Health Insurance Innovations, Inc. (NASDAQ:HIIQ) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June 14, 2017, the Board of Directors (the Board) of Health
Insurance Innovations, Inc. (the Company) approved the following
actions and grants relating to the Companys executive
compensation programs: (i) the Board approved a short-term
incentive cash bonus plan (the Cash Bonus Plan), including
applicable target award amounts, for the Companys executive
officers for fiscal years 2017 and 2018, (ii) the Board approved
awards of restricted stock and performance shares to certain of
the Companys executive officers under the Companys Long Term
Incentive Plan (the LTIP), (iii) the Board approved increases to
the base salaries of Gavin D. Southwell, the Companys President
and Chief Executive Officer, and Michael D. Hershberger, the
Companys Chief Financial Officer, and (iv) the Board approved
amendments to the employment agreements of certain of the
Companys executive officers to be consistent with the foregoing
executive compensation actions and arrangements, all as described
in more detail below. The foregoing actions and grants were made
upon the recommendation of the Boards Compensation Committee
following a review of the executive compensation programs of peer
companies.
Approval of Short-Term Incentive Cash Bonus Plan
The Cash Bonus Plan will govern the fiscal year 2017 and 2018
annual cash incentive award opportunities for the Companys
executive officers. Target award levels under the Cash Bonus Plan
are based on a percentage of base salary, and cash incentive
awards are earned based on performance against metrics, which
will be based on the Companys (or the executives respective
business units) annual Adjusted EBITDA in each of fiscal years
2017 and 2018. For 2017 and 2018, target award levels for the
Companys executive officers were set at the following levels as a
percentage of base salary: Gavin D. Southwell: 100%; Michael W.
Kosloske: 75%; Michael D. Hershberger: 60%; Bruce A. Telkamp:
60%; and Dr. Sheldon Wang: 60%. For each of 2017 and 2018, awards
may be earned at a level of up to 200% of the target level if the
maximum performance goals are achieved. Final payouts for 2017
and 2018 will be determined by the Companys Board of Directors or
Compensation Committee and will be subject to such adjustments as
the Board or Compensation Committee may determine in its
discretion.
Award of Restricted Stock and Performance Shares
The awards of restricted stock are time-vesting equity awards
under the Companys LTIP that will vest in four equal annual
installments following the grant date, subject to the recipients
continued employment with the Company on the applicable vesting
date (provided that Mr. Southwells unvested restricted shares
will vest upon a termination without cause, resignation for good
reason, death, or disability). The restricted stock awards were
granted in the following amounts to the following executive
officers: Gavin D. Southwell: 100,000 shares; Michael D.
Hershberger: 22,000 shares; Bruce A. Telkamp: 17,500 shares; and
Dr. Sheldon Wang: 17,500 shares. These restricted stock awards
are intended to replace any other grants that would otherwise be
made to the applicable executive officer in 2017 and 2018 under
their respective employment agreements with the Company.
The performance shares are performance-vesting equity incentive
awards under the Companys LTIP that will be earned based on the
Companys, or the executives respective business units,
performance against metrics relating to annual Adjusted EBITDA
and annual revenue in each of fiscal years 2017 and 2018.
Performance shares may be earned at a level ranging from 0%-200%
of the target number of performance shares granted, depending on
the level of performance. If performance shares are earned, the
Company will issue the participant an equal number of shares of
restricted stock that will vest in two equal annual installments
following the restricted stock grant date, subject to the
recipients continued employment with the Company on the
applicable vesting date (provided that Mr. Southwells unvested
restricted shares will vest upon a termination without cause,
resignation for good reason, death, or disability). The following
target number of performance shares were awarded to the following
executive officers (with one-half of the performance shares
earned based on 2017 performance and one-half for 2018
performance): Gavin D. Southwell: 125,000 target shares; Michael
D. Hershberger: 22,000 target shares; Bruce A. Telkamp: 17,500
target shares; and Dr. Sheldon Wang: 17,500 target shares. The
final determination of whether the performance shares have been
earned will be determined by the Companys Board of Directors or
Compensation Committee and will be subject to such adjustments as
the Board or Compensation Committee may determine in its
discretion.
