oxford ceo to get millions in severance
may 14, 2004
by diane levick, courant staff writer
oxford health plans' chief executive, charles g. berg, will get at least $5.5 million severance as he joins acquirer unitedhealth group, and his new employer has promised millions in new pay and stock options.
his new employment agreement - and the wealth he has accumulated while at oxford - were detailed in a federal regulatory filing this week by minnesota-based unitedhealth.
unitedhealth said last month that it plans to buy trumbull-based oxford in a nearly $5 billion cash-and-stock deal by the end of this year.
the filing for the merger says berg's existing oxford stock options would be converted in the merger to unitedhealth options valued at $31.7 million, based on united's april 30 stock price. that includes any unvested oxford options, which would vest at the merger.
just before the merger, berg's restricted stock units from oxford will be turned into unrestricted oxford shares valued at $2.7 million, based on the terms of the deal.
oxford shareholders would get 0.6357 shares of unitedhealth for each oxford share, plus $16.17 in cash for each share.
berg held 30,921 oxford shares directly as of april 30. those would be worth about $1.7 million, based on the terms of the deal and unitedhealth's closing price thursday of $62.31 a share.
berg will serve as chief executive of unitedhealth's northeast region after the merger, and will be the chief integration officer of the two companies' operations in the region.
berg and five other top oxford executives have employment agreements with unitedhealth that will run through the end of 2006 and then renew for one-year terms unless either party gives notice.
the agreements provide for payments based on severance that they would have gotten under their oxford employment agreements. in berg's case, the sum is $5,475,000, but that would be reduced to $2,975,000 if he's granted 72,500 shares of unitedhealth restricted stock.
berg's annual base salary with unitedhealth will be $825,000, and he'll get a supplemental annual benefit of $250,000 for the first two years.
his target annual bonus will be $825,000, and the target for a separate annual incentive award would be $495,000, or 60 percent of his base salary.
in addition, berg will receive options on 200,000 unitedhealth shares on the merger date, then 150,000 options each year after that if he's still with the company.
berg and other oxford executives will also get bonuses that would have been paid by oxford for performance periods ending dec. 31, 2004. the amounts aren't yet known.