December 17, 2009
VIA EDGAR AND OVERNIGHT FEDEX
Jeffrey Riedler
Assistant Director
Division of Corporation Finance
United States Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
Assistant Director
Division of Corporation Finance
United States Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549
| Re: | HealthSpring, Inc. Definitive Proxy Statement filed April 9, 2009 File No. 001-32739 |
Dear Mr. Riedler:
The following sets forth the responses of HealthSpring, Inc. (“HealthSpring” or the “Company”) to the comments issued on December 4, 2009 by the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) regarding HealthSpring’s Definitive Proxy Statement that was filed with the Commission on April 9, 2009. For your convenience, we have set out the text of the Staff’s comments, followed in each case by the Company’s responses.
Definitive Proxy Statement filed April 9, 2009
Executive and Director Compensation, page 14
Compensation Discussion and Analysis, page 14
| 1. | You disclose under “2008 Named Executive Officer Compensation” that the bonus targets established for Messrs. Huebner and Morris were 50% based on 2008 EPS and 50% based on the Texas and Tennessee plans’ performance compared to budgeted EBITDA. Although you disclosed the 2008 EPS target and EPS achievement level, we were unable to locate your disclosure of the Texas and Tennessee plans’ budgeted EBITDA target and achievement level. Please provide us draft disclosure for your 2010 proxy statement which provides each goal and target established and communicated to your named executive officers other than your CEO and President. It appears from your disclosure on page 19 that you intended to establish and communicate 2009 goals regarding company-wide performance, specific plan performance and individual performance for your named executive officers other than your CEO and President. Please also confirm that your 2010 proxy statement will also discuss the achievement of the goals and how the level of achievement will affect the actual bonuses to be paid. To the extent that the goals are quantified, the discussion should also be quantified. |
Mr. Jeffrey Riedler
Securities and Exchange Commission
December 17, 2009
Page 2
Securities and Exchange Commission
December 17, 2009
Page 2
Response:
