Form 4: Centene Executive Koster Reports Significant Equity Grant

Centene Corp's Secretary & General Counsel, Christopher Koster, reported the acquisition of 126,925 shares of common stock, primarily through restricted and performance stock units.

Summary

• Christopher Koster, Secretary & General Counsel of Centene Corp (CNC), reported the acquisition of 126,925 shares of common stock on January 26, 2026, with an acquisition price of $0 per share.
• This acquisition includes 50,770 restricted stock units (RSUs) that will vest in three annual installments, commencing on March 15, 2027.
• The acquisition also includes 76,155 performance stock units (PSUs) reported at target level performance, which will vest on March 15, 2029.
• The actual number of PSUs vesting can range from 0% to 200% of the reported target, based on Centene's stock price performance between the final 20 trading days of 2025 and the final 60 trading days of 2028.
• Following this transaction, Koster's total beneficial ownership stands at 388,861.617 shares, which includes previously granted RSUs and PSUs subject to vesting, and common stock acquired through the Company's Employee Stock Purchase Program.
• Koster also holds 15,690 common stock options with an exercise price of $81.85, granted on December 15, 2021, and expiring on December 15, 2031.
• These options may become exercisable on or after December 15, 2024, if Centene's common stock closing price equals or exceeds $100 per share for 20 consecutive trading days following the grant date.
• Additionally, Koster beneficially owns 3,015.544 phantom stock units, granted on March 6, 2020, which represent the right to receive the fair market value of one share of Centene common stock, settled in cash or non-Company securities upon termination or election.

Sentiment

Score: 6

Explanation: The filing reports a significant equity grant to a key executive, which is a positive for aligning management's interests with shareholders. While routine for executive compensation, it indicates continued commitment and incentivization, slightly positive for long-term outlook.

Positives

• A significant equity grant to a key executive aligns management's financial interests with those of shareholders, incentivizing long-term performance.
• The inclusion of performance stock units ties a substantial portion of the executive's compensation directly to the company's stock price performance, promoting value creation.

Negatives

• The acquired shares are primarily restricted and performance-based, meaning they are not immediately liquid and are subject to future vesting conditions and performance hurdles.
• The performance stock units introduce uncertainty regarding the final number of shares that will vest, as it depends on future stock price performance.

Risks

• The vesting of 76,155 performance stock units is contingent on Centene's stock price performance, specifically comparing the final 20 trading days of 2025 to the final 60 trading days of 2028, introducing market-related risk to the executive's compensation.
• The exercisability of 15,690 common stock options is dependent on Centene's common stock reaching and sustaining a price of $100 per share for 20 consecutive trading days, posing a market performance risk.

Future Outlook

The future outlook for a significant portion of the executive's compensation is directly tied to Centene's stock price performance, with performance stock units vesting based on stock price comparisons between 2025 and 2028, and stock options becoming exercisable if the stock price reaches $100 for 20 consecutive trading days.

Industry Context

This Form 4 filing details a routine executive compensation event, specifically an equity grant, which is a common practice in publicly traded companies within the healthcare and managed care industry. Such grants are designed to align the interests of key executives with long-term shareholder value creation.

Comparison to Industry Standards

• The use of restricted stock units (RSUs) and performance stock units (PSUs) as components of executive compensation is a standard practice across large-cap companies, including those in the healthcare sector, to incentivize retention and performance.
• Performance hurdles tied to stock price appreciation, as seen with the PSUs and stock options, are typical mechanisms used by companies like UnitedHealth Group, Anthem (now Elevance Health), and Cigna to link executive rewards to market-based outcomes and shareholder returns.

Stakeholder Impact

• Shareholders: The equity grant aligns the interests of a key executive with shareholders, potentially leading to better long-term performance and value creation.
• Employees: The Employee Stock Purchase Program mentioned indicates broader employee participation in company ownership, which can foster a sense of shared success.

Next Steps

• Vesting of 50,770 restricted stock units in three annual installments beginning March 15, 2027.
• Assessment of Centene's stock price performance for the final 20 trading days of 2025 and the final 60 trading days of 2028 to determine the final vesting percentage of performance stock units.
• Vesting of 76,155 performance stock units on March 15, 2029, based on performance conditions.
• Potential exercisability of 15,690 common stock options on or after December 15, 2024, if the stock price condition is met.

Key Dates

Keywords

Centene, CNC, Form 4, insider transaction, executive compensation, restricted stock units, performance stock units, stock options, equity grant, Christopher Koster