þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2010 | ||
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware
(State of incorporation) |
20-2783228 (I.R.S. Employer Identification No.) |
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111 Eighth Avenue
New York, New York (Address of principal executive office) |
10011 (Zip code) |
Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, par value $0.01 per share
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The Nasdaq Stock Market LLC (Global Select Market) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Item 10. | Directors, Executive Officers and Corporate Governance |
Name
|
Age
|
Positions
|
||||
Mark J.
Adler, M.D.(3)
|
54 | Director; Chairman of the Compensation Committee | ||||
Kevin M. Cameron
|
44 | Director; Special Advisor to the Chairman of the Board | ||||
Neil F.
Dimick(1)(2)(4)
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61 | Director; Chairman of the Nominating & Governance Committee | ||||
Wayne T.
Gattinella(1)
|
59 | Director; Chief Executive Officer and President | ||||
Jerome C.
Keller(4)
|
68 | Director | ||||
James V.
Manning(1)(2)
|
64 | Director; Chairman of the Audit Committee | ||||
Abdool Rahim
Moossa, M.D.(4)
|
71 | Director | ||||
Herman
Sarkowsky(3)
|
85 | Director | ||||
Joseph E.
Smith(3)
|
72 | Director | ||||
Stanley S. Trotman,
Jr.(1)(2)
|
67 | Director | ||||
Martin J.
Wygod(1)
|
71 | Chairman of the Board |
(1) | Member of the Executive Committee | |
(2) | Member of the Audit Committee | |
(3) | Member of the Compensation Committee | |
(4) | Member of the Nominating & Governance Committee |
Name
|
Age
|
Positions
|
||||
Wayne T. Gattinella
|
59 | Chief Executive Officer and President | ||||
Anthony Vuolo
|
53 | Chief Operating Officer and Chief Financial Officer | ||||
Nan-Kirsten Forte
|
48 | Executive Vice President Consumer Services | ||||
William Pence
|
48 | Executive Vice President and Chief Technology Officer | ||||
Douglas W. Wamsley
|
52 | Executive Vice President, General Counsel and Secretary | ||||
Martin J. Wygod
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71 | Chairman of the Board | ||||
Steven Zatz, M.D.
|
54 | Executive Vice President Professional Services |
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2
3
4
5
| forwarded to the addressees or distributed at the next scheduled Board meeting; or | |
| if they relate to financial or accounting matters, forwarded to the Audit Committee or discussed at the next scheduled Audit Committee meeting; or | |
| if they relate to the recommendation of the nomination of an individual, forwarded to the Nominating & Governance Committee or discussed at the next scheduled Nominating & Governance Committee meeting; or | |
| if they relate to the operations of WebMD, forwarded to the appropriate officers of WebMD, and the response or other handling reported to the Board at the next scheduled Board meeting. |
| retaining and overseeing the registered public accounting firm that serves as our independent auditor and evaluating their performance and independence; | |
| reviewing our annual audit plan with WebMDs management and registered public accounting firm; | |
| pre-approving any permitted services provided by our registered public accounting firm; | |
| approving the fees to be paid to our registered public accounting firm; | |
| reviewing the adequacy and effectiveness of our internal controls with WebMDs management, internal auditors and registered public accounting firm; | |
| reviewing and discussing the annual audited financial statements and the interim unaudited financial statements with WebMDs management and registered public accounting firm; | |
| approving our internal audit plan and reviewing reports of our internal auditors; |
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| determining whether to approve related party transactions; and | |
| overseeing the administration of WebMDs Code of Business Conduct. |
| oversight of our executive compensation program and our incentive and equity compensation plans; | |
| determination of compensation levels for and grants of incentive and equity-based awards to our executive officers and the terms of any employment agreements with them; | |
| determination of compensation levels for non-employee directors; and | |
| review of and making recommendations regarding other matters relating to our compensation practices. |
| identifying individuals qualified to become Board members; | |
| recommending to the Board the director nominees for each Annual Meeting of Stockholders; | |
| recommending to the Board candidates for filling vacancies that may occur between Annual Meetings; | |
| evaluating and making recommendations to the Board regarding matters relating to the governance of WebMD; | |
| providing oversight of WebMDs compliance programs and assisting the Board and the Boards other standing committees with respect to their oversight of those compliance programs; and | |
| providing oversight of senior executive recruitment and management development. |
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| the amount and type of the potential nominees managerial and policy-making experience in complex organizations and whether any such experience is particularly relevant to WebMD; | |
| any specialized skills or experience that the potential nominee has and whether such skills or experience are particularly relevant to WebMD; | |
| in the case of non-employee directors, whether the potential nominee has sufficient time to devote to service on the WebMD Board and the nature of any conflicts of interest or potential conflicts of interest arising from the nominees existing relationships; | |
| in the case of non-employee directors, whether the nominee would be an independent director and would be considered a financial expert or to have financial sophistication under applicable SEC rules and the listing standards of The Nasdaq Global Select Market; | |
| in the case of potential new members, whether the nominee assists in achieving a mix of Board members that represents a diversity of background and experience, including with respect to age, gender, race, areas of expertise and skills; and | |
| in the case of existing members, the nominees contributions as a member of the Board during his or her prior service. |
| Special Committee Regarding the DOJ Investigation. Messrs. Manning, Sarkowsky and Smith and Dr. Adler are members of a special committee of the Board of Directors to oversee matters relating to the investigations described in Legal Proceedings Investigations by United States Attorney for the District of South Carolina and the SEC in Note 9 to the Consolidated Financial Statements. This committee is a successor to a similar committee at HLTH prior to the Merger. |
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| Strategic Planning Committee. Dr. Adler and Messrs. Dimick, Keller, Manning, Trotman and Wygod are members of a Strategic Planning Committee of the Board, which meets informally between regularly scheduled Board meetings regarding WebMDs business strategies and their implementation and any other matters that the Non-Employee Directors wish to discuss with management. | |
| Securities Repurchase Committee. Messrs. Cameron, Smith and Trotman are members of a Securities Repurchase Committee of the Board, which is authorized to make determinations relating to repurchases of WebMDs Common Stock and Convertible Notes. |
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| annual fees for service on the Board and its standing committees, paid by WebMD in October 2010 in the form of shares of WebMD Common Stock not subject to any vesting requirements; | |
| grants of non-qualified options to purchase WebMD Common Stock; and | |
| cash fees for service on certain other committees of the Board. |
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Stock |
||||||||||||||||
Fees Earned or |
Awards |
Option Awards |
Total |
|||||||||||||
Name
|
Paid in Cash ($)(1) | ($)(2) | ($)(3) | ($) | ||||||||||||
Mark J. Adler, M.D.
|
16,000 | 40,000 | 172,183 | 228,183 | ||||||||||||
Paul A. Brooke
|
8,125 | | 172,183 | 180,308 | ||||||||||||
Neil F. Dimick
|
6,000 | 55,000 | 172,183 | 233,183 | ||||||||||||
Jerome C. Keller
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6,000 | 37,500 | 172,183 | 215,683 | ||||||||||||
James V. Manning
|
16,000 | 55,000 | 172,183 | 243,183 | ||||||||||||
A. R. Moossa, M.D.
|
| 37,500 | 172,183 | 209,683 | ||||||||||||
Herman Sarkowsky
|
10,000 | 37,500 | 172,183 | 219,683 | ||||||||||||
Joseph E. Smith
|
10,000 | 37,500 | 172,183 | 219,683 | ||||||||||||
Stanley S. Trotman, Jr.
|
6,000 | 45,000 | 172,183 | 223,183 |
(1) | The amounts in Column (b) reflect fees to members of the following committees for service on those committees: (1) the Strategic Planning Committee of the WebMD Board ($6,000 for each of Dr. Adler and Messrs. Dimick, Keller, Manning and Trotman); and (2) the Special Committee Regarding the DOJ Investigation ($10,000 for each of Dr. Adler and Messrs. Manning, Sarkowsky and Smith and $8,125 for Mr. Brooke). See Corporate Governance Committees of the Board of Directors Other Committees above. | |
(2) | The Non-Employee Directors received shares of WebMD Common Stock, not subject to any vesting requirements and valued at the respective amounts reported in Column (c) above, in payment of their annual retainers for service on the WebMD Board and its standing committees. In 2010, the annual retainers were paid by WebMD in WebMD Common Stock to each director on October 22, 2010 (the day after the 2010 Annual Meeting of Stockholders). See Annual Fees below. For each Non-Employee Director, the number of shares to be issued was determined by dividing the aggregate dollar amount of the fees payable to such Non-Employee Director by $50.57 (the closing price of WebMD Common Stock on the Nasdaq Global Select Market on October 22, 2010), with |
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cash paid in lieu of issuing fractional shares. Based on that, the individual Non-Employee Directors received the following numbers of shares: |
Number of |
||||||||
Name
|
Shares | |||||||
Mark J. Adler, M.D.
|
790 | |||||||
Neil F. Dimick
|
1,087 | |||||||
Jerome C. Keller
|
741 | |||||||
James V. Manning
|
1,087 | |||||||
A.R. Moossa, M.D.
|
741 | |||||||
Herman Sarkowsky
|
741 | |||||||
Joseph E. Smith
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741 | |||||||
Stanley S. Trotman, Jr.
|
889 |
(3) | The amounts reported in Column (d) and (e) above reflect the grant date fair value for the stock options awarded to the Non-Employee Directors by WebMD on January 1, 2010, computed in accordance with FASB ASC Topic 718. See Note 10 (Stock-Based Compensation) to the Consolidated Financial Statements included in this Annual Report for an explanation of the methodology and assumptions used in determining the fair value of stock option awards granted. The actual amounts, if any, ultimately realized by our Non-Employee Directors from these stock options will depend on the price of our Common Stock at the time they exercise vested stock options. |
Number of Shares Subject |
Weighted Average |
|||||||
Name
|
to Outstanding Options_ | Exercise Price_ | ||||||
Mark J. Adler, M.D.
|
79,200 | $ | 32.64 | |||||
Paul A. Brooke
|
13,200 | $ | 38.49 | |||||
Neil F. Dimick
|
92,400 | $ | 30.48 | |||||
Jerome C. Keller
|
72,600 | $ | 32.96 | |||||
James V. Manning
|
92,400 | $ | 30.48 | |||||
A.R. Moossa, M.D.
|
66,000 | $ | 33.36 | |||||
Herman Sarkowsky
|
13,200 | $ | 38.49 | |||||
Joseph E. Smith
|
13,200 | $ | 38.49 | |||||
Stanley S. Trotman, Jr.
|
72,600 | $ | 33.46 |
Number of Shares Subject |
Weighted Average |
|||||||
Name
|
to Outstanding Options | Exercise Price | ||||||
Mark J. Adler, M.D.
|
41,329 | $ | 35.07 | |||||
Paul A. Brooke
|
97,768 | $ | 19.92 | |||||
Neil F. Dimick
|
44,440 | $ | 24.38 | |||||
James V. Manning
|
61,327 | $ | 26.14 | |||||
Herman Sarkowsky
|
144,430 | $ | 27.98 | |||||
Joseph E. Smith
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100,434 | $ | 25.81 |
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| an annual retainer for service on the Board; | |
| annual fees for service on standing Committees of the Board; and | |
| annual fees, if any, for serving as Chairperson of standing Committees of the Board. |
Type of Service
|
Annual Fee | |||
Membership on Audit Committee (Messrs. Dimick, Manning
and Trotman)
|
$ | 15,000 | ||
Chairperson of Audit Committee (Mr. Manning)
|
$ | 10,000 | ||
Membership on Compensation Committee (Dr. Adler and
Messrs. Sarkowsky and Smith) or Nominating &
Governance Committee (Messrs. Dimick and Keller and
Dr. Moossa)
|
$ | 7,500 | ||
Chairperson of Compensation Committee (Dr. Adler) or
Nominating & Governance Committee (Mr. Dimick)
|
$ | 2,500 |
Type of Service
|
Fees Paid in 2010 | |||
Membership on the Strategic Planning Committee (Dr. Adler and
Messrs. Dimick, Keller, Manning and Trotman)
|
$ | 6,000 | ||
Membership on the Special Committee regarding the DOJ
Investigation (Dr. Adler and Messrs. Manning,
Sarkowsky and Smith, with Mr. Brooke receiving a pro rated
amount of $8,125)
|
$ | 10,000 |
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Item 11. | Executive Compensation |
| 2010 Report of the Compensation Committee. This section contains a report of the Compensation Committee of our Board of Directors regarding the Compensation Discussion and Analysis section described below. The material in the 2010 Report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that WebMD specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. | |
| Compensation Committee Interlocks and Insider Participation. This section contains information regarding certain types of relationships involving our Compensation Committee members. | |
| Compensation Discussion and Analysis. This section contains a description of the specific types of compensation we pay, a discussion of our compensation policies, information regarding how those policies were applied to the compensation of our Named Executive Officers for 2010 and other information that we believe may be useful to investors regarding compensation of our Named Executive Officers and other employees. | |
| Executive Compensation Tables. This section provides information, in tabular formats specified in applicable SEC rules, regarding the amounts or value of various types of compensation paid to our Named Executive Officers and related information. | |
| Potential Payments and Other Benefits Upon Termination or Change of Control. This section provides information regarding amounts that could become payable to our Named Executive Officers following specified events. | |
| Employment Agreements with Named Executive Officers. This section contains summaries of the employment agreements between our Named Executive Officers and WebMD or its subsidiaries. We refer to these summaries in various other places in this Executive Compensation section. |
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| cash salary; | |
| an annual cash bonus, the amount of which was determined by the Compensation Committee in its discretion; | |
| Supplemental Bonus Plan contributions (which are cash amounts contributed to a trust, which distributes such amounts, with interest earned, the following year if the executive officer remains employed through a specified date), the amount of which was determined by the Compensation Committee in its discretion; | |
| special bonuses to provide recognition for specific accomplishments or at the time of a promotion, if determined by the Compensation Committee to be appropriate and in amounts determined by the Compensation Committee in its discretion; | |
| grants of options to purchase shares of WebMD Common Stock, subject to vesting based on continued employment, with an exercise price that is equal to the fair market value of WebMD Common Stock on the grant date; and | |
| grants of shares of WebMD Restricted Stock, subject to vesting based on continued employment. |
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| Competitive with the market in order to help attract, motivate and retain highly qualified managers and executives. We seek to attract and retain talent by offering competitive base salaries, annual incentive opportunities, and the potential for long-term rewards through equity-based awards, such as stock options and restricted stock. We have, in the past, granted and may continue to grant equity-based awards to a large portion of our employees, not just our executives. Those awards have been primarily in the form of non-qualified options to purchase WebMD Common Stock. | |
| Performance-based to link executive pay to company performance over the short term and long term and to facilitate shareholder value creation. It is WebMDs practice to provide compensation opportunities in addition to base salary that are linked to our companys performance and the individuals performance. Achievement of short-term goals is rewarded through annual cash bonuses, while achievement of long-term objectives is encouraged through nonqualified stock option grants and restricted stock awards that are subject to vesting over periods generally ranging from three to four years. Through annual and long-term incentives, a major portion of the total potential compensation of WebMDs executive officers (and other members of senior management) is placed at risk in order to motivate them to improve the performance of our businesses and to increase the value of our company. In addition, WebMD has made equity-based grants to virtually all of its full-time employees for at least a portion of their compensation. The equity compensation is offered in lieu of higher cash compensation in order to align the interests of our employees with the long-term interests of our stockholders. |
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| Designed to foster a long-term commitment by management. The Compensation Committee believes that there is great value to our company in having a team of long-tenured, seasoned executives and managers. Our compensation practices are designed to foster a long-term commitment to WebMD by our management team. The vesting schedules attributable to equity grants are typically three to four years. |
| the amounts of the annual bonuses for 2010 and the amounts contributed to the Supplemental Bonus Plan that were approved by the Compensation Committee in February 2011, as more fully described under Use of Specific Types of Compensation in 2010 Annual Bonuses and Use of Specific Types of Compensation in 2010 Supplemental Bonus Plan (SBP) Awards below; and | |
| the size and terms of the equity grants that were approved by the Compensation Committee in June 2010, as more fully described below under Use of Specific Types of Compensation in 2010 Equity Compensation 2010 Grants to Certain Members of Senior Management below. |
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| goals of any type set by the Board and communicated to senior management at any point in the year; | |
| the effects of acquisitions and dispositions of businesses made during the year; and | |
| the effects of unexpected events and changes in WebMDs businesses during the year. |
Target |
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Annual |
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Target |
Bonus |
|||||||||||||
Annual |
Amount as |
|||||||||||||
Named |
Annual |
Bonus |
a Percent |
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Executive Officer
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Title
|
Salary | Opportunity | of Salary | ||||||||||
Wayne T. Gattinella
|
Chief Executive Officer and President | $ | 560,000 | $ | 560,000 | 100 | % | |||||||
Anthony Vuolo
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Chief Operating Officer and Chief Financial Officer | $ | 450,000 | $ | 450,000 | 100 | % | |||||||
William Pence
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Executive Vice President and Chief Technology Officer | $ | 375,000 | $ | 131,300 | 35 | % | |||||||
Steven Zatz, M.D.
