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This excerpt taken from the WBMD DEF 14A filed Nov 5, 2008. Compensation
Following Termination of Employment or a Change in
Control
Overview. WebMD does not offer any deferred
compensation plans to WebMD’s executive officers or other
employees and does not offer any retirement plans to
WebMD’s executive officers, other than a 401(k) plan
generally available to other employees. Accordingly, the payment
and benefit levels for WebMD’s Named Executive Officers
applicable upon a termination or a change in control result from
provisions in the employment agreements between WebMD or HLTH
and the individual Named Executive Officers. However, unlike
annual or special bonuses or the amounts of equity grants (which
the Compensation Committee generally determines in its
discretion at the time of payment or grant), the terms of
employment agreements are the result of negotiations between
WebMD or HLTH and those individuals, which generally occur at
the time the individual joins WebMD or HLTH or in connection
with a promotion to a more senior position with WebMD or HLTH
(subject to the approval of the applicable Compensation
Committee in the case of executive officer employment
agreements). The Compensation Committees of WebMD and HLTH have,
in the past, usually been willing to include similar provisions
relating to potential terminations and changes in control in
connection with the renewal of or extensions to an employment
agreement with an existing executive officer as those in the
existing employment agreement with that executive officer. The
employment agreements with Named Executive Officers are
described under the heading “Employment Agreements with
Named Executive Officers” below and summaries of the types
of provisions relating to post-termination compensation included
in those agreement are included in this section under the
headings “Employment Agreement Provisions
Table of Contents
Regarding Termination Benefits” and “Employment
Agreement Provisions Regarding Change in Control Benefits”
below.
In determining whether to approve executive officer employment
agreements (or renewals of or extensions to those agreements),
the Compensation Committees of WebMD and HLTH consider their
need for the services of the specific individual and the
alternatives available to WebMD, as well as potential
alternative employment opportunities available to the individual
from other companies. In considering whether to approve
employment agreement terms that may result in potential payments
and other benefits for executives that could become payable
following a termination or change in control, the Compensation
Committee considers both the costs that could potentially be
incurred by WebMD, as well as the potential benefits to WebMD,
including benefits from post-termination confidentiality,
non-solicit and non-compete obligations imposed on the executive
and provisions relating to post-termination services required of
certain Named Executive Officers. In the case of potential
payments and other benefits that could potentially become
payable following a change in control, the Compensation
Committee considers whether those provisions would provide
appropriate benefit to an acquiror, in light of the cost the
acquiror would incur, as well as benefits to WebMD during the
period an acquisition is pending.
Employment Agreement Provisions Regarding Termination
Benefits. WebMD’s employment agreements with
Named Executive Officers provide for some or all of the
following to be paid if the Named Executive Officer is
terminated without cause or resigns for good reason (the
definitions of which are typically set forth in the applicable
employment agreement), dies or ceases to be employed as a result
of disability:
The amount and nature of these benefits vary by individual, with
the most senior of the Named Executive Officers typically
receiving more of these benefits and receiving them for a longer
period. These benefits also vary depending on the reason for the
termination. See “Employment Agreements with Named
Executive Officers” below for a description of the specific
provisions that apply to each of WebMD’s Named Executive
Officers and “Potential Payments and Other Benefits upon
Termination of Employment or Change in Control” below for a
sample calculation, based on applicable SEC rules, of the
amounts that would have been payable if termination for
specified reasons had occurred as of December 31, 2007. No
such post-termination benefits apply if a Named Executive
Officer is terminated for cause (the definition of which is
typically set forth in the applicable employment agreement). The
Compensation Committee believes that the protections provided to
executive officers by the types of employment agreement
provisions described above are appropriate for the attraction
and retention of qualified and talented executives and
consistent with good corporate governance.
