| $ | — |
| $ | — |
| | Chief Financial Officer | Stock Awards | — |
| — |
| $ | 3,048,259 |
| — |
| $ | 5,668,031 |
| — |
| — |
| | | Health Benefits(3) | — |
| — |
| $ | 50,000 |
| — |
| $ | 43,500 |
| — |
| — |
| | | Disability Income | — |
| — |
| — |
| — |
| — |
| $ | 1,965,840 |
| — |
| | | Life Insurance Benefits(4) | — |
| — |
| — |
| — |
| $ | 1,968 |
| — |
| 750,000 |
| | | Total Value | $ | — |
| $ | — |
| $ | 4,398,259 |
| $ | — |
| $ | 7,663,499 |
| $ | 1,965,840 |
| $ | 750,000 |
| | Jeff D. Barlow | Cash Severance(1) | $ | — |
| $ | — |
| $ | 1,100,000 |
| $ | — |
| $ | 1,595,000 |
| $ | — |
| $ | — |
| | Chief Legal Officer and Secretary | Stock Awards | — |
| — |
| $ | 1,351,255 |
| — |
| $ | 3,229,608 |
| — |
| — |
| | | Health Benefits(3) | — |
| — |
| $ | 50,000 |
| — |
| $ | 50,000 |
| — |
| — |
| | | Disability Income | — |
| — |
| — |
| — |
| — |
| $ | 1,560,000 |
| — |
| | | Life Insurance Benefits(4) | — |
| — |
| — |
| — |
| $ | 1,968 |
| — |
| 750,000 |
| | | Total Value | $ | — |
| $ | — |
| $ | 2,501,255 |
| $ | — |
| $ | 4,876,576 |
| $ | 1,560,000 |
| $ | 750,000 |
| Terry P. Bayer(5) | Cash Severance(1)(2) | $ | — |
| $ | — |
| $ | 1,400,000 |
| $ | — |
| $ | 2,100,000 |
| $ | — |
| $ | — |
| | Former Chief Operating Officer | Stock Awards | — |
| — |
| $ | 2,239,670 |
| — |
| $ | 5,340,456 |
| — |
| — |
| | | Health Benefits(3) | — |
| — |
| $ | 50,000 |
| — |
| $ | 43,500 |
| — |
| — |
| | | Disability Income | — |
| — |
| — |
| — |
| — |
| $ | 315,000 |
| — |
| | | Life Insurance Benefits(4) | — |
| — |
| — |
| — |
| $ | 1,279 |
| — |
| 750,000 |
| | | Total Value | $ | — |
| $ | — |
| $ | 3,689,670 |
| $ | — |
| $ | 7,485,235 |
| $ | 315,000 |
| $ | 750,000 |
| Lisa A. Rubino(3)(6) | Cash Severance(1)(2) | $ | — |
| $ | — |
| $ | 500,000 |
| $ | — |
| $ | 1,250,000 |
| $ | — |
| $ | — |
| | Former Sr. Vice President of Medicare & Duals Integration | Stock Awards | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 2,139,065 |
| $ | — |
| $ | — |
| | | Health Benefits(3) | $ | — |
| $ | — |
| $ | 25,703 |
| $ | — |
| $ | 25,703 |
| $ | — |
| $ | — |
| | | Disability Income | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 840,000 |
| $ | — |
| | | Life Insurance Benefits(4) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 1,968 |
| $ | — |
| $ | — |
| | | Total Value | $ | — |
| $ | — |
| $ | 525,703 |
| $ | — |
| $ | 3,416,736 |
| $ | 840,000 |
| $ | — |
|
Molina Healthcare, Inc. 2018 Proxy Statement | 49
| | | | | | | EXECUTIVE COMPENSATION | | The |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Name &
Principal Position | Compensation Components | Voluntary Termination
($) | Retirement
($) | Involuntary Not for Cause Termination
($) | Involuntary Not for Cause or for Good Reason Termination (Change-in-Control) ($)(1) | Disability
($) | Death
($) | | | | | | | | | | | Joseph M. Zubretsky President and Chief Executive Officer | Cash Severance(2) | — | | — | | 6,750,000 | | 9,000,000 | | — | | — | | | Stock Awards(3) | — | | 70,104,343 | | 51,789,250 | | 70,104,343 | | 70,104,343 | | 70,104,343 | | | Health Benefits(4) | — | | — | | — | | 30,220 | | — | | — | | | | Disability Income | — | | — | | — | | — | | — | | — | | | | Life Insurance Benefits | — | | — | | — | | — | | — | | 650,000 | | | | Total Value | — | | 70,104,343 | | 58,539,250 | | 79,134,563 | | 70,104,343 | | 70,754,343 | | | Mark L. Keim Chief Financial Officer | Cash Severance(2) | — | | — | | 850,000 | | 2,550,000 | | — | | — | | | Stock Awards(3) | — | | — | | — | | 13,215,997 | | — | | — | | | | Health Benefits | — | | — | | — | | 29,036 | | — | | — | | | | Disability Income | — | | — | | — | | — | | — | | — | | | | Life Insurance Benefits | — | | — | | — | | — | | — | | 1,000,000 | | | | Total Value | — | | — | | 850,000 | | 15,795,033 | | — | | 1,000,000 | | | James E. Woys Chief Operating Officer | Cash Severance(2) | — | | — | | 800,000 | | 2,400,000 | | — | | — | | | Stock Awards(3) | — | | — | | — | | 10,862,062 | | — | | — | | | | Health Benefits | — | | — | | — | | 28,669 | | — | | — | | | | Disability Income | — | | — | | — | | — | | — | | — | | | | Life Insurance Benefits | — | | — | | — | | — | | — | | 650,000 | | | | Total Value | — | | — | | 800,000 | | 13,290,731 | | — | | 650,000 | | | Jeff D. Barlow Chief Legal Officer and Secretary | Cash Severance(2)(5) | — | | — | | 1,370,000 | | 2,055,000 | | — | | — | | | Stock Awards(3) | — | | — | | 2,975,026 | | 9,700,089 | | — | | — | | | | Health Benefits | — | | — | | 50,000 | | 50,000 | | — | | — | | | | Disability Income | — | | — | | — | | — | | — | | — | | | | Life Insurance Benefits | — | | — | | — | | — | | — | | 1,000,000 | | | | Total Value | — | | — | | 4,395,026 | | 11,805,089 | | — | | 1,000,000 | | | Maurice S. Hebert Chief Accounting Officer | Cash Severance(2) | — | | — | | 212,500 | | 1,062,500 | | — | | — | | | Stock Awards(3) | — | | — | | — | | 1,805,105 | | — | | — | | | | Health Benefits | — | | — | | — | | 31,065 | | — | | — | | | | Disability Income | — | | — | | — | | — | | — | | — | | | | Life Insurance Benefits | — | | — | | — | | — | | — | | 850,000 | | | | Total Value | — | | — | | 212,500 | | 2,898,670 | | — | | 850,000 | | |
(1)For Messrs. Keim, Woys, and Hebert, all amounts reflected in the table were computed based on the named executive officers’ salaries and target short-term bonus opportunity as of December 31, 2017. In February 2018, the compensation committee determined to leave unchanged the base salaries for Mr. Zubretsky and Mr. White, and to increase the base salary for Mr. Barlow to $600,000. The compensation committee further determined to set Mr. Zubretsky’s 2018 target short-term bonus opportunity at 150% of his base salary, leave unchanged Mr. White’s 2018 target short-term bonus opportunity at 100% of his base salary, and increase Mr. Barlow’s 2018 target short-term bonus opportunity to 100% of his base salary. As provided in his employment agreement, Mr. Zubretsky was not entitled to a short-term bonus in 2017. |
(2) Severance for involuntary, not for cause or for good reason termination (change-in-control) represent executive’s payments pursuant to the Company’s amended and restated change in control severance plan.
(2)The amounts in the table were computed based on the NEOs’ salaries and target short-term bonus opportunity as of December 31, 2023. (3)The market value represents executive’s severance paymentthe product of the closing price of the Company’s stock as of December 29, 2023, the last trading date of our fiscal year, which was $361.31, and the number of shares due to the employment under their employment agreement or offer letters. | | | | | | | | | | 52 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
(4)For Mr. Zubretsky, the amount for health benefits payable upon involuntary, not for cause or good reason termination (change-in-control) represents the amount he would have been entitled to receive for continued health care and dental benefits under the Company’s applicable benefits programs pursuant to the Company’s change in control severance plan since such paymentthat amount is higher than the severance payment executiveamount he would be entitled to receive under executive’sas health benefits pursuant to his employment agreement,agreement. (5)Mr. Barlow’s cash severance payable upon involuntary, not for cause or with respectgood reason termination (change-in-control) represents the amount he would have been entitled to Ms. Rubino, under her employment offer letter. | | (3)
| For Mr. Zubretsky, the amount for health benefits payable upon involuntary, not for cause or good reason termination (change-in-control) represents the amount he is entitled to receive for continued health care and dental benefits under the Company’s applicable benefits programs for 24 months following the date of termination, pursuant to the Company’s change in control severance plan. For Mr. White, Mr. Barlow, and Ms. Bayer such amounts under the change in control severance plan are lower than the amounts for health benefits they are entitled to receive under their respective change in control agreements, and for Ms. Rubino pursuant to her employment offer letter, therefore, the amounts in the table represent the health benefits payable for involuntary, not for cause or good reason termination (change-in-control) under those agreements. |
(4) Pursuant to the Company’s amended and restated change in control severance plan for termination in connection with a change in control,since that amount is higher than the executive isamount he would be entitled to receive continued life insurance benefits under the Company’s applicable benefits programs for 24 months following the date of termination.
(5) Ms. Bayer retired on February 2, 2018, and her retirement was deemed a termination without cause for purposes of receivingas cash severance payments and benefits pursuant to herhis employment agreement with the Company. For more information on such severance payments and benefits, see discussion above in “Executive Compensation - Retirement of Chief Operating Officer.”agreement.
(6) Ms. Rubino’s employment was terminated by the Company without cause on March 2, 2018. For information on her severance payments, see discussion above in “Executive Compensation - Termination of Senior Vice President of Medicare & Duals Integration.”
CEO Pay Ratio As required by Item 402(u) of Regulation S-K, we are providing the following information: For fiscal 2017,2023, our last completed fiscal year: year, the median of the total direct compensation of all employees of our Company (other than Mr. Zubretsky, our chief executive officer), was $46,397;$78,620, and the total direct compensation of Mr. Zubretsky, our chief executive officer, was $20,864,108. $21,491,723. Based on this information, for fiscal 2023, the ratio of the median of the total direct compensation of all employees (other than the chief executive officer) to the total direct compensation of our chief executive officer was 1 to 450.273. Our chief executive officer, Mr. Zubretsky, started employment with the Company on November 6, 2017. As an inducement to leave his previous employer and join the Company, the Company agreed to pay him a $4,000,000 sign-on bonus, and also agreed to provide him with a one-time substitutive option grant to purchase 375,000 shares of the Company’s common stock. Both of these inducements result in an increase in the median employee to CEO pay ratio. Without including the sign-on bonus in the calculation of the pay ratio, the ratio would reduce to 1 to 364. Based on estimated 2018 total direct compensation for our chief executive officer (including current base salary, non-equity incentive compensation assumed to be paid out at the target level, the target grant value of equity-based compensation, and an assumed figure for all other compensation), and assuming the median of the total direct compensation for all employees remained the same, the ratio would reduce to 1:286.
Our median employee pay ratio was calculated in accordance with the requirements of item 402(u) of Regulation S-K. With respect to the total direct compensation of our chief executive officer and the median employee, we annualized his base salary and used the other compensation components (Bonus, Option Awards, All Other Comp) reported in our 2023 2017 Summary Compensation Table included in this proxy statement. Our calculation of the total direct compensationdetermination of our median employee includes all employees, part-time or full-time, excluding our chief executive officer, who were employed on December 1, 2017.2023. The median employee for the 2023 calculation is a full-time employee.
Molina Healthcare, Inc. 2018 Proxy Statement | 50
Pay elements that were included We determined our median compensated employee in the total direct compensation calculation for each employee consisted of the following:
Salary received in fiscal year 2017;
Short2023 by using base salary, short term incentives (cash bonus);
Long term, grant date fair value of long-term incentives (equity-based awards);
granted to employees in 2023, Company-paid 401(K) plan match (4%) made in fiscal year 2017;2023, and All other compensation (stipends, sign-on bonus, one-time bonus, etc.).bonus), as our consistently applied compensation measure.