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Executive Vice President Professional Services | $ | 375,000 | $ | 131,300 | 35 | % |
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Sum of 2010 Annual |
Sum of 2009 Annual |
|||||||||||||||||
Named |
Bonus and SBP Award | Bonus and SBP Award | ||||||||||||||||
Executive Officer
|
Title
|
Amount | % of Target | Amount | % of Target | |||||||||||||
Wayne T. Gattinella
|
Chief Executive Officer and President | $ | 400,000 | 71 | % | $ | 400,000 | 71 | % | |||||||||
Anthony Vuolo
|
Chief Operating Officer and Chief Financial Officer | $ | 375,000 | 83 | % | $ | 315,000 | 70 | % | |||||||||
William Pence
|
Executive Vice President and Chief Technology Officer | $ | 150,000 | 114 | % | $ | 125,000 | 95 | % | |||||||||
Steven Zatz, M.D.
|
Executive Vice President Professional Services | $ | 125,000 | 95 | % | $ | 125,000 | 95 | % |
Named |
2010 Amounts | 2009 Amounts | ||||||||||||||||
Executive Officer
|
Title
|
Cash Bonus | SBP Award | Cash Bonus | SBP Award | |||||||||||||
Wayne T. Gattinella
|
Chief Executive Officer and President | $ | 268,000 | $ | 132,000 | $ | 268,000 | $ | 132,000 | |||||||||
Anthony Vuolo
|
Chief Operating Officer and Chief Financial Officer | $ | 251,250 | $ | 123,750 | $ | 211,050 | $ | 103,950 | |||||||||
William Pence
|
Executive Vice President and Chief Technology Officer | $ | 100,500 | $ | 49,500 | $ | 83,750 | $ | 41,250 | |||||||||
Steven Zatz, M.D.
|
Executive Vice President Professional Services | $ | 83,750 | $ | 41,250 | $ | 83,750 | $ | 41,250 |
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| 2010 SBP Awards. In February 2011, the Compensation Committee approved the contribution, made in March 2011, to the Supplemental Bonus Trust of SBP Awards for 2010 (which we refer to as the 2010 SBP Awards), including: a $132,000 contribution for Mr. Gattinella; a $123,750 contribution for Mr. Vuolo; a $49,500 contribution for Dr. Pence; a $577,500 contribution for Mr. Wygod; and a $41,250 contribution for Dr. Zatz. In order to receive the applicable payment from the Supplemental Bonus Trust for the 2010 SBP Awards, each SBP participant is required to be employed by WebMD on March 1, 2012 (subject to limited exceptions for death, disability, or certain terminations of employment in connection with a sale of a subsidiary or division or, in the discretion of the governing committee, certain other reductions in force or position eliminations). The Supplemental Bonus Trust will distribute the 2010 SBP Awards, together with actual net interest earned on the respective amounts, to SBP participants as promptly as practicable following March 1, 2012 (but in no event later than 21/2 months following such date). | |
| 2009 SBP Awards. In March 2010, the Compensation Committee of the WebMD Board approved the contribution, made in March 2010, to the Supplemental Bonus Trust of SBP Awards for 2009 (which we refer to as the 2009 SBP Awards), including: a $132,000 contribution for Mr. Gattinella; a $103,950 contribution for Mr. Vuolo; a $41,250 contribution for Dr. Pence; a $165,000 contribution for Mr. Wygod; and a $41,250 contribution for Dr. Zatz. In order to receive the applicable payment from the Supplemental Bonus Trust for the 2009 SBP Awards, each SBP participant was required to be employed by WebMD on March 1, 2011 (subject to the limited exceptions described above). In March 2011, the Supplemental Bonus Trust distributed the 2009 SBP Awards, together with actual net interest earned on the respective amounts, to SBP participants and, at that time: Mr. Gattinella received $132,013; Mr. Vuolo received $103,960; Dr. Pence received $41,254; Mr. Wygod received $165,016; and Dr. Zatz received $41,254. | |
| 2008 SBP Awards. In February 2009, the Compensation Committee of the WebMD Board approved the contribution, made in March 2009, to the Supplemental Bonus Trust of SBP Awards for certain WebMD officers and employees for 2008 (which we refer to as the 2008 SBP Awards), including: a $135,000 contribution for Mr. Gattinella; a $125,000 contribution for Mr. Vuolo; a $55,000 contribution for Dr. Pence; and a $45,000 contribution for Dr. Zatz. Mr. Wygod did not receive a 2008 SBP Award. In order to receive the applicable payment from the Supplemental Bonus Trust for the 2008 SBP Awards, each SBP participant was required to be employed by WebMD on March 1, 2010 (subject to the limited exceptions described above). In March 2010, the Supplemental Bonus Trust distributed the 2008 SBP Awards, together with actual net interest earned on the respective amounts, to SBP participants and, at that time: Mr. Gattinella received $135,099; Mr. Vuolo received $125,091; Dr. Pence received $55,040; and Dr. Zatz received $45,033. |
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| 2007 SBP Awards. In March 2008, the WebMD Compensation Committee approved the contribution, made in March 2008, to the Supplemental Bonus Trust of SBP Awards for 2007 (which we refer to as the 2007 SBP Awards) for certain WebMD officers and employees, including: a $135,000 contribution for Mr. Gattinella; a $125,000 contribution for Mr. Vuolo; and a $45,000 contribution for Dr. Zatz. Dr. Pence and Mr. Wygod did not receive 2007 SBP Awards. In order to receive the applicable payment from the Supplemental Bonus Trust for the 2007 SBP Awards, each SBP participant was required to be employed by WebMD on March 1, 2009 (subject to the limited exceptions described above). In March 2009, the Supplemental Bonus Trust distributed the 2007 SBP Awards, together with actual net interest earned on the respective amounts, to SBP participants and, at that time: Mr. Gattinella received $136,869; Mr. Vuolo received $126,730; and Dr. Zatz received $45,623. |
| 2008 Broad-Based Grants by WebMD and HLTH. In December 2008, the WebMD Compensation Committee approved the making of a broad-based equity grant to most of WebMDs employees, following an increase in the number of shares available for grant under the 2005 Plan approved at our 2008 Annual Meeting of Stockholders. Similarly, in December 2008, the HLTH Compensation Committee approved the making of a broad-based equity grant to HLTHs corporate employees. The respective Compensation Committees also specifically determined the size and terms of the grants to be made to executive officers. WebMD had not made any grants to any of its executive officers since the grants made at the time of our initial public offering in September 2005, other than the grant to Dr. Pence at the time he joined WebMD in late 2007. Accordingly, most of our current executive officers held equity awards that were substantially vested (with one 25% vesting in September 2009 remaining), which reduced the employee retention incentive provided by those awards. The vesting schedule for the December 2008 WebMD equity grants is 25% on March 31 of each of 2010 through 2013. This vesting schedule, which differs from the standard vesting schedule used by WebMD (25% on the first four anniversaries of grant), was designed so that the initial vesting would be six months |
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after the last vesting of the grants made in connection with our initial public offering. HLTH had not made any grants to its executive officers since the fourth quarter of 2006 (with no grant being made to Mr. Gattinella at that time). In making grants of HLTH equity in December 2008, the HLTH Compensation Committee took into consideration the fact that the option grants made in 2006 were out-of-the-money in December 2008, with an exercise price of $11.86. The grants made in December 2008 had an exercise price of $9.46 (the closing price on December 10, 2008, the date of grant), other than the grant to Mr. Wygod, which had an exercise price of $8.49 (the closing price on December 1, 2008, the date of grant). Similarly, in making grants of WebMD equity to Dr. Pence in December 2008, the WebMD Compensation Committee took into consideration the fact that the option grants made to Dr. Pence when he joined WebMD in November 2007 were out-of-the-money, with an exercise price of $45.23. The grants made by WebMD in December 2008 had an exercise price of $23.61. |
| 2009 Grants Based on Specific Events. WebMD made two grants of equity to Named Executive Officers in 2009: (1) a grant of 44,000 shares of WebMD Restricted Stock to Mr. Vuolo in connection with his taking on the additional position of Chief Financial Officer in November 2009 and (2) a grant of 110,000 shares of WebMD Restricted Stock to Mr. Wygod at the time of the reduction of his salary from $975,000 per year to $120,000 per year in connection with the completion of the Merger. HLTH did not make any grants of equity to our Named Executive Officers in 2009. | |
| 2010 Grants to Certain Members of Senior Management. WebMD made grants to each of the Named Executive Officers on June 28, 2010, as described under Executive Compensation Tables Grants of Plan-Based Awards in 2010 below. In addition, the two other executive officers and approximately 15 other members of senior management received grants on June 28, 2010, with the same exercise price for options to purchase WebMD Common Stock ($46.81 per share) and the same vesting schedule for options and shares of WebMD Restricted Stock (25% on each of the first four anniversaries of the date of grant) as the grants made to the Named Executive Officers. The total number of shares of WebMD Restricted Stock granted on June 28, 2010 was 232,000. The total number of options to purchase shares of WebMD Common Stock granted on June 28, 2010 was 960,000. The June 28, 2010 grants were intended to provide additional compensation designed to motivate and retain executive officers and other employees believed to be important to the future growth of WebMD. |
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| continuation of cash compensation (including salary and, in some cases, an amount based on past bonuses) for a period following termination; | |
| continuation or acceleration of vesting and/or exercisability of some or all options or restricted stock; and | |
| continued participation in certain of our health and welfare insurance plans or payment of COBRA premiums. |
24
| In the case of Mr. Gattinella, so long as he remains employed for one year following a change of control of WebMD, his options to purchase WebMD Common Stock granted in December 2008 and June 2010 would continue to vest until the second anniversary of the change of control, even if he resigns from the employ of WebMD prior to such vesting date. In addition, that portion of the grants of WebMD Restricted Stock made in December 2008 and June 2010 that would have vested through the second anniversary of the change of control would become vested on the date of his resignation. In the event that, following a change of control, Mr. Gattinella is terminated by WebMD without cause or he resigns for good reason, the options and restricted stock will be treated in the same manner described above. | |
| With respect to Mr. Vuolo, he would be able to resign following a change of control, (a) after the completion of a six month transition period with the successor, and receive the same benefits that he would be entitled to upon a termination without cause following the change of control (as set forth in the tables below and the description of his employment agreement that follows) or (b) in the case of the December 2008 stock option and restricted stock grants from WebMD and HLTH, the November 2009 WebMD Restricted Stock grant and the June 2010 grants of WebMD Restricted Stock and options to purchase WebMD Common Stock, after the completion of a one year transition period, in which event (i) the options would continue to vest until the second anniversary of the change of control, (ii) that portion of the WebMD Restricted Stock granted in December 2008 and June 2010 that would have vested through the second anniversary of the change of control would become vested on the date of his resignation and (iii) that portion of the WebMD Restricted Stock granted in November 2009 that remains unvested will vest on the date of resignation. In the event that, following a change of control, Mr. Vuolo is terminated by WebMD without cause or he resigns for good reason, the options and restricted stock will be treated in the same manner described above. | |
| With respect to Mr. Wygod, the vesting of all WebMD Restricted Stock and all options to purchase WebMD Common Stock outstanding at the time of a change of control will accelerate on the date of the change of control. If Mr. Wygods employment terminates for any reason (other than cause) thereafter the options will remain outstanding through the remainder of their term. |
25
| In making the grants to Mr. Wygod, the Compensation Committee determined that it was appropriate for the existing provisions of Mr. Wygods employment agreement regarding equity compensation (as described above) to apply to those grants. | |
| In making the grants to Messrs. Gattinella and Vuolo, the Compensation Committee determined that it was appropriate to treat the June 2010 grants in the same manner as the grants made in December 2008 (as described above). |
| Summary Compensation Table, which presents information regarding the total compensation of each of our Named Executive Officers and the types and values of the components; and | |
| three tables providing additional information regarding our equity compensation, entitled: Grants of Plan-Based Awards in 2010; Outstanding Equity Awards at End of 2010; and Option Exercises and Stock Vested in 2010. |
26
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
|||||||||||||||||||||
Stock |
Option |
All Other |
||||||||||||||||||||||||||
Name and |
Salary |
Bonus |
Awards |
Awards |
Compensation |
Total |
||||||||||||||||||||||
Principal Position
|
Year | ($)(1) | ($)(2) | ($)(3) | ($)(3) | ($) | ($) | |||||||||||||||||||||
Wayne T. Gattinella
|
2010 | 560,000 | 403,099 | (4) | 1,404,300W | 1,845,660W | 9,464 | (5) | 4,222,523 | |||||||||||||||||||
Chief Executive Officer
|
2009 | 581,538 | 404,869 | (4) | | | 13,658 | (5) | 1,000,065 | |||||||||||||||||||
and President
|
2008 | 560,000 | 135,000 | 1,416,600W | 2,426,184W | 9,758 | (5) | 4,547,542 | ||||||||||||||||||||
Anthony Vuolo
|
2010 | 450,000 | 376,341 | (7) | 936,200W | 1,538,050W | 17,704 | (8) | 3,318,295 | |||||||||||||||||||
Chief Operating Officer &
|
2009 | 467,308 | 437,780 | (7) | 1,507,440W | | 18,l65 | (8) | 2,430,693 | |||||||||||||||||||
Chief Financial
Officer(6)
|
2008 | 450,000 | 375,000 | (7) | 1,156,890W | 500,310H | 17,704 | (8) | 4,481,288 | |||||||||||||||||||
1,981,384W | ||||||||||||||||||||||||||||
2,481,694 | ||||||||||||||||||||||||||||
William Pence
|
2010 | 375,000 | 155,540 | (9) | 468,100W | 1,153,538W | 6,193 | (10) | 2,158,371 | |||||||||||||||||||
Executive Vice President &
|
2009 | 389,423 | 83,750 | | | 13,292 | (10) | 486,465 | ||||||||||||||||||||
Chief Technology Officer
|
2008 | 375,000 | 55,000 | 295,125W | 1,516,365W | 4,360 | (10) | 2,245,850 | ||||||||||||||||||||
Martin J.
