Humana has updated its employment agreement with CEO Bruce Broussard to increase, among other items, his compensation in case of a change-in-control event, such as a merger or acquisition.
In filings with the Securities and Exchange Commission, the insurer on Monday updated agreements including its Change in Control Policy and Executive Severance Policy.
It marks the second time in nine months that the Louisville-based insurer has made changes to executive compensation policies in case of a change-in-control event. A similar filing in November that dealt with some executives — but not Broussard — had fueled speculation about a Humana merger or acquisition.
Monday’s filing indicates that now Broussard, too, enjoys better protections if he lost his job after a merger or acquisition. If such an event were to occur and Broussard lost his job in the subsequent 24 months, he would receive severance, like the other executives, equal to 2.5 times the sum of his annual base salary, or about $3.2 million, and other benefits, including health insurance for 30 months.
The new agreement takes effect Jan. 1.
A company spokesman told Insider Tuesday via email that Broussard’s contract is scheduled to expire Dec. 31 and that board action therefore was “prudent.”
“This filing does not signal any change in our expectations with respect to Bruce’s employment status, nor is it related to any speculation or potential consideration of a merger,” said Tom Noland, senior vice president for corporate communication.
Noland also said that the changes align Humana’s policies with current corporate best practices and “would allow flexibility should the needs of our business change.”
The Wall Street Journal had reported in March that Humana was in early stage merger discussion with retail giant Walmart. Industry experts have told Insider that Humana’s acquisition of a portion of Kindred Healthcare and its reported interest in a merger with Walmart reflect the insurance company’s growing interest in providing health care — not just paying for it, as it tries to gain control of ballooning costs related especially to patients with chronic conditions.
Monday’s filing by the insurer also amends Broussard’s stock options and other equity-based compensation awards under various scenarios including termination by the company other than for cause, termination by the executive for good reason and termination after a change-in-control event.
For example, if Broussard were let go after a merger, all time-vested and all performance-vested stock options would become fully vested and exercisable as of the termination date. If, however, Broussard were let go by the company outside of a change-in-control event, and other than for cause or disability, all stock options that are unvested as of the termination date would be forfeited immediately.