Fiscal Year 2018 Compensation | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 53 | | |
In February 2018, the compensation committee established the 2018 compensation for the named executive officers. The compensation committee consists of Mr. Schapiro (Chair), Mr. Fedak, Mr. Orlando, and Ms. Romney. The 2018 named executive officers consist of the following:
Joseph M. Zubretsky, president and chief executive officer;
Joseph W. White, chief financial officer;
Jeff D. Barlow, chief legal officer and secretary;
Pamela S. Sedmak, executive vice president of health plan operations; and
Mark L. Keim, executive vice president of strategic planning and corporate development.
Executive Pay Study for 2018
To evaluate where the current compensation levels of the Company’s named executive officers stand in relation to the compensation levels of executives with the Company’s industry peers, the compensation committee engaged Exequity, a compensation advisory services firm, to conduct a total compensation study with respect to the compensation of the Company’s named executive officers for 2018. Exequity reports directly and exclusively to the compensation committee with respect to executive compensation matters.
In its 2018 study of the named executive officers’ compensation, Exequity used a 13-company peer group consisting of eight publicly traded managed care companies and five managed care facilities companies, as follows:
| | | | | | | EXECUTIVE COMPENSATION | | 1. Acadia Healthcare Company, Inc. | 8. Humana Inc. | 2. Aetna, Inc. | 9. Magellan Health, Inc. | 3. Anthem, Inc. | 10. Tenet Healthcare Corporation | 4. Centene Corporation | 11. Triple-S Management Corporation | 5. Cigna Corporation | 12. Universal Health Services, Inc. | 6. Community Health Systems, Inc. | 13. WellCare Health Plans, Inc. | 7. DaVita Inc. | |
OfPay Versus Performance
In accordance with rules adopted by the 13-companySecurities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | Summary Compensation Table Total for PEO (Joseph Zubretsky)(1) ($) | Compensation Actually Paid to PEO (Joseph Zubretsky)(1),(2),(3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1),(2),(3) ($) | | Value of Initial Fixed $100 Investment Based on:(4) | | Net Income
($ Millions) | Adjusted Net Income per Diluted Share(5) ($) | | | TSR
($) | Peer Group TSR
($) | | | | (a) | (b) | (c) | (d) | (e) | | (f) | (g) | | (h) | (i) | | | | | | | | | | | | | | | 2023 | 21,491,723 | | 25,202,450 | | 4,707,296 | | 2,881,779 | | | 266.28 | | 155.73 | | | 1,091 | | 20.88 | | | | 2022 | 22,131,256 | | 41,668,352 | | 5,392,703 | | 9,278,192 | | | 243.36 | | 155.74 | | | 792 | | 17.92 | | | | 2021 | 19,961,698 | | 75,905,547 | | 4,196,221 | | 10,545,861 | | | 234.42 | | 141.70 | | | 659 | | 13.54 | | | | 2020 | 17,812,327 | | 58,165,935 | | 4,428,117 | | 8,983,969 | | | 156.74 | | 106.73 | | | 673 | | 10.67 | | |
(1)Joseph Zubretsky was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below. | | | | | | | | | | | | | 2020 | 2021 | 2022 | 2023 | | | | | | Mark L. Keim | Mark L. Keim | Mark L. Keim | Mark L. Keim | | James E. Woys | James E. Woys | James E. Woys | James E. Woys | | Jeff D. Barlow | Jeff D. Barlow | Jeff D. Barlow | Jeff D. Barlow | | Marc S. Russo | Marc S. Russo | Marc S. Russo | Maurice S. Hebert | | Thomas L. Tran | Thomas L. Tran | | Marc S. Russo |
(2)The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3)Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the amounts from the Stock Awards column set forth in the Summary Compensation Table. | | | | | | | | | | | | | | | | | | | | | | Year | Summary Compensation Table Total for
Joseph Zubretsky
($) | Exclusion of Change in Pension Value for
Joseph Zubretsky
($) | Exclusion of
Stock Awards for
Joseph Zubretsky
($) | Inclusion of
Equity Values for
Joseph Zubretsky
($) | Compensation
Actually Paid to
Joseph Zubretsky
($) | | | | | | | | | | 2023 | 21,491,723 | | — | | (15,500,092) | | 19,210,819 | | 25,202,450 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | Year | Summary Compensation Table Total for
Non-PEO NEOs
($) | Average Exclusion of Change in Pension Value for Non-PEO NEOs
($) | Average Exclusion of
Stock Awards for
Non-PEO NEOs
($) | Average Inclusion of
Equity Values for
Non-PEO NEOs
($) | Average Compensation Actually Paid to
Non-PEO NEOs
($) | | | | | | | | | | 2023 | 4,707,296 | | (36,594) | | (2,829,997) | | 1,041,074 | | 2,881,779 | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | 54 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables: | | | | | | | | | | | | | | | | | | | | | | | | | Year | Year-End Fair Value
of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for
Joseph Zubretsky
($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Joseph Zubretsky
($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Joseph Zubretsky
($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Joseph Zubretsky
($) | Fair Value at
Last Day of
Prior Year of
Equity Awards Forfeited During Year for Joseph Zubretsky
($) | Total - Inclusion of Equity Values for Joseph Zubretsky
($) | | | | | | | | | | | 2023 | 20,454,120 | | 8,066,563 | | — | | (9,309,864) | | — | | 19,210,819 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs
($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs
($) | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs
($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs
($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs
($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs
($) | | | | | | | | | | | 2023 | 2,876,750 | | 1,043,874 | | — | | (1,548,252) | | (1,331,298) | | 1,041,074 | | | | | | | | | | | | | | | | | | | | | | | | | | |
(4)The Peer Group TSR set forth in this table utilizes the peer companies (the “Compensation Peer Group”) used for compensation benchmarking purposes for the year 2023 (which was the same peer group usedfor year 2022), which is listed in our Compensation Discussion & Analysis section of the 2018 study, ten companies were used inproxy statement. The Peer Group TSR is weighted according to the 2017 named executive officers executive compensation study that Exequity had performedrespective peer companies’ stock market capitalization on December 31, 2019. The comparison assumes $100 was invested for the Company. Acadia Healthcare Company, Inc., Aetna, Inc., and Anthem, Inc. were added toperiod starting December 31, 2019, through the 2018 study, and Team Health Holdings, Inc., and Universal American Corp. were not included in the 2018 study. Team Health Holdings, Inc. and Universal American Corp. were removed as peers because each was acquired in 2017. The market study concluded that the target total compensation for the Company’s named executive officers in the aggregate is close to peer median benchmarks and this relative positioning is reasonably consistent across all elements of pay. We endeavor to pay our management team competitively within the marketplace in a manner that will ensure our ability to attract and retain high quality personnel that are properly motivated to increase profitability and stockholder value. To that end, 2018 total compensation opportunities for the Company’s executives are generally targeted at or near median relative to appropriate peer executives, with actual compensation positioned below median when performance is below target and actual compensation positioned closer to or even above 75th percentile when performance is strong.
Molina Healthcare, Inc. 2018 Proxy Statement | 51
Fiscal Year 2018 Base Salaries
Based on peer group compensation levels and the considerations of compensation philosophy and approach as discussed above, the compensation committee set the base salaries for the named executive officers at the levels reflected in the table below.
| | | | | | | | | | | | | | | Base Salary | | Named Executive Officer | 2018 | 2017 | Change ($) | Change (%) | | Joseph M. Zubretsky, President and Chief Executive Officer | $ | 1,300,000 |
| $ | 1,300,000 |
| $ | — |
| — |
| Joseph W. White, Chief Financial Officer(1) | $ | 650,000 |
| $ | 650,000 |
| $ | — |
| — |
| | Jeff D. Barlow, Chief Legal Officer and Secretary | $ | 600,000 |
| $ | 550,000 |
| $ | 50,000 |
| 9.09 | % | | Pamela S. Sedmak, Executive Vice President of Health Plan Operations | $ | 600,000 |
| N/A |
| N/A |
| N/A |
| | Mark L. Keim, Executive Vice President of Strategic Planning and Corporate Development | $ | 500,000 |
| N/A |
| N/A |
| N/A |
|
| | (1)
| From May 2, 2017 to November 6, 2017, Mr. White also received an additional monthly special salary of $100,000 for his role as interim president and chief executive officer. Such special salary is not included in his base salary for this position of chief financial officer reflected in the table. |
Fiscal Year 2018 Short-Term Performance-Based Cash Bonus Awards
In February 2018, the compensation committee established short-term cash bonus opportunity levels and measures for our named executive officers. For Mr. Zubretsky, who in 2017 was not eligible for a short-term cash bonus opportunity, the 2018 target cash bonus opportunity level was set at 150% of his base salary. Mr. White’s 2018 target cash bonus opportunity was left unchanged from the 2017 level at 100% of his base salary (such level was previously increased in 2017 from 90% to 100%), and Mr. Barlow’s 2018 target cash bonus opportunity was increased to 100% of his base salary from 90% of his base salary in 2017. The 2018 target cash bonus opportunity levels for Ms. Sedmak and Mr. Keim were set at 70% of their respective base salaries.
The bonus performance measures of each of the named executive officers shall be based 70% on a 2018 pre-tax income metric, and 30% on the discretion of the compensation committee, as follows:
70% of the bonus opportunity shall be based on the Company’s pre-tax income achievement in 2018. The target bonus level shall be based on the achievement of pre-tax income in 2018 that corresponds with the high end of the rangelisted year in the Company and in the Compensation Peer Group, respectively. Historical stock performance is not necessarily indicative of future stock performance.
(5)We determined Adjusted EPS to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023. Adjusted EPS represents adjusted net income divided by weighted average common shares outstanding on a fully diluted basis. Adjusted net income represents GAAP net income recognizing adjustments, net of tax. Adjustments represent additions and deductions to GAAP net income which include the non-cash impact of amortization of acquired intangible assets, acquisition-related expenses, and the impact of certain expenses and other items that management believes are not indicative of longer-term business trends and operations. This performance measure may not have been the most important financial performance measure for years 2022, 2021 and 2020 and we may determine a different financial performance measure to be the most important financial performance measure in future years. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 55 | | |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our net income during the four most recently completed fiscal years. | | | | | | | | | | 56 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company-Selected Measure The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our Adjusted EPS during the four most recently completed fiscal years. The equity compensation actually paid to the PEO and NEOs was significantly impacted by stock price appreciation related both to the Company’s financial results and to its forward P/E multiple from significant actual and expected revenue growth. Description of Relationship Between Company TSR and Peer Group TSR The following chart compares our cumulative TSR over the four most recently completed fiscal years to that of the Company’s 2018 preliminary guidance. Achievement atCompensation Peer Group over the target pre-tax income level shall trigger payout in cash of this bonus element at 100%. Achievement at a substantial fraction of the target level shall constitute the threshold level of achievement, triggering payout of this bonus element at 50%. Achievement substantially in excess of the target level shall trigger payout of this bonus element at the maximum amount of 200%. Under all circumstances payout shall be capped at the 200% level. All pre-tax income amounts shall be calculated net of the short-term cash bonus payouts. The actual cash bonus payout amounts for achievement within the specified points along the pre-tax income range shall be interpolated linearly between the specified points.same period. 30% of the bonus opportunity shall be subject to the discretion of the compensation committee, and shall be based upon consideration by the committee of a wide variety of factors closely aligned with the chief executive officer’s goals and objectives, including for purposes of illustration (but not limited to), such factors as: (1) performance and operational improvements; (2) talent identification and succession planning; (3) financial planning and capital management; (4) development of a long term strategic plan; and miscellaneous other factors as may be identified by the compensation committee in the exercise of its discretion. As with the pre-tax income metric, payment of the discretionary bonus shall be capped at the 200% level.
The 70% pre-tax income bonus metric and the 30% discretionary bonus shall be determined and paid independently. Entry level achievement of the pre-tax income metric shall not serve as a condition for any partial or full payment of the discretionary bonus.
