WebMD Health (WBMD)

 

The Compensation Committee of our Board of Directors has determined that it is in the best interests of WebMD and our stockholders to amend WebMD’s 2005 Long-Term Incentive Plan (which we sometimes refer to as the 2005 Plan) to increase the number of shares of our Common Stock issuable under the 2005 Plan by 1,850,000 shares, to a total of 9,000,000 shares, subject to the approval of our stockholders. We are asking stockholders to ratify and approve this increase in the number of shares issuable under the 2005 Plan in order to comply with applicable requirements of The NASDAQ Global Market and, to the extent permitted by law, to preserve the tax deductible status for the certain awards granted under the 2005 Plan. The stock options (and, if any, stock appreciation rights) that would be granted under the 2005 Plan are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code. In addition, the 2005 Plan authorizes performance-based stock awards that would give the Company the flexibility to structure stock-based bonus opportunities as performance-based within the meaning of Section 162(m).

 

Competition for qualified personnel in the healthcare information services and Internet industries is intense. WebMD needs to be able to attract, motivate and retain experienced executives, writers and editors, software developers and other technical personnel, and sales and marketing personnel, among others. The availability of additional options and/or other stock-based awards for future grants will provide WebMD with greater ability to attract and retain employees in the future by offering compensation packages competitive with those available from other potential employers, while continuing to allow WebMD to use equity as a significant component of compensation.

 

The 2005 Plan is the only equity compensation plan of WebMD under which grants of stock-based awards may currently be made. Under the 2005 Plan, a total of approximately 1,152,000 shares were available for future grant, as of August 1, 2007. If Proposal 2 is approved by our stockholders, an additional 1,850,000 shares would become available for future grants under the 2005 Plan.

 

Persons eligible to receive awards under the 2005 Plan are employees or officers (including executive officers) of WebMD or its subsidiaries and parent, directors of WebMD, and certain consultants to WebMD or any of its subsidiaries. As of August 1, 2007, approximately 1,100 officers and employees of WebMD and its subsidiaries (including all of its executive officers), as well as each of its 6 non-employee directors, are eligible to receive grants under the 2005 Plan. As of August 1, 2007, approximately 1,300 officers and employees of HLTH and its subsidiaries (other than WebMD and its subsidiaries) are eligible to receive grants under the 2005 Plan and three employees of HLTH who are not officers or employees of WebMD have received a grant under the 2005 Plan. The Compensation Committee does not, in general, intend to make grants under the 2005 Plan to employees of HLTH and its subsidiaries who are not officers or employees of WebMD or its subsidiaries.

 

As more fully described in “Executive Compensation — Compensation Discussion and Analysis” above, WebMD typically grants stock options (and, in the case of certain officers, restricted stock) when officers and other employees first join our company, in connection with a significant change in responsibilities and, occasionally, to achieve equity within a peer group. We expect to continue these practices. We have in the past, from time to time, made additional grants where appropriate to retain and motivate our officers and employees and may do so in the future. See “— New Plan Benefits” below for information regarding grants under the 2005 Plan during 2006. However, as of the date of this Proxy Statement, we have no current plans or proposals to make grants of awards under the 2005 Plan to specific employees or officers.

 

Prior to our initial public offering, our officers (including our Named Executive Officers) received grants of HLTH Restricted Stock and options to purchase shares of HLTH Common Stock under HLTH’s equity compensation plans and they continue to be eligible to receive awards under those plans. However, the HLTH Compensation Committee does not, in general, intend to make grants to WebMD employees under HLTH equity compensation plans and has not done so since our initial public offering. So long as WebMD remains a subsidiary of HLTH for purposes of the applicable HLTH equity compensation plan, HLTH Restricted Stock and options to purchase HLTH Common Stock held by WebMD officers and employees will generally