Employment Agreement Provisions Regarding Change in Control
Benefits. The Compensation Committees of the
WebMD board and the HLTH board believe that executives should
generally not be entitled to severance benefits upon the
occurrence of a change in control, but that it is appropriate to
provide for such benefits if a change in control is followed by
a termination of employment or other appropriate triggering
event. See “Employment Agreement Provisions Regarding
Termination Benefits” above. However, as more fully
described below under “Employment Agreements with the Named
Executive Officers” and “Potential Payments and Other
Benefits upon Termination of Employment or Change in
Control” below, the Compensation Committee has approved the
following exceptions:
Table of Contents
In the negotiations with those Named Executive Officers
regarding their employment agreements, the HLTH Compensation
Committee (which was authorized to make compensation
determinations with respect to WebMD executive officers prior to
WebMD’s initial public offering and is authorized to make
compensation determinations with respect to HLTH’s
executive officers) recognized that, for those individuals, a
change in control is likely to result in a fundamental change in
the nature of their responsibilities. Accordingly, under their
employment agreements, the HLTH Compensation Committee approved
those Named Executive Officers having, following a change in
control, the rights described above. The HLTH Compensation
Committee believed that the rights provided were likely to be
viewed as appropriate by a potential acquiror in the case of
those specific individuals. In addition, the HLTH Compensation
Committee sought to balance the rights given to those Named
Executive Officers with certain requirements to provide
transitional or consulting services (as described below) in
types and amounts likely to be viewed as reasonable by a
potential acquiror.
If the benefits payable to Mr. Vuolo in connection with a
change in control would be subject to the excise tax imposed
under Section 280G of the Internal Revenue Code of 1986,
WebMD has agreed to make an additional payment to him so that
the net amount of such payment (after taxes) that he receives is
sufficient to pay the excise tax due. HLTH has agreed to make
such additional payments to Mr. Wygod.
Application in 2007. No changes were made
during 2007 to the provisions of the employment agreements with
the Named Executive Officers relating to post-termination
compensation.
Deductibility of
Compensation. Section 162(m) of the
Internal Revenue Code generally limits the ability of a publicly
held corporation to deduct compensation in excess of
$1 million per year paid to certain executive officers. It
is the policy of the Compensation Committee to structure, where
practicable, compensation paid to its executive officers so that
it will be deductible under Section 162(m) of the Code.
Accordingly, WebMD’s equity plans under which awards are
made to officers and directors are generally designed to ensure
that compensation attributable to stock options granted will be
tax deductible by WebMD. However, cash bonuses for WebMD’s
executive officers and grants of restricted stock do not qualify
as performance-based within the meaning of Section 162(m)
and, therefore, are subject to its limits on deductibility. In
determining that the compensation of WebMD’s executive
officers for 2007 was appropriate under the circumstances and in
the best interests of WebMD and its stockholders, the
Compensation Committee considered the amount of net operating
loss carryforwards available to WebMD to offset income for
federal income tax purposes. See Note 15 to the
Consolidated Financial Statements included as Annex B-1 to
this proxy statement.
These excerpts taken from the WBMD 10-K filed Apr 29, 2008. Compensation
Following Termination of Employment or a Change in
Control
Overview. WebMD does not offer any deferred
compensation plans to our executive officers or other employees
and does not offer any retirement plans to our executive
officers, other than a 401(k) plan generally available to our
other employees. Accordingly, the payment and benefit levels for
WebMD’s Named Executive Officers applicable upon a
termination or a change in control result from provisions in the
employment agreements between WebMD or HLTH and the individual
Named Executive Officers. However, unlike annual or special
bonuses or the amounts of equity grants (which the Compensation
Committee generally determines in its discretion at the time of
payment or grant), the terms of employment agreements are the
result of negotiations between WebMD or HLTH and those
individuals, which generally occur at the time the individual
joins WebMD or HLTH or in connection with a promotion to a more
senior position with WebMD or HLTH (subject to the approval of
the applicable Compensation Committee in the case of executive
officer employment agreements). The Compensation Committees of
WebMD and HLTH have, in the past, usually been willing to
include similar provisions relating to potential terminations
and changes in control in connection with the renewal of or
extensions to an employment agreement with an existing executive
officer as those in the existing employment agreement with that
executive officer. The employment agreements with our Named
Executive Officers are described under the heading
“Employment Agreements with Named Executive Officers”
below and summaries of the types of provisions relating to
post-termination compensation included in those agreement are
included in this section under the headings
“— Employment Agreement Provisions Regarding
Termination Benefits” and “— Employment
Agreement Provisions Regarding Change in Control Benefits”
below.
