EXHIBIT 10.21
HEALTH NET, INC.
DEFERRED COMPENSATION
PLAN
FOR DIRECTORS
(as amended and restated effective
November 12, 2007)
I. INTRODUCTION
The purpose of the Health Net, Inc.
Deferred Compensation Plan for Directors (the “Plan”)
is to permit members of the board of directors of Health Net, Inc.,
a Delaware corporation (the “Company”), who are not
employees of the Company to defer the receipt of certain meeting
fees and other cash remuneration payable by the Company, until such
times as set forth herein. Prior to January 1, 2004, such
directors were eligible to participate in the Health Net, Inc.
Deferred Compensation Plan, on substantially the same terms and
conditions that they are eligible to participate in this
Plan.
II. DEFINITIONS
For purposes of the Plan, the
following capitalized terms shall have the meanings set forth in
this Article.
2.1 “Account” shall mean
the account kept on the books and records of the Company
established on behalf of a Participant in the Plan to which amounts
deferred by such Participant (and deemed earnings and losses
thereon), other than amounts credited to the Participant’s
In-Service Withdrawal Account, are credited.
2.2 “Beneficiary” shall
mean the beneficiary or beneficiaries (including any contingent
beneficiary) designated pursuant to Section 4.5.
2.3 “Board” shall mean
the Board of Directors of the Company.
2.4 “Code” shall mean
the Internal Revenue Code of 1986, as amended.
2.5 “Committee” shall
mean the Compensation and Stock Option Committee of the
Board.
2.6 “Common Stock” shall
mean the Class A Common Stock, $.001 par value, of the
Company.
2.7 “Company” shall mean
Health Net, Inc. (formerly known as Foundation Health Systems,
Inc.), a Delaware corporation, or any successor thereto.
2.8 “Compensation” shall
mean the fees and other cash remuneration payable to a Director
during a Deferral Year.
2.9 “Deferral Year”
shall mean the twelve-month period beginning each July 1,
except that the first Deferral Year shall be the six-month period
beginning on January 1, 2004.
2.10 “Director” shall
mean a member of the Board.
2.11 “Disability” shall
mean a physical or mental disability which, in the judgment of the
Committee, prevents a Participant from performing substantially
such Participant’s duties and responsibilities to the Company
for a continuous period of at least six months.
2.12 “ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as
amended.
2.13 “Effective Date”
shall mean January 1, 2004.
2.14 “Exchange Act”
shall mean the Securities Exchange Act of 1934, as
amended.
2.15 “In-Service Withdrawal
Account” shall mean the account kept on the books and records
of the Company established on behalf of a Participant to which
amounts deferred by such Participant pursuant to
Section 3.2(f) shall be paid in a lump sum at the time or
times described in Section 4.1(b).
2.16 “In-Service Withdrawal
Year” shall mean the calendar year designated by a
Participant on his or her deferral election form filed pursuant to
Section 3.2(f), which year begins at least three years after
the year in respect of which the Participant has filed such
election form.
2.17 “Investment Fund”
shall mean an “open-end,” “closed-end” or
other collective investment fund selected by the Company from time
to time as a measure for allocating deemed investment gains and
losses to Participants’ accounts.
2.18 “Merger” shall mean
any merger of the Company in which the holders of the Class A
common stock, $.001 par value, of the Company immediately prior to
the merger have the same proportionate ownership of common stock of
the surviving or resulting parent corporation immediately after the
merger.
2.19 “Participant” shall
mean a Director who has elected to defer, pursuant to the terms of
the Plan, an amount that would otherwise be payable as Compensation
in a Deferral Year.
2.20 “Payment Date”
shall mean the date chosen by the Company, in its sole discretion,
that occurs within the 90-day period beginning immediately after
the last day of a Deferral Year.
III. PARTICIPATION AND
DEFERRALS
3.1 Participation
.
(a) In General . Each
Director may participate in the Plan in a Deferral Year by
irrevocably specifying on an election form filed with the Company
prior to the beginning of such Deferral Year the percentage(s) of
the Compensation otherwise payable to him or her by the
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Company during the Deferral Year to be deducted
from such Compensation and deferred for payment at a later date
pursuant to the Plan. The Company shall establish rules and
procedures prescribing the time and manner in which election forms
shall be filed with the Company.
(b) Initial Participation .
An individual may participate in the Plan during the first Deferral
Year in which the individual becomes a Director. To participate in
the Plan for such Deferral Year, such individual must file a
deferral election form with the Company within 30 days of his or
her becoming a Director and may only elect to defer Compensation
with respect to services performed for periods following the date
of the election.
3.2 Deferral Elections
.