Molina Healthcare, Inc. 2018 Proxy Statement | 52 | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 57 | | |
Tabular List of Contents
Most Important Financial Performance Measures
The following table sets forthpresents the fiscal year 2018 base salary levels, along withfinancial performance measure that the two bonus elementsCompany considers to have been the most important in linking Compensation Actually Paid to our PEO and other NEOs for the Company’s named executive officers:2023 to Company performance. No other financial performance measures were used for this purpose. | | | | Performance Measures | | | Adjusted Net Income per Diluted Share |
| | | | | | | | | | 58 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | | | | | | | | | | | Named Executive Officer | Base Salary | | Target Bonus Opportunity (% of Base Salary) | | Target Net Income Bonus Opportunity (70% of Target Bonus Opportunity) | | Discretionary Bonus Opportunity (30% of Target Bonus Opportunity) | | Joseph M. Zubretsky | | | | | | | | | President and Chief Executive Officer | $ | 1,300,000 |
| | 150 | % | | $ | 1,365,000 |
|
| $ | 585,000 |
| | Joseph W. White | | | | | | | | | Chief Financial Officer | $ | 650,000 |
| | 100 | % | | $ | 455,000 |
| | $ | 195,000 |
| | Jeff D. Barlow | | | | | | | | | Chief Legal Officer and Secretary | $ | 600,000 |
| | 100 | % | | $ | 420,000 |
| | $ | 180,000 |
| | Pamela S. Sedmak | | | | | | | | Executive Vice President of Health Plan Operations
| $ | 600,000 |
| | 70 | % | | $ | 294,000 |
| | $ | 126,000 |
| | Mark L. Keim | | | | | | | | | Executive Vice President of Strategic Planning and Corporate Development | $ | 500,000 |
| | 70 | % | | $ | 245,000 |
| | $ | 105,000 |
|
Fiscal Year 2018 Long-Term Equity-Based Incentive Compensation Awards
Effective as of March 1, 2018, the named executive officers were granted long-term incentive awards in the form of performance stock units (PSUs) and restricted stock, in the following amounts, with the actual PSUs and share numbers being determined by using the closing price of the Company’s common stock as of that same March 1, 2018 grant date of $71.88. | | | | | | | | | 2018 Equity-Based Compensation | | Named Executive Officer | Amount ($) | Total PSUs & Shares (#) |
| | Joseph M. Zubretsky, President and Chief Executive Officer | $ | 10,000,000 |
| 139,120 |
| Joseph W. White, Chief Financial Officer(1) | $ | 1,900,000 |
| 26,433 |
| Jeff D. Barlow, Chief Legal Officer and Secretary(2) | $ | 2,500,000 |
| 34,780 |
| | Pamela S. Sedmak, Executive Vice President of Health Plan Operations | $ | 750,000 |
| 10,434 |
| | Mark L. Keim, Executive Vice President of Strategic Planning and Corporate Development | $ | 750,000 |
| 10,434 |
|
(1) Mr. White’s long-term incentive award consists entirely of PSUs.
(2) Effective as of March 1, 2018, in addition to the 2018 annual $1,500,000 equity-based compensation, the compensation committee also awarded Mr. Barlow a restricted stock award of 13,912 shares (or $1,000,000 based on the closing price of the Company’s common stock as of March 1, 2018 grant date). Such incremental award was conveyed to Mr. Barlow to recognize his superior performance and key role in providing stability during a critical transition period. The award is subject to vesting in equal one-third increments over three years, on each of March 1, 2019, March 1, 2020, and March 1, 2021. Such additional award is included in the table.
The compensation committee determined that, with the exception of Mr. White’s award, 60% of the long-term incentive award to the named executive officers shall be in the form of PSUs. The vesting of the PSUs is based entirely on the achievement of a single financial metric: the Company’s cumulative net income over the three fiscal years of 2018, 2019, and 2020. This single cumulative three-year metric aligns the long-term incentive awards of the both the chief executive officer and the named executive officers with our three-year strategic plan and stated business goal of sustained margin recovery. We believe it will be marginally difficult for the Company to achieve the threshold cumulative net income level, which would result in vesting at the 50% level. If that threshold cumulative net income level is not achieved, no PSUs shall vest. We believe it will be difficult but achievable to reach the target cumulative net income level, which would result in vesting at the 100% level. Further, we believe it will be possible but not probable to achieve the maximum cumulative net income level, which would result in vesting at the 200% level, which represents the cap on achievement. Achievement falling within the threshold level and the maximum
Molina Healthcare, Inc. 2018 Proxy Statement | 53
level will be interpolated linearly to determine the appropriate PSUs payout. The PSUs will be settled by the issuance of shares of common stock of the Company equal to the number of PSUs as described herein. Any payout of the PSUs, if achieved, will occur when we report 2020 net income in early 2021, when we are then able to calculate the three-year cumulative net income for this metric.
The compensation committee determined that, with the exception of Mr. White’s award, the balance of 40% of the total long-term incentive awards to the named executive officers shall be in the form of time-vested restricted stock awards. These awards are subject to vesting in equal one-third increments over three years, on each of March 1, 2018, March 1, 2019, and March 1, 2020.
Mr. White’s long-term incentive award shall be 100% in the form of PSUs, which award shall be consistent with the PSUs as described above.
A detailed schedule of the equity awards granted to each of the named executive officers is set forth in the table below.
| | | | | | | | | | | | | | Performance Stock Units | Restricted Stock Awards | | Named Executive Officer | PSUs (#) |
| PSUs ($) |
| Restricted Stock Awards Total (#) |
| Restricted Stock Awards Total ($) |
| | Joseph M. Zubretsky | 83,472 |
| $ | 5,999,967 |
| 55,648 |
| $ | 3,999,978 |
| | Joseph W. White | 26,433 |
| $ | 1,900,004 |
| — |
| $ | — |
| Jeff D. Barlow(1) | 12,521 |
| $ | 900,009 |
| 22,259 |
| $ | 1,599,977 |
| | Pamela S. Sedmak | 6,260 |
| $ | 449,969 |
| 4,174 |
| $ | 300,027 |
| | Mark L. Keim | 6,260 |
| $ | 449,969 |
| 4,174 |
| $ | 300,027 |
|
(1) The restricted stock award to Mr. Barlow includes the additional grant effective March 1, 2018 of 13,912 shares (or $1,000,000 based on the closing price of the Company’s common stock as of March 1, 2018 grant date).
Compensation Committee Interlocks and Insider Participation The persons listed on page 1723 of this proxy statement were the members of the compensation committee during 2017.2023. No member of the compensation committee was a part of a “compensation committee interlock” during 20172023 as described under SEC rules. In addition, none of our executive officers served as a director or member of the compensation committee of another entity that would constitute a “compensation committee interlock.” NoExcept for Ronna E. Romney, in respect of her son’s employment with the Company as described under “Related Party Person Transactions”, no member of the compensation committee had any material interest in a transaction with Molina Healthcare. Except for Joseph M. Zubretsky, no director is a current or former employee of Molina Healthcarethe Company or any of its subsidiaries. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 59 | | |
Fiscal Year 2024 Compensation In February 2024, the compensation committee determined to continue the NEO compensation program for 2024 without material changes to the 2023 NEO compensation program. 2024 Executive Compensation Study To evaluate the compensation levels of the Company’s named executive officers in relation to the compensation levels of executives employed by the Company’s peers, the compensation committee engaged Aon to conduct a total compensation study with respect to the Company’s named executive officers’ compensation for 2024 (the “2024 Compensation Study”). Aon reports directly and exclusively to the compensation committee with respect to executive compensation matters. In the 2024 Compensation Study, Aon used the following 16-company peer group selected across business segment and based on certain financial metrics, including but not limited to criteria relevant to revenue, market capitalization, EBITDA, organization model, and employee recruitment: | | | | | | | Aflac Incorporated | Humana, Inc. | | Becton, Dickinson and Company | Laboratory Corporation of America Holdings | | Boston Scientific Corporation | MetLife, Inc. | | Centene Corporation | Prudential Financial, Inc. | | Community Health Systems, Inc. | Quest Diagnostics Incorporated | | DaVita Inc. | Tenet Healthcare Corporation | | Elevance Health, Inc. | The Cigna Group | | HCA Healthcare, Inc. | Universal Health Services, Inc. |
Fiscal Year 2024 Base Salaries Based on peer group compensation levels and the Company’s compensation philosophy, the compensation committee determined to leave unchanged the NEOs’ 2024 base salaries as compared to their 2023 base salaries, except for Mr. Zubretsky whose base salary was increased, as indicated in the table below. Mr. Zubretsky’s base salary increase reflects his outstanding performance and contributions to the Company. | | | | | | | | | | | | | | | | | | | Base Salary | | | Named Executive Officer | 2024 | 2023 | Change
($) | Change
(%) | | | | | | | | Joseph M. Zubretsky President and Chief Executive Officer | 1,600,000 | | 1,500,000 | | 100,000 | | 7 | % | | Mark L. Keim Chief Financial Officer | 850,000 | | 850,000 | | — | | — | | | James E. Woys Chief Operating Officer | 800,000 | | 800,000 | | — | | — | | | Jeff D. Barlow Chief Legal Officer and Secretary | 685,000 | | 685,000 | | — | | — | | | Maurice S. Hebert Chief Accounting Officer | 425,000 | | 425,000 | | — | | — | | |
Molina Healthcare, Inc. 2018 Proxy Statement | 54 | | | | | | | | | | 60 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | FISCAL YEAR 2024 COMPENSATION |
Fiscal Year 2024 Short-Term Performance-Based Cash Bonus Awards In February 2024, the compensation committee established the annual short-term performance-based cash bonus opportunity levels and measures for our NEOs. For the 2024 annual short-term performance based cash bonus, 70% of the bonus is based on the financial metric for our 2024 adjusted net income per diluted share and 30% of the bonus which is subject to the applicable NEO’s individual performance. The 2024 annual short-term performance-based cash bonus opportunity levels for the NEOs were left unchanged from their 2023 levels and are reflected in the table below. Such determination was made by the compensation committee considering several factors including the 2024 Compensation Study. The 2024 annual short-term performance-based cash bonus awards for the NEOs, other than the chief executive officer, are subject to payout pursuant to the recommendations of the chief executive officer to the compensation committee, as approved by the compensation committee. The compensation committee retains full discretion to alter and determine the short-term performance-based cash bonus amounts for 2024 prior to payout. For the Company’s NEOs, the following table sets forth the fiscal year 2024 base salary levels, the target bonus opportunity as a percentage of base salary, and the two general categories of target bonus opportunity: | | | | | | | | | | | | | | | | | | | Named Executive Officer | Base Salary
($) | Target Bonus
Opportunity
(% of Base Salary) | Company Financial Metric Bonus Opportunity
(70% of Target Bonus Opportunity)
($) | Individual Performance Bonus Opportunity
(30% of Target Bonus Opportunity)
(%) | | | | | | | | Joseph M. Zubretsky President and Chief Executive Officer | 1,600,000 | | 200 | | 2,240,000 | | 960,000 | | | Mark L. Keim Chief Financial Officer | 850,000 | | 100 | | 595,000 | | 255,000 | | | James E. Woys Chief Operating Officer | 800,000 | | 100 | | 560,000 | | 240,000 | | | Jeff D. Barlow Chief Legal Officer and Secretary | 685,000 | | 100 | | 479,500 | | 205,500 | | | Maurice S. Hebert Chief Accounting Officer | 425,000 | | 50 | | 148,750 | | 63,750 | | |
Fiscal Year 2024 Long-Term Equity-Based Incentive Compensation Awards Effective as of March 1, 2024, the NEOs were granted long-term incentive awards in the form of performance stock units (“PSUs”) and restricted stock, with the actual PSUs and restricted stock share numbers being determined by using the closing price of the Company’s common stock as of that same March 1, 2024 grant date of $387.21. The compensation committee determined that 60% of the long-term incentive award to the NEOs, except for Mr. Hebert for whom such awards accounted for 50%, shall be in the form of PSUs subject to vesting based on achievement of a single Company financial metric consisting of the cumulative adjusted earnings per share for the three fiscal years 2024, 2025, and 2026, which if achieved would be payable at the respective levels on March 1, 2027. Upon vesting, the PSUs will be settled by the issuance of shares of common stock of the Company. The compensation committee determined that the balance of 40% of the total long-term incentive awards to the NEOs, except for Mr. Hebert for whom such awards accounted for 50%, shall be in the form of time-vested restricted stock awards. These awards are subject to vesting in equal one-third increments over three years, on each of March 1, 2025, March 1, 2026, and March 1, 2027. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 61 | | |
| | | | | | | FISCAL YEAR 2024 COMPENSATION | |
A detailed schedule of Contentsthe equity-based awards granted to each of the NEOs is set forth in the table below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Stock Units | | Restricted Stock Awards | | | | | Named Executive Officer | PSUs
(#) | PSUs
($) | | RSAs Total
(#) | RSAs Total
($) | Total
(#) | Total
($) | | | | | | | | | | | | Joseph M. Zubretsky | 25,103 | | 9,720,133 | | | 16,735 | | 6,479,959 | | 41,838 | | 16,200,092 | | | | Mark L. Keim | 7,748 | | 3,000,103 | | | 5,165 | | 1,999,940 | | 12,913 | | 5,000,043 | | | | James E. Woys | 6,973 | | 2,700,015 | | | 4,649 | | 1,800,139 | | 11,622 | | 4,500,154 | | | | Jeff D. Barlow | 4,958 | | 1,919,787 | | | 3,306 | | 1,280,116 | | 8,264 | | 3,199,903 | | | | Maurice S. Hebert | 776 | | 300,475 | | | 774 | | 299,701 | | 1,550 | | 600,176 | | |
| | | | | | | | | | 62 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | | | | | | | | | | | | | | | PROPOSAL THREE Ratification of the Appointment of Independent Registered Public Accounting Firm | | | | | |
Appointment The firm of Ernst & Young LLP served as our independent registered public accounting firm for the year ended December 31, 2023. The audit committee has selected Ernst & Young LLP to continue in that capacity for 2024 and is submitting this matter to our stockholders for their ratification. In the event this proposal is not approved, a selection of another independent registered public accounting firm for us will be made by the audit committee. A representative of Ernst & Young LLP is expected to be present at the annual meeting, will be given an opportunity to make a statement if such representative desires and is expected to be available to respond to appropriate questions. Notwithstanding ratification by our stockholders, the audit committee reserves the right to replace our independent registered public accounting firm at any time. | | | | | | | | | | | | | | | | | | The board of directors unanimously recommends that the stockholders vote "FOR" the ratification of the appointment of Ernst & Young LLP for the year ending December 31, 2024. | | | | | |
