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
Date of report (Date of earliest event reported):
MARCH 10, 2005
MAGELLAN HEALTH SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-6639 58-1076937
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
16 MUNSON ROAD 06032
FARMINGTON, CONNECTICUT
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (860) 507-1900
N/A
(Former Name or Former Address, if Changed Since Last Report)
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 (see General Instruction A.2. below):
|_| 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))
ITEM 1.01 -- ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 10, 2005, the Compensation Committee of the Board of
Directors of Magellan Health Services, Inc. (the "Company") granted options to
purchase shares of its Ordinary Common Stock, $0.01 par value per share, of the
Company (the "Ordinary Common Stock"), as well as restricted Ordinary Common
Stock awards to certain members of management, including the Company's executive
officers, pursuant to the Company's shareholder approved 2003 Management
Incentive Plan (the "Plan"). The options granted permit the purchase of a total
of 492,230 shares of Ordinary Common Stock, and are exercisable at a price of
$34.57 per share, the fair market value of the shares on the date of grant based
on the trading price. The options become exercisable in 25% increments on March
10, 2006, 2007, 2008 and 2009, and expire on March 10, 2015, subject to earlier
exercise or termination as specified in the Plan and related option agreements
and award notices. A total of 60,712 shares of restricted stock were granted to
the Company's executive officers, with no payment required from the recipients
of such shares. The shares of restricted stock vest in accordance with the same
schedule and are subject to repurchase by the Company upon termination of
employment to the extent not vested, as provided in the Plan and related
restricted stock agreements and award notices. The vesting of the options and
shares of restricted stock will accelerate upon a change in control of the
Company, as defined in the pertinent award notices. In connection with the
foregoing restricted stock and option grants, the pertinent executive officers
entered into Restricted Stock Agreements and Stock Option Agreements, and
related implementing award notices, with the Company, all of which are subject
to the terms of the Plan. A copy of the Plan is filed as Exhibit 2.14 to the
Company's current report on Form 8-K, filed with the Commission on January 6,
2004.
The restricted share and option awards received by the executive
officers of the Company on the terms described above are as follows: Steven J.
Shulman, Chief Executive Officer--24,451 shares of restricted stock and options
to purchase 198,250 shares of Ordinary Common Stock, Rene' Lerer, Chief
Operating Officer--14,671 shares of restricted stock and options to purchase
118,950 shares of Ordinary Common Stock, Mark S. Demilio, Chief Financial
Officer--9,780 shares of restricted stock and options to purchase 79,300 shares
of Ordinary Common Stock, Daniel N. Gregoire--2,390 shares of restricted stock
and options to purchase 19,380 shares of Ordinary Common Stock, Jeff D.
Emerson--5,790 shares of restricted stock and options to purchase 46,950 shares
of Ordinary Common Stock, Anthony M. Kotin--2,210 shares of restricted stock and
options to purchase 17,890 shares of Ordinary Common Stock, and Jeffrey N.
West--1,420 shares of restricted stock and options to purchase 11,510 shares of
Ordinary Common Stock. In addition, the Committee approved the grant to Mr.
Shulman under the Plan on March 14, 2005 of 14,267 shares of Ordinary Common
Stock, free of any restrictions, as part of his bonus for 2004.
In addition, at the time of entering into the Restricted Stock
Agreements and Stock Option Agreements for the grants referred to above, the
Company and its three senior executive officers (Messrs. Shulman,; Lerer, and
Demilio,) entered into implementing award notices with regard to, collectively,
a total of 251,258 shares of restricted Ordinary Common Stock and options for a
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total of 2,891,022 shares of Ordinary Common Stock which had been awarded to
them on January 5, 2004 (the effective date of the Company's Third Joint Amended
Plan of Reorganization under chapter 11 of title 11 of the U.S. Bankruptcy Code)
in accordance with the respective Employment Agreements with the Company they
entered into on that date. The restricted stock and option awards reflected in
such notices are subject to the same Restricted Stock Agreements and Stock
Option Agreements entered into by such executives and the Company as referred to
above. The terms of these Employment Agreements and restricted stock and option
grants are described in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2004 filed with the U.S. Securities and Exchange
Commission on March 30, 2004 and the employment agreements between the Company
and each of Messrs. Shulman, Lerer and Demilio, were filed as Exhibits 2.11,
2.12 and 2.13 to the Company's Current Report on Form 8-K-A, filed with the
Commission on January 7, 2004.