Wygod(11)
|
2010 | 120,000 | 1,172,500 | 3,510,750W | 1,153,538W | 17,208 | (12) | 5,973,996 | ||||||||||||||||||||
Chairman of the Board
|
2009 | 848,077 | 1,235,000 | (13) | 3,768,600W | | 10,847 | (12) | 5,862,524 | |||||||||||||||||||
2008 | 975,000 | 1,500,000 | 2,037,600H | 1,224,960H | 10,847 | (12) | 9,591,191 | |||||||||||||||||||||
1,416,600W | 2,426,184W | |||||||||||||||||||||||||||
3,454,200 | 3,651,144 | |||||||||||||||||||||||||||
Steven Zatz, M.D.
|
2010 | 375,000 | 128,783 | (14) | 468,100W | 1,153,538W | 6,415 | (15) | 2,131,836 | |||||||||||||||||||
Executive Vice President
|
2009 | 378,577 | 129,373 | (14) | | | 8,865 | (15) | 516,815 | |||||||||||||||||||
Professional Services
|
2008 | 345,000 | 45,000 | 566,640W | 1,010,910W | 6,257 | (15) | 1,973,807 |
(1) | We pay salary to our employees on a bi-weekly basis and, in calendar year 2009, we made 27 such bi-weekly payments, so certain of the Named Executive Officers received aggregate salary payments in calendar year 2009 that exceeded their annual salary rate and that higher amount is reported in Column (c) for 2009. The amounts for 2010 in Column (c) are equal to the current annual salary rate for each of the Named Executive Officers. For additional information regarding the annual salary rate of the Named Executive Officers, see Employment Agreements with Named Executive Officers below. | |
(2) | The amounts reported in Column (d) include, to the extent applicable to the individual Named Executive Officers, with respect to the years listed: annual cash bonuses for that year (which were paid in February or March of the following year); special bonuses paid in cash during that year; and amounts released from the Supplemental Bonus Trust during that year. For additional information, see Background Information Regarding the Summary Compensation Table Supplemental Bonus Plan (SBP) below and Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Supplemental Bonus Plan (SBP) above. Where amounts listed for an individual in a specific year include anything other than just the annual cash bonus for that year, we have included the breakdown in a footnote to this table below. | |
(3) | The amounts reported in Columns (e) and (f) above reflect the grant date fair value, in the year of grant, for the WebMD Restricted Stock and options to purchase WebMD Common Stock awarded in each of 2010, 2009 and 2008 (and HLTH Restricted Stock and options to purchase HLTH Common Stock awarded in 2008), if any, to the respective Named Executive Officers, computed in accordance with FASB ASC Topic 718. See Note 10 (Stock-Based Compensation) to the Consolidated Financial Statements included in this Annual Report for an explanation of the methodology and assumptions used in determining the fair value of these awards. |
27
The actual amounts, if any, ultimately realized by our Named Executive Officers from these grants depend on the price of our Common Stock at the time of vesting of restricted stock or at the time of exercise of vested stock options, as the case may be. | ||
(4) | For 2010, consists of: (a) an annual bonus for 2010 of $268,000 and (b) $135,099 released in March 2010 from the Supplemental Bonus Trust with respect to contributions made on Mr. Gattinellas behalf for 2008. For 2009, consists of: (a) an annual bonus for 2009 of $268,000 and (b) $136,869 released in March 2009 from the Supplemental Bonus Trust with respect to contributions made on Mr. Gattinellas behalf for 2007. | |
(5) | For 2010, consists of: (a) $3,156 in company matching contributions under the 401(k) Plan; (b) $3,986 for company-paid supplemental disability insurance; and (c) $2,322 for company-paid group term life insurance. For 2009, consists of: (a) $7,350 in company matching contributions under the 401(k) Plan; (b) $3,986 for company-paid supplemental disability insurance; and (c) $2,322 for company-paid group term life insurance. For 2008, consists of: (a) $3,450 in company matching contributions under the 401(k) Plan; (b) $3,986 for company-paid supplemental disability insurance; and (c) $2,322 for company-paid group term life insurance. | |
(6) | Mr. Vuolo served as our Chief Operating Officer for all of 2009 and began serving in the additional position of Chief Financial Officer in October 2009. In connection with Mr. Vuolo becoming Chief Financial Officer of WebMD, he was granted 44,000 shares of WebMD Restricted Stock on November 3, 2009, 25% of which vested on the first anniversary of the date of grant and 25% of which is scheduled to vest on each of the next three anniversaries of the date of grant. That grant is reflected in Column (e) for 2009. | |
(7) | For 2010, consists of: (a) an annual bonus for 2010 of $251,250 and (b) $125,091 released in March 2010 from the Supplemental Bonus Trust with respect to contributions made on Mr. Vuolos behalf for 2008. For 2009, consists of: (a) an annual bonus for 2009 of $211,050; (b) a special bonus of $100,000 paid in November 2009 in recognition of his contributions to the completion of HLTHs divestiture of Porex; and (c) $126,730 released in March 2009 from the Supplemental Bonus Trust with respect to contributions made on Mr. Vuolos behalf for 2007. For 2008, consists of: (a) an annual bonus for 2008 of $125,000 and (b) a bonus of $250,000 for services Mr. Vuolo provided to HLTH during 2008 outside his responsibilities as an officer of WebMD, including services in connection with HLTHs divestitures and tender offer during 2008. | |
(8) | For 2010, consists of: (a) $4,462 for company-paid supplemental disability insurance; (b) $1,242 for company-paid group term life insurance; and (c) an automobile allowance of $12,000. For 2009, consists of: (a) $4,462 for company-paid supplemental disability insurance; (b) $1,242 for company-paid group term life insurance; and (c) an automobile allowance of $12,461. For 2008, consists of: (a) $4,462 for company-paid supplemental disability insurance; (b) $1,242 for company-paid group term life insurance; and (c) an automobile allowance of $12,000. | |
(9) | Consists of: (a) an annual bonus for 2010 of $100,500 and (b) $55,040 released in March 2010 from the Supplemental Bonus Trust with respect to contributions made on Mr. Pences behalf for 2008. | |
(10) | For 2010, consists of: (a) $810 for company-paid group term life insurance, (b) $3,421 for company-paid supplemental disability insurance; and (c) $1,962 in company matching contributions under the 401(k) Plan. For 2009, consists of: (a) $810 for company-paid group term life insurance, (b) $5,132 for company-paid supplemental disability insurance; and (c) $7,350 in company matching contributions under the 401(k) Plan. For 2008, consists of: (a) $810 for company-paid group term life insurance, (b) a $100 incentive (for employees who completed a WebMD Health Manager online questionnaire); and (c) $3,450 in company matching contributions under the 401(k) Plan. | |
(11) | At the time of the Merger, Mr. Wygods salary was reduced from $975,000 per year to $120,000 per year. In connection with that reduction, Mr. Wygod was granted 110,000 shares of WebMD Restricted Stock on November 3, 2009, 25% of which vested on the first anniversary of the date of grant and 25% of which is scheduled to vest on each of the next three anniversaries of the date of grant. That grant is reflected in Column (e) for 2009. For additional information, see Employment Agreements with Named Executive Officers Martin J. Wygod below. | |
(12) | For 2010, consists of: (a) $6,083 for company-paid supplemental disability insurance; and (b) $11,125 for company-paid group term life insurance. For each of 2009 and 2008, consists of: (a) $3,989 for company-paid supplemental disability insurance; and (b) $6,858 for company-paid group term life insurance. | |
(13) | Consists of: (a) an annual bonus for 2009 of $335,000; and (b) a special bonus of $900,000 paid in November 2009 in recognition of his contributions to the completion of HLTHs divestiture of Porex. | |
(14) | For 2010, consists of: (a) an annual bonus for 2010 of $83,750 and (b) $45,033 released in March 2010 from the Supplemental Bonus Trust with respect to contributions made on Dr. Zatzs behalf for 2008. For 2009, consists of: (a) an annual bonus for 2009 of $83,750 and (b) $45,623 released in March 2009 from the Supplemental Bonus Trust with respect to contributions made on Dr. Zatzs behalf for 2007. | |
(15) | For 2010, consists of: (a) $1,242 company-paid group term life insurance, (b) $2,723 company-paid supplemental disability insurance; and (c) $2,450 in company matching contributions under the 401(k) Plan. For 2009, consists of: (a) $1,242 for company-paid group term life insurance; (b) $2,723 for company-paid supplemental disability insurance; and (c) $4,900 in company matching contributions under the 401(k) Plan. For 2008, consists of: (a) $1,242 company-paid group term life insurance, (b) $2,715 company-paid supplemental disability insurance; and (c) $2,300 in company matching contributions under the 401(k) Plan. |
28
29
(a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||||||
Grant |
||||||||||||||||||||||||
All Option |
Date |
|||||||||||||||||||||||
Awards: |
Exercise |
Fair |
||||||||||||||||||||||
All Stock |
Number of |
or Base |
Value of |
|||||||||||||||||||||
Awards: |
Securities |
Price of |
Stock and |
|||||||||||||||||||||
Number of |
Underlying |
Option |
Option |
|||||||||||||||||||||
Approval |
Grant |
Shares of Stock |
Options |
Awards |
Awards |
|||||||||||||||||||
Name
|
Date | Date | (#) | (#) | ($/Sh) | ($)(1) | ||||||||||||||||||
Wayne T. Gattinella
|
6/28/10 | 6/28/10 | 30,000 | 120,000 | 46.81 | 3,249,960 | ||||||||||||||||||
Anthony Vuolo
|
6/28/10 | 6/28/10 | 20,000 | 100,000 | 46.81 | 2,474,250 | ||||||||||||||||||
William Pence
|
6/28/10 | 6/28/10 | 10,000 | 75,000 | 46.81 | 1,621,638 | ||||||||||||||||||
Martin J. Wygod
|
6/28/10 | 6/28/10 | 75,000 | 75,000 | 46.81 | 4,664,288 | ||||||||||||||||||
Steven Zatz, M.D.