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 63 | | |
Audit Committee Report The audit committee (“committee”) operates under a charter that specifies the scope of the committee’s responsibilities and how it carries out those responsibilities. The Board of Directors has determined that all four members of the committee are independent based upon the standards adopted by the Board, which incorporate the independence requirements under applicable laws, rules, and regulations. Management is responsible for the financial reporting process, the system of internal controls, including internal control over financial reporting, risk management, and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. Ernst & Young LLP, the Company’s independent registered public accounting firm (“independent auditors”), is responsible for performing the integrated independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”), expressing an opinion as to the conformity of the financial statements with U.S. generally accepted accounting principles, and auditing management’s assessment of the effectiveness of internal control over financial reporting. The committee’s responsibility is to monitor and oversee these processes and procedures. The committee relies, without independent verification, on the information provided to it and on the representations made by management regarding the effectiveness of internal control over financial reporting, that the financial statements have been prepared with integrity and objectivity, and that such financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The committee also relies on the opinions of the independent auditors on the consolidated financial statements and the effectiveness of internal control over financial reporting. The committee’s meetings facilitate communication among the members of the committee, management, the internal auditors, and the Company’s independent auditors. The committee separately met with each of the internal and independent auditors with and without management, to discuss the results of their examinations and their observations and recommendations regarding the Company’s internal controls. The committee also discussed with the Company’s independent auditors all communications required by generally accepted auditing standards. The committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the year ended December 31, 20172023 with management, the internal auditors, and the Company’s independent auditors. The committee has received the written disclosures required by PCAOB Rule 3526 — “Communication with Audit Committees Concerning Independence.” The committee discussed with the independent auditors any relationships that may have an impact on their objectivity and independence, and satisfied itself as to the auditors’ independence. The committee has reviewed and approved the amount of fees paid to the independent auditors for audit, audit related, and tax compliance services. The committee concluded that the provision of services by the independent auditors is compatible with the maintenance of their independence. Based on the above-mentioned review and discussions, and subject to the limitations on our role and responsibilities described above and in the committee charter, the committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20172023 (“Annual Report”) for filing with the SEC. Audit Committee Steven J. Orlando, CPA (inactive), Chair Daniel Cooperman
Charles Z. Fedak,Barbara L. Brasier, CPA MBA(inactive)
Richard M. Schapiro February 27, 2018Richard C. Zoretic
March 11, 2024
Molina Healthcare, Inc. 2018 Proxy Statement | 55 | | | | | | | | | | 64 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Audit Committee’s Evaluation and Oversight of Independent Auditors The audit committee engaged Ernst & Young LLP (“EY”) as our independent auditors for the year endingended December 31, 2018.2023. The audit committee is directly responsible for the appointment, compensation, retention, and oversight of the independent external audit firm retained to audit our financial statements. In order to assure the continuing independence of our auditors, the audit committee periodically evaluates whether there should be a regular rotation of the independent audit firm. The committee ensures that the mandated rotation of EY’s personnel occurs routinely and is directly involved in the selection of EY’s lead engagement partner. Evaluation of IndependentAuditors
The audit committee annually evaluates the performance of our independent auditors, including the senior audit engagement team, and determines whether to reengage the current independent auditors or consider other audit firms. Factors considered by the audit committee in deciding whether to retain the independent auditors include: •EY’s national capabilities; •EY’s technical expertise and knowledge of the Company’s operations and industry; •the quality and candor of EY’s communications with the audit committee and management; •EY’s independence; •the quality and efficiency of the services provided by EY, including input from management on EY’s performance and how effectively EY demonstrated its independent judgment, objectivity and professional skepticism; •external data on audit quality and performance, including recent PCAOB reports on EY and its peer firms; and •the appropriateness of EY’s fees, EY’s tenure as independent auditors, including the benefits of a longer tenure, and the controls and processes in place that help ensure EY’s continued independence. The benefits of EY’s longer tenure include the following: •Enhanced audit quality - EY’s significant institutional knowledge and deep expertise of the Company’s business, accounting policies and practices and internal control over financial reporting enhance audit quality. •Competitive fees - because of EY’s familiarity with the Company, audit and other fees are competitive withcompared to EY’s peer companies. •Avoidance of costs associated with new auditor - engaging new independent auditors would be costly and require a significant time commitment which could lead to management distractions. Additionally, the Company already has in place controls and processes that help ensure EY’s continued independence: •Audit Committee oversight - oversight includes regular private sessions with EY, discussion with EY about the scope of audit and business imperatives, a comprehensive annual evaluation when determining whether to reengage EY, and direct involvement by the audit committee and its chair in the selection of the lead assurance engagement partner and coordinating partner in connection with the mandated rotation of these positions. •Limits on non-audit services - the audit committee pre-approves audit and permissible non-audit services provided by EY in accordance with its pre-approval policy. •EY’s internal independence process - EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on the Company’s account and rotates the lead assurance engagement partner and other partners on the engagement consistent with independence requirements. A new lead engagement partner was designated in starting with the 2014 audit. 2024.•Strong regulatory framework - EY, as an independent registered public accounting firm, is subject to PCAOB inspections, “Big 4” peer reviews, and PCAOB and SEC oversight. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 65 | | |
Molina Healthcare, Inc. 2018 Proxy Statement | 56
| | | | | | | AUDIT COMMITTEE’S EVALUATION AND OVERSIGHT OF INDEPENDENT AUDITORS | |
Oversight of Contents
Oversightof IndependentAuditors
In its meetings with EY’s representatives, the audit committee asks them to address, and discusses their responses to, several questions that the audit committee believes are particularly relevant to its oversight. These questions include: •Are there any significant accounting judgments or estimates made by management in preparing the financial statements that would have been made differently had the independent auditors prepared and been responsible for the financial statements? •Based on the independent auditors’ experience, and their knowledge of the Company, do the Company’s financial statements fairly present to investors, with clarity and completeness, the Company’s financial position and performance for the reporting period in accordance with generally accepted accounting principles and SEC disclosure requirements? •Based on the independent auditors’ experience, and their knowledge of the Company, has the Company implemented internal controls and internal audit procedures that are appropriate for the Company? The audit committee believes that asking these questions to help focus its discussions with EY promotes a more meaningful dialogue that provides a basis for its oversight judgment. The audit committee also discussed with the independent auditors those matters required to be discussed by the auditors with the audit committee under the rules adopted by the PCAOB. The audit committee received the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding the independent auditors’ communication with the audit committee concerning independence, and has discussed with the independent auditors their independence. The audit committee considered with the independent auditors whether the provision of non-audit services provided by them to the Company during 20172023 was compatible with their independence. | | | | | | | | | | 66 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Fees Paid to Independent Registered Public Accounting Firm Ernst & Young LLP served as our independent registered public accountant during 20172023 and 2016.2022. Fees earned by Ernst & Young LLP for the years ended December 31, 20172023 and 20162022 were as follows: | | | | | | | | | | | | | | | | Year Ended December 31, | | | 2023 | | 2022 | | | | | | | | (In thousands) | | Audit Fees(1) | | | | | | Integrated audit of the financial statements and internal control over financial reporting | 5,694 | | | 5,517 | | | | Quarterly reviews | 286 | | | 286 | | | | Total audit fees | 5,980 | | | 5,803 | | | Audit-Related Fees(2) | | | | | | | | | | | Service Organization Control 2 audits | 520 | | | 160 | | | | Total audit-related fees | 520 | | | 160 | | | Tax Fees(2) | | | | | | Federal and state hiring incentives | 70 | | | 65 | | | | Routine on-call advisory services | 1 | | | 3 | | | | | | | | | Total tax fees | 71 | | | 68 | | | | Total Fees | 6,571 | | | 6,031 | | |
| | | | | | | | | | | December 31, | | | 2017 | | 2016 | | | (In thousands) | Audit Fees(1) | | | | | Integrated audit of the financial statements and internal control over financial reporting (including audits of subsidiaries) | $ | 4,539 |
| | $ | 4,358 |
| | Quarterly reviews | 247 |
| | 256 |
| | Audit work relating to debt and equity offerings, including registration statements | 92 |
| | 385 |
| | Accounting consultation | — |
| | 90 |
| | Total audit fees | 4,878 |
| | 5,089 |
| Audit-Related Fees(2) | | | | | State agreed-upon procedures report and audit work paper review | 81 |
| | 103 |
| | Service Organization Control (“SOC”) 1 audits | 804 |
| | 636 |
| | Total audit-related fees | 885 |
| | 739 |
| Tax Fees(2) | | | | | Federal and state hiring incentives | 67 |
| | 56 |
| | Routine on-call advisory services | 56 |
| | 39 |
| | Tax advisory services | — |
| | 19 |
| | Total tax fees | 123 |
| | 114 |
| | Total Fees | $ | 5,886 |
| | $ | 5,942 |
|
Molina Healthcare, Inc. 2018 Proxy Statement | 57
| | (1)
| Includes fees related to the fiscal year audit and interim reviews, notwithstanding when the fees were billed or when the services were rendered. |
| | (2)
| Includes fees for services rendered from January through December of the fiscal year, notwithstanding when the fees were billed. |
The audit committee has considered the nature of the services underlying these fees and does not consider them to be incompatible with the independent registered public accountant’s independence. The audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that the Company will not engage its independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the audit committee, or the engagement is entered into pursuant to one of the pre-approval procedures described below. For each proposed service, the independent auditors are required to provide detailed supporting documentation at the time of approval to permit the audit committee to make a determination whether the provision of such service would impair the independent auditors’ independence. From time to time, the audit committee may pre-approve specified types of services that are expected to be provided to the Company by its independent registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount. The audit committee has also delegated to the chairman of the audit committee the authority to approve audit or non-audit services to be provided to the Company by its independent registered public accounting firm. Any approval of services by the chairman of the audit committee pursuant to this delegated authority is reported on at the next meeting of the audit committee. All audit-related fees and tax fees for 2017 and 20162023 were pre-approved by the audit committee or the audit committee chairman. Related Party Transactions
The Board has adopted a policy regarding the review, approval, and monitoring of transactions involving the Company and related persons (directors and executive officers or their immediate family members). Such related persons are required to promptly and fully disclose to the Company’s chief legal officer all financial, social, ethical, personal, legal, or other potential conflicts of interest involving the Company. The chief legal officer shall confer as necessary with the chairman of the Board and/or with the Company’s corporate governance and nominating committee regarding the facts of the matter and the appropriate resolution of any conflict of interest situation in the best interests of the Company, including potential removal of the related person from a position of decision-making or operational authority with respect to the conflict situation, or other more significant steps depending upon the nature of the conflict.
Related persons transactions that are identified as such prior to the consummation or amendment are consummated or amended only if (i) with respect to executive officers of the Company, the corporate governance and nominating committee approves or ratifies such transaction in accordance with the policy, and (ii) with respect to directors of the Company, the full Board approves or ratifies such transaction in accordance with the policy. At least annually the corporate governance and nominating committee reviews any previously approved or ratified related persons transactions. Based on all relevant facts and circumstances, taking into consideration the Company’s contractual obligations, the Board or the committee as appropriate determines if it is in the best interests of the Company and its stockholders to continue, modify, or terminate the related person transaction.
