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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
August 8, 2023 (August 2, 2023)
Date of Report (Date of earliest event reported)
Elevance Health, Inc.
(Exact name of registrant as specified in its charter)
| Indiana | 001-16751 | 35-2145715 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
220 Virginia Ave
Indianapolis, IN 46204
(Address of principal executive offices and zip code)
833-401-1577
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol |
Name of each exchange on which registered |
||
| Common Stock, Par Value $0.01 | ELV | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined Rule 405 of the Securities Act (§230.405 of this chapter) or Rule 12b-2 of the Exchange Act (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On August 8, 2023, Elevance Health, Inc. (the “Company”) announced that Mark Kaye has been named Executive Vice President and Chief Financial Officer (“CFO”) of the Company, effective November 1, 2023 (the “Transition Date”). Mr. Kaye will commence employment with the Company on September 6, 2023 as CFO Designate prior to assuming the CFO position on the Transition Date. Mr. Kaye succeeds John Gallina, who, after nearly thirty years of dedicated services to the Company, has decided to retire as CFO. Mr. Gallina will continue to be employed by the Company in the new role of Special Advisor to the Chief Executive Officer from the Transition Date.
Mr. Kaye, age 44, joins the Company from Moody’s Corporation, where he served as the Executive Vice President and Chief Financial Officer since April 2021 and as Senior Vice President and Chief Financial Officer from August 2018 to April 2021. Prior to his role at Moody’s Corporation, Mr. Kaye was Senior Vice President and Head of Financial Planning and Analysis at Massachusetts Mutual Life Insurance Company (“MassMutual”) since February 2016 and Chief Financial Officer of MassMutual U.S. since July 2015. Prior to that, Mr. Kaye served as Chief Financial Officer and Senior Vice President, Retirement Solutions, at Voya Financial from 2011 to 2015. Mr. Kaye previously held various senior financial and risk reporting positions at ING U.S. and ING Group, and was in the investment banking division of Credit Suisse First Boston.
On August 2, 2023, Mr. Kaye accepted a written offer letter from the Company establishing his compensation (the “Offer Letter”). Mr. Kaye’s initial compensation will consist of (i) an annual base salary of $900,000, (ii) a target annual incentive bonus opportunity equal to 120% of eligible base salary earnings and (iii) long-term incentive awards with an annual aggregate target value equal to $5,500,000 beginning in 2024. Mr. Kaye will also participate in the Company’s Directed Executive Compensation Program (“DEC”).
To compensate Mr. Kaye for unvested equity he will forfeit when he departs his current employer and to provide a prorated long-term incentive award for 2023, Mr. Kaye will receive a one-time award of equity with a value of $8,000,000 in restricted stock units. Mr. Kaye will also receive a prorated 2023 long-term incentive award of $3,700,000 in a mixture of restricted stock units, performance stock units and stock options. These one-time equity awards will be subject to the terms and conditions of the 2017 Elevance Health Incentive Compensation Plan, as amended and restated effective June 28, 2022, and the individual award agreement corresponding to the award. One-third of the restricted stock units and one-third of the stock options subject to these one-time equity awards will vest on each of the first, second, and third anniversaries of the date of grant, assuming Mr. Kaye’s continued employment by the Company through each such date, subject to the terms of the applicable award agreement. The performance stock units vest in 2026 based on the level of achievement of Company performance from 2023 through 2025 in accordance with the terms of the performance stock units granted to the Company’s senior officers in 2023.
In addition, to compensate Mr. Kaye for forfeited bonus payments and other incentives from his current employer, the Company will provide Mr. Kaye with a one-time cash award of $2,500,000, which will be paid to him on his first paycheck after Mr. Kaye’s start date. Mr. Kaye will be required to repay this cash bonus if he voluntarily resigns or is terminated for cause within three years of his start date.
Pursuant to the Offer Letter, Mr. Kaye will participate in the Elevance Health Executive Agreement Plan, as amended and restated effective June 28, 2022 (the “Executive Agreement Plan”), at the Executive Vice President level, which provides for severance benefits following a termination of employment without cause or resignation for good reason consisting of two years of salary and target bonus, as well as continued employee benefits and DEC benefits during the severance period. Additionally, the Executive Agreement Plan provides for accelerated vesting of equity grants upon a termination of employment without cause or for good reason within three years following a change in control. Mr. Kaye will be subject to certain restrictive covenants including confidentiality, non-competition, non-solicitation and non-disparagement during his employment and for specified periods of time after the termination of his employment.