|
6/28/10 | 6/28/10 | 10,000 | 75,000 | 46.81 | 1,621,638 |
(1) | The amounts reported in this column have been calculated in accordance with FASB ASC Topic 718 and reflect the fair value of each equity award based on the grant date fair market value of WebMD Common Stock. See Note 10 (Stock-Based Compensation) to the Consolidated Financial Statements included in this Annual Report for an explanation of the methodology and assumptions used in determining the fair value of these awards. The actual amounts, if any, ultimately realized by our Named Executive Officers from these grants depend on the price of our Common Stock at the time of vesting of restricted stock or at the time of exercise of vested stock options, as the case may be. |
30
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||
Option Awards(1) | Stock Awards(2) | |||||||||||||||||||||||||||||||||||
Number of |
Number of |
Market |
||||||||||||||||||||||||||||||||||
Securities |
Securities |
Number of |
Value of |
|||||||||||||||||||||||||||||||||
Underlying |
Underlying |
Shares of |
Shares of |
|||||||||||||||||||||||||||||||||
Unexercised |
Unexercised |
Option |
Stock That |
Stock |
Stock |
|||||||||||||||||||||||||||||||
Options |
Options |
Exercise |
Option |
Option |
Have Not |
Award |
That Have |
|||||||||||||||||||||||||||||
(#) |
(#) |
Price |
Grant |
Expiration |
Vested |
Grant |
Not Vested |
|||||||||||||||||||||||||||||
Name
|
Exercisable | Unexercisable | ($) | Date | Date | (#) | Date | ($)(3) | ||||||||||||||||||||||||||||
Wayne T. Gattinella
|
(W | ) | | 120,000 | (4) | 46.81 | 6/28/10 | 6/28/20 | 30,000 | (4) | 6/28/10 | 1,531,800 | ||||||||||||||||||||||||
(W | ) | 60,000 | 180,000 | (5) | 23.61 | 12/10/08 | 12/10/18 | 45,000 | (5) | 12/10/08 | 2,297,700 | |||||||||||||||||||||||||
(H | ) | 41,100 | | 19.33 | 3/17/04 | 3/17/14 | | | | |||||||||||||||||||||||||||
Anthony Vuolo
|
(W | ) | | 100,000 | (4) | 46.81 | 6/28/10 | 6/28/20 | 20,000 | (4) | 6/28/10 | 1,021,200 | ||||||||||||||||||||||||
(W | ) | | | | | | 33,000 | (4) | 11/03/09 | 1,684,980 | ||||||||||||||||||||||||||
(W | ) | | 147,000 | (5) | 23.61 | 12/10/08 | 12/10/18 | 36,750 | (5) | 12/10/08 | 1,876,455 | |||||||||||||||||||||||||
(H | ) | 39,996 | 39,996 | (4) | 21.29 | 12/10/08 | 12/10/18 | | | | ||||||||||||||||||||||||||
William Pence
|
(W | ) | | 75,000 | (4) | 46.81 | 6/28/10 | 6/28/20 | 10,000 | (4) | 6/28/10 | 510,600 | ||||||||||||||||||||||||
(W | ) | | 112,500 | (5) | 23.61 | 12/10/08 | 12/10/18 | 9,375 | (5) | 12/10/08 | 478,608 | |||||||||||||||||||||||||
(W | ) | 112,500 | 37,500 | (4) | 45.23 | 11/01/07 | 11/01/17 | 6,250 | (4) | 11/01/07 | 319,125 | |||||||||||||||||||||||||
Martin J. Wygod
|
(W | ) | | 75,000 | (4) | 46.81 | 6/28/10 | 6/28/20 | 75,000 | (4) | 6/28/10 | 3,829,500 | ||||||||||||||||||||||||
(W | ) | | | | | | 82,500 | (4) | 11/03/09 | 4,212,450 | ||||||||||||||||||||||||||
(W | ) | | 180,000 | (5) | 23.61 | 12/10/08 | 12/10/18 | 45,000 | (5) | 12/10/08 | 2,297,700 | |||||||||||||||||||||||||
(H | ) | | 106,656 | (4) | 19.11 | 12/01/08 | 12/01/18 | 53,328 | (4) | 12/01/08 | 2,722,928 | |||||||||||||||||||||||||
(H | ) | 11,110 | | 51.54 | 7/01/98 | 7/01/13 | | | | |||||||||||||||||||||||||||
(H | ) | 11,110 | | 34.88 | 7/01/97 | 7/01/12 | | | | |||||||||||||||||||||||||||
(H | ) | 11,110 | | 33.31 | 7/01/96 | 7/01/11 | | | | |||||||||||||||||||||||||||
Steven Zatz, M.D.
|
(W | ) | | 75,000 | (4) | 46.81 | 6/28/10 | 6/28/20 | 10,000 | (4) | 6/28/10 | 510,600 | ||||||||||||||||||||||||
(W | ) | | 75,000 | (5) | 23.61 | 12/10/08 | 12/10/18 | 18,000 | (5) | 12/10/08 | 919,080 |
(1) | Each grant reported in the table above was granted under, and is subject to, the WebMD 2005 Plan, HLTHs Amended and Restated 2000 Long-Term Incentive Plan, HLTHs Amended and Restated 1996 Stock Plan or another plan or agreement that contains substantially similar terms. The option expiration date shown in Column (f) above is the normal expiration date, and the last date that the options may be exercised. For each Named Executive Officer, the unexercisable options shown in Column (c) above are also unvested. Unvested options are generally forfeited if the Named Executive Officers employment terminates, except to the extent otherwise provided in an employment agreement. For information regarding the effect on vesting of options of the death, disability or termination of employment of a Named Executive Officer or a change of control of WebMD, see Potential Payments and Other Benefits Upon Termination of Employment or a Change of Control below. The exercisable options shown in Column (b) above, and any unexercisable options shown in Column (c) above that subsequently become exercisable, will generally expire earlier than the normal expiration date if the Named Executive Officers employment terminates, except as otherwise specifically provided in the Named Executive Officers employment agreement. For a description of the material terms of the Named Executive Officers employment agreements, see Employment Agreements with Named Executive Officers below. | |
(2) | Unvested shares of restricted stock are generally forfeited if the Named Executive Officers employment terminates, except to the extent otherwise provided in an employment agreement or award agreement. The stock awards held by our Named Executive Officers are subject to accelerated or continued vesting in connection with a change of control of WebMD and upon certain terminations of employment, as described below in more detail under Employment Agreements with Named Executive Officers and Potential Payments and Other Benefits Upon Termination of Employment or a Change of Control. Except as otherwise indicated in those sections, unvested stock awards will generally be forfeited if a Named Executive Officers employment terminates. | |
(3) | The market or payout value of stock awards reported in Column (i) is computed by multiplying the number of shares of WebMD Restricted Stock reported in Column (g) by $51.06, the closing market price of WebMD Common Stock on December 31, 2010. | |
(4) | Vesting schedule: 25% of the original amount granted on each of first, second, third and fourth anniversaries of the date of the grant. | |
(5) | Vesting schedule: 25% of the original amount granted on March 31 of each of 2010, 2011, 2012 and 2013. |
31
(a) | (b) | (c) | (d) | (e) | ||||||||||||
Option Awards | Stock Awards | |||||||||||||||
Number of Shares |
Value Realized |
Number of Shares |
Value Realized |
|||||||||||||
Acquired on Exercise |
on Exercise |
Acquired on Vesting |
on Vesting |
|||||||||||||
Name
|
(#) | ($)(1) | (#) | ($)(2) | ||||||||||||
Wayne T. Gattinella
|
70,000H | 2,248,400H | 15,000W | 695,700W | ||||||||||||
110,000W | 3,734,500W | |||||||||||||||
5,982,900 | ||||||||||||||||
Anthony Vuolo
|
111,100H | 3,565,199H | 23,250W | 1,144,555W | ||||||||||||
225,000W | 7,159,360W | |||||||||||||||
10,724,559 | ||||||||||||||||
William Pence
|
37,500W | 905,250W | 9,375W | 468,375W | ||||||||||||
Martin J. Wygod
|
1,726,016H | 30,752,476H | 26,664H | 1,360,397H | ||||||||||||
280,000W | 7,017,200W | 42,500W | 2,136,700W | |||||||||||||
37,769,676 | 3,497,097 | |||||||||||||||
Steven Zatz, M.D.
|
222,200H | 3,509,940H | 6,000W | 278,280W | ||||||||||||
113,000W | 3,424,210W | |||||||||||||||
6,934,150 |
(1) | The dollar amounts shown in Column (c) above for option awards are determined by multiplying (i) the number of shares for which the option was exercised, by (ii) the difference between (1) the per-share closing price of WebMD Common Stock on the date of exercise (or, for any shares sold on the date of exercise, the actual sale price received) and (2) the exercise price of the options. | |
(2) | The dollar amounts shown in Column (e) above for stock awards are determined by multiplying the number of shares that vested by the per-share closing price of WebMD Common on the vesting date. |
| employment agreements; | |
| equity grant agreements; | |
| the Supplemental Bonus Plan; and | |
| our Severance Benefit Plan, an ERISA severance plan applicable to all of our employees (the Severance Plan). |
32
| In the column entitled Permanent Disability or Death, the amounts reflect both provisions contained in certain employment agreements and the fact that WebMDs equity plans (including HLTH equity plans assumed by WebMD in the Merger) generally provide for acceleration of vesting of awards in the event of a termination of employment as a result of death or disability. |
| Under their employment agreements, Messrs. Vuolo and Wygod are eligible to continue to participate in our health and welfare plans (or comparable plans) for a specified period. In the row entitled Health and Welfare Benefits Continuation, the amounts are based upon the current average cost to our company of these benefits per employee (with an estimate for individual coverage after expiration of the applicable COBRA period) and are net of amounts that the executives would continue to be responsible for. We have not made any reduction in the amounts in this row to reflect the fact that the obligation to continue benefits ceases in the event the executive becomes eligible for comparable coverage with a subsequent employer. |
33
Termination of |
||||||||||||||||||||||||||||
Voluntary |
Employment |
|||||||||||||||||||||||||||
Termination |
without Cause or |
|||||||||||||||||||||||||||
Voluntary |
in connection |
Involuntary |
for Good Reason |
|||||||||||||||||||||||||
Termination |
with a |
Other |
Permanent |
Involuntary |
Termination |
Following a |
||||||||||||||||||||||
Executive Benefits and |
for Good |
Change of |
Voluntary |
Disability |
Termination |
without |
Change of |
|||||||||||||||||||||
Payments
|
Reason | Control(1) | Termination | or Death | for Cause | Cause | Control(2) | |||||||||||||||||||||
Cash Severance
|
-0- | -0- | -0- | 132,000 | (3) | -0- | 226,000 | (4) | 226,000 | (4) | ||||||||||||||||||
Stock Options
|
-0- | 3,549,000 | -0- | 5,451,000 | -0- | -0- | 3,549,000 | |||||||||||||||||||||
Restricted Stock
|
-0- | 2,298,000 | -0- | 3,830,000 | -0- | -0- | 2,298,000 | |||||||||||||||||||||
Health and Welfare Benefits Continuation
|
-0- | -0- | -0- | -0- | -0- | 2,000 | (5) | 2,000 | (5) | |||||||||||||||||||
280G Tax
Gross-Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
Other
|
-0- | -0- | -0- | -0- | -0- | 15,000 | (6) | 15,000 | (6) | |||||||||||||||||||
TOTAL
|
-0- | 5,847,000 | -0- | 9,413,000 | -0- | 243,000 | 6,090,000 |
(1) | So long as Mr. Gattinella remains employed for one year following a Change of Control of WebMD, his options to purchase WebMD Common Stock granted in December 2008 and June 2010 would continue to vest until the second anniversary of the Change of Control, even if he resigns from the employ of WebMD prior to such vesting date. In addition, that portion of the grants of WebMD Restricted Stock made in December 2008 and June 2010 that would have vested through the second anniversary of the Change of Control would become vested on the date of his resignation. For purposes of calculating the amounts included in this column, we treat such resignation as occurring on December 31, 2010 and assume, solely for purposes of preparing this table, that the requirement for the applicable transition period has been met. | |
(2) | In the event that, following a change of control, Mr. Gattinella is terminated by WebMD without cause or he resigns for good reason, the options and restricted stock will be treated in the same manner described above in footnote (1) to this table. | |
(3) | Represents the amount contributed in March 2010 on Mr. Gattinellas behalf to the Supplemental Bonus Trust, which would be paid to him in the event of a termination of his employment, as of December 31, 2010, as a result of death or disability. | |
(4) | Our contractual obligation to pay Mr. Gattinella cash severance if his employment is terminated without Cause or by him for Good Reason under his employment agreement expired in 2009. However, if Mr. Gattinellas employment is terminated by us, he may be eligible for severance under our Severance Plan if the reason for his termination is covered under that Plan (see Background and Assumptions above). Under the Severance Plan, he would be eligible for 21 weeks of base salary as severance. We have assumed, solely for purposes of preparing this table, that the reason for termination satisfies the requirements of the Severance Plan. | |
(5) | Represents one month of COBRA under the Severance Plan. | |
(6) | Represents the cost of outplacement assistance under the Severance Plan. |
Termination of |
||||||||||||||||||||||||||||
Voluntary |
Employment |
|||||||||||||||||||||||||||
Termination |
without Cause or |
|||||||||||||||||||||||||||
Voluntary |
in connection |
Involuntary |
for Good Reason |
|||||||||||||||||||||||||
Termination |
with a |
Other |
Permanent |
Involuntary |
Termination |
Following a |
||||||||||||||||||||||
Executive Benefits and |
for Good |
Change of |
Voluntary |
Disability |
Termination |
without |
Change of |
|||||||||||||||||||||
Payments
|
Reason | Control(1) | Termination | or Death(2) | for Cause | Cause | Control | |||||||||||||||||||||
Cash
Severance(3)
|
1,463,000 | 1,463,000 | -0- | 1,566,000 | -0- | 1,463,000 | 1,463,000 | |||||||||||||||||||||
Stock Options
|
-0- | 4,093,000 | -0- | 5,651,000 | -0- | -0- | 4,093,000 | |||||||||||||||||||||
Restricted Stock
|
-0- | 3,447,000 | -0- | 4,583,000 | -0- | -0- | 3,447,000 | |||||||||||||||||||||
Health and Welfare Benefits Continuation
|
105,000 | 105,000 | -0- | 105,000 | -0- | 105,000 | 105,000 | |||||||||||||||||||||
280G Tax
Gross-Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
Other
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
TOTAL
|
1,568,000 | 9,108,000 | -0- | 11,905,000 | -0- | 1,568,000 | 9,108,000 |
(1) | Mr. Vuolo may resign from his employment after six months following a Change in Control of WebMD and receive the same benefits, under his employment agreement, as if he was terminated without Cause or for Good Reason following a Change in Control |
34
(other than with respect to the option and restricted stock awards granted to him in December 2008 and June 2010 and the restricted stock award granted in November 2009). He may not unilaterally resign without Good Reason prior to such date and receive these benefits. The December 2008 and June 2010 option and restricted stock awards will continue to vest through the second anniversary of the Change in Control so long as he remains employed for one year following the Change in Control and also in such event, the restricted stock granted in November 2009 will be deemed fully vested on the date of resignation after such one year period. However, for purposes of calculating the amounts included in the column entitled Voluntary Termination in Connection with Change in Control we have treated such resignation as occurring on December 31, 2010 and have assumed that the requirement for the applicable transition period has been met. | ||
(2) | Includes the amount contributed in March 2010 on Mr. Vuolos behalf to the Supplemental Bonus Trust, which would be paid to him in the event of a termination of his employment, as of December 31, 2010, as a result of death or disability. | |
(3) | The amounts in this row, other than the columns that are zero, include 18 months of salary and annual bonuses, plus an assumed annual bonus for 2010, which is calculated based on annual bonus amounts for 2009 (the year prior to the year of the assumed termination). Accordingly, we have assumed that the 2010 annual bonus is equal to the sum of the actual amount of Mr. Vuolos annual bonus for 2009 ($211,050) plus the actual amount contributed to the Supplemental Bonus Trust for Mr. Vuolo for 2009 ($103,950). |
Termination of |
||||||||||||||||||||||||||||
Voluntary |
Employment |
|||||||||||||||||||||||||||
Termination |
without Cause or |
|||||||||||||||||||||||||||
Voluntary |
in Connection |
Involuntary |
for Good Reason |
|||||||||||||||||||||||||
Termination |
with a |
Other |
Permanent |
Involuntary |
Termination |
Following a |
||||||||||||||||||||||
Executive Benefits and |
for Good |
Change of |
Voluntary |
Disability |
Termination |
without |
Change of |
|||||||||||||||||||||
Payments
|