Joseph M. Molina, M.D., Professional Corporations
TheJoseph M. Molina, M.D. Professional Corporations (JMMPC) constitute medical provider groups originally created as “friendly professional corporations” to advance our direct delivery line of business. JMMPC’s primary shareholder is Dr. J. Mario Molina, who was formerly the Company’s president, chief executive officer, and a member of our Board of Directors. Dr. Molina’s employment with the Company terminated on May 2, 2017, and he resigned as a director on December 12, 2017. When JMMPC was created, we concluded that we were the primary beneficiary of the JMMPC Variable Interest Entity (VIE) because we had the power to direct the activities (excluding clinical decisions) that most significantly affected JMMPC’s economic performance, and the obligation to absorb losses or right to receive benefits that were potentially significant to the VIE, under the agreements described below. Because we were its primary beneficiary, we consolidated JMMPC.
In July 2017, the Company made the strategic decision to discontinue its direct delivery line of business. In execution of this strategic change, the Company delivered to Dr. Molina notice of its intent to terminate all contracts between itself and JMMPC. Effective as of September 30, 2017, we terminated our relationship with JMMPC in
Molina Healthcare, Inc. 2018 Proxy Statement | 58
| | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 67 | | |
Florida, Michigan, New Mexico, Washington, and Utah. In connection with this termination, and to effect a deconsolidation of JMMPC, we absorbed JMMPC’s then-outstanding losses and received JMMPC’s then-accrued earnings. The net impact of this deconsolidation was a gain to the Company of approximately $4.3 million.
In July 2017, Dr. Molina expressed an interest in assuming the operation of the Company’s 17 leased clinic spaces in California. Under the oversight of the corporate governance and nominating committee, the Company proceeded to negotiate the terms under which Dr. Molina would assume the operation of the Company’s 17 California clinics. In December 2017, the Company agreed to sell to JMMPC the tangible assets in the clinics for $1,980,000, which represented the appraised fair market value of the assets as determined by an independent third party appraiser. The Company also agreed to relinquish all claims to the assembled professional workforce in the clinics in consideration for the payment by JMMPC of $100,000. In addition, the Company agreed to assign the clinics leases to JMMPC in consideration for Dr. Molina’s entering into a personal guaranty with respect to the liability under the remaining clinic lease terms. Finally, the Company’s California health plan agreed to enter into a capitated provider contract with JMMPC at favorable and competitive market-based rates negotiated on an arms’ length basis. All prior agreements between the Company and JMMPC were terminated effective January 3, 2018. Following the termination of the agreements with JMMPC, the Company no longer has the power to direct the activities that most significantly affect JMMPC’s economic performance, or the obligation to absorb losses or right to receive benefits that are potentially significant to JMMPC. As of December 31, 2017, JMMPC had total assets of $8 million, and total liabilities of $8 million.
Pacific Healthcare IPA
The Company’s California health plan has entered into a provider agreement with Pacific Healthcare IPA (“Pacific”), an independent practice association, in the Los Angeles, California region. Pacific is 50% owned by the brother-in-law of Dr. J. Mario Molina, the Company’s former president, chief executive officer, chairman of the board, and director, and Mr. Molina, one of the directors of the Company and its former chief financial officer. Under the terms of this provider agreement, the California health plan paid Pacific approximately $413,000 in 2017 and approximately $469,000 in 2016 for medical care provided to health plan members. The rates paid to Pacific are the same as those paid to other independent practice associations in the same region.
FrankE.Murray
Frank E. Murray retired from the Board of Directors effective November 6, 2017. The Board has agreed to engage Dr. Murray as a consultant to provide advisory services to the Company for the balance of his foregone Board term (through May 2018). The Company expects to pay Dr. Murray approximately $150,000 for his advisory services from November 6, 2017 to May 2018. Please see footnote 5 in the Non-Employee Director Compensation table under “Information About the Board and its Committees” relating to the fees for advisory services paid to Dr. Murray from November 6, 2017 to December 31, 2017.
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Proposal 2 - Advisory Vote on the Compensation of our Named Executive Officers
The Dodd-Frank Wall Street Reform and Consumer Protection Act, or simply the Dodd-Frank Act, requires that public companies give their stockholders the opportunity to vote on say-on-pay proposals. The SEC adopted rules to implement the provisions of the Dodd-Frank Act relating to stockholder votes on executive compensation (including say-on-pay and say-when-on-pay proposals). At our 2017 annual meeting of stockholders, our stockholders approved, on an advisory basis, the conducting of an advisory vote on the compensation of our named executive officers every year. Our stockholders last approved, on an advisory basis, the Company’s executive compensation in 2017. Thus, pursuant to Section 14A of the Securities of 1934, as amended, we are again holding in 2018 an advisory vote on the Company’s executive compensation, as described in this proxy statement.
You are voting on a proposal, commonly known as a “say-on-pay” proposal, which gives our stockholders the opportunity to endorse or not endorse our executive officer pay program and policies through the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the CD&A, compensation tables, and narrative discussion, is hereby APPROVED.”
As discussed at length in the CD&A, we believe that our executive compensation program is reasonable, competitive, and strongly focused on pay for performance principles. We emphasize compensation opportunities that reward our executives when they deliver targeted financial results. The compensation of our named executive officers varies depending upon the achievement of pre-established performance goals, both individual and corporate. Through stock ownership requirements and equity incentives, we also align the interests of our executives with those of our stockholders and the long-term interests of the Company. Our executive compensation policies have enabled us to attract and retain talented and experienced senior executives. We believe that the compensation program for our named executive officers is appropriate and aligned with the Company’s financial results and position for growth in future years.
Because your vote is advisory, it will not be binding upon the Board of Directors. However, our Board of Directors values the opinions that our stockholders express in their votes and will take into account the outcome of the vote when considering future executive compensation arrangements as it deems appropriate.
| | | | | | | | | | | | | | | | | ü | | |
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT.FOUR
Shareholder Proposal Regarding Simple Majority Voting | | | | | |
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Proposal 3 - Approval of the Amendment and Restatement of our BylawsThe Company has been advised that John Chevedden intends to Implement Proxy Access
The Board is recommending that stockholders approve an amendment and restatement of the Company's Fourth Amended and Restated Bylaws that would permit certain stockholders to include qualified stockholder-nominated director candidates in the Company's proxy materials ("proxy access"). The proposed amendments to be approved by stockholders are contained in Sections 2.13, 2.2(a) and 2.2(f) of Article II of the Company's Fifth Amended and Restated Bylaws, a copy of which is attached to this proxy statement as Appendix A ("Amendments"). Additions to the Bylaws are indicated by underlining, and deletions are indicated by strikethrough text.
Introduction
Proxy access allows eligible stockholders to include their own nominees for director in the Company's proxy materials for an annual meeting of stockholders, along with the candidates nominated by the Board. The Board believes that the proposed Amendments include requirements and provisions designed to provide meaningful rights of proxy access while reducing some risks of abuse.
Description of Proposed Amendments
The following description of the proposed Amendments is a summary only and is qualified in its entirety by reference to the complete text of the Amendments which is attached to this proxy statement as Appendix A. You are urged to read the Amendments in their entirety.
Eligibility of Stockholders to Nominate Directors
Any stockholder or group of up to 20 stockholders who have maintained continuous qualifying ownership of at least 3% of the shares of the Company's outstanding common stock for at least the previous three years would be permitted to include a specified number of director nominees in the Company's proxy materials for its annual meeting of stockholders. No stockholder may be a member of more than one group for these purposes.
Calculation of Qualifying Ownership
To ensure that the interests of stockholders seeking to include director nominees in the Company's proxy materials are aligned with those of other stockholders, a nominating stockholder would be deemed to own only those shares of outstanding common stock of the Company as to which the stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in such shares, including the opportunity for profit and the risk of loss. With respect to the stockholder or any of the stockholder’s affiliates,submit the following shares would not count as “owned" shares for purposes of the Amendments:
shares sold in any transaction that has not settled or closed;
shares borrowed for any purpose or purchased pursuant to an agreement to resell; or
shares subject to any option, warrant, forward contract, swap, contract of sale or other derivative or similar agreement, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (i) reducing in any manner, to any extent or at any time in the future, the full right to vote or direct the voting of any such shares, and/or (ii) hedging, offsetting, or altering to any degree any gain or loss arising from the full economic ownership of such shares.
A stockholder will be deemed to "own" shares held in the name of a nominee or other intermediary so long as the stockholder retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A stockholder's ownership of shares will be deemed to continue during any period in which the stockholder has loaned such shares or delegated any voting power over such shares by means of a proxy, power of attorney or other instrument or arrangement which in either case is revocable at any time by the stockholder; provided that in the event of a loan, the stockholder has the power to recall such loaned shares on five or less business days' notice.
Funds under common management and investment control would be treated as one eligible stockholder.
Number of Stockholder-Nominated Candidates
The maximum number of candidates nominated by all eligible stockholders that the Company would be required to include in the Company's proxy materials, together with any nominees who were previously elected to the Board using proxy access during the preceding two annual meetings, is that number of directors constituting the greater of 2 or 20% of the total number of directors (rounded down to the nearest whole number) on the last day on which a nomination notice may be submitted to the Company (as described below under the section captioned "Nomination
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Window"). If one or more vacancies occur on the Board, and the Board decides to reduce the size of the Board after the nomination deadline, the nominee limit would be calculated based on the reduced number of directors. Any stockholder nominee who is included in the Company’s proxy materials for a particular annual meeting of stockholders but either (i) withdraws from or becomes ineligible or unavailable for electionproposal at the annual meeting,meeting.
Proposal 4 - Simple Majority Vote Shareholders request that our board take each step necessary so that each voting requirement in our charter and bylaws (that is explicit or (ii) does not receive at least 25%implicit due to default to state law) that calls for a greater than simple majority vote be replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in favorcompliance with applicable laws. If necessary this means the closest standard to a majority of the stockholder nominee’s election, will be ineligiblevotes cast for and against such proposals consistent with applicable laws. This includes making the necessary changes in plain English. Shareholders are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to "What Matters in Corporate Governance" by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a stockholder nominee forstatus quo management. This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs, FirstEnergy, McGraw-Hill and Macy' s. These votes would have been higher than 74% to 88% if more shareholders had access to independent proxy voting advice. This proposal topic also received overwhelming 98%-support each at the next two2023 annual meetings.meetings of American Airlines (AAL) and The Carlyle Group (CG). Procedure for Electing Candidates if Nominee Limit ExceededThis is a corporate governance improvement proposal that the Molina Healthcare Board of Directors should have put to a shareholder vote on its own initiative years ago.
IfThis proposal is focused on the numbersimple majority vote topic, but it is worth noting that there are other areas of stockholder-nominated candidates exceeds the maximum number of stockholder nominees, the highest ranking stockholder nominee from each nominating stockholder would be selected for inclusionimprovement needed in the Company's proxy materials until the nominee limit is reached, goingcorporate governance of Molina Healthcare. For instance executive pay was rejected by 15% of votes in order2023 and Ms. Ronna Romney, age 80, Vice-Chair of the amount (largest to smallest) of shares of stock of the Company that each nominating stockholder disclosed as owned in its respective nomination notice submitted to the Company. This selection process will continue as many times as necessary, following the same order each time, until the nominee limit is reached.
Nomination Window
In order to provide adequate time to assess stockholder-nominated candidates, requests to include stockholder-nominated candidates in the Company's proxy materials must be received by the secretary of the Company no earlier than 150 daysBoard and no later than 120 days before the first anniversary of the date that the Company distributed its proxy statement to stockholders for the previous year's annual meeting of stockholders. If the annual meeting is scheduled more than 30 days prior to or 60 days following the anniversary of the preceding year’s annual meeting, the request must be received no earlier than 120 days before the annual meeting and no later than the later of 90 days before the annual meeting or 10 days following the day on which public announcement of the date of the annual meeting is first made.