Copies of the form of the Stock Option Agreement and related form of
Notice of Stock Option Award and form of Restricted Stock Agreement and related
form of Notice of Restricted Stock Award entered into by the Company with its
executive officers with regard to the March 10, 2005 option and restricted stock
grants described above are also filed herewith as Exhibits 10.1, 10.2, 10.3 and
10.4, respectively. A copy of the three forms of Notice of Stock Option Awards
and two forms of Notice of Restricted Stock Awards entered into by the Company
with its senior executive officers with regard to their January 5, 2004 option
and restricted stock awards referred to above are also filed herewith as
Exhibits 10.5, 10.6, 10.7, 10.8 and 10.9.
In addition, on March 10, 2005, the Compensation Committee approved
the use of the Company's Supplemental Accumulation Plan ("SAP"), which the Board
of Directors had established in 2000 for deferred compensation awards for
executives of the Company but which had not been utilized in 2003, with respect
to 2004 bonus compensation and included contributions to such plan as a portion
of the 2004 bonuses it awarded five of the Company's executive officers. The SAP
is a calendar year - based plan that is funded through a contribution by the
Company calculated as a percentage of the participating executive's base salary
determined by the Committee and is structured to provide an incentive for
executives to remain with the Company. It may also be funded by executives
through voluntary deferrals of base and/or incentive compensation. Annually, the
Compensation Committee approves the fixed percentage contribution which may be
made for participating executives. For calendar 2004, the Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer were each awarded a
Company contribution to the SAP of 11 percent of their base salary and two other
executive officers were awarded a Company contribution of 9 percent of their
base salary. Both Company and voluntary contributions are paid to a trust and
invested in one or more mutual funds selected by the respective executive
officer. The amount contributed to the trust and any appreciation thereon is
paid to the executive officer on a date at least two years from the date of
funding, if such officer is still employed at that time, or two years following
the date of termination from the Company, provided that the executive officer
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has complied with covenants not to compete with the Company during that time
period and the termination was not "for cause". The terms of the SAP provide
that amounts deposited in the trust by or on behalf of executive officers are to
be immediately and fully vested upon a change of control of the Company. A copy
of the SAP is filed herewith as Exhibit 10.10.
ITEM 9.01 -- FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
10.1 Form of Stock Option Agreement.
10.2 Form of Notice of March 2005 Stock Option Grant.
10.3 Form of Restricted Stock Agreement.
10.4 Form of Notice of March 2005 Restricted Stock Award.
10.5 First form of Notice of Stock Option Grant, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company, and Mark S.
Demilio, Chief Financial Officer of the Company.
10.6 Second form of Notice of Stock Option Grant, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company, and Mark S.
Demilio, Chief Financial Officer of the Company.
10.7 Third form of Notice of Stock Option Grant, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company, and Mark S.
Demilio, Chief Financial Officer of the Company.
10.8 Form of Notice of Restricted Stock Award, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company and Mark S.
Demilio, Chief Financial Officer of the Company.
10.9 Notice of Restricted Stock Award, dated as of January 5,
2004, between the Company and Steven J. Shulman, Chief
Executive Officer of the Company.
10.10. Supplemental Accumulation Plan, adopted in 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MAGELLAN HEALTH SERVICES, INC.
By: /s/ Mark S. Demilio
------------------------------------
Name: Mark S. Demilio
Title: Executive Vice President and
Chief Financial Officer
Dated: March 16, 2005
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EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
---------- -------
10.1 Form of Stock Option Agreement.
10.2 Form of Notice of March 2005 Stock Option Grant.
10.3 Form of Restricted Stock Agreement.
10.4 Form of Notice of March 2005 Restricted Stock Award.
10.5 First form of Notice of Stock Option Grant, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company, and Mark S.
Demilio, Chief Financial Officer of the Company.
10.6 Second form of Notice of Stock Option Grant, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company, and Mark S.
Demilio, Chief Financial Officer of the Company.
10.7 Third form of Notice of Stock Option Grant, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company, and Mark S.
Demilio, Chief Financial Officer of the Company.
10.8 Form of Notice of Restricted Stock Award, dated as of
January 5, 2004, between the Company and Steven J.
Shulman, Chief Executive Officer of the Company, Rene'
Lerer, Chief Operating Officer of the Company and Mark S.
Demilio, Chief Financial Officer of the Company.
10.9 Notice of Restricted Stock Award, dated as of January 5,
2004, between the Company and Steven J. Shulman, Chief
Executive Officer of the Company.
10.10. Supplemental Accumulation Plan, adopted in 2002.
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