Magellan Health, Inc. 4800 N
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29MAR201601032835 MAGELLAN HEALTH, INC. 4800 N. Scottsdale Road, Suite 4400 Scottsdale, Arizona 85251 MagellanHealth.com April 9, 2018 Dear Shareholder: You are cordially invited to attend the 2018 annual meeting of shareholders of Magellan Health, Inc., to be held on Thursday, May 24, 2018 at 7:30 a.m., local time, at Magellan Offices, G-2 Auditorium Level, 4800 N. Scottsdale Road, Scottsdale, Arizona 85251. This year, three (3) directors are nominated for election to our board of directors. At the meeting, shareholders will be asked to: (i) elect three (3) directors to serve until our 2019 annual meeting; (ii) approve, in an advisory vote, the compensation of our named executive officers; (iii) approve an amendment to our 2014 Employee Stock Purchase Plan to increase by 300,000 the number of shares available for issuance under the plan; (iv) ratify the appointment of Ernst & Young LLP as our independent auditor for fiscal year 2018; and (v) transact such other business as may properly come before the meeting or any adjournment or postponement thereof. The accompanying proxy statement provides a detailed description of these proposals. We urge you to read the accompanying materials so that you may be informed about the business to be addressed at the annual meeting. It is important that your shares be represented at the annual meeting. Accordingly, we ask you, whether or not you plan to attend the annual meeting, to complete, sign and date a proxy and submit it to us promptly or to otherwise vote in accordance with the instructions on your proxy card or other notice. If you received notice of how to access the proxy materials over the Internet, a proxy card and voting instruction card were not sent to you, but you may vote over the Internet or by email. If you received a proxy card and other proxy materials by mail, you may submit your proxy card or voting instruction card for the annual meeting by completing, signing, dating and returning your proxy card or voting instruction card in the enclosed envelope. If you attend the meeting, you may vote in person, even if you have previously submitted your proxy. However, if you hold your shares in a brokerage account (‘‘street name’’), you will need to obtain a proxy form from the institution that holds your shares reflecting your stock ownership as of the record date, to be able to vote by ballot at the meeting. We look forward to seeing you at the meeting. IF YOU PLAN TO ATTEND THE MEETING: Registration and seating will begin at 7:00 a.m. Shareholders and their guests will be asked to sign-in and may be asked to present a valid picture identification. Shareholders holding stock in street name will need to obtain a proxy form from their broker or other institution that holds their shares to evidence their stock ownership as of the record date. Sincerely, 30MAR201623330572 Barry M. Smith Chairman and Chief Executive Office 29MAR201601032835 MAGELLAN HEALTH, INC. 4800 N. Scottsdale Road Suite 4400 Scottsdale, AZ 85251 MagellanHealth.com NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TIME AND DATE: 7:30 a.m., local time, on Thursday, May 24, 2018 PLACE: Magellan Offices, G-2 Auditorium Level, 4800 N. Scottsdale Road, Scottsdale, Arizona 85251. PURPOSE: (1) To elect three (3) members of the board of directors to serve until our 2019 annual meeting; (2) To approve, in an advisory vote, the compensation of our named executive officers; (3) To approve an amendment of our 2014 Employee Stock Purchase Plan to increase by 300,000 the number of shares available for issuance under the plan; (4) To ratify the appointment of Ernst & Young LLP as our independent auditor for the fiscal year 2018; and (5) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. RECORD DATE: You can vote if you were a shareholder of record at the close of business on March 26, 2018. PROXY VOTING: It is important that you vote your shares. You can vote your shares by completing and returning the proxy card sent to you, or by following the online voting instructions. You can revoke a proxy at any time prior to its exercise at the meeting by following the instructions in the accompanying proxy statement. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 24, 2018: On or about April 9, 2018, we mailed to our shareholders either (i) a copy of the proxy statement and proxy card and a 2017 Annual Report, or (ii) a Notice of Internet Availability of Proxy Materials, which indicates how to access the proxy materials on the Internet. We believe furnishing the proxy materials to our shareholders on the Internet provides our shareholders with the information they need while lowering the costs of delivery and reducing the environmental impact of the distribution process. 13APR200520254122 Daniel N. Gregoire Secretary Scottsdale, Arizona April 9, 2018 TABLE OF CONTENTS INTRODUCTION ........................................................ 1 ABOUT THE MEETING ................................................... 1 Why did I receive a ‘‘Notice of Internet Availability of Proxy Materials’’ but no proxy materials .... 1 What is the purpose of the annual meeting? ........................................ 1 Who is entitled to vote at the meeting? ........................................... 1 What constitutes a quorum and why is one required? ................................. 2 How do I vote? ........................................................... 2 Can I change my vote? ...................................................... 3 How do I obtain a separate set of proxy materials if I share an address with other shareholders? ... What vote is required to approve each proposal? ..................................... 3 What is the effect of broker non-votes, withholding authority and abstentions? ................ 5 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . 5 Who are the largest owners of your stock? ......................................... 5 How much stock do your executive officers and directors own? ........................... 6 Section 16(a) Beneficial Ownership Reporting Compliance .............................. 7 CORPORATE GOVERNANCE AND RELATED MATTERS ........................ 8 Corporate Governance Highlights ............................................... 8 General ................................................................. 8 Lead Director ............................................................. 9 Management of Risk ........................................................ 9 Committees of the Board of Directors ............................................ 10 Directors’ Compensation ..................................................... 11 Process for Selecting Nominees to the Board ....................................... 13 Majority Voting Policy ....................................................... 16 Director Independence ....................................................... 16 Compensation Committee Interlocks and Insider Participation ........................... 18 Review of Related Person Transactions ............................................ 18 Codes of Ethics ........................................................... 19 Disclosure Controls and Procedures ............................................. 20 Communications with Directors and Management ................................... 20 PROPOSAL NUMBER ONE—ELECTION OF DIRECTORS ........................ 21 Certain Information Regarding Our Directors and Executive Officers ....................... 21 Directors ................................................................ 22 Arrangements Regarding the Nomination of Directors ................................. 24 EXECUTIVE COMPENSATION .............................................. 25 Compensation Discussion and Analysis ........................................... 25 2017 Highlights ............................................................ 25 Report of Management Compensation Committee .................................... 45 Summary Compensation Table for 2017, 2016 and 2015 ............................... 45 Grants of Plan-Based Awards for 2017 ........................................... 47 Narrative to the Summary Compensation Table and the Grants of Plan-Based Awards Table ...... 48 Outstanding Equity Awards at December 31, 2017 ................................... 50 Option Exercises and Stock Vested for 2017 ........................................ 51 Nonqualified Deferred Compensation ............................................ 53 i EXECUTIVE OFFICERS ................................................... 54 Executive Officers of the Company .............................................. 54 Employment Contracts and Termination of Employment and Change of Control Payments ....... 54 Estimated Benefits Upon Various Termination Scenarios ............................... 60 Pay Ratio Disclosure ........................................................ 62 Report of Audit Committee ................................................... 62 PROPOSAL NUMBER TWO—ADVISORY VOTE ON EXECUTIVE COMPENSATION . 64 PROPOSAL NUMBER THREE—APPROVAL OF AMENDMENT INCREASING SHARES RESERVED UNDER THE 2014 EMPLOYEE STOCK PURCHASE PLAN ............ 67 PROPOSAL NUMBER FOUR—RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR ............................................................ 71 Audit, Audit-Related, Tax and Other Fees and Approval of Audit and Non-Audit Services ........ 71 ADDITIONAL