Information Required of All Nominating Stockholders
Each stockholder seeking to include a director nominee in the Company's proxy materials would be required to provide certain information to the Company (with respect to such stockholder, other stockholders whose shares are aggregated to satisfy the 3% ownership requirement, and certain others, if the stockholder is a legal entity), including:
verification of the stockholder’s ownership of the requisite 3% of shares;
an agreement to continue to hold the requisite 3% of shares, and to continue to satisfy the Bylaw eligibility requirements for proxy access, through the annual meeting date;
a copy of the stockholder's notice on Schedule 14N that has been or concurrently is filed with the SEC;
details regarding certain relationships during the past 3 years between the stockholder or stockholder group, the nominee and/or the Company or any of its affiliates;
the information, questionnaire, representation and agreement of the stockholder and/or stockholder nominee required pursuant to the advance notice requirements for stockholder nominees set forth in Sections 2.2(b)(2) and 2.2(f) of the Company's Fifth Amended and Restated Bylaws, including such matters as:
| | ◦ | information regarding the stockholder nominee that is required to be included in the proxy statement under the SEC’s proxy rules; |
| | ◦ | compensation and other arrangements between the stockholder and the stockholder nominee; |
| | ◦ | positions held by the stockholder nominee with any competitors of the Company during the preceding 3 years; |
| | ◦ | information relating to the stockholder and its share ownership interests; |
| | ◦ | the absence of any (i) voting commitments of the stockholder nominee that have not been disclosed to the Company or that would interfere with the stockholder nominee’s fiduciary duties as a director; or (ii) undisclosed compensation arrangements of the stockholder nominee for service as a director; |
| | ◦ | the stockholder nominee’s agreement to be in compliance with the Company’s corporate governance and other corporate policies; |
such other questionnaires of the stockholder nominee that are required of the Company’s directors, and such other information as the Company may reasonably request for the Company to comply with its disclosure obligation under applicable law, determine the stockholder’s satisfaction of the proxy access
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requirements, and ascertain the stockholder nominee’s eligibility for nomination, including the Board independence requirements; and
in the case of a nomination by a group of stockholders, the designation of one authorized group member.
Nominating stockholders would also be required to make certain additional representations and warranties to, and agreements with, the Company regarding matters such as the following:
the absence of any intent to change or influence control of the Company;
not nominating any person for election to the Board other than the stockholder’s nominees submitted through the proxy access process;
not soliciting proxies in support of any person other than the stockholder’s proxy access nominees or nominees of the Company;
not distributing any proxy card for the annual meeting in connection with the election of a stockholder nominee other than the form distributed by the Company;
the nominating stockholder’s agreement to:
| | ◦ | assume all liability stemming from any legal or regulatory violation arising from the stockholder’s statements in connection with the nomination or election of directors; |
| | ◦ | indemnify and hold harmless the Company and its officers, directors and employees for losses incurred in connection with proceedings against the stockholder arising out of the stockholder’s actions, including information provided and statements made by the stockholder, in connection with any nomination submitted by the stockholder using the proxy access process; |
| | ◦ | in the event of material misstatements or omissions in information provided by the stockholder, or the stockholder discovers that the stockholder fails to satisfy the eligibility requirements for use of proxy access, notify the Company and any other recipient of such misstatement or omission and the information required to correct it, or notify the Company of such failure to satisfy the eligibility requirements; |
| | ◦ | comply with all laws and regulations in connection with any proxy solicitation for the annual meeting; |
| | ◦ | file all solicitations and communications relating to the annual meeting with the SEC; and |
| | ◦ | provide the Company with such additional information as reasonably requested by the Company to comply with its disclosure obligations under applicable law, determine the stockholder’s satisfaction of the proxy access requirements, and ascertain the stockholder nominee’s eligibility for nomination under the Bylaws. |
Exclusion of Stockholder Nominees
The Company would not be required to include a stockholder nominee in the Company's proxy materials, no vote on the stockholder nominee will occur, and the nominating stockholder cannot, after the last dayChair of the nomination window, cure any associated defect, if:committee, was rejected by 13% of votes. A 5% rejection each regarding the say on executive pay topic and director elections is often the norm at well performing companies.
the Company receives a noticePlease vote yes:
Simple Majority Vote - Proposal 4 | | | | | | | | | | 68 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
The Company’s Statement in Opposition of Proposal NO. 4 Proposal No. 4 requests that a stockholder intends to nominate any candidate for election to the Board at the annual meeting outsidetake “each step necessary so that each voting requirement in [the Company’s] charter and bylaws (that is explicit or implicit due to default to state law) that calls for a greater than simple majority vote be replaced by a requirement for a majority of the proxy access process; the nominating stockholder materially breaches any of its agreementsvotes cast for and against applicable proposals, or a simple majority in connectioncompliance with the proxy access process;
the Board, acting in good faith, determines that the nominating stockholder has provided representations and warranties or other information to the Company in connection with the nomination that contain or contained a material misstatement or omission;
the stockholder nominee withdraws his or her consent or becomes unwilling or unable to serve on the Board, or any material breach occurs of the stockholder nominee’s obligations, agreements, representations or warranties pursuant to the proxy access process;
the nominating stockholder withdraws the nomination;
the Board, acting in good faith, after consultation with outside counsel, determines that the stockholder nominee’s nomination or election to the Board would result in the Company violating the Bylaws,applicable laws.” However, neither the Company’s certificate of incorporation, oras amended (the “Charter”), nor its amended and restated bylaws (the “Bylaws”) contains any applicable law or stock exchange rule;voting requirement that calls for a greater than simple majority vote.
The voting standards included in the Company’s Charter and Bylaws are stated below:
Molina Healthcare, Inc. 2018 Proxy Statement | 63
Table of Contents | | | | | | | | | | Matter | Voting Standard | Charter or Bylaw Provision | | | | | | | | Election of directors | Majority of the votes cast in uncontested election; plurality of the votes cast in contested election | Bylaws, Section 3.2(a) | | | | | | | | Amendment of Charter by stockholders | Affirmative vote of at least 50% of the voting power of all the then outstanding shares of the capital stock, voting together as a single class | Charter, Article XI | | | | | | | | Director Removal | Affirmative vote of the holders of a majority of the voting power on the then issued and outstanding shares of the Corporation’s stock entitled to vote at an election of directors | Charter, Article V, Paragraph B | | | | | | | | Amendment of Bylaws by stockholders | Affirmative vote of the holders of a majority of the stock issued and outstanding and having voting power | Bylaws, Section 9.9(a) | | | | | | | | All other matters, unless a different vote is required by law, stock exchange rule, Charter or Bylaws | Vote of the holders of a majority in voting power of the shares present in person or represented by proxy end entitled to vote on such matter | Bylaws, Section 2.9 | | | |
As noted in the stockholder nominee (i) is not independent under NYSE rules, (ii)table above, the Company does not qualify as independent under the NYSE audit committee independence requirements, or as a “non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934, as amended, (iii) is or has been, within the past 3 years, an officer or director of a competitor, (iv) is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in a criminal proceeding within the past 10 years, or (v) is or has been subject tohave any order, judgment, decree, event or circumstance specified in Rule 506(d)(1) under the Securities Act of 1933, as amended, such that the exemption under Rule 506 would be unavailable to the Company were the stockholder nominee a member of the Board; the Board, acting in good faith, determines that the nominating stockholder has failed to continue to satisfy the proxy access eligibility requirements; or
the nominating stockholder or designated lead group member, or any qualified representative thereof, does not appear at the annual meeting to present the nomination.
Supporting Statement and Other Information
A nominating stockholder would be permitted to include in the Company's proxy statement for the applicable annual meeting a statement not to exceed 500 words in support of its nominee(s).
The Company would be permitted to omit any information or statement if such information or statement (i) contains any material misstatements or omissions, (ii) impugns a person's character, integrity or personal reputation, or makes charges concerning improper, illegal or immoral conduct or associations without factual foundation, or (iii) would violate any applicable law or regulation.
The Company would be permitted to includevoting standard in its proxy statement any informationCharter or Bylaws that would require anything greater than a simple majority vote. For that reason, this proposal is unnecessary. The Board unanimously recommends that stockholders vote against the Company or the Board determines, in its discretion, to include relating to the nomination, including without limitation any statement in opposition to the nomination, information relating to any compensation arrangement and/or voting commitment, and any of the information provided to the Company pursuant to the proxy access process.proposal.
Solicitation by the Company Against Stockholder Nominees | | | | | | | | | | | | | | | | | | The Board of Directors recommends a vote “AGAINST” this proposal, as the Company does not have any supermajority voting provisions in its governing documents. | | | | | |
The Company would be permitted to solicit support for its position in opposition to any stockholder nominee.Interpretation | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 69 | | |
The interpretation of, and compliance with, any provision of the Amendments, including the representations, warranties and covenants contained therein, shall be determined by the Board or, in the discretion of the Board, one or more of its designees, in each case acting reasonably and in good faith.
Stockholder Approval Requirement
The affirmative vote of holders of a majority of the shares of common stock which are issued and outstanding is required for the approval of the proposed Amendments. The proposed Amendments would become effective upon the required approval by our stockholders.
Molina Healthcare, Inc. 2018 Proxy Statement | 64
Proposal 4 - Ratification of the Appointment of Independent Registered Public Accounting Firm
Appointment
The firm of Ernst & Young LLP served as our independent registered public accounting firm for the year ended December 31, 2017. The audit committee has selected Ernst & Young LLP to continue in that capacity for 2018 and is submitting this matter to our stockholders for their ratification. In the event this proposal is not approved, a selection of another independent registered public accounting firm for us will be made by the audit committee. A representative of Ernst & Young LLP is expected to be present at the annual meeting, will be given an opportunity to make a statement if he or she desires and is expected to be available to respond to appropriate questions. Notwithstanding ratification by our stockholders, the audit committee reserves the right to replace our independent registered public accounting firm at any time.
| | | ü | THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC, and to furnish us with copies of the forms they file pursuant to Section 16(a). Purchases and sales of our equity securities by such persons are published on our website at www.molinahealthcare.com. Based on our review of the copies of such reports, on our involvement in assisting our reporting persons with such filings, and on written representations from our reporting persons, we believe that, during 2017, each of our officers, directors, and greater than 10% stockholders complied with all such filing requirements on a timely basis.
As a practical matter, the Company assists its directors and officers by monitoring transactions and completing and filing Section 16 reports on their behalf.
Molina Healthcare, Inc. 2018 Proxy Statement | 65
Security Ownership of Certain Beneficial Owners and Management Security Ownership of Management The following table sets forth the shares of Molina Healthcare common stock beneficially owned as of March 5, 20188, 2024 by (i) each of our directors, named executive officers, and(ii) each of our directors and nominees for directors, and (iii) our executive officers, directors, and nominees for directors as a group,group. As of March 8, 2024, there were 58,583,802 shares of our common stock outstanding. Beneficial ownership is determined in accordance with the rules of the SEC. | | | | | | | | | | | | | | | Name | Number of Shares Beneficially Owned(1) (#) | Percentage of
Outstanding Shares
(%) | | | | | | | | | | | Directors, nominees for directors, and named executive officers: | | | | | | | Joseph M. Zubretsky | 349,952 | | * | | | | | Mark L. Keim | 47,594 | | * | | | | | James E. Woys | 63,613 | | * | | | | | Jeff D. Barlow | 71,419 | | * | | | | | Maurice S. Hebert | 9,866 | | * | | | | Marc S. Russo(2) | 28,645 | | * | | | | | Stephen H. Lockhart | 2,118 | | * | | | | | Daniel Cooperman | 5,653 | | * | | | | | Richard M. Schapiro | 11,207 | | * | | | | Ronna E. Romney(3) | 17,059 | | * | | | | | Dale B. Wolf | 14,867 | | * | | | | | Barbara L. Brasier | 3,552 | | * | | | | Steven J. Orlando(4) | 20,201 | | * | | | | | Richard C. Zoretic | 6,323 | | * | | | | | All executive officers, directors, and nominees for directors as a group (14 persons) | 652,069 | | 1.11 | | | | |
* Denotes less than 1%. (1)As required by SEC regulation, the number of shares shown as beneficially owned includes shares which could be acquired within 60 days of March 8, 2024. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws, and the address of each of the named stockholders is c/o Molina Healthcare, Inc., 200 Oceangate, Suite 100, Long Beach, California 90802. (2)Mr. Russo’s employment was terminated on October 25, 2023, the number of shares represents the number of vested shares he beneficially owned as of March 5, 2018. Percentage ownership calculations are based on 59,958,401the termination date. (3)All shares outstanding as of March 5, 2018.held by Ronna Romney Revocable Trust. (4)Consists of: 18,701 shares held by Orlando Family Trust and 1,500 shares held by Mr. Orlando’s 401(k) plan. | | | | | | | | | | 70 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | Name | Number of Shares Beneficially Owned(1) | Percentage of Outstanding Shares | | Directors and Executive Officers: | | | Joseph M. Zubretsky(2) | 55,648 |
| * |
| | Joseph W. White | 84,531 |
| * |
| | Jeff D. Barlow | 59,976 |
| * |
| Garrey E. Carruthers(3) | 7,733 |
| * |
| Daniel Cooperman(4) | 21,579 |
| * |
| | Charles Z. Fedak | 20,648 |
| * |
| Steven J. Orlando(5)
| 26,353 |
| * |
| Ronna E. Romney(6) | 22,623 |
| * |
| | Richard M. Schapiro | 10,704 |
| * |
| Dale B. Wolf(7) | 30,603 |
| * |
| | All executive officers and directors as a group (11 persons)** | 391,988 |
| 0.65 | % |
| | ** | Includes all Section 16 reporting persons. |
| | | As required by SEC regulation, the number of shares shown as beneficially owned includes shares which could be purchased within 60 days of March 5, 2018. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws, and the address of each of the named stockholders is c/o Molina Healthcare, Inc., 200 Oceangate, Suite 100, Long Beach, California 90802.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
| | (2)
| Mr. Zubretsky holds 375,000 options, however no options to purchase are exercisable within 60 days of March 5, 2018. |
| | (3)
| All shares held by Carruthers Family Revocable Trust. |
| | (4)
| Consists of: 6,579 shares and 15,000 options. |
| | (5)
| Consists of: 24,853 shares held by Orlando Family Trust and 1,500 shares held by Mr. Orlando’s 401(k) plan. |
| | (6)
| All shares held by Ronna Romney Revocable Trust. |
| | (7)
| Consists of: 15,603 shares and 15,000 options. |
Security Ownership of Principal Stockholders The following table sets forth the shares of Molina Healthcare common stock beneficially owned as of March 5, 2018 by each stockholderprovides information about stockholders known to us to beneficially own more than five percent (5%) percent of the Company’sMolina Healthcare’s outstanding shares of common shares. The percentagestock. As of ownership indicated in the following table is based on 59,958,401March 8, 2024, there were 58,583,802 shares of our common shares outstandingstock outstanding. | | | | | | | | | | | | | | | Name | Number of Shares
Beneficially Owned
(#) | Percentage of Outstanding Shares (1) (%) | | | | | | | | | | | Other Principal Stockholders: | | | | | | Wellington Management Group LLP (2) | 3,831,100 | | 6.54 | | | | | T. Rowe Price Associates, Inc.(3) | 4,157,240 | | 7.10 | | | | | BlackRock, Inc.(4) | 4,877,403 | | 8.33 | | | | | Capital World Investors(5) | 5,494,706 | | 9.38 | | | | | The Vanguard Group (6) | 6,585,954 | | 11.24 | | | | |
(1)Calculated as of March 5, 2018.8, 2024.
