Exhibit 2.3
Memorandum of Understanding
between Dr. Michael A. Stocker and WellPoint,
Inc.
Relating to Terms of
Employment
By executing this Memorandum of Understanding,
WellPoint, Inc. an Indiana corporation (“Purchaser”)
and Dr. Michael A. Stocker ( “Executive”),
agree before the closing of the merger of WellChoice, Inc., a
Delaware corporation (the “Company”) with and into
WellPoint Holding Corp., a Delaware corporation and a direct wholly
owned subsidiary of Purchaser (“Merger Sub”), as more
fully described in the Agreement and Plan of Merger among
Purchaser, Merger Sub and the Company dated as of
September 26, 2005 (the “Merger Agreement”), to
sign a definitive document (“Employment Agreement”)
incorporating the terms set forth below.
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Employment
Agreement
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Parties
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Executive and
Purchaser.
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Position
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Executive Vice
President of Purchaser and President and Chief Executive Officer of
Purchaser’s Northeast Region.
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Employment
Term
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From the
Effective Time (as defined in the Merger Agreement) until May 1,
2007.
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Base
Salary
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Base salary of
$650,000.
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Annual Incentive Bonus
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For each full
and partial calendar year from the Effective Time to the end of
Executive’s employment, Purchaser will provide Executive with
an annual incentive bonus opportunity, with entitlement to such
bonus dependent upon the achievement of performance goals annually
determined by Purchaser. The target bonus opportunity will be 80%
of Executive’s base salary and the maximum bonus opportunity
will be 240% of Executive’s base salary. For calendar year
2005, Purchaser will pay Executive his annual incentive bonus in
accordance with the existing targets and percentages that have
previously been established for Executive by the Company without
any material modification thereto, such payment to be made no later
than the time that similar annual incentive bonus payments have
customarily been made to Executive by the Company (i.e., by the end
of March, 2006).
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Long Term
Incentive Plan
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Purchaser will provide Executive with a
long-term incentive bonus opportunity, with respect to each of the
2003-2005 and 2004-2006 performance cycles, that is no less
favorable than that provided to Executive immediately prior to the
Effective Time, based on the same terms (except as provided below)
as the long-term incentive plan in effect for Executive immediately
prior to the Effective Time.
Notwithstanding the foregoing, (1)
there will be no material modifications to the performance goals
applicable to the 2003-2005 performance cycle, (2) Purchaser may
modify the performance goals applicable to the 2004-2006
performance cycle to be consistent with the integration of the
Company as a subsidiary of the Purchaser, and (3) the transactions
contemplated by the Merger Agreement will not be deemed a
“change in control” for purposes of the long-term
incentive plan for any performance cycles thereunder and the
Executive will not be entitled to any payment (including any
pro-rata payment) as a result thereof.
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The outstanding
2005-2007 performance cycle under the long-term incentive plan in
effect for Executive immediately prior to the Effective Time will
terminate at the Effective Time and Executive will not be entitled
to any payment (including any pro-rata payment) with respect
thereto.
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Benefits,
Expenses
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Executive will
continue to participate in the Company’s (or be entitled to
participate in Purchaser’s) medical, dental, hospitalization
and life insurance plans and other employee benefit plans at a
level that is, in the aggregate, no less favorable than the lesser
of (i) that provided to Executive at the Effective Time and (ii)
that provided to Purchaser’s similarly situated employees.
Executive will be entitled to reimbursement of business expenses in
accordance with Purchaser’s expense reimbursement policy. In
this regard, Executive may charter a private airplane in lieu of
the method of travel permitted by Purchaser’s standard
business travel policy; provided that such travel is in
compliance with Purchaser’s travel policy relating to the use
of private airplanes with respect to safety issues and/or to
protect the interests of the Purchaser, and provided,
further , that Purchaser will only reimburse Executive for the
amount of Executive’s actual business travel expenditures up
to the amount that would have been incurred had Executive traveled
using the method of travel permitted by Purchaser’s standard
business travel policy. Executive will be entitled to reimbursement
of personal expenditures, up to a maximum of $15,000 per year, for
advice and/or services relating to financial planning and/or tax
planning. Executive will also be entitled to participate in
Purchaser’s executive perquisite benefit program, pursuant to
which he will be entitled to receive a monthly cash benefit of
$2,500.
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Change in
Control Payment
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Within ten business days following the date that
is six months following the Effective Time, Purchaser will make a
one-time lump-sum cash payment to Executive of $5,580,075 (the
“Change in Control Payment”), provided that in no event
will such payment be made sooner than the expiration of any
revocation period relating to a release described below or sooner
than allowable under applicable law.
As a condition to receiving the
Change in Control Payment, Executive will be required to execute
and deliver to Purchaser a general release of Purchaser, its
subsidiaries and affiliates and their respective officers,
directors and employees from all claims of any kind whatsoever
(other than Executive’s claims to (i) payments and benefits
to which Executive is entitled pursuant to this Memorandum of
Understanding and the Employment Agreement, (ii) any benefits in
which he is vested in connection with his employment with the
Company; (iii) indemnification pursuant to Purchaser’s
bylaws, and (iv) coverage under Purchaser’s directors’
and officers’ insurance policies) arising out of
Executive’s employment or termination thereof (including,
without limitation, civil rights claims) in such form as reasonably
requested by Purchaser.
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Restricted
Stock
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At the Effective Time, Purchaser will grant
Executive a total of 30,000 shares of restricted stock (i.e.,
shares of the Purchaser’s common stock which are
non-transferable and forfeitable on the terms set forth below) (the
“Restricted Stock”). The restrictions on the Restricted
Stock will lapse on May 1, 2007.
Notwithstanding the foregoing, the
portion of the Restricted Stock to which the restrictions have not
so lapsed will be immediately forfeited upon termination
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of
Executive’s employment for any reason; provided, however,
that: (a) in the event that the Executive’s employment is
involuntarily terminated by Purchaser without Cause (
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