DEF: Molina Healthcare Seeks Stockholder Approval for 2025 Equity Incentive Plan, Board Refreshment Underway

• Molina Healthcare is soliciting proxies for its 2025 annual meeting of stockholders to be held on April 30, 2025.
• Key proposals include the election of nine director nominees, approval of executive compensation, ratification of Ernst & Young LLP as the independent accounting firm, approval of the 2025 Equity Incentive Plan, and a stockholder proposal regarding special meetings.
• The Board recommends voting FOR the election of all director nominees and FOR proposals 2, 3, and 4, and AGAINST proposal 5.
• The company highlights its commitment to corporate governance, including board refreshment, director independence, and risk management oversight.
• Molina Healthcare served approximately 5.5 million members as of December 31, 2024, across 21 states.
• The company's long-term growth strategy focuses on organic and inorganic growth, reinvesting capital, and strong medical care ratio (MCR) management.
• Recent key developments include the acquisition of ConnectiCare for $350 million and various Medicaid and Medicare contract awards and extensions in multiple states.
• The company's executive compensation program is designed to reflect pay-for-performance, with a focus on long-term performance in alignment with the company's long-term strategic business interests and stockholders' interests.
• The company's 2024 annual short-term performance-based cash bonus program combined both financial performance and individual performance elements, with 70% of the program based on a 2024 adjusted net income per diluted share measure, and 30% of the program based on an assessment of individual performance pursuant to the compensation committees discretion.
• In fiscal year 2024, the Company achieved adjusted net income per diluted share of $22.65, representing a 2024 adjusted net income of $1,308 million, falling short of the Company's initial 2024 earnings guidance.
• Based on the Company's financial results, as well as the Company's achievement of most of its 2024 goals and objectives, the compensation committee approved a total payout factor for the 2024 short-term incentive bonus program to the named executive officers at 105% of target.
• In 2024, 60% of the annual long-term equity awards to the NEOs were granted in the form of performance stock units based on achievement of a single company financial metric consisting of the cumulative adjusted earnings per share for the three fiscal years of 2024, 2025, and 2026, and 40% of the awards were based on time vesting in equal one-third increments over three years from the grant date.
• As a result of sustained strong financial performance in 2022, 2023, and 2024, the Company achieved three-year average adjusted earnings per share at the 149% vesting level for the 2022 PSUs.
• In the latter part of 2024, to incentivize both their retention and the achievement of the Company's aggressive annual growth targets, Joseph Zubretsky and Mark Keim were each granted a one-time performance-based stock award that is subject to the achievement of a fiscal year 2027 adjusted EPS target of at least $36, representing a cumulative annual growth rate in excess of 15% from the date of grant, as well as continued employment through December 31, 2027.

Score: 7

Explanation: The document presents a generally positive outlook with strong growth and strategic initiatives, but also acknowledges some challenges and risks.

• The company has a strong focus on corporate governance, including director independence and risk management.
• Molina Healthcare has demonstrated a commitment to stockholder engagement and responsiveness to feedback.
• The company has a clear long-term growth strategy focused on both organic and inorganic growth.
• The executive compensation program is designed to align pay with performance and stockholder interests.
• The company achieved a 149% vesting level for the 2022 PSUs due to sustained strong financial performance.
• The company is incentivizing key executives with performance-based stock awards tied to aggressive long-term financial targets.

• The company's adjusted net income per diluted share fell short of its initial 2024 earnings guidance.
• A stockholder proposal regarding the ability to call a special meeting is being opposed by the Board, citing potential disruption and cost.

• Ongoing procurement protests may delay the implementation of a new contract in Georgia.
• A legal action is ongoing in Virginia regarding a Medicaid contract award.
• The company faces risks and uncertainties that could cause actual results to differ materially from forward-looking statements.

Collectively, newly reported RFP successes and acquisitions in 2024 represent nearly $7 billion of incremental annual premium revenue, which will be partially realized in 2025, is expected to be mostly realized in 2026 and is expected to be fully realized in 2027 and 2028.

• Our mission is to improve the health and lives of our members by delivering high-quality health care.
• We will distinguish ourselves as the low-cost, most effective and reliable health plan delivering government-sponsored care.

Molina Healthcare operates in the managed healthcare services industry, focusing on government-sponsored programs such as Medicaid and Medicare. The company competes with other managed care organizations for state contracts and acquisitions to expand its market presence.

• The peer group used in the 2024 Compensation Study was different than the peer group used for the 2023 executive compensation study as follows: Acadia Healthcare Company, Inc. was removed from the Companys peer group and MetLife, Inc., Prudential Financial, Inc., Becton, Dickinson and Company, and Boston Scientific Corporation were added to the Companys peer group.
• The 16-company peer group for the executive compensation study, consisting of the following publicly-traded companies, which represented relevant peers across business segment and certain financial metrics, including but not limited to criteria relevant to revenue, market capitalization, EBITDA, organization model, and employee recruitment: Aflac Incorporated (AFL), Becton, Dickinson and Company (BDX), Boston Scientific Corporation (BSX), Centene Corporation (CNC), Community Health Systems, Inc. (CYH), DaVita Inc. (DVA), Elevance Health, Inc. (ELV), HCA Healthcare, Inc. (HCA), Humana, Inc. (HUM), Laboratory Corporation of America Holdings (LH), MetLife, Inc. (MET), Prudential Financial, Inc. (PRU), Quest Diagnostics Incorporated (DGX), Tenet Healthcare Corporation (THC), The Cigna Group (CI), Universal Health Services, Inc. (UHS).