In determining whether to approve executive officer employment
agreements (or renewals of or extensions to those agreements),
the Compensation Committees of WebMD and HLTH consider our need
for the services of the specific individual and the alternatives
available to us, as well as potential alternative employment
opportunities available to the individual from other companies.
In considering whether to approve employment agreement terms
that may result in potential payments and other benefits for
executives that could become payable following a termination or
change in control, the Compensation Committee considers both the
costs that could potentially be incurred by our company, as well
as the potential benefits to our company, including benefits to
our company from post-termination confidentiality, non-solicit
and non-compete obligations imposed on the executive and
provisions relating to post-termination services required of
Table of Contents
certain Named Executive Officers. In the case of potential
payments and other benefits that could potentially become
payable following a change in control, the Compensation
Committee considers whether those provisions would provide
appropriate benefit to an acquiror, in light of the cost the
acquiror would incur, as well as benefits to our company during
the period an acquisition is pending.
Employment Agreement Provisions Regarding Termination
Benefits. The employment agreements with our
Named Executive Officers provide for some or all of the
following to be paid if the Named Executive Officer is
terminated without cause or resigns for good reason (the
definitions of which are typically set forth in the applicable
employment agreement), dies or ceases to be employed as a result
of disability:
The amount and nature of these benefits vary by individual, with
the most senior of the Named Executive Officers typically
receiving more of these benefits and receiving them for a longer
period. These benefits also vary depending on the reason for the
termination. See “Employment Agreements with Named
Executive Officers” below for a description of the specific
provisions that apply to each of our Named Executive
Officers” and “Potential Payments and Other Benefits
Upon Termination of Employment or Change in Control” below
for a sample calculation, based on applicable SEC rules, of the
amounts that would have been payable if termination for
specified reasons had occurred as of December 31, 2007. No
such post-termination benefits apply if a Named Executive
Officer is terminated for cause (the definition of which is
typically set forth in the applicable employment agreement). The
Compensation Committee believes that the protections provided to
executive officers by the types of employment agreement
provisions described above are appropriate for the attraction
and retention of qualified and talented executives and
consistent with good corporate governance.
Employment Agreement Provisions Regarding Change in Control
Benefits. The Compensation Committees of the
WebMD Board and the HLTH Board believe that executives should
generally not be entitled to severance benefits upon the
occurrence of a change in control, but that it is appropriate to
provide for such benefits if a change in control is followed by
a termination of employment or other appropriate triggering
event. See “— Employment Agreement Provisions
Regarding Termination Benefits” above. However, as more
fully described below under “Employment Agreements with the
Named Executive Officers” and “Potential Payments and
Other Benefits Upon Termination of Employment or Change in
Control” below, the Compensation Committee has approved the
following exceptions:
Table of Contents
In the negotiations with those Named Executive Officers
regarding their employment agreements, the HLTH Compensation
Committee (which was authorized to make compensation
determinations with respect to WebMD executive officers prior to
WebMD’s initial public offering and is authorized to make
compensation determinations with respect to HLTH’s
executive officers) recognized that, for those individuals, a
change in control is likely to result in a fundamental change in
the nature of their responsibilities. Accordingly, under their
employment agreements, the HLTH Compensation Committee approved
those Named Executive Officers having, following a change in
control, the rights described above. The HLTH Compensation
Committee believed that the rights provided were likely to be
viewed as appropriate by a potential acquiror in the case of
those specific individuals. In addition, the HLTH Compensation
Committee sought to balance the rights given to those Named
Executive Officers with certain requirements to provide
transitional or consulting services (as described below) in
types and amounts likely to be viewed as reasonable by a
potential acquiror.