The foregoing description of Mr. Kaye’s Offer Letter is qualified in its entirety by reference to Mr. Kaye’s Offer Letter, a copy of which is filed as Exhibit 10.1 to this report and is incorporated herein by reference.
There are no arrangements or understandings between Mr. Kaye and any other persons pursuant to which he was selected as Chief Financial Officer. There are no family relationships between Mr. Kaye and any director or executive officer of the Company, and Mr. Kaye has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Item 7.01 – Regulation FD Disclosure
A copy of the press release issued by the Company on August 8, 2023 announcing Mr. Kaye’s appointment as Executive Vice President and Chief Financial Officer effective on the Transition Date is furnished as Exhibit 99.1 to this report.
The Company is reaffirming its net income guidance for full year 2023 to be greater than $29.09 per share, including approximately $3.76 per share of net unfavorable items. Excluding these items, the Company continues to expect adjusted net income to be greater than $32.85 per share. This guidance does not include any other adjustment items beyond those reported in the Company’s second quarter 2023 earnings release.
None of the information furnished in Item 7.01 or Exhibit 99.1 hereto shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Unless expressly set forth by specific reference in such filings, none of the information furnished in this report shall be incorporated by reference in any filing under the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings.
Item 9.01 – Financial Statements and Exhibits
| Exhibit |
Exhibit |
|
| 10.1 | Offer Letter, dated August 2, 2023, between Mark Kaye and Elevance Health, Inc. | |
| 99.1 | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized on this 8th day of August, 2023.
| ELEVANCE HEALTH, INC. | ||
| By: | /s/ Kathleen S. Kiefer |
|
| Name: | Kathleen S. Kiefer | |
| Title: | Chief Governance Officer and Corporate Secretary | |
Exhibit 10.1
August 2, 2023
Mark Kaye
Sent Via Email
Dear Mark:
On behalf of the Board and me, I am pleased to provide the following offer of employment to you as Chief Financial Officer reporting to Gail Boudreaux. This position will be based out of our 220 Virginia Avenue, Indianapolis, Indiana office and your start date will be September 6, 2023. You will be CFO Designate from your start date until November 1, 2023, at which time you will assume the CFO position. We are very enthusiastic about you joining our team!
I am pleased to advise you that the starting compensation and benefits for this position are as follows:
| • | An annualized base salary of $900,000 paid bi-weekly, one week in arrears. |
| • | Participation in the Annual Incentive Plan (AIP) with a target award of 120% of your eligible earnings as defined in the AIP; your eligible earnings will generally be the base salary that is paid to you during the calendar year. The AIP provides you with an opportunity to earn an award based on goals set at the beginning of each year. |
| • | Participation in Elevance Health’s annual Long Term Stock Incentive program beginning in the calendar year following your hire date with a target amount of $5,500,000. There is no guarantee of future grants, but the company has typically provided grants to eligible associates each March. The actual amount granted reflects the level of your job and management’s review of your performance and contributions. Grants are made using a mix of grant types including restricted stock, performance stock and stock options, which typically vest within three years. |
Stock grants are awarded pursuant to Elevance Health’s Incentive Compensation Plan and require accepting all terms and conditions including, but not limited to a confidentiality obligation, a prohibition from obtaining a competitive position in a restricted territory performing a restricted activity with a competitor (as these terms are defined in the grant agreement), a prohibition from soliciting associates or customers to leave Elevance Health, a prohibition on disparaging Elevance Health, and a cooperation clause.
| • | You will receive a stock grant with a value of approximately $3,700,000 on the first business day of the month following or coinciding with your hire date. You will receive 50% of your grant in the form of performance stock units (PSUs). |
Additionally, 25% of your grant will be in the form of restricted stock units (RSUs) and the final 25% in stock options. These grants will vest within three years assuming your continued service.
| • | You will receive a second sign-on grant with a value of approximately $8,000,000 also the first business day of the month following or coinciding with your hire date. You will receive 100% of this grant in the form of RSUs, vesting in equal installments on the first, second and third anniversary of the grant. |
In order to accept your grants, you must electronically accept the grant agreements through E*TRADE at any time within ninety (90) days after the Grant Date. If you do not timely and electronically accept the agreements, they will be null and void as of the 90th day after the grant date and you will have no right or claim to your stock grants.