(2)Based on the Schedule 13G filed by such stockholder and affiliated entities on February 8, 2024. Such stockholders’ address is 280 Congress Street, Boston, MA 02210. Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP have (a) shared power to dispose or direct the disposition of 3,831,100 shares of our common stock; and (b) shared power to vote or direct the vote of 3,234,652shares of our common stock.
(3)Based on the Schedule 13G filed by such stockholder on February 14, 2024. Such stockholder’s address is 100 East Pratt Street, Baltimore, MD 21202. T. Rowe Price Associates, Inc. has (a) sole power to dispose or direct the disposition of 4,154,566 shares of our common stock; and (b) sole power to vote or direct the vote of 1,275,947 shares of our common stock.
Molina Healthcare,(4)Based on the Schedule 13G/A filed by such stockholder on January 25, 2024. Such stockholder’s address is 50 Hudson Yards, New York, NY 10001. BlackRock, Inc. 2018 Proxy Statement | 66
(5)Based on the Schedule 13G/A filed by such stockholder on February 9, 2024. Such stockholder’s address is 333 South Hope Street, 55th Floor, Los Angeles, CA 90071. Capital World Investors has (a) sole power to dispose or direct the disposition of 5,494,706 shares of our common stock; and (b) sole power to vote or direct the vote of 5,490,304 shares of our common stock.
(6)Based on the Schedule 13G/A filed by such stockholder on February 13, 2024. Such stockholder’s address is 100 Vanguard Boulevard, Malvern, PA 19355. The Vanguard Group has (a) sole power to dispose or direct the disposition of 6,338,971 shares of our common stock; (b) shared power to dispose or direct the disposition of 246,983shares of our common stock; and (c) shared power to vote or direct the vote of 74,995 shares of our common stock.
| | | | | | | Name | Number of Shares Beneficially Owned | Percentage of Outstanding Shares | | Other Principal Stockholders: | | | Capital World Investors(1) | 5,569,005 |
| 9.29 | % | T. Rowe Price Associates, Inc.(2) | 5,392,307 |
| 8.99 | % | BlackRock, Inc.(3) | 4,735,433 |
| 7.90 | % | The Vanguard Group(4) | 4,053,946 | 6.76 | % |
| | (1)
| Based on the Schedule 13G/A filed by such stockholder on February 14, 2018. Such stockholder’s address is 333 South Hope Street, Los Angeles, California 90071. |
| | (2)
| Based on the Schedule 13G filed by such stockholder on February 14, 2018. Such stockholder’s address is 100 East Pratt Street, Baltimore, Maryland 21202. |
| | (3)
| Based on the Schedule 13G/A filed by such stockholder on February 8, 2018. Such stockholder’s address is 55 East 52nd Street, New York, New York 10055. |
| | (4)
| Based on the Schedule 13G/A filed by such stockholder on February 9, 2018. Such stockholder’s address is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. |
Securities Authorized for Issuance Under Equity Compensation Plans (as of December 31, 2017) | | | | | | | | | | | | | | | | | | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
(b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c) | | | | | | | | Plan Category | | | | | | Equity compensation plans approved by security holders | — | | — | | 405,000 3,443,820(1)
| | $64.79
(1)Includes shares remaining available to issue under the 2019 Equity Incentive Plan, and the 2019 Employee Stock Purchase Plan. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 71 | | 2,700,371 (2) |
| | | | | | | | Options to purchase shares of our common stock issued under the 2011 Equity Incentive Plan.
| | (2)
| Includes shares remaining available to issue under the 2011 Equity Incentive Plan, and the 2011 Employee Stock Purchase Plan. |
Management Analysis of Material Effects of Compensation Plans Management has concluded that the Company’s compensation plans are not reasonably likely to have a material adverse effect on the Company. Householding Under SEC rules, a single set of annual reports and proxy statements may be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses. In accordance with a notice sent to certain stockholders who shared a single address, only one annual report and proxy statement will be sent to that address unless any stockholder at that address requested that multiple sets of documents be sent. However, if any stockholder who agreed to householding wishes to receive a separate annual report or proxy statement for 20182024 or in the future, he or shesuch stockholder may telephone toll-free 1-866-540-7095 or write to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, NY 11717. Stockholders sharing an address who wish to receive a single set of reports may do so by contacting their banks or brokers, if they are beneficial holders, or by contacting Broadridge Financial Solutions, Inc. at the address set forth above, if they are record holders.
Molina Healthcare, Inc. 2018 Proxy Statement | 67
Other Matters The Board of Directors knows of no other matters that will be presented for consideration at the meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment. | | | | | By Order of the Board of Directors | | | Dale B. Wolf | | Chairman of the Board |
Dated: March 23, 2018
21, 2024
Molina Healthcare, Inc. 2018 Proxy Statement | 68 | | | | | | | | | | 72 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
Questions and Answers About our Annual Meeting Why did I receive these proxy materials? You are viewing or have received these proxy materials because the Board of Directors of Molina Healthcare, Inc. is soliciting your vote at the 2024 annual meeting of Molina Healthcare’s stockholders, which this year will be a completely “virtual meeting” held on the Internet. This proxy statement includes information that we are required to provide to you under the rules of the SEC and that is designed to assist you in voting your shares. How many votes are needed for each proposal and what are the effects of abstentions, broker non-votes, and unmarked proxy cards? | | | | | | | | | | | | | | | | Proposal | | | | | Proposal | Votes Required for Approval | Effect of Abstention(1) | Broker Non-Votes(2) | Unmarked/Signed Proxy Cards | | | | | | | | | | | To elect three Class Ithe nine directors named in this proxy statement to hold office until the 20212025 annual meeting.(1) (Proposal 1 on the proxy card) | The number of votes cast “For” a nominee exceed the number of votes cast “Against” that nominee(2)(3) | No effect | Not voted, No effect(3)(4) | Counted as “For” | | | | | |
| | | | | | To consider and approve, on a non-binding, advisory basis, the compensation of our named executive officers.
(Proposal 2 on the proxy card)
| Majority in voting power of shares present in person or by proxy and entitled to vote | Counted as “Against” | Not voted, No effect(3)(4) | Counted as “For” | | | | | |
| | | | | To approve an amendment and restatementratify the appointment of our Bylaws to implement proxy access.
Ernst & Young LLP.
(Proposal 3 on the proxy card) | Majority of shares outstanding and entitled to vote | Counted as “Against” | Counted as “Against”(3)
| Counted as “For” | To ratify the appointment of Ernst & Young LLP
(Proposal 4 on the proxy card)
| Majorityin voting power of shares present in person or by proxy and entitled to vote | Counted as “Against” | Broker non-votes not expected(5) | Counted as “For” | | | | | | | | | | | To consider and vote upon the shareholder proposal regarding simple majority voting.
(Proposal 4 on the proxy card) | Majority in voting power of shares present in person or by proxy and entitled to vote | Counted as “Against” | Not voted, No effect(4) | Counted as “For”“Against” | | | | | |
(1)1.An “abstention” represents a stockholder’s affirmative choice to decline to vote on proposal.
2.See “Can my broker vote my shares for me on each of the proposals?” for further information on broker non-votes. 3.The Company’s Bylawsbylaws provide for a majority vote standard for an uncontested election of directors (i.e., an election where the number of nominees for director does not exceed the number of directors to be elected). (2) If an incumbent director is not elected due to failure to receive a majority of the votes cast, and his or her successor is not otherwise elected and qualified, such director shall tender his or her offer of resignation promptly following the certification of the election results. Within 90 days from the certification of the vote, the corporate governance and nominating committee will make a recommendation to the Board of Directors with respect to any such tendered resignation, and the Board of Directors will act on such committee’s recommendation and publicly disclose its decision and the rationale behind it.
(3)4.Proposals 1, 2, and 34 are not considered routine matters under the NYSE rules, and brokers are not permitted to vote on such proposals if the beneficial owners fail to provide voting instructions.
(4)5.Proposal 43 is considered a routine matter under the NYSE rules, and brokers are permitted to vote in their discretion on such proposal if the beneficial owners fail to provide voting instructions.
Molina Healthcare, Inc. 2018 Proxy Statement | 69
Who is soliciting my vote? The Board of Directors of Molina Healthcare, Inc. is soliciting your vote at the 20182024 annual meeting of Molina Healthcare’s stockholders.stockholders, which this year will be a completely “virtual meeting” held on the Internet. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 73 | | |
| | | | | | | QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING | |
What willam I be votingbeing asked to vote on? You will be votingare being asked to vote on the following matters: | | 1. | The election of three Class I directors to hold office until the 2021 annual meeting; |
| | 2. | The compensation of our named executive officers (as an advisory vote); |
| | 3. | The amendment and restatement of our Bylaws to implement proxy access; |
| | 4. | The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018; and |
| | 5. | Any other matters properly brought before the meeting or any adjournment or postponement thereof. |
1.The election of the nine directors named in this proxy statement to hold office until the 2025 annual meeting; 2.The compensation of our named executive officers (on an advisory basis); 3.The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024; 4.The shareholder proposal regarding simple majority voting; and 5.Any other matters properly brought before the meeting or any adjournment or postponement thereof. The Board of Directors unanimously recommends that the stockholders vote “FOR” the election of each director nominee and “FOR” Proposals 2 and 3 for the reasons discussed in this proxy statement, and “AGAINST” Proposal 4, as the Company does not have any supermajority voting provisions in its governing documents. Why did I not receive my proxy materials in the mail? As permitted by rules of the SEC, we are making this proxy statement and our Annual Report available to our stockholders electronically via the Internet. The “e-proxy” process expedites your receipt of proxy materials and lowers the costs and reduces the environmental impact of the annual meeting. On or about March 23, 2018,21, 2024, we mailed to stockholders of record as of the close of business on March 5, 20188, 2024 a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this proxy statement, our Annual Report and other soliciting materials via the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail.mail unless you specifically request them. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy statement and our Annual Report. The Notice also instructs you on how you may submit your proxy. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice for requesting such materials. What does it mean if I receive more than one Notice or more than one set of proxy materials? It means that your shares are held in more than one account at the transfer agent and/or with banks or brokers. Please vote all of your shares. To ensure that all of your shares are voted, for each Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or, if you received printed copies of the proxy materials, by signing, dating, and returning the enclosed proxy card in the enclosed envelope. How many votes do I have? You will have one vote for every share of our common stock you owned on March 5, 2018,8, 2024, which is the record date for the annual meeting. You are entitled to vote at the annual meeting only if you were a holder of record of common stock as of the close of business on the record date. How many votes can be cast by all stockholders? 59,958,401,58,583,802 consisting of one vote for each share of our common stock that was outstanding on March 8, 2024, the record date. There is no cumulative voting.