If the benefits payable to Mr. Vuolo in connection with a
change in control would be subject to the excise tax imposed
under Section 280G of the Internal Revenue Code of 1986
(“Section 280G”), WebMD has agreed to make an
additional payment to him so that the net amount of such payment
(after taxes) that he receives is sufficient to pay the excise
tax due. HLTH has agreed to make such additional payments to
Mr. Wygod.
Application in 2007. No changes were made
during 2007 to the provisions of the employment agreements with
the Named Executive Officers relating to post-termination
compensation. Consummation of the pending HLTH Merger will not
result in a “change in control” under the terms of any
of the employment agreements between HLTH or WebMD and their
respective executive officers.
Deductibility of
Compensation. Section 162(m) of the
Internal Revenue Code generally limits the ability of a publicly
held corporation to deduct compensation in excess of
$1 million per year paid to certain executive officers. It
is the policy of the Compensation Committee to structure, where
practicable, compensation paid to its executive officers so that
it will be deductible under Section 162(m) of the Code.
Accordingly, WebMD’s equity plans under which awards are
made to officers and directors are generally designed to ensure
that compensation attributable to stock options granted will be
tax deductible by WebMD. However, cash bonuses for WebMD’s
executive officers and grants of restricted stock do not qualify
as performance-based within the meaning of Section 162(m)
and, therefore, are subject to its limits on deductibility. In
determining that the compensation of WebMD’s executive
officers for 2007 was appropriate under the circumstances and in
the best interests of WebMD and its stockholders, the
Compensation Committee considered the amount of net operating
loss carryforwards available to WebMD to offset income for
Federal income tax purposes. See Note 15 to the
Consolidated Financial Statements included in this Annual Report.
Compensation Following Termination of Employment or a Change in Control Overview. WebMD does not offer any deferred compensation plans to our executive officers or other employees and does not offer any retirement plans to our executive officers, other than a 401(k) plan generally available to our other employees. Accordingly, the payment and benefit levels for WebMD’s Named Executive Officers applicable upon a termination or a change in control result from provisions in the employment agreements between WebMD or HLTH and the individual Named Executive Officers. However, unlike annual or special bonuses or the amounts of equity grants (which the Compensation Committee generally determines in its discretion at the time of payment or grant), the terms of employment agreements are the result of negotiations between WebMD or HLTH and those individuals, which generally occur at the time the individual joins WebMD or HLTH or in connection with a promotion to a more senior position with WebMD or HLTH (subject to the approval of the applicable Compensation Committee in the case of executive officer employment agreements). The Compensation Committees of WebMD and HLTH have, in the past, usually been willing to include similar provisions relating to potential terminations and changes in control in connection with the renewal of or extensions to an employment agreement with an existing executive officer as those in the existing employment agreement with that executive officer. The employment agreements with our Named Executive Officers are described under the heading “Employment Agreements with Named Executive Officers” below and summaries of the types of provisions relating to post-termination compensation included in those agreement are included in this section under the headings “— Employment Agreement Provisions Regarding Termination Benefits” and “— Employment Agreement Provisions Regarding Change in Control Benefits” below. In determining whether to approve executive officer employment agreements (or renewals of or extensions to those agreements), the Compensation Committees of WebMD and HLTH consider our need for the services of the specific individual and the alternatives available to us, as well as potential alternative employment opportunities available to the individual from other companies. In considering whether to approve employment agreement terms that may result in potential payments and other benefits for executives that could become payable following a termination or change in control, the Compensation Committee considers both the costs that could potentially be incurred by our company, as well as the potential benefits to our company, including benefits to our company from post-termination confidentiality, non-solicit and non-compete obligations imposed on the executive and provisions relating to post-termination services required of
Table of Contentscertain Named Executive Officers. In the case of potential payments and other benefits that could potentially become payable following a change in control, the Compensation Committee considers whether those provisions would provide appropriate benefit to an acquiror, in light of the cost the acquiror would incur, as well as benefits to our company during the period an acquisition is pending. Employment Agreement Provisions Regarding Termination Benefits. The employment agreements with our Named Executive Officers provide for some or all of the following to be paid if the Named Executive Officer is terminated without cause or resigns for good reason (the definitions of which are typically set forth in the applicable employment agreement), dies or ceases to be employed as a result of disability:
The amount and nature of these benefits vary by individual, with the most senior of the Named Executive Officers typically receiving more of these benefits and receiving them for a longer period. These benefits also vary depending on the reason for the termination. See “Employment Agreements with Named Executive Officers” below for a description of the specific provisions that apply to each of our Named Executive Officers” and “Potential Payments and Other Benefits Upon Termination of Employment or Change in Control” below for a sample calculation, based on applicable SEC rules, of the amounts that would have been payable if termination for specified reasons had occurred as of December 31, 2007. No such post-termination benefits apply if a Named Executive Officer is terminated for cause (the definition of which is typically set forth in the applicable employment agreement). The Compensation Committee believes that the protections provided to executive officers by the types of employment agreement provisions described above are appropriate for the attraction and retention of qualified and talented executives and consistent with good corporate governance. Employment Agreement Provisions Regarding Change in Control Benefits. The Compensation Committees of the WebMD Board and the HLTH Board believe that executives should generally not be entitled to severance benefits upon the occurrence of a change in control, but that it is appropriate to provide for such benefits if a change in control is followed by a termination of employment or other appropriate triggering event. See “— Employment Agreement Provisions Regarding Termination Benefits” above. However, as more fully described below under “Employment Agreements with the Named Executive Officers” and “Potential Payments and Other Benefits Upon Termination of Employment or Change in Control” below, the Compensation Committee has approved the following exceptions:
Table of ContentsIn the negotiations with those Named Executive Officers regarding their employment agreements, the HLTH Compensation Committee (which was authorized to make compensation determinations with respect to WebMD executive officers prior to WebMD’s initial public offering and is authorized to make compensation determinations with respect to HLTH’s executive officers) recognized that, for those individuals, a change in control is likely to result in a fundamental change in the nature of their responsibilities. Accordingly, under their employment agreements, the HLTH Compensation Committee approved those Named Executive Officers having, following a change in control, the rights described above. The HLTH Compensation Committee believed that the rights provided were likely to be viewed as appropriate by a potential acquiror in the case of those specific individuals. In addition, the HLTH Compensation Committee sought to balance the rights given to those Named Executive Officers with certain requirements to provide transitional or consulting services (as described below) in types and amounts likely to be viewed as reasonable by a potential acquiror. If the benefits payable to Mr. Vuolo in connection with a change in control would be subject to the excise tax imposed under Section 280G of the Internal Revenue Code of 1986 (“Section 280G”), WebMD has agreed to make an additional payment to him so that the net amount of such payment (after taxes) that he receives is sufficient to pay the excise tax due. HLTH has agreed to make such additional payments to Mr. Wygod. Application in 2007. No changes were made during 2007 to the provisions of the employment agreements with the Named Executive Officers relating to post-termination compensation. Consummation of the pending HLTH Merger will not result in a “change in control” under the terms of any of the employment agreements between HLTH or WebMD and their respective executive officers. Deductibility of Compensation. Section 162(m) of the Internal Revenue Code generally limits the ability of a publicly held corporation to deduct compensation in excess of $1 million per year paid to certain executive officers. It is the policy of the Compensation Committee to structure, where practicable, compensation paid to its executive officers so that it will be deductible under Section 162(m) of the Code. Accordingly, WebMD’s equity plans under which awards are made to officers and directors are generally designed to ensure that compensation attributable to stock options granted will be tax deductible by WebMD. However, cash bonuses for WebMD’s executive officers and grants of restricted stock do not qualify as performance-based within the meaning of Section 162(m) and, therefore, are subject to its limits on deductibility. In determining that the compensation of WebMD’s executive officers for 2007 was appropriate under the circumstances and in the best interests of WebMD and its stockholders, the Compensation Committee considered the amount of net operating loss carryforwards available to WebMD to offset income for Federal income tax purposes. See Note 15 to the Consolidated Financial Statements included in this Annual Report. | EXCERPTS ON THIS PAGE:
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