• The proposals outlined in the proxy statement will impact stockholders through potential changes in corporate governance and executive compensation.
• The company's performance and strategic initiatives will affect employees, customers, and other stakeholders.

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will continue to implement its growth strategy and manage its operations.
• The Board will consider the outcome of the stockholder vote on executive compensation when making future compensation arrangements.

• On April 26, 2024, Molina filed a legal action in Virginia Circuit Court over DMASs decision not to award Molina a CCMC contract.
• The state court action continues.
• A trial date has not been set.

• Ronna E. Romney's son, George Romney, is employed by the Company with an annual base salary of approximately $153,000 and he received a 2024 annual short-term incentive cash bonus of $39,589.
• The Board evaluated and ratified such transaction pursuant to the policy.

• 1995: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
• 2003: Molina Healthcare, Inc. Board of Directors from 2003 to 2017
• 2010: Served as President for Mellon Hedge Advisors, LLC from 2010-2023
• 2012: Served as Senior Vice President, Tax and Treasury for Mondelez International, a multinational food and beverage company, (successor to Kraft Foods, Inc.) from 2012 to 2015
• 2013: Chairman of the Board, Molina Healthcare, Inc. DIRECTOR SINCE: 2013
• 2015: Since April 2015, served as Chief Executive Officer of SchapiroCo LLC
• 2016: Served as President and Chief Executive Officer of Onecall Care Management, a healthcare network management company, from January 2016 to February 2019, and Executive Chairman from September 2015 to January 2016
• 2017: Has served as President and Chief Executive Officer of Molina Healthcare, Inc. since November 6, 2017
• 2018: In 2018, Mr. Schapiro achieved Board Leadership Fellow status, completed the NACD/ Carnegie Mellon Cyber-Security Course and was selected for inclusion in the 2018 NACD Directorship 100, recognizing individual directors who serve as role models promoting exemplary Board leadership, oversight, and courage in the boardroom
• 2019: Member of the Board of Directors of John Bean Technologies Corporation since 2019
• 2020: Member of the Board of Directors of Henny Penny Corporation since 2020
• 2021: Serves on the board of directors of NRC Health since 2021
• 2022: Serves on the board of West Pharmaceutical Services since 2022
• 2023: Selected as one of WomenInc. Magazines 2023 and 2019 Most Influential Corporate Board Directors
• 2024-01-01: Effective January 1, 2024, we closed on our acquisition of 100% of the issued and outstanding capital stock of Bright Health Medicare, which added approximately 109,000 members.
• 2024-01-01: Our new contract with the California Department of Health Care Services (DHCS) commenced on January 1, 2024, which enabled us to continue servicing Medi-Cal members in most of our existing counties and significantly expanded our footprint in Los Angeles County.
• 2024-01-01: Our new contract with the Nebraska Department of Health and Human Services commenced on January 1, 2024, which added approximately 114,000 members.
• 2024-04-19: On April 19, 2024, DMAS upheld its notice of intent to award in response to our protest.
• 2024-04-26: On April 26, 2024, Molina filed a legal action in Virginia Circuit Court over DMASs decision not to award Molina a CCMC contract.
• 2024-07-01: Our new contract with the New Mexico Health Care Authority commenced on July 1, 2024 and will run through December 31, 2026, with a further expected extension.
• 2024-07-01: In July 2024, we were notified that the Florida Agency for Healthcare Administration awarded a Medicaid managed care contract to Molina Healthcare of Florida.
• 2024-09: In September 2024, our Massachusetts health plan was selected to proceed to contract negotiations to operate both One Care and Senior Care Options plans.
• 2024-10: In October 2024, our Michigan health plan was awarded a contract to provide benefits for the states Highly Integrated Dual Eligible Special Needs Plan (HIDE D-SNP) in six service regions.
• 2024-11: In November 2024, our Ohio health plan was awarded a contract to provide benefits to the states Next Generation MyCare program.
• 2024-11: In November 2024, the Michigan procurement office announced it was cancelling the previously-issued notice of intent to award contracts.
• 2024-12: In December 2024, the Idaho Department of Health and Welfare announced that it intends to award a contract to our Idaho health plan to administer the states Dually-Eligible Medicare/Medicaid Managed Care Plan, which provides access to integrated benefits to the states dual eligible population.
• 2024-12: In December 2024, the Georgia Department of Administrative Services issued the Notice of Intent to Award in the Georgia Families Medicaid Managed procurement.
• 2024-12: In December 2024, we were re-awarded the contract in eleven service regions, Michigans entire lower peninsula.
• 2025-02-01: Effective February 1, 2025, we closed on our acquisition of ConnectiCare Holding Company, Inc. (ConnectiCare), a wholly owned subsidiary of EmblemHealth, Inc.
• 2025-03-07: Stockholders of record on the close of business on March 7, 2025 are entitled to vote at the 2025 Annual Meeting.