How many votesstockholders must be present in person or represented by proxy to hold the meeting? AHolders of a majority in voting power of the votes that canshares issued and outstanding and entitled to vote at the meeting, or 29,291,902 shares, must be cast,present in person or 29,979,201 votes.represented by proxy at the meeting. We urge you to vote by proxy even if you plan to attend the annual meeting so that we will know as soon as possible whether enough votesshares will be present or represented by proxy for us to hold the meeting. Votes withheld and abstentions are counted as present and entitled to vote for purposes of determining a quorum. If a quorum is not established at the scheduled time of the annual meeting, the Chair of the annual meeting, or any other officer entitled to preside over the meeting or to serve as secretary of the meeting, is authorized by our Bylaws to adjourn the meeting, without the vote of stockholders.
| | | | | | | | | | 74 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING |
How do I vote? You can vote either in person at the annual meeting or by proxy whether or not you attend the annual meeting. To vote by proxy, you must: •fill out the enclosed proxy card,, date and sign it, and return it in the enclosed postage-paid envelope; •vote by telephone (instructions are on the proxy card); or •vote by Internet (instructions are on the proxy card). Internet and telephone voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m., Eastern time, on April 30, 2024. To participate in the annual meeting, including to vote via the Internet or telephone, you will need the 16-digit control number included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials. To ensure that your vote is counted, please remember to submit your vote by May 1, 2018,April 30, 2024, the day before the annual meeting. If Whether or not you wantexpect to attend the annual meeting online, we urge you to vote in personyour shares as promptly as possible to ensure your representation and the presence of a quorum at the annual meeting and you holdmeeting.
If your shares are held through a bank or securities broker (that is, in “street name”), these proxy materials are being provided to you by your bank or broker, along with a voting instruction card if you received printed copies of our proxy materials. As the “beneficial owner” of these shares, you have the right to direct your bank or broker how to vote your shares, and the bank or broker is required to vote your shares in accordance with your instructions. If your shares are held in street name),name, you mustmay not vote your shares online at the annual meeting unless you obtain a legal proxy from your broker, bank, trustee, or nominee. How can I vote my shares in person and bringparticipate at the annual meeting? This year’s annual meeting will be held entirely online. Stockholders may participate in the annual meeting by visiting the following website: www.virtualshareholdermeeting.com/MOH2024. To participate in the annual meeting, you will need the 16‐digit control number included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials. Shares held in your name as the stockholder of record may be voted electronically during the annual meeting. Shares for which you are the beneficial owner but not the stockholder of record also may be voted electronically during the annual meeting if you have obtained a legal proxy from your broker, bank, trustee, or nominee. However, even if you plan to attend the annual meeting, the Company recommends that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the annual meeting. What will I need in order to attend the annual meeting? You are entitled to attend the virtual annual meeting only if you were a stockholder of record as of March 8, 2024, the record date for the annual meeting, or you hold a valid proxy for the annual meeting. You may attend the annual meeting, vote, and submit a question during the annual meeting by visiting www.virtualshareholdermeeting.com/MOH2024 and using your 16‐digit control number to enter the meeting. If you are not a stockholder of record but hold shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the virtual annual meeting. Can I change my vote or revoke my proxy? Yes. Just send in a new proxy card with a later date, or cast a new vote by telephone or Internet, or send a written notice of revocation to Molina Healthcare’s Corporate Secretary at 200 Oceangate, Suite 100, Long Beach, California 90802. If you attend the annual meeting and want to vote in person,at the annual meeting, you can request that your previously submitted proxy not be used. If your shares are held in street name, you can change or revoke your voting instructions by following the specific directions provided to you by your bank or broker, or you can attend and vote at the annual meeting using your 16-digit control number. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 75 | | |
| | | | | | | QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING | |
What if I do not vote for the four proposals listed on my proxy card? If you return a signed proxy card without indicating your vote, in accordance with the Board’s recommendation, your shares will be voted as follows: | | 1. | For the three director nominees listed on the card;
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1.For the nine director nominees listed on the card (Proposal 1);
2.For the approval, on a non-binding, advisory basis, of the compensation of our named executive officers (Proposal 2);
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4.Against the shareholder proposal regarding simple majority voting (Proposal 4).
| | 2. | For the approval, on a non-binding, advisory basis, the compensation of our named executive officers;
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| | 3. | For the approval, to amend and restate our Bylaws to implement proxy access; and
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| | 4. | For the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018.
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Can my broker vote my shares for me on each of the proposals? If your shares of our common stock are held in street name, and you do not provide your broker with voting instructions, your broker has the discretion to vote your shares of common stock for or against Proposal 3, the ratification of the appointment of our independent registered public accounting firm for 2024, and not any of the other proposals. If your broker does not have discretion to vote your common stock without your instructions, this is referred to as a “broker non-vote.” Broker non-votes will not be considered as votes cast on, and will have no effect on the outcome of Proposals 1, 2, and 3 are not considered routine matters under NYSE rules, and brokers will not be permitted to vote on such proposals if the beneficial owners fail to provide voting instructions. Please vote your proxy so your vote can be counted. Proposal 4 is considered a routine matter under the NYSE rules on which brokers will be permitted to vote in their discretion even if the beneficial owners do not provide voting instructions.4.
Can my shares be voted if I do not return my proxy card and do not attend the annual meeting? If you do not vote your shares held in street name, your broker can vote your shares on matters that the NYSE has ruled discretionary. As noted above, Proposals 1, 2, and 34 are not discretionary items. However, Proposal 43 (to ratify the appointment of Ernst & Young LLP) is a discretionary item, and thus NYSE member brokers that do not receive instructions from beneficial owners may vote such shares at their discretion for such proposal. If you do not vote the shares that are registered directly in your name, notrather than in the name of a bank or broker, your shares will not be voted.voted on your behalf. Could other matters be decided at the annual meeting? We do not know of any other matters that will be considered at the annual meeting. If any other matters are properly brought before the meeting (including any adjournment or postponement thereof), the proxies will be voted at the discretion of the proxy holders. Why hold a virtual meeting? A virtual meeting enables increased stockholder attendance and participation because stockholders can participate from any location around the world. You will be able to attend the Annual Meeting online and submit your questions by visiting www.virtualshareholdermeeting.com/MOH2024. You also will be able to vote your shares electronically at the Annual Meeting by following the instructions above. What happens if the meeting is postponed or adjourned? Your proxy will still be good and may be voted at the postponed or adjourned meeting. You will still be able to change or revoke your proxy until it is voted. Do I need proof of stock ownership to attendWhat if during the annual meeting?
Yes, you will need proof of ownership of common stock to enter the meeting.
When you arrive atcheck-in or during the annual meeting I have technical difficulties or trouble accessing the virtual meeting website?
We will have technicians ready to assist you with any technical difficulties you may be asked to present photo identification, such as a driver’s license. If you are a stockholder of record, youhave accessing the virtual meeting website, and the information for assistance will be located on the list of Molina Healthcare’s registered stockholders. If your shares are held in the name of a bank, broker, or other holder of record, a recent brokerage statement or letter from a bank or broker is an example of proof of ownership. In accordance with our discretion, we may admit you only if we are able to verify that you are a Molina Healthcare stockholder.www.virtualshareholdermeeting.com/MOH2024. How can I access Molina Healthcare’s proxy materials and 20172023 Annual Report electronically? This proxy statement and our Annual Report are available on Molina Healthcare’s website at www.molinahealthcare.com.www.molinahealthcare.com. From the Molina home page, click on “About Molina,” then click on “Investors,“Company Information, and then “Investor Information,” and this proxy statement and our Annual Report can be found under the heading “Annual Reports, Filings & Statements.“Latest Reports.” | | | | | | | | | | 76 | Molina Healthcare, Inc. 2024 Proxy Statement | | |
| | | | | | | QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING |
Most stockholders can elect not to receive paper copies of future proxy statements and annual reports and can instead view those documents on the Internet. If you are a stockholder of record, you can choose this option and save Molina Healthcare the cost of producing and mailing these documents by following the instructions provided when you vote over the Internet. If you hold your shares through a bank, broker, or other holder of record, please refer to the information provided by that entity for instructions on how to elect not to receive paper copies of future proxy statements and annual reports. If you choose not to receive paper copies of future proxy statements and annual reports, you will receive an e-mail message next year containing the Internet address to use to access the proxy statement and annual report. Your choice will remain in effect until you tell us otherwise. Where can I find the voting results? We intend to announce preliminary voting results at the annual meeting. We will publish the final results in a current report on Form 8-K, which we expect to file within four business days after the annual meeting is held. You can obtain a copy of the Form 8-K by logging on to our website at www.molinahealthcare.com,, or through the EDGAR system maintained by the SEC, at www.sec.gov.
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www.sec.gov. Information on our website does not constitute part of this proxy statement. Who pays the costs of the annual meeting and the solicitation of proxies? Molina Healthcare pays the cost of the annual meeting and the cost of soliciting proxies. The Company has retained Alliance Advisors LLC to assist in the solicitation of proxies from individual shareholders as well as banks, brokers and proxy intermediaries representing beneficial owners of shares for the annual meeting. We have agreed to pay Alliance Advisors a fee of approximately $17,500 plus variable amounts for additional proxy solicitation services and out-of-pocket expenses. In addition to soliciting proxies by mail, Molina Healthcare directors, officers and other employees may solicit proxies by telephone and similar means. No director, officer, or employee of Molina Healthcare will be specially compensated for these activities. Molina HealthcareWe will also intends to request that brokers, banks,nominees, custodians and other nominees solicit proxies from their principals and will payfiduciaries forward soliciting materials to the beneficial owners of shares held by the brokers, banks,nominees, custodians and other nominees certainfiduciaries. We will reimburse these persons for their reasonable expenses they incur for suchin connection with these activities. How can I present a proposal or director nomination for next year’s annual meeting? Stockholder proposals (excluding nominations for director), submitted for inclusion in our proxy statement for our next annual meeting of stockholders must comply with the applicable requirements ofpursuant to Rule 14a-8 under the Exchange Act and must be delivered in writing to our Corporate Secretary in a timely manner.manner and must comply with the other requirements of Rule 14a-8. For a stockholder proposal to be considered for inclusion in our proxy statement for our 20192025 annual meeting of stockholders, our Corporate Secretary must receive written notice of such proposal no later than November 23, 2018.21, 2024. Pursuant to our bylaws, stockholders wishing to present any proposal including nominationsor nomination for director for consideration at our next annual meeting of stockholders (but not include itthe proposal in our proxy statement for our 20192025 annual meeting of stockholders) must provide written notice of such proposal to our Corporate Secretary between January 2, 20181, 2025 and February 1, 2018,January 31, 2025, and comply with the other applicable provisions of our bylaws. If Proposal 3 is approved In addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19(b) under the Exchange Act by the requisite vote at this year’s annual meeting offoregoing deadline for submitting director nominations under our bylaws.
Eligible stockholders eligible stockholders willalso have the ability to submit director nominees for inclusion in our proxy statement at the 20192025 annual meeting of stockholders.stockholders pursuant to the proxy access provisions in our bylaws. As described in more detail in Proposal 3,our bylaws, to be eligible, stockholders must have owned at least three percent (3%) of ourthe outstanding shares of our common stock for at least three (3) years. Up to twenty (20) stockholders will be able to aggregate their holdings for this purpose. Nominations must be submitted toreceived by our Corporate Secretary at our principal executive offices no earlier than October 24, 201822, 2024 and no later than November 23, 2018.21, 2024. All stockholder proposals and director nomination submissions must be submitted in writing to our Corporate Secretary at our principal executive offices at 200 Oceangate, Suite 100, Long Beach, California 90802 by the applicable dates specified above. You can obtain a copy of our bylaws by writing to our Corporate Secretary at the foregoing address. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these or other applicable requirements. Wherecan I obtain a copy of the Annual Report? If you received these materials by mail, you should have also received with them our Annual Report. Our Annual Report is also available on Molina Healthcare’s website at www.molinahealthcare.com as described above. We urge you to read these documents carefully. In accordance with the rules of the SEC, the Company’s performance graph appears in Part II, Item 5, under the subheading “Stock Performance Graph,” of our Annual Report. | | | | | | | | | | Molina Healthcare, Inc. 2024 Proxy Statement | 77 | | |
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