| • | You will receive a sign-on bonus in the total gross amount of $2,500,000 on the first paycheck following your start date. This payment will be subject to all applicable taxes and withholdings. If you voluntarily resign or are terminated for Cause within thirty-six (36) months of your start date, you agree to reimburse Elevance Health the full amount of this sign-on bonus. Cause is defined as (1) a violation of conduct as such term is defined in the Elevance Health HR Corrective Action Policy, and/or (2) the “Cause” definition in Section 8.1.3 of the Executive Agreement Plan. |
| • | You will be eligible for associate and executive Rewards & More programs. A few of these benefits are highlighted below; for additional details please go to benefitsatelevancehealth.com. Additionally, please refer to the enclosed Executive Rewards & More Benefits brochure. Executive Services will be contacting you shortly after your start date to schedule a time to answer any questions you may have. |
| — | A cafeteria-style benefits plan offering medical, dental and vision coverage, life and long-term disability insurance, and medical and dependent care spending account options from which you can choose to best meet your, and your family’s needs. As a full-time associate, you are eligible for this coverage the first day of the month following employment. |
| — | The Directed Executive Compensation (DEC) Program provides $30,000 annually in an equal combination of cash and core credits, prorated in 2023 based on your hire date. Cash credits will be paid on the first pay of each month and can be used at your discretion. Core credits will reimburse you for costs associated with allowable expenses such as financial and investment counseling, tax advice and preparation, estate planning and other advisory services. |
| — | The Elevance Health 401(k) Plan includes a company match of 100% of your contributions on the first 4%, and 50% on the next 2% of your eligible earnings. You will be eligible to participate in the plan and Elevance Health will begin matching your contributions 30 days after your first day of employment. You will be 100% vested in your matching contributions on the second anniversary of your employment. |
| — | The Elevance Health Deferred Compensation Plan allows you to save for future needs by deferring salary and bonus in excess of IRS limits and accumulating investment earnings tax-free until distribution. Additionally, Elevance Health will match contributions into this plan at the same rate as they are made in the 401(k) Plan. |
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| — | The Employee Stock Purchase Plan (ESPP) will offer you the opportunity to accumulate contributions through payroll deductions and purchase Elevance Health stock. |
| — | Participation in the Executive Physical Program, a benefit worth over $2,000, offering comprehensive physicals every 12 or 24 months, depending on your age. |
| — | Paid Time Off (PTO) - Executives do not have a fixed number of PTO days, and no formal approvals or tracking of PTO is required. Executives may take PTO at their discretion as long as it does not conflict with performing their job responsibilities. |
You are eligible for relocation benefits as outlined in the enclosed Relocation Guidelines. It is expected that you will relocate to Indiana within the first six (6) months of employment. If you resign within twenty-four (24) months of your hire date, you agree to reimburse Elevance Health a prorated share of all relocation expenses paid to you or on your behalf.
As a top-level executive of a public company, it is important that your interests and rewards are aligned with those of our shareholders. With this position, you will be subject to Elevance Health’s Stock Ownership Guidelines and will need to hold 300% of your annual salary in Elevance Health stock. Your progress towards achieving your stock ownership guideline will be reviewed on an annual basis, and you will have five years from your date of hire to meet the requirement.
Finally, I would like to offer you participation in the Elevance Health Executive Agreement Plan (the “Plan”), which provides for severance benefits consisting of twenty-four (24) months of salary and target bonus, outplacement services, and continued health benefits while receiving severance. Additional benefits are provided in the instance of a termination after a change in control of Elevance Health.
Elevance Health uses an electronic on-boarding tool to facilitate all of your pre-employment paperwork. Following your acceptance of this offer, you will receive a welcome email providing you with information regarding our on-boarding tool and your login information to access your customized new hire portal. This portal will contain documents and videos to further introduce you to the Elevance Health organization, important resources and benefits information. It also provides links for you to complete pre-employment activities, such as your online new hire forms. Additionally, there will also be some pre-employment tasks that push directly to your mailbox, please be sure to keep an eye out for these as well. Lillian Penn will be your point of contact throughout the on-boarding process. Please feel free to contact her at lillian.penn@elevancehealth.com with any questions.
We are making this offer because of your general skills and knowledge of the industry and not to obtain any confidential or proprietary information belonging to your current employer. In fact, as a condition of employment, you are expressly prohibited from providing or disclosing to Elevance Health, or any of its subsidiaries and related entities, and from relying upon or utilizing in the provision of services to Elevance Health, any confidential and proprietary information of your current employer. Instead, you are expected to utilize only your general skills, knowledge and abilities gained over the course of your education, career and business experiences. Any improper use or disclosure of confidential or proprietary information of another entity would be the basis for immediate termination of your employment.
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By signing this letter, you are representing that you will not retain any originals, copies, duplicates, reproduction or excerpts of any confidential or proprietary information of your current employer, whether in hard copy, electronic or other format, and that you will return all such information to your current employer and otherwise comply with your obligations to that employer regarding its property and confidential information. In addition, upon hire, you will be asked to acknowledge that you did not retain any documents of your current employer.
This offer is contingent upon the following:
| • | Your ability to furnish proof of your identity and legal right to work in the United States. Be sure to bring the required documents on your first day of work. |
| • | Review of employment agreements and documents related to restrictive covenants from your current or former employer. |
Once again, I am very pleased to extend this offer of employment to you and hope you will decide to join us. If you have any questions with regard to your position or the content of this letter, please feel free to contact me.
Very truly yours,
Blair W. Todt
Executive Vice President Chief
Legal Officer and Chief
Administrative Officer
I hereby accept the offer of employment described in this letter.
| /s/ Mark Kaye |
8/2/2023 |
|||||
| Mark Kaye | Date |
4
Exhibit 99.1
Elevance Health Announces John Gallina to Retire as CFO
Mark Kaye named Executive Vice President, Chief Financial Officer
INDIANAPOLIS— August 8, 2023 – Elevance Health (NYSE: ELV) announced today that John Gallina will retire from his role as executive vice president and CFO later this year. Mark Kaye has been named executive vice president and CFO and will serve as a member of the company’s executive leadership team, reporting directly to Gail K. Boudreaux, President and CEO. Kaye will serve as CFO Designate from September 6 to November 1, 2023, when he will assume full responsibility for the role. Gallina will remain with Elevance Health serving as Special Advisor to the CEO following his retirement as CFO to ensure a seamless transition.
Gallina’s distinguished career in the finance and healthcare fields spans more than four decades with nearly 30 of those years at Elevance Health where he was appointed as CFO in 2016 leading all financial and actuarial functions for the company including procurement and corporate real estate. Prior to his role as CFO, Gallina served in several leadership roles at the company including Senior Vice President and Chief Financial Officer for the Commercial and Specialty Business Division; Senior Vice President, Chief Accounting Officer and Chief Risk Officer; Senior Vice President, Internal Audit and Continuous Improvement; and Chief Financial Officer of Comprehensive Health Services.
“On behalf of the entire Elevance Health team, I want to thank John for his contributions to our company over the last three decades. John has been a valued member of our organization who has successfully led our finance organization, navigated an ever-changing and dynamic healthcare landscape, and played an important role in our transformation to become a lifetime trusted health partner,” said Gail K. Boudreaux, President and CEO. “John’s commitment to improve the health of the people and communities we serve is a testament to his career at Elevance Health and the driving force behind his dedication to guide the company through its cultural transformation,” added Boudreaux.
Kaye joins Elevance Health from Moody’s Corporation, where he served as Chief Financial Officer with responsibility for all global finance activities. Kaye is a seasoned C-Suite executive with deep financial, actuarial, and business experience known for both his leadership and passion in creating and instilling a culture of excellence, and his commitment to long-term sustainability and inclusion. Before joining Moody’s in 2018, Kaye held a variety of leadership roles in strategic finance, financial planning and analysis, and large-scale project management, including at MassMutual Life Insurance Company, and Voya Financial.
“Mark is a well-respected leader with an extensive global finance background, who has significant experience in leveraging data-driven financial insight to support the execution of superior operational and strategic decisions, including growing and scaling businesses to drive success,” said Boudreaux. “With an innovative and customer first mindset coupled with his passion for fostering a high-performance culture, Mark will be a tremendous asset as we work to deliver on our purpose to improve the health of humanity. I’m pleased to welcome Mark to the Elevance Health team.”
Kaye holds an MBA in Finance and a BSE in Statistics and Actuarial Science from The Wharton School of Business and the University of Pennsylvania and is a Fellow of the Society of Actuaries.
About Elevance Health, Inc.
Elevance Health is a lifetime, trusted health partner fueled by its purpose to improve the health of humanity. The company supports consumers, families, and communities across the entire care journey – connecting them to the care, support, and resources they need to lead healthier lives. Elevance Health’s companies serve approximately 118 million people through a diverse portfolio of industry-leading medical, digital, pharmacy, behavioral, clinical, and complex care solutions. For more information, please visit www.elevancehealth.com or follow us @ElevanceHealth on Twitter and Elevance Health on LinkedIn.
Investor Relations:
Stephen Tanal
Stephen.tanal@elevancehealth.com
Media Relations:
Leslie Porras
Leslie.Porras@elevancehealth.com