Coventry Health Care, Inc. Special Incentive Plan for Thomas McDonough and James McGarry (2005)
Coventry Health Care, Inc. established this Special Incentive Plan to reward Thomas McDonough and James McGarry for meeting specific financial goals related to First Health Group's performance in 2005. To qualify, both must remain employed throughout the year and on the payout date. Awards are based on achieving set EBITDA targets, with payouts ranging from $0 to $2,000,000 for McDonough and $0 to $800,000 for McGarry, depending on results. Payments are made after year-end financials are finalized and are deposited into a designated retention account.
Exhibit 10.1
Coventry Health Care, Inc.
Special Incentive Plan
Plan Objective
The objective of the Coventry Health Care (CHC) Special Incentive Plan (the Plan) is to reward Thomas McDonough and James McGarry (the Participants) for the attainment of pre–established financial goals on first year performance of First Health Group.
Plan YearThe Plan year is January 1 through December 31, 2005.
EligibilityEligibility in the Plan and eligibility to receive a Plan award are conditioned on the Participants being actively employed during the entire Plan period and on the payout date.
Timing of Incentive PayoutsPayouts under the Plan will be made as soon as possible after the close of the fiscal year and after CHC and First Health year–end financial results are finalized.
Performance CriteriaPlan awards are based on the achievement of the following First Health financial results, as measured and certified by CHC Corporate Controller and CHC CEO, and approved by the “Compensation Committee”.
Performance Criteria: EBIDTA*
Threshold: Budgeted EBIDTA
Stretch: 8.75% increase over Threshold
*Earnings Before Interest, Depreciation, Taxes and Amortization
Award CalculationAwards under the Plan are calculated as follows:
| Results Achieved | McDonough Award | McGarry Award |
| EBITDA ‹ Threshold | $0 | $0 |
| = Threshold | $500,000 | $200,000 |
| = Stretch | $2,000,000 | $800,000 |
Awards for results achieved between the above–cited levels are calculated based on straight–line interpolation.
AwardThe cash award payment will be deposited into the Participant’s 2004 Mid–Term Executive Retention Program account.
Administrative GuidelinesThe Plan is governed by the terms and conditions of the Coventry Health Care, Inc. 2004 Incentive Plan. This document shall not be construed as a contract with the employee and is in no way intended to limit the employment at will status of employees of Coventry Health Care, Inc., or its Health Plans.