Reason | Control | Termination | or Death | for Cause | Cause | Control | |||||||||||||||||||||
Cash Severance
|
500,000 | (1) | -0- | -0- | 41,000 | (2) | -0- | 500,000 | (1) | 500,000 | (1) | |||||||||||||||||
Stock
Options(3)
|
1,248,000 | -0- | -0- | 3,626,000 | -0- | 1,248,000 | 2,277,000 | |||||||||||||||||||||
Restricted Stock
|
-0- | -0- | -0- | 1,308,000 | -0- | -0- | 319,000(4 | ) | ||||||||||||||||||||
Health and Welfare Benefits Continuation
|
24,000 | -0- | -0- | -0- | -0- | 24,000 | 24,000 | |||||||||||||||||||||
280G Tax
Gross-Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
Other
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
TOTAL
|
1,772,000 | -0- | -0- | 4,975,000 | -0- | 1,772,000 | 3,120,000 |
(1) | $500,000 represents one year of salary ($375,000) and an assumed annual bonus for 2010 of $125,000, which is calculated based on annual bonus amounts for 2009 (the year prior to the year of the assumed termination). We have assumed that the 2010 annual bonus is equal to the sum of the actual amount of Dr. Pences annual bonus for 2009 ($83,750) plus the actual amount contributed to the Supplemental Bonus Trust for Dr. Pence for 2009 ($41,250). | |
(2) | Represents the amount contributed in March 2010 on Dr. Pences behalf to the Supplemental Bonus Trust, which would be paid to him in the event of a termination of his employment, as of December 31, 2010, as a result of death or disability. | |
(3) | If Dr. Pences employment is terminated by WebMD without cause or by him for good reason, the option grants made to Dr. Pence in November 2007 (at the time he joined WebMD) and in December 2008 will each continue to vest until the next scheduled vesting date following such termination. If such a termination occurs within twelve months after a change of control, those options will continue to vest until the second scheduled vesting date following such termination. | |
(4) | The restricted stock grant made to Dr. Pence in November 2007 (at the time he joined WebMD) will continue to vest until the next scheduled vesting date following termination if such termination occurs within 12 months after a change of control. |
35
Termination of |
||||||||||||||||||||||||||||
Employment |
||||||||||||||||||||||||||||
Voluntary |
without |
|||||||||||||||||||||||||||
Termination |
Cause or for |
|||||||||||||||||||||||||||
Voluntary |
in Connection |
Involuntary |
Good Reason |
|||||||||||||||||||||||||
Termination |
with a |
Other |
Permanent |
Involuntary |
Termination |
Following a |
||||||||||||||||||||||
Executive Benefits and |
for Good |
Change of |
Voluntary |
Disability |
Termination |
without |
Change of |
|||||||||||||||||||||
Payments(1)
|
Reason | Control | Termination | or Death | for Cause | Cause | Control | |||||||||||||||||||||
Cash
Severance(2)
|
5,725,000 | 5,725,000 | 5,725,000 | 5,725,000 | -0- | 5,725,000 | 5,725,000 | |||||||||||||||||||||
Stock Options
|
8,667,000 | 8,667,000 | -0- | 8,667,000 | -0- | 8,667,000 | 8,667,000 | |||||||||||||||||||||
Restricted Stock
|
13,063,000 | 13,063,000 | -0- | 13,063,000 | -0- | 13,063,000 | 13,063,000 | |||||||||||||||||||||
Health and Welfare Benefits Continuation
|
75,000 | 75,000 | 75,000 | 75,000 | -0- | 75,000 | 75,000 | |||||||||||||||||||||
280G Tax
Gross-Up(3)
|
-0- | 7,888,000 | -0- | -0- | -0- | -0- | 7,888,000 | |||||||||||||||||||||
Other
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
TOTAL
|
27,530,000 | 35,418,000 | 5,800,000 | 27,530,000 | -0- | 27,530,000 | 35,418,000 |
(1) | As more fully described under Employment Agreements with Named Executive Officers Martin J. Wygod below, in connection with the Merger, Mr. Wygod agreed to remain Executive Chairman notwithstanding the terms of his employment agreement. Accordingly, his agreement was amended to provide that he may resign with or without Good Reason and receive his cash severance. | |
(2) | Such cash severance represents salary and bonus for three years, with (a) the annual salary amount being $975,000, the salary in effect immediately prior to the Merger and (b) the annual bonus amount determined by averaging the bonus amounts received by Mr. Wygod for the three years prior to the Merger. | |
(3) | We have assumed, solely for purposes of preparing this table, that the salary continuation portion of the severance is the only portion of the benefits that constitutes reasonable compensation for the restrictive covenants to which the executive is bound following the termination of employment. Accordingly, we have not treated the salary continuation portion as a parachute payment for purposes of Section 280G. Such assumption may change at the time of an actual change of control. |
Termination of |
|||||||||||||||||||||||||||||||
Voluntary |
Employment |
||||||||||||||||||||||||||||||
Termination |
without Cause or |
||||||||||||||||||||||||||||||
Voluntary |
in Connection |
Involuntary |
for Good Reason |
||||||||||||||||||||||||||||
Termination |
with a |
Other |
Permanent |
Involuntary |
Termination |
Following a |
|||||||||||||||||||||||||
Executive Benefits and |
for Good |
Change of |
Voluntary |
Disability |
Termination |
without |
Change of |
||||||||||||||||||||||||
Payments
|
Reason | Control | Termination | or Death | for Cause | Cause | Control | ||||||||||||||||||||||||
Cash Severance
|
-0- | -0- | -0- | 41,000 | (1 | ) | -0- | 195,000 | (2 | ) | 195,000 | (2 | ) | ||||||||||||||||||
Stock Options
|
-0- | -0- | -0- | 2,378,000 | -0- | -0- | -0- | ||||||||||||||||||||||||
Restricted Stock
|
-0- | -0- | -0- | 1,430,000 | -0- | -0- | -0- | ||||||||||||||||||||||||
Health and Welfare Benefits Continuation
|
-0- | -0- | -0- | -0- | -0- | 2,000 | (3 | ) | 2,000 | (3 | ) | ||||||||||||||||||||
280G Tax
Gross-Up
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- | ||||||||||||||||||||||||
Other
|
-0- | -0- | -0- | -0- | -0- | 15,000 | (4 | ) | 15,000 | (4 | ) | ||||||||||||||||||||
TOTAL
|
-0- | -0- | -0- | 3,849,000 | -0- | 212,000 | 212,000 |
(1) | Represents the amount contributed in March 2010 on Dr. Zatzs behalf to the Supplemental Bonus Trust, which would be paid to him in the event of a termination of his employment, as of December 31, 2010, as a result of death or disability. | |
(2) | Represents 27 weeks of base salary under the Severance Plan. Our contractual obligation to pay Dr. Zatz cash severance if his employment is terminated by WebMD without Cause or by him for Good Reason under his employment agreement expired in 2009. However, if Dr. Zatzs employment is terminated by us, he may be eligible for severance under our Severance Plan if the reason for his termination is covered under that Plan (see Background and Assumptions above). In addition, we have assumed, solely for purposes of preparing this table, that the reason for termination satisfies the requirements of the Severance Plan. | |
(3) | Represents one month COBRA payment under the Severance Plan. | |
(4) | Represents the cost of outplacement assistance under the Severance Plan. |
36
| Under his employment agreement, Mr. Gattinellas annual base salary is $560,000 and he is eligible for an annual bonus, the target of which is 100% of his base salary, with the actual amount to be determined by the Compensation Committee of our Board in its discretion. For 2010, Mr. Gattinella received an annual bonus of $268,000, determined by the WebMD Compensation Committee in its discretion. In addition, the WebMD Compensation Committee approved an SBP Award of $132,000 with respect to Mr. Gattinella. See Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Annual Bonuses and Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Supplemental Bonus Plan (SBP) Awards above. | |
| For information regarding Mr. Gattinellas equity compensation, see Executive Compensation Tables above. In 2010, Mr. Gattinella received grants, under the 2005 Plan, of non-qualified options to purchase 120,000 shares of WebMD Common Stock at an exercise price of $46.81 (the closing price of WebMD Common Stock on June 28, 2010, the date of grant) and of 30,000 shares of WebMD Restricted Stock. Both the option grant and the restricted stock grant made on June 28, 2010 are scheduled to vest over a four year period, with 25% scheduled to vest on each of the first, second, third and fourth anniversaries of the date of grant. The options are scheduled to expire on the tenth anniversary of the date of grant. The following terms apply to the grants made to Mr. Gattinella on June 28, 2010: |
| at any time after the first anniversary of the occurrence of a Change of Control (as defined in the 2005 Plan) of WebMD, he may resign, in which case (a) the options granted to him will continue to vest and remain outstanding through the date on which the second vesting after the change of control occurs and such options will expire, if they have not been exercised, 90 days after such second vesting date and (b) the two vestings of the restricted stock that would have occurred after the Change of Control will, if not already vested, accelerate to the date of termination; and | |
| if his employment is terminated by WebMD without cause or by him for good reason following a Change of Control, the options and restricted stock granted to him will be treated in the same manner as described above. |
| The December 2008 amendment described the material terms of the December 2008 equity awards made to Mr. Gattinella, which are identical, with respect to the impact of a Change of Control, to the terms of the June 2010 awards described above. The December 2008 amendment also made changes to the agreement that were intended to bring its terms into compliance with, or exempt it from, Section 409A of the Internal Revenue Code. | |
| As used in the employment agreement, good reason means a material reduction in base salary, a material reduction in Mr. Gattinellas authority or a material breach by WebMD of the terms of the employment agreement. Our obligation to pay cash severance, under the employment agreement, in the event of a termination by WebMD without cause or by Mr. Gattinella for good reason, has expired. |
37
| The employment agreement and the Trade Secret and Proprietary Information Agreement described below are governed by the laws of the State of New York. |
| Under his employment agreement, Mr. Vuolos annual base salary is $450,000 and he is eligible for an annual bonus, the target of which is 100% of his base salary, with the actual amount to be determined by the Compensation Committee of our Board in its discretion. For 2010, Mr. Vuolo received an annual bonus of $251,250, determined by the WebMD Compensation Committee in its discretion. In addition, the Compensation Committee approved an SBP Award of $123,750 with respect to Mr. Vuolo. See Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Bonuses Paid by WebMD to its Named Executive Officers and Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Supplemental Bonus Plan (SBP) Awards above. | |
| For information regarding Mr. Vuolos equity compensation, see Executive Compensation Tables above. In 2010, Mr. Vuolo received grants, under the 2005 Plan, of non-qualified options to purchase 100,000 shares of WebMD Common Stock at an exercise price of $46.81 (the closing price of WebMD Common Stock on June 28, 2010, the date of grant) and of 20,000 shares of WebMD Restricted Stock. Both the option grant and the restricted stock grant made on June 28, 2010 are scheduled to vest over a four year period, with 25% scheduled to vest on each of the first, second, third and fourth anniversaries of the date of grant. The options are scheduled to expire on the tenth anniversary of the date of grant. The following terms apply to the grants made to Mr. Vuolo on June 28, 2010: |
| at any time after the first anniversary of the occurrence of a Change in Control (as described below) of WebMD, he may resign, in which case (a) the options granted to him will continue to vest and remain outstanding through the date on which the second vesting after the change of control occurs and such options will expire, if they have not been exercised, 90 days after such second vesting date and (b) the two vestings of the restricted stock that would have occurred after the Change in Control will, if not already vested, accelerate to the date of termination; and | |
| if his employment is terminated by WebMD without Cause (as described below) or by him for Good Reason (as described below) following a Change in Control, the options and restricted stock granted to him will be treated in the same manner as described above. |
| In the event of the termination of Mr. Vuolos employment due to his death or disability, by WebMD without Cause (as described below), or by Mr. Vuolo for Good Reason (as described below), or as a result of WebMDs failure to renew his employment agreement, he would be entitled to the following |
38
(subject, if necessary, to a six month delay to comply with Section 409A of the Internal Revenue Code): |
| continuation of his base salary for a period of 18 months following the date of termination; | |
| any unpaid bonus for the year preceding the year in which the termination of employment occurs, as well as payment for bonuses for the 18-month period following the date of termination calculated using the bonus paid for the year prior to the year of termination (and, for this purpose only, the amount of his SBP Award for such year, if any); and | |
| continued participation in certain of WebMDs welfare benefit plans for 36 months (or, if earlier, until he is eligible for comparable benefits); provided that, pursuant to the December 2008 amendment, he will no longer be entitled to participate in WebMDs disability plans and will instead be entitled to a payment equal to the greater of $10,000 and 200% of the cost of his coverage for up to three years. |
| The December 2008 amendment described the material terms of the December 2008 WebMD equity awards made to Mr. Vuolo. Specifically, Mr. Vuolo may resign one year after the occurrence of a Change in Control (as described below) and (i) he would continue to vest in the option granted on December 10, 2008 through the second anniversary of the Change in Control and (ii) that portion of the restricted stock award made on the same date that would have vested over the two year period following the Change in Control will become vested on the date of resignation. The February 2009 amendment provided that the option granted to Mr. Vuolo by HLTH on December 10, 2008 will be treated in the same manner as the WebMD grants made on such date and described above. | |
| For purposes of the employment agreement: (a) Cause includes (i) a material breach of his employment agreement that remains unremedied after 30 days written notice, or (ii) conviction of a felony; and (b) Good Reason includes (i) a material reduction in his title or responsibilities, (ii) the requirement to report to anyone other than WebMDs CEO, (iii) a reduction in his base salary or material fringe benefits, (iv) a material breach by WebMD of his employment agreement, (v) relocation of his place of work outside Manhattan, New York, unless it is within 25 miles of his current residence, or (vi) the date that is six months following a Change in Control (as described below) of WebMD (so long as Mr. Vuolo remains employed by WebMDs successor, or is terminated without Cause or resigns for Good Reason, during such six-month period). | |
| For purposes of the employment agreement, a Change in Control would occur when: (i) any person, entity, or group acquires at least 50% of the voting power of WebMD, (ii) there is a sale of all or substantially all of WebMDs assets in a transaction where then-current stockholders do not receive a majority of the voting power or equity interest in the acquiring entity or its controlling affiliates or (iii) a complete liquidation or dissolution of WebMD occurs. | |
| The grant of 44,000 shares of WebMD Restricted Stock made in November 2009 is scheduled to vest in equal annual installments over four years, subject to continued employment on such dates; provided, however, that if a Change of Control (as defined in the 2005 Plan) occurs, he may resign beginning one year after the change in control and any remaining unvested shares would vest on the date of resignation. | |