(a) In General . Except as
provided in Section 3.1(b), a deferral election form must be
filed in accordance with rules and procedures prescribed by the
Company prior to the Deferral Year for which the election is to be
effective. A Participant may not revoke or change a deferral
election for a Deferral Year after the beginning of such year. A
Participant must file a new election form with the Company prior to
each Deferral Year for which the election is to be effective. In no
event shall an election under the Plan apply to Compensation earned
prior to the date on which the election to participate in the Plan
for a Deferral Year is received by the Company.
(b) Deferral Amount . A
Director may elect on the election form designated by the Company
to defer the receipt of any or all of the amount otherwise payable
as Compensation to such Director during the Deferral
Year.
(c) Deemed Investment
Election . Upon the commencement of participation in the Plan,
each Participant shall specify on his or her election form any one
or more of the Investment Funds in which all of the
Participant’s accounts under the Plan are to be deemed
invested.
(d) Change of Deemed
Investment Election . A Participant may elect to change
his or her deemed investment election as frequently as may be
designated by the Company. Any such change shall specify the whole
percentages (or amounts if so permitted by the Company) to be
deemed invested in one or more of the then available Investment
Funds. A Participant may change his or her election (i) with
respect to the balance of his or her account(s) as of the effective
date of the Participant’s new investment election,
(ii) with respect to future amounts credited to the
Participant’s account(s) under Section 3.3(a) and
(b) or (iii) both. A Participant’s change of a
deemed investment election must be made in accordance with the
written rules and conditions provided by the Company to the
Participants.
(e) Payment Election . Except
as provided in subsection (f) of this Section 3.2, a
Director must designate on each deferral election form filed with
the Company (i) a manner of payment in which his or her
Account shall be paid, provided that such manner of payment
is permitted under Section 4.2, and (ii) whether the
Account is to be paid on the Payment Date occurring immediately
after (x) the Deferral Year in which the Director terminates
service as a Director, or (y) the Deferral Year immediately
following the Deferral Year in which such service terminates. The
Participant’s election on a deferral election form shall in
no event supersede the Participant’s election with respect to
previously deferred amounts (and credits attributable
thereto).
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(f) In-Service Withdrawals .
A Participant may elect for any Deferral Year on a deferral
election form filed with the Company (i) to designate any
percentage of the amount to be deferred to be credited to an
In-Service Withdrawal Account established on behalf of the
Participant and (ii) to receive payment of the balance of such
In-Service Withdrawal Account in a lump-sum within 90 days after
the last day of the In-Service Withdrawal Year so designated by the
Participant.
3.3 Deferred Compensation
Account .
(a) Crediting Deferred
Compensation . Any amount otherwise payable as Compensation
that is deferred by a Participant shall be credited to the
applicable account of the Participant as of the date on which,
absent such election, such amount would have been payable to the
Participant as Compensation.
(b) Earnings . Each
Participant’s account(s) under the Plan shall be credited
with deemed earnings, or reduced by deemed losses, equal to the
earnings or losses that would have been realized or paid if assets
in an amount equal to the balance of such account(s) were actually
invested among the Investment Funds selected by the Participant in
accordance with Section 3.2(c) and (d). Although the Company
might actually invest assets of the Company according to the
Participant’s election, it is not required to do so nor to
set aside any assets to provide for payments hereunder. The Company
may promulgate separate accounting and administrative rules to
facilitate the deemed investment in an Investment Fund.
(c) Notices . Each
Participant shall receive written notice of the balance of his or
her account(s) as soon as practicable following the last day of
each calendar quarter.
IV. PAYMENTS OF DEFERRED
COMPENSATION
4.1 Timing .
(a) In General . The balance
of a Participant’s Account shall be paid or shall commence to
be paid on the Payment Date occurring immediately after
(i) the Deferral Year in which the Participant terminates
service as Director, or (ii) the Deferral Year immediately
following the Deferral Year in which such service terminates, as
elected by the Participant on the applicable election form of the
Participant. Notwithstanding the foregoing, in the event that the
Participant is a “specified employee” (within the
meaning of Section 409A of the Code (“Section
409A”)) with respect to the Company at the time of a
termination of service, the payment (or the commencement of
payment) of the Participant’s Account shall be delayed until
the earliest date upon which such payment may be made or commenced
without such payment being subject to taxation under
Section 409A (the “Required Delay”). In the event
that the Participant has elected payment in annual installments,
the delay described in the preceding sentence, if applicable, shall
only be applied to the installments which must be delayed in order
to comply with Section 409A and shall not otherwise affect the
timing of payment of subsequent installments.
(b) In-Service Withdrawals .
A Participant may elect to receive any percentage of an amount
deferred for a