Increases to Base Salaries
As part of a yearly review of executive base salaries, the Board
increased the base salary of Gavin D. Southwell, the Companys
President and Chief Executive Officer, from $550,000 to $650,000
and Michael D. Hershberger, the Companys Chief Financial Officer,
from $310,000 to $350,000. Such changes were effective June 14,
2017.
Amendments to Executive Employment Agreements
Effective June 14, 2017, the Company entered into an amendment to
the respective employment agreements of each of Messrs.
Southwell, Hershberger, Telkamp, and Wang in order amend the
terms of the existing employment agreements to be consistent with
the executive compensation actions and grants described above.
Such amendments are attached as exhibits hereto and incorporated
by reference herein, and the disclosures in this Form 8-K are
qualified by reference to the full text of such amendments.
Non-Employee Director Compensation Plan
Also on June 14, 2017, the Board approved a revised compensation
plan for non-employee directors of the Company (the Director
Plan). The Director Plan will become effective as of July 1,
2017. Under the revised Director Plan, the Companys non-employee
directors will be entitled to an annual cash retainer of $55,000
and an annual restricted stock grant having a fair market value
of $75,000. The annual restricted stock grant will be made under
the LTIP, and the grant will vest 50% on the first anniversary of
the grant date and 50% of the second anniversary, subject to the
terms of the LTIP and the applicable award agreement.
Under the Director Plan, the Chairman of the Board will also
receive an additional annual cash retainer of $35,000, and
members of Board committees will be paid the following additional
annual retainers: Audit Committee members: $7,500 ($15,000 for
committee chair); Compensation Committee members: $5,000 ($10,000
retainer for committee chair); Nominating and Corporate
Governance Committee Members: $2,500 ($5,000 retainer for
committee chair); and Acquisition Committee Members: $1,500.
Under the Director Plan, the directors will not receive
per-meeting fees, either for Board meetings or committee
meetings.
The foregoing does not purport to be a complete description of
the Director Plan and is qualified by reference to the full text
of such plan attached as an exhibit to this Form 8-K, which
exhibit is incorporated herein by reference.
| Item 9.01(d). | Financial Statements and Exhibits |
| Exhibit No. | ||
| 10.1 | Form of Restricted Stock Award Agreement for executives | |
| 10.2 | Form of Restricted Stock Award for non-employee directors | |
| 10.3 |
Form of Performance Share and Restricted Stock Award |
|
| 10.4 |
Amendment to Amended and Restated Employment Agreement between Gavin Southwell and the Company |
|
| 10.5 |
Amendment to Second Amended and Restated Employment Agreement between Michael Hershberger and the Company |
|
| 10.6 |
Amendment to Employment Agreement between Sheldon Wang and the Company |
|
| 10.7 |
Amendment to Employment Agreement between Bruce Telkamp and the Company |
|
| 10.8 |
Non-Employee Director Compensation Plan of the Company, approved June 14, 2017 and effective as of July 1, 2017 |
Health Insurance Innovations, Inc. ExhibitEX-10.1 2 ex10-1.htm HEALTH INSURANCE INNOVATIONS,…To view the full exhibit click here About Health Insurance Innovations, Inc. (NASDAQ:HIIQ)
Health Insurance Innovations, Inc. is a developer, distributor and virtual administrator of individual and family health insurance plans and supplemental products. The Company sells individual and family insurance plans (IFP) that include short-term medical (STM) insurance plans and hospital indemnity plans. The Company operates through Insurance Plan Development and Distribution (IPD) segment. Its STM plans cover individuals for over 360 days with a range of co-pay and deductible options. Its individual major medical (IMM) plans cover prescription drugs, pre-existing conditions and preventive care, while STM plans provide optional coverage for prescription drugs. The Company’s hospital indemnity plans provide a daily cash benefit for hospital treatment and doctor office visits, as well as accidental injury and death or dismemberment benefits. It provides supplemental insurance products, including pharmacy benefit cards, dental plans, vision plans and cancer/critical illness plans.