| The employment agreement contains confidentiality obligations that survive indefinitely and non-solicitation and non-competition obligations that end on the second anniversary of the date employment has ceased. |
39
| The December 2008 amendment also made changes to the agreement that were intended to bring its terms into compliance with, or exempt it from, Section 409A of the Internal Revenue Code by, among other things, clarifying the timing of certain payments. | |
| The employment agreement is governed by the laws of the State of New York. | |
| The employment agreement contains a tax gross-up provision relating to any excise tax that Mr. Vuolo incurs by reason of his receipt of any payment that constitutes an excess parachute payment as defined in Section 280G. Any excess parachute and related gross-up payments made to Mr. Vuolo will not be deductible for federal income tax purposes. |
| Under his employment agreement, Dr. Pences annual base salary is $375,000 and he is eligible for an annual bonus, the target of which is 35% of his base salary, with the actual amount to be determined by the Compensation Committee of our Board in its discretion. For 2010, Dr. Pence received an annual bonus of $100,500, determined by the Compensation Committee of our Board in its discretion. In addition, the Compensation Committee approved an SBP Award of $49,500 with respect to Dr. Pence. See Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Annual Bonuses and Supplemental Bonus Plan (SBP) Awards above. | |
| For information regarding Dr. Pences equity compensation, see the Executive Compensation Tables above. In 2010, Dr. Pence received grants, under the 2005 Plan, of non-qualified options to purchase 75,000 shares of WebMD Common Stock at an exercise price of $46.81 (the closing price of WebMD Common Stock on June 28, 2010, the date of grant) and of 10,000 shares of WebMD Restricted Stock. Both the option grant and the restricted stock grant made on June 28, 2010 are scheduled to vest over a four year period, with 25% scheduled to vest on each of the first, second, third and fourth anniversaries of the date of grant. The options are scheduled to expire on the tenth anniversary of the date of grant. | |
| In the event of the termination of Dr. Pences employment, by WebMD without Cause or by Dr. Pence for Good Reason (as those terms are described below), he would be entitled to continue to receive his base salary for one year from the date of termination, to receive any unpaid bonus for the year preceding the year in which the termination occurs, and to receive the employer portion of COBRA premiums until the earlier of one year following his termination and the date upon which he receives comparable coverage under another plan. Amounts with respect to Dr. Pences SBP Award are payable in accordance with the terms of the Supplemental Bonus Trust (see Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Annual Bonuses and Supplemental Bonus Plan (SBP) Awards above). In addition, in the event that a termination of Dr. Pences employment by WebMD without Cause or by Dr. Pence for Good Reason occurs before the fourth anniversary of the date of grant, 25% of the options to purchase WebMD Common Stock granted to Dr. Pence on November 1, 2007 upon his joining WebMD and on December 10, 2008 would continue to vest through the next vesting date following the date of termination. | |
| In the event of a Change of Control of WebMD (as such term is defined in the 2005 Plan) and his subsequent termination by WebMD without Cause or by him for Good Reason within 12 months following such Change of Control, the unvested portion of the options to purchase WebMD Common Stock granted to Dr. Pence on November 1, 2007 upon his joining WebMD and on December 10, 2008 |
40
would continue to vest through the second vesting date following such termination and 25% of the WebMD Restricted Stock granted to him on November 1, 2007 would continue to vest through the next vesting date following the date of termination. |
| For purposes of the employment agreement: |
| a Change of Control (as such term is defined in the 2005 Plan) would occur when: (i) a person, entity or group acquires more than 50% of the voting power of WebMD, (ii) there is a reorganization, merger or consolidation or sale involving all or substantially all of WebMDs assets, or (iii) there is a complete liquidation or dissolution of WebMD. | |
| Cause includes (i) continued willful failure to perform duties after 30 days written notice, (ii) willful misconduct or violence or threat of violence that would harm WebMD, (iii) a breach of a material WebMD policy, the employment agreement, or the Trade Secret and Proprietary Information Agreement (as described below), that remains unremedied after 30 days written notice, or (iv) conviction of a felony in respect of a dishonest or fraudulent act or other crime of moral turpitude. | |
| Good Reason means Dr. Pences resignation of employment within 1 year of the occurrence of any of the following conditions or events: (i) a material reduction in base salary, (ii) a material reduction in authority, or (iii) any material breach of the employment agreement by WebMD; provided that Dr. Pence has provided written notice to WebMD within 90 days after the occurrence of such condition or event claimed to be Good Reason and WebMD has failed to remedy such condition or event within 30 days of receipt of such written notice. |
| The employment agreement and the Trade Secret and Proprietary Information Agreement described below are governed by the laws of the State of New York. |
| Pursuant to the 2008 Amendment, upon the closing of the Merger, (i) Mr. Wygods employment would have terminated, (ii) Mr. Wygod would have become a non-executive Chairman of the Board of WebMD and (iii) Mr. Wygod would have been entitled to receive the cash severance and benefits provided in the employment agreement (described below). However, HLTH, WebMD and Mr. Wygod agreed, in the 2009 Amendment, that Mr. Wygod would continue to serve as executive Chairman of the Board of WebMD following the Merger and that, upon the consummation of the Merger, Mr. Wygods salary would be reduced from $975,000 to $120,000. The 2009 Amendment also provided that Mr. Wygod would continue to have the right, if his employment were to terminate for any reason, to receive the severance he would have received under the 2008 Amendment had he become a non-employee Chairman of the Board of WebMD upon the closing of the Merger, as had originally been |
41
contemplated. Accordingly, upon any such termination, Mr. Wygod would be entitled to the following severance benefits: |
| a severance payment of $975,000 (Mr. Wygods base salary prior to the Merger), per year payable for three years following the date of termination in equal installments at the same time as WebMDs payroll practices (for an aggregate of $2,925,000); provided that the first six months of severance shall be delayed for six months and will be paid in a lump sum after such six month period in accordance with Section 409A of the Internal Revenue Code; | |
| a bonus payment in the amount of $933,333.34 (the average of the three annual bonuses prior to the closing date of the Merger) for each of the three calendar years following the date of termination (for an aggregate of $2.8 million), with the payments to be made at such time as bonuses are paid to executive officers generally for each such year but not later than December 31 of the year following the year to which the bonus relates; and | |
| continued participation in WebMDs health, dental, vision and life insurance plans in which he participates on the date of termination (or reasonably equivalent plans) for three years from the date of termination (or, if earlier, until eligible for comparable coverage with a subsequent employer). |
| The amount of any bonus payable to Mr. Wygod is in the discretion of the WebMD Compensation Committee. For 2010, Mr. Wygod received an annual bonus of $1,172,500 from WebMD, determined by the WebMD Compensation Committee in its discretion. In addition, the Compensation Committee approved an SBP Award of $577,500 with respect to Mr. Wygod. See Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Annual Bonuses and Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Supplemental Bonus Plan (SBP) Awards above. | |
| For information regarding Mr. Wygods equity compensation, see Executive Compensation Tables above. In 2010, Mr. Wygod received grants, under the 2005 Plan, of non-qualified options to purchase 75,000 shares of WebMD Common Stock at an exercise price of $46.81 (the closing price of WebMD Common Stock on June 28, 2010, the date of grant) and of 75,000 shares of WebMD Restricted Stock. Both the option grant and the restricted stock grant made on June 28, 2010 are scheduled to vest over a four year period, with 25% scheduled to vest on each of the first, second, third and fourth anniversaries of the date of grant. The options are scheduled to expire on the tenth anniversary of the date of grant. On February 11, 2011, Mr. Wygod received a grant of 100,000 shares of WebMD Restricted Stock, scheduled to vest over a four year period, with 25% scheduled to vest on each of the first, second, third and fourth anniversaries of the date of grant. | |
| The 2008 Amendment extended the employment period, under the employment agreement, through December 31, 2012, provided that a non-renewal by WebMD will be treated as a termination without Cause (as that term is described below) and have the consequences described below. | |
| For purposes of the employment agreement: (a) Cause includes a final court adjudication that Mr. Wygod (i) committed fraud or a felony directed against WebMD or an affiliate relating to his employment, or (ii) materially breached any of the material terms of the employment agreement; and (b) the definition of Good Reason includes the following conditions or events: (i) a material reduction in title or responsibility that remains in effect for 30 days after written notice, (ii) a final court adjudication that WebMD materially breached any material provisions of the employment agreement, (iii) failure to serve on WebMDs Board or Executive Committee of WebMDs Board, or (iv) the occurrence of a Change in Control of WebMD. |
42
| The employment agreement contains confidentiality obligations that survive indefinitely and non-solicitation and non-competition obligations that continue until the third anniversary of the date his employment has ceased. Post-employment payments and benefits that may be due to Mr. Wygod under the employment agreement are subject to his continued compliance with these covenants. | |
| The employment agreement contains a tax gross-up provision relating to any excise tax that Mr. Wygod incurs by reason of his receipt of any payment that constitutes an excess parachute payment as defined in Section 280G. Any excess parachute payments and related tax gross-up payments made to Mr. Wygod will not be deductible by WebMD for federal income tax purposes. |
| Under his employment agreement, Dr. Zatzs annual base salary is $375,000 and he is eligible for an annual bonus, the target of which is 35% of his base salary, with the actual amount to be determined by the Compensation Committee of our Board in its discretion. For 2010, Dr. Zatz received an annual bonus of $83,750, determined by the Compensation Committee of our Board in its discretion. In addition, the Compensation Committee approved an SBP Award of $41,250 with respect to Dr. Zatz. See Compensation Discussion and Analysis Use of Specific Types of Compensation in 2010 Annual Bonuses and Supplemental Bonus Plan (SBP) Awards above. | |
| For information regarding Dr. Zatzs equity compensation, see the Executive Compensation Tables above. In 2010, Dr. Zatz received grants, under the 2005 Plan, of non-qualified options to purchase 75,000 shares of WebMD Common Stock at an exercise price of $46.81 (the closing price of WebMD Common Stock on June 28, 2010, the date of grant) and of 10,000 shares of WebMD Restricted Stock. Both the option grant and the restricted stock grant made on June 28, 2010 are scheduled to vest over a four year period, with 25% scheduled to vest on each of the first, second, third and fourth anniversaries of the date of grant. The options are scheduled to expire on the tenth anniversary of the date of grant. | |
| The December 2008 amendment made changes to the agreement that were intended to bring its terms into compliance with, or exempt it from, Section 409A. | |
| Our obligation to pay cash severance, under the employment agreement, in the event of a termination by WebMD without cause or by Dr. Zatz for good reason, has expired. | |
| The employment agreement and the Trade Secret and Proprietary Information Agreement described below are each governed by the laws of the State of New York. |
43
| As a result of his serving as HLTHs Chief Executive Officer for over three years, he would be entitled to continuation of his base salary for three years from his termination date at the rate in effect when he served as CEO of HLTH, which was $660,000 per year (an aggregate of $1.98 million); provided that the first six months of severance shall be delayed for six months and will be paid in a lump sum after such six month period in accordance with Section 409A of the Internal Revenue Code. | |
| He would generally be entitled to continue to participate for three years, on the same terms and conditions that would have applied had he remained employed by WebMD during such period, in all health, medical, dental, life, and disability plans provided to him at the time of such termination and which are provided to employees generally following the date of termination (or comparable plans). |
| if his employment is terminated by WebMD without Cause (defined as described below), by Mr. Cameron for Good Reason (defined as described below) or as a result of death or disability, (a) the options would remain outstanding and continue to vest until the next vesting date following termination and (b) the next vesting of the restricted stock would accelerate to the date of termination; and | |
| if, following a Change of Control (defined as described below), his employment is terminated by WebMD without Cause or by Mr. Cameron for Good Reason, (a) the options would remain outstanding and continue to vest for the remainder of their term and (b) the restricted stock would become fully vested on the date of termination. |
44
| a Change of Control would occur when (a) any person, entity or group acquires at least 50% of the voting power of WebMD, (b) there is a reorganization, merger or consolidation or sale involving all or substantially all of WebMDs assets, or (c) there is a complete liquidation or dissolution of WebMD. | |
| Cause includes (a) any willful misconduct relating, directly or indirectly, to WebMD, which if it can be cured, is not cured within 30 days following written notice from WebMD, (b) any breach of any material provision contained in Mr. Camerons employment agreement or any material policy, which, if it can be cured, is not cured within 30 days following written notice from WebMD, or (c) conviction of a felony or crime involving moral turpitude. | |
| Good Reason includes (a) a material breach by WebMD of its obligations under the employment agreement, which, if able to be cured, remains uncured, (b) a material demotion of Mr. Camerons position with WebMD, and (c) if Mr. Cameron is required to relocate from his present residence or is required to commute, on a regular basis, to the WebMDs headquarters and WebMDs headquarters is outside of the New York City metropolitan area; provided that Mr. Cameron has provided 30 days written notice and WebMD has failed to remedy such condition within 30 days of receipt of such written notice. |
45
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Name and Address of Beneficial |
Common |
Total |
Percent of |
|||||||||||||
Owner
|
Stock(1) | Other(2) | Shares | Outstanding(2) | ||||||||||||
FMR LLC(3)
|
8,761,134 | | 8,761,134 | 14.8 | % | |||||||||||
82 Devonshire Street
|
||||||||||||||||
Boston, MA 02109
|
||||||||||||||||
Kensico Capital Management Corporation, Michael
|
||||||||||||||||
Lowenstein and Thomas J.