• 2025-03-07: The Board of Directors has fixed the close of business on March 7, 2025 as the record date for the determination of stockholders entitled to notice of, and to vote at, the annual meeting and at any continuation, adjournment, or postponement thereof.
• 2025-03-17: This notice and the accompanying proxy statement are being mailed or transmitted on or about March 17, 2025 to the Companys stockholders of record as of March 7, 2025.
• 2025-03-17: Dated: March 17, 2025
• 2025-03-17: For a stockholder proposal to be considered for inclusion in our proxy statement for our 2026 annual meeting of stockholders, our Corporate Secretary must receive written notice of such proposal no later than November 17, 2025.
• 2025-03-17: Nominations must be received by our Corporate Secretary at our principal executive offices no earlier than October 18, 2025 and no later than November 17, 2025.
• 2025-03-11: March 11, 2025
• 2025-04-30: DATE AND TIME Wednesday, April 30, 2025 10:00 a.m., Eastern time
• 2025-04-30: The 2025 Plan will terminate on April 30, 2035, unless terminated earlier by the Board.
• 2025-04-30: If the 2025 Plan is approved by our stockholders, the 2025 Plan will become effective on April 30, 2025 (the Effective Date), and, as of such Effective Date, no further awards will be made under the 2019 Plan.
• 2025-04-29: To ensure that your vote is counted, please remember to submit your vote by April 29, 2025, the day before the annual meeting.
• 2025-12-31: The contract commenced on February 1, 2025 and will run through December 31, 2030.
• 2025-12-31: Pursuant to our bylaws, stockholders wishing to present any proposal or nomination for director for consideration at our next annual meeting of stockholders (but not include the proposal in our proxy statement for our 2026 annual meeting of stockholders) must provide written notice of such proposal to our Corporate Secretary between December 31, 2025 and January 30, 2026, and comply with the other applicable provisions of our bylaws.
• 2026-01-01: The new contract, which is expected to commence on January 1, 2026, is expected to have an initial term of four years, with a potential one-year extension.
• 2026-01-01: The new contract is expected to commence on January 1, 2026 in the 29 counties where MyCare Ohio is currently available, with statewide expansion of the program to follow as quickly as possible.
• 2026-01-01: The new contract, which is expected to commence on January 1, 2026 in select regions, will be implemented statewide in 2027 and is expected to continue for seven years, with up to three renewal options.
• 2026-01-01: The new contract is expected to commence on January 1, 2026.
• 2026-01-01: The contract commenced on January 1, 2025, and is expected to have a duration of two years, with an option for three two-year extensions.
• 2026-01-01: We now expect the new four-year contract, which will cover both TANF & ABD and CHIP, to commence on July 1, 2025.
• 2026-01-01: The new Medicaid contract commenced on October 1, 2024. The new contract is expected to have a duration of five years, with an option for three one-year extensions.
• 2026-01-30: Pursuant to our bylaws, stockholders wishing to present any proposal or nomination for director for consideration at our next annual meeting of stockholders (but not include the proposal in our proxy statement for our 2026 annual meeting of stockholders) must provide written notice of such proposal to our Corporate Secretary between December 31, 2025 and January 30, 2026, and comply with the other applicable provisions of our bylaws.
• 2026-10-18: Nominations must be received by our Corporate Secretary at our principal executive offices no earlier than October 18, 2025 and no later than November 17, 2025.
• 2026-11-17: For a stockholder proposal to be considered for inclusion in our proxy statement for our 2026 annual meeting of stockholders, our Corporate Secretary must receive written notice of such proposal no later than November 17, 2025.
• 2026-11-17: Nominations must be received by our Corporate Secretary at our principal executive offices no earlier than October 18, 2025 and no later than November 17, 2025.
• 2026-12-31: Our new contract with the New Mexico Health Care Authority commenced on July 1, 2024 and will run through December 31, 2026, with a further expected extension.
• 2027-01-01: The new contract, which is expected to commence on January 1, 2026 in select regions, will be implemented statewide in 2027 and is expected to continue for seven years, with up to three renewal options.
• 2027-12-31: In the latter part of 2024, to incentivize both their retention and the achievement of the Company's aggressive annual growth targets, Joseph Zubretsky and Mark Keim were each granted a one-time performance-based stock award that is subject to the achievement of a fiscal year 2027 adjusted EPS target of at least $36, representing a cumulative annual growth rate in excess of 15% from the date of grant, as well as continued employment through December 31, 2027.
• 2030-12-31: The contract commenced on February 1, 2025 and will run through December 31, 2030.
• 2035-04-30: The 2025 Plan will terminate on April 30, 2035, unless terminated earlier by the Board.