Coleman(4)
|
3,446,029 | | 3,446,028 | 5.8 | % | |||||||||||
55 Railroad Avenue, 2nd Floor
|
||||||||||||||||
Greenwich, CT 06830
|
||||||||||||||||
Mark J. Adler, M.D.
|
9,656 | (5) | 34,398 | 44,054 | * | |||||||||||
Kevin M. Cameron
|
184,575 | (6) | 787,050 | 971,625 | 1.6 | % | ||||||||||
Neil F. Dimick
|
17,041 | 102,291 | 119,332 | * | ||||||||||||
Wayne T. Gattinella
|
142,308 | (7) | 161,100 | 303,408 | * | |||||||||||
Jerome C. Keller
|
10,069 | (8) | 46,200 | 56,269 | * | |||||||||||
James V. Manning
|
210,853 | (9) | 2,776 | 213,629 | * | |||||||||||
Abdool Rahim Moossa
|
4,341 | 26,400 | 30,741 | * | ||||||||||||
William Pence
|
24,493 | (10) | 150,000 | 174,493 | * | |||||||||||
Herman Sarkowsky
|
159,438 | (11) | 81,809 | 241,247 | * | |||||||||||
Joseph E. Smith
|
35,532 | 95,585 | 131,117 | * | ||||||||||||
Stanley S. Trotman, Jr.
|
46,142 | (12) | 46,200 | 92,342 | * | |||||||||||
Anthony Vuolo
|
191,021 | (13) | 88,996 | 280,017 | * | |||||||||||
Martin J. Wygod
|
1,516,197 | (14) | 71,110 | 1,587,307 | 2.7 | % | ||||||||||
Steven Zatz, M.D.
|
65,544 | (15) | 25,000 | 90,544 | * | |||||||||||
All executive officers and directors as a group (16 persons)
|
2,665,335 | 1,793,915 | 4,459,250 | 7.3 | % |
* | Less than 1%. |
(1) | The amounts set forth in this column include shares of WebMD Common Stock held in the accounts of Messrs. Cameron, Keller and Wygod and Dr. Zatz in the 401(k) Plan (which we refer to in this table as 401(k) Plan Shares) in the respective amounts stated in the footnotes below, all of which are vested in accordance with terms of the Plan. The amount set forth in this column for All executive officers and directors as a group includes 556 401(k) Plan Shares, all of which are vested in accordance with the terms of the 401(k) Plan. | |
Certain of the individuals listed in this table are beneficial owners of shares of unvested WebMD Restricted Stock in the respective amounts stated in the footnotes below. Holders of WebMD Restricted Stock have voting power, but not dispositive power, with respect to unvested shares of WebMD Restricted Stock. | ||
(2) | Beneficial ownership is determined under the rules and regulations of the SEC, which provide that shares of common stock that a person has the right to acquire within 60 days are deemed to be outstanding and beneficially owned by that person for the purpose of computing the total number of shares beneficially owned by that person and the percentage ownership of that person. However, those shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. Accordingly, we have set forth, in the column entitled Other, with respect to each person listed, the number of shares of WebMD Common Stock that such person has the right to acquire pursuant to options that are currently exercisable or that will be exercisable within 60 days of April 20, 2011. We have calculated the percentages set forth in the column entitled Percent of Outstanding based on the |
46
number of shares outstanding as of April 20, 2011 (which was 59,017,084, including all outstanding unvested shares of WebMD Restricted Stock) plus, for each listed person or group, the number of additional shares deemed outstanding, as set forth in the column entitled Other. | ||
(3) | This amount is based upon information disclosed by FMR LLC, Fidelity Management & Research Company and Edward C. Johnson, 3d in a Schedule 13G filed with the SEC reporting that FMR Corp. and the other members of the filing group had, as of December 31, 2010, sole power to vote or to direct the vote of 42,214 shares of WebMD Common Stock and sole power to dispose of or to direct the disposition of 8,761,134 shares of WebMD Common Stock. Sole power to vote the other shares of WebMD Common Stock beneficially owned by the filing group resides in the respective boards of trustees of the funds that have invested in the shares. | |
(4) | The information shown is as of December 31, 2010 and is based upon information disclosed by Kensico Capital Management Corporation, Michael Lowenstein and Thomas J. Coleman in a Schedule 13G filed with the SEC. Such persons reported that they had shared power to dispose of or to direct the disposition of 3,446,028 shares of WebMD Common Stock. | |
(5) | Includes: 6,390 shares held by Dr. Adler, 3,000 shares held by Dr. Adler through an IRA; and 266 shares held by Dr. Adlers son. | |
(6) | Includes: 64,506 shares held by Mr. Cameron; 69 401(k) Plan Shares; and 120,000 unvested shares of WebMD Restricted Stock. | |
(7) | Includes: 82,308 shares held by Mr. Gattinella; and 60,000 unvested shares of WebMD Restricted Stock. | |
(8) | Includes: 10,000 shares held by Mr. Keller; and 69 401(k) Plan Shares. | |
(9) | Includes: 203,965 shares held by Mr. Manning; 5,555 shares held by Mr. Manning through an IRA; and 1,333 shares held by Mr. Mannings wife through an IRA. | |
(10) | Includes: 1,993 shares held by Dr. Pence; and 22,500 unvested shares of WebMD Restricted Stock. | |
(11) | Includes: 135,438 shares held by Mr. Sarkowsky; 2,000 shares held by Mr. Sarkowskys wife; 12,000 shares held by SPF Holdings (an entity controlled by Mr. Sarkowsky); and 10,000 shares held by The Sarkowsky Family LLP (entities controlled by Mr. Sarkowsky). | |
(12) | Includes: 35,207 shares held by Mr. Trotman; and 10,935 shares held by The Stanley S. Trotman, Jr. Trust, of which Mr. Trotman is a trustee. | |
(13) | Includes: 113,521 shares held by Mr. Vuolo; and 77,500 unvested shares of WebMD Restricted Stock. | |
(14) | Includes: 30,772 shares held by Mr. Wygod; 105 401(k) Plan Shares; 340,828 shares of unvested WebMD Restricted Stock; 1,070,575 shares held by The Wygod Family Revocable Living Trust, of which Mr. Wygod is a trustee and shares voting and dispositive power; 2,222 shares held by Mr. Wygods spouse through an IRA; 31,695 shares held by SYNC, Inc., which is controlled by Mr. Wygod; and 40,000 shares held by the Rose Foundation, a private charitable foundation of which Mr. Wygod is a trustee and shares voting and dispositive power. | |
(15) | Includes: 43,440 shares held by Dr. Zatz, 104 401(k) Plan Shares; and 22,000 unvested shares of WebMD Restricted Stock. |
(c) |
||||||||||||
(a) |
(b) |
Number of securities |
||||||||||
Number of securities to be |
Weighted-average |
remaining available for |
||||||||||
issued upon exercise of |
exercise price of |
future issuance under equity |
||||||||||
outstanding options, |
outstanding options, |
compensation plans |
||||||||||
warrants and |
warrants |
(excluding securities |
||||||||||
Plan category(1)
|
rights | and rights | reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders
|
7,727,273 | $ | 32.91 | 3,784,264 | ||||||||
Equity compensation plans not approved by security
holders(2)
|
8,900 | $ | 40.60 | | ||||||||
Total
|
7,736,173 | $ | 32.92 | 3,784,264 | (3) | |||||||
(1) | This table does not include outstanding options to acquire 2,491,582 shares of WebMD Common Stock at a weighted-average exercise price of $24.16 per share, as of December 31, 2010, that were assumed by WebMD in the Merger. We cannot grant additional awards under equity compensation plans assumed in the Merger. For additional information regarding the assumed options, see Note 10 to the Consolidated Financial Statements in this Annual Report. The 2005 Plan is the only equity compensation plan under which we could make grants as of December 31, 2010. |
47
(2) | The plan included in this category is the WebMD Health Corp. Long-Term Incentive Plan for Employees of Subimo, LLC, which did not require approval of our stockholders under applicable law and Nasdaq rules. We refer to that Plan as the Subimo Plan. A description of the Subimo Plan follows this table. | |
(3) | In 2010, the 2005 Plan was amended to place a limit on the number of shares available for grants of restricted stock and similar awards for which no exercise or purchase price is payable (often referred to as full value awards). The amendment provided that: (a) the number of shares available for full value awards under the 2005 Plan made after the amendment became effective would not exceed 20% of the aggregate number of shares available for grant under the 2005 Plan on October 21, 2010; and (b) if full value awards are forfeited prior to vesting, the limit on the number of shares available for grant as full value awards would be increased by the number of shares underlying the forfeited full value awards (but would not be increased as a result of forfeitures of options). As of December 31, 2010, approximately 774,000 shares were available under the 2005 Plan for grant as full value awards. |
48
Item 13. | Certain Relationships and Related Transactions |
49
50
Item 14. | Principal Accountant Fees and Services |
Type of Fees
|
2010 | 2009 | ||||||
Audit Fees
|
$ | 978,284 | $ | 1,085,818 | ||||
Audit-Related Fees
|
85,460 | 639,165 | ||||||
Tax Fees
|
214,563 | 299,965 | ||||||
All Other Fees
|
2,569 | 1,995 | ||||||
Total Fees
|
$ | 1,280,876 | $ | 2,026,943 | ||||
| audit fees include: (a) fees for professional services (i) for the audit of consolidated financial statements of WebMD for 2010 and 2009, (ii) for review of the consolidated financial statements included in WebMDs Quarterly Reports on Form 10-Q filed during each year (and review of the quarterly financial statements of HLTH in 2009 prior to the Merger), and (iii) for the audits of internal control over financial reporting with respect to WebMD for 2010 and 2009; and (b) fees for services that are normally provided by the principal accountant in connection with statutory and regulatory filings or engagements for each year; | |
| audit-related fees are fees in each year for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, and included fees related to employee benefit plan and other audits during 2010 and 2009 and, during 2009, also included fees for services related to the Merger and the disposition of Porex; | |
| tax fees are fees in the year for professional services for tax compliance, tax advice, and tax planning and analysis, a portion of which during 2009 related to the Merger; and | |
| all other fees are fees in the year for any products and services not included in the first three categories and consisted of a subscription to Ernst & Youngs online research tool. |
51
By: |
/s/ Anthony
Vuolo
|
52
Exhibit No.
|
Description
|
|||
2 | .1* | Stock Purchase Agreement, dated as of August 8, 2006, between HLTH Corporation (HLTH) and Sage Software, Inc. (incorporated by reference to Exhibit 2.1 to HLTHs Current Report on Form 8-K filed on August 11, 2006) | ||
2 | .2* | Amended and Restated Agreement and Plan of Merger, dated as of November 15, 2006, among Emdeon Corporation, EBS Holdco, Inc., EBS Master LLC, Emdeon Business Services LLC, Medifax-EDI Holding Company, EBS Acquisition LLC, GA EBS Merger LLC and EBS Merger Co. (incorporated by reference to Exhibit 2.1 to HLTHs Current Report on Form 8-K filed on November 21, 2006) | ||
2 | .3* | Securities Purchase Agreement, dated as of February 8, 2008, among HLTH, EBS Master LLC, the voting members of EBS Master LLC and the purchasers listed therein (incorporated by reference to Exhibit 2.1 to HLTHs Current Report on Form 8-K filed on February 13, 2008) | ||
2 | .4* | Agreement and Plan of Merger, dated as of June 17, 2009, between HLTH Corporation and WebMD Health Corp. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the Registrant on June 18, 2009, as amended on June 22, 2009) | ||
2 | .5* | Stock Purchase Agreement, dated as of September 17, 2009, among SNTC Holding, Inc., Aurora Equity Partners III L.P. and Aurora Overseas Equity Partners III, L.P. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by HLTH on September 22, 2009) | ||
2 | .6* | Unit Purchase Agreement, dated as of November 2, 2006, by and among the Registrant, Subimo, LLC and the Sellers referred to therein (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the Registrant on November 8, 2006) (the Subimo Purchase Agreement) | ||
2 | .7 | Amendment, dated December 3, 2008, to the Subimo Purchase Agreement (incorporated by reference to Exhibit 2.7 to the Registrants Annual Report on Form 10-K for the year ended December 31, 2008 (the 2008 Form 10-K)) | ||
2 | .8* | Stock Purchase Agreement, dated as of June 3, 2008, between SNTC Holding, Inc. and General Dynamics Information Technology, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 1, filed on June 10, 2008, to the Current Report on Form 8-K filed by HLTH on June 4, 2008) | ||
2 | .9* | Termination and Mutual Release Agreement, dated as of November 18, 2008, among the Registrant, Marketing Technology Solutions Inc., Jay Goldberg and Russell Planitzer (incorporated by reference to Exhibit 2.8 to the 2008 Form 10-K) | ||
2 | .10* | Purchase and Release Agreement, dated as of April 20, 2010, between WebMD Health Corp. and Citigroup Global Markets Inc. (incorporated by reference to Exhibit 2.1 to the Registrants Current Report on Form 8-K filed on April 26, 2010) | ||
3 | .1 | Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrants Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162651)) | ||
3 | .2 | Amended and Restated By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrants Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162651)) | ||
4 | .1 | Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 in Amendment No. 1, filed on August 11, 2009, to the Registrants Registration Statement on Form S-4 (Reg. No. 333-160530)) | ||
4 | .2 | Indenture, dated as of January 11, 2011, between the Registrant and The Bank of New York Mellon Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to Amendment No. 1, filed on January 14, 2011, to the Registrants Current Report on Form 8-K filed on January 11, 2011 | ||
4 | .3 | Form of 2.50% Convertible Note Due 2018 (included in Exhibit 4.2) | ||
10 | .1 | Form of Indemnification Agreement between HLTH and each of its directors and executive officers (incorporated by reference to Exhibit 10.1 to HLTHs Quarterly Report on Form 10-Q for the quarter ended June 30, 2002) |
E-1
Exhibit No.
|
Description
|
|||
10 | .2 | Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.9 to the Registrants Registration Statement on Form S-1 (No. 333-124832) (which we refer to as the IPO Registration Statement)) | ||
10 | .3** | WebMD Health Corp. Long-Term Incentive Plan for Employees of Subimo, LLC (incorporated by reference to Exhibit 10.2 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2006) | ||
10 | .4 | Healtheon/WebMD Media Services Agreement dated January 26, 2000 among HLTH, Eastrise Profits Limited and Fox Entertainment Group, Inc. (incorporated by reference to Exhibit 10.5 to HLTHs Quarterly Report on Form 10-Q for the quarter ended March 31, 2000), as amended by Amendment dated February 15, 2001 (incorporated by reference to Exhibit 10.2 to HLTHs Quarterly Report on Form 10-Q for the quarter ended March 31, 2001) | ||
10 | .5** | Amended and Restated Employment Agreement, dated as of August 3, 2005 between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.1 to HLTHs Current Report on Form 8-K filed on August 5, 2005) | ||
10 | .6** | Letter Agreement, dated as of February 1, 2006 between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.3 to HLTHs Current Report on Form 8-K filed on February 2, 2006) | ||
10 | .7** | Employment Agreement, dated September 23, 2004, between HLTH and Kevin Cameron (incorporated by reference to Exhibit 10.1 to HLTHs Current Report on Form 8-K filed September 28, 2004) | ||
10 | .8** | Letter Agreement, dated as of February 1, 2006 between HLTH and Kevin M. Cameron (incorporated by reference to Exhibit 10.2 to HLTHs Current Report on Form 8-K filed on February 2, 2006) | ||
10 | .9** | Letter Agreement, dated as of April 27, 2005, between HLTH. and Wayne T. Gattinella (incorporated by reference to Exhibit 99.1 to HLTHs Current Report on Form 8-K filed on May 3, 2005) | ||
10 | .10** | Employment Agreement, dated as of April 28, 2005, between WebMD, Inc. and Wayne T. Gattinella (incorporated by reference to Exhibit 99.1 to HLTHs Current Report on Form 8-K filed on May 3, 2005) | ||
10 | .11** | Form of Amendment to HLTHs Equity Compensation Plans and Stock Option Agreements (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by HLTH on November 9, 2006) | ||
10 | .12** | 2001 Employee Non-Qualified Stock Option Plan of HLTH, as amended (incorporated by reference to Exhibit 10.46 to HLTHs Form 10-K for the year ended December 31, 2001, as amended by Amendment No. 1 on Form 10-K/A) | ||
10 | .13** | 2002 Restricted Stock Plan of HLTH and Form of Award Agreement (incorporated by reference to Exhibit 10.21 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2002) | ||
10 | .14** | Amended and Restated 1996 Stock Plan of HLTH (incorporated by reference to Exhibit 10.8 to HLTHs Quarterly Report on Form 10-Q for the quarter ended March 31, 2006) | ||
10 | .15** | Amended and Restated 2000 Long-Term Incentive Plan of HLTH (incorporated by reference to Annex E to HLTHs Proxy Statement for its 2006 Annual Meeting filed on August 14, 2006) | ||
10 | .16** | 1991 Director Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.2 to Synetic, Inc.s Registration Statement on Form S-8 (No. 333-46640) filed March 24, 1992) | ||
10 | .17** | Amended and Restated 1991 Special Non-Qualified Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.3 to Synetic, Inc.s Registration Statement on Form S-8 (No. 333-36041) filed September 19, 1997) | ||
10 | .18** | 1996 Class C Stock Option Plan of Synetic, Inc. (incorporated by reference to Exhibit 4.1 to Synetic, Inc.s Registration Statement on Form S-8 (No. 333-36041) filed September 19, 1997) | ||
10 | .19** | CareInsite, Inc. 1999 Director Stock Option Plan (incorporated by reference to Annex H to the Proxy Statement/Prospectus, filed on August 7, 2000, and included in HLTHs Registration Statement on Form S-4 (No. 333-39592)) |
E-2
Exhibit No.
|
Description
|
|||
10 | .20** | WebMD Health Corp. Amended and Restated 2005 Long-Term Incentive Plan (the 2005 LTIP) (incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K filed on October 27, 2010) | ||
10 | .21** | Amended and Restated Employment Agreement, dated as of July 14, 2005, between WebMD Health Corp. and Anthony Vuolo (incorporated by reference to Exhibit 99.2 to HLTHs Current Report on Form 8-K, as amended, filed with the Securities and Exchange Commission on July 19, 2005) | ||
10 | .22** | Form of Restricted Stock Agreement with Employees (incorporated by reference to Exhibit 4.2 to the Registrants Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162653)) | ||
10 | .23** | Form of Restricted Stock Agreement with Non-Employee Directors (incorporated by reference to Exhibit 10.49 to the IPO Registration Statement) | ||
10 | .24** | Form of Non-Qualified Stock Option Agreement with Employees (incorporated by reference to Exhibit 4.3 to the Registrants Registration Statement on Form S-8 filed on October 23, 2009 (Reg. No. 333-162653)) | ||
10 | .25** | Form of Non-Qualified Stock Option Agreement with Non-Employee Directors (incorporated by reference to Exhibit 10.51 to the IPO Registration Statement) | ||
10 | .26** | Employment Agreement between WebMD Health Holdings, Inc. and Douglas W. Wamsley (incorporated by reference to Exhibit 10.15 to the IPO Registration Statement) | ||
10 | .27** | Employment Agreement between WebMD Health Holdings, Inc. and Nan-Kirsten Forte (incorporated by reference to Exhibit 10.16 to the IPO Registration Statement) | ||
10 | .28** | Employment Agreement between WebMD Health Holdings, Inc. and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.17 to the IPO Registration Statement) | ||
10 | .29** | Employment Agreement between WebMD Health Holdings, Inc. and Craig Froude (incorporated by reference to Exhibit 10.18 to the IPO Registration Statement) | ||
10 | .30 | Agreement of Lease, dated as of June 30, 2004, between III Chelsea Commerce LP and WebMD, Inc. (incorporated by reference to Exhibit 10.45 to the IPO Registration Statement) | ||
10 | .31 | First Amendment to the Lease Agreement, dated as of December 21, 2004, between III Chelsea Commerce LP and WebMD, Inc. (incorporated by reference to Exhibit 10.46 to the IPO Registration Statement) | ||
10 | .32 | Services Agreement, dated as of February 12, 2004, between WebMD, Inc. and Fidelity Human Resources Services Company LLC (f/k/a Fidelity Employer Services Company LLC) (incorporated by reference to Exhibit 10.47 to the IPO Registration Statement) | ||
10 | .33** | Form of Restricted Stock Agreement between HLTH and Employees for Grants Under HLTHs 2000 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.57 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2005) | ||
10 | .34** | Form of Non-Qualified Stock Option Agreement between HLTH and Employees for Grants Under HLTHs 2000 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.58 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2005) | ||
10 | .35** | Form of Non-Qualified Stock Option Agreement between HLTH and Employees for Grants Under HLTHs 1996 Stock Plan (incorporated by reference to Exhibit 10.59 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2005) | ||
10 | .36** | Amendment No. 2, dated as of December 1, 2008, between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.1 to HLTHs Current Report on Form 8-K filed on December 5, 2008) | ||
10 | .37** | Letter Agreement, dated December 29, 2008, between HLTH and Martin J. Wygod (incorporated by reference to Exhibit 10.52 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2008) | ||
10 | .38** | Amendment to Employment Agreement, dated as of December 16, 2008, between HLTH and Kevin M. Cameron (incorporated by reference to Exhibit 10.53 to HLTHs Annual Report on Form 10-K for the year ended December 31, 2008) |
E-3
Exhibit No.
|
Description
|
|||
10 | .39** | Letter Amendment, dated as of December 10, 2008, between the Registrant and Wayne T. Gattinella (incorporated by reference to Exhibit 10.53 to the 2008 Form 10-K) | ||
10 | .40** | Letter Amendment, dated as of July 9, 2009, among HLTH Corporation, WebMD Health Corp. and Martin J. Wygod (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Registrant on July 14, 2009) | ||
10 | .41** | WebMD, LLC Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.48 to Amendment No. 1, filed on April 29, 2008, to the Registrants Annual Report on Form 10-K for the year ended December 31, 2007) | ||
10 | .42** | Amendment No. 1 to WebMD Supplemental Bonus Program Trust Agreement (incorporated by reference to Exhibit 10.58 to Amendment No. 1, filed on April 30, 2009, to the 2008 Form 10-K) | ||
10 | .43** | Letter Agreement, dated as of October 1, 2007, between the Registrant and William Pence (incorporated by reference to Exhibit 10.59 to Amendment No. 1, filed on April 30, 2009, to the 2008 Form 10-K) | ||
10 | .44** | Letter Amendment, dated as of December 10, 2008, between the Registrant and William Pence (incorporated by reference to Exhibit 10.60 to Amendment No. 1, filed on April 30, 2009, to the 2008 Form 10-K) | ||
10 | .45** | Amendment, dated as of December 10, 2008 to Amended and Restated Employment Agreement between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.55 to the 2008 Form 10-K) | ||
10 | .46** | Letter Amendment, dated as of December 14, 2008, between the Registrant and Nan Forte (incorporated by reference to Exhibit 10.56 to the 2008 Form 10-K) | ||
10 | .47** | Letter Agreement, dated as of February 19, 2009, between HLTH and Anthony Vuolo (incorporated by reference to Exhibit 10.57 to the 2008 Form 10-K) | ||
10 | .48 | Note Purchase Agreement, dated October 19, 2009, among SNTC Holding, Inc., Porex Holding Corporation, Porex Corporation and Porex Surgical, Inc. (incorporated by reference to Exhibit 10.1 to HLTHs Current Report on Form 8-K filed October 20, 2009) | ||
10 | .49** | Restricted Stock Agreement, dated November 3, 2009, between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.71 to the Registrants Annual Report on Form 10-K for the year ended December 31, 2009 (the 2009 Form 10-K)) | ||
10 | .50** | Letter Amendment, dated as of November 3, 2009, between the Registrant and Kevin M. Cameron (incorporated by reference to Exhibit 10.72 to the 2009 Form 10-K) | ||
10 | .51** | Letter Amendment, dated as of December 14, 2008, between the Registrant and Steven Zatz, M.D. (incorporated by reference to Exhibit 10.74 to Amendment No. 1, filed April 30, 2010, to the 2009 Form 10-K) | ||
10 | .52 | Letter Agreement, dated March 26, 2010, among SNTC Holding, Inc. and Porex Holding Corporation, Porex Corporation and Porex Surgical Inc. (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q filed on May 10, 2010) | ||
10 | .53** | Letter Agreement, dated as of June 28, 2010, between the Registrant and Wayne Gattinella (incorporated by reference to Exhibit 10.1 to the Registrants Quarterly Report on Form 10-Q filed on August 9, 2010) | ||
10 | .54** | Letter Agreement, dated as of June 28, 2010, between the Registrant and Kevin Cameron (incorporated by reference to Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q filed on August 9, 2010) | ||
10 | .55** | Letter Agreement, dated as of June 28, 2010, between the Registrant and Anthony Vuolo (incorporated by reference to Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q filed on August 9, 2010) | ||
10 | .56** | Letter Amendment, dated as of February 11, 2011, between the Registrant and William Pence*** | ||
14 | .1 | Code of Business Conduct (incorporated by reference to Exhibit 14.1 to the Registrants Current Report on Form 8-K filed on September 17, 2010) | ||
21 | Subsidiaries of the Registrant**** | |||
23 | .1 | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm**** |
E-4
Exhibit No.
|
Description
|
|||
31 | .1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Registrant***** | ||
31 | .2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Registrant***** | ||
32 | .1 | Section 1350 Certification of Chief Executive Officer of the Registrant**** | ||
32 | .2 | Section 1350 Certification of Chief Financial Officer of the Registrant**** | ||
99 | .1 | Explanation of Non-GAAP Measures**** | ||
99 | .2 | Audit Committee Charter**** | ||
99 | .3 | Compensation Committee Charter**** | ||
99 | .4 | Nominating & Governance Committee Charter**** |
* | With respect to the agreements filed as Exhibits 2.1 through 2.6 and Exhibits 2.8 through 2.10, certain of the exhibits and the schedules to those agreements have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish copies of any of the exhibits and schedules to the Securities and Exchange Commission upon request. | |
** | Agreement relates to executive compensation. | |
*** | Filed with this Amendment No. 1. | |
**** | Previously filed with this Annual Report on Form 10-K (as originally filed on March 1, 2011). | |
***** | Filed with this Amendment No. 1 and the required copy was also previously filed with this Annual Report on Form 10-K (as originally filed on March 1, 2011). | |
| Portions of this exhibit were redacted pursuant to confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 406 under the Securities Act of 1933, as amended. |
E-5
WebMD Health Corp. |
||||
/s/ Douglas Wamsley | ||||
Douglas Wamsley | ||||
EVP - General Counsel | ||||
/s/ William Pence
|
/s/ Wayne T. Gattinella | ||||
Wayne T. Gattinella | ||||
Chief Executive Officer (Principal executive officer) |
||||
* | Paragraphs 3 through 5, omitted here, are included in Exhibit 31.1 to the Annual Report on Form 10-K filed by WebMD Health Corp. on March 1, 2011. |
/s/ Anthony Vuolo | ||||
Anthony Vuolo | ||||
Chief Operating Officer and Chief Financial Officer (Principal financial and accounting officer) |
||||
* | Paragraphs 3 through 5, omitted here, are included in Exhibit 31.2 to the Annual Report on Form 10-K filed by WebMD Health Corp. on March 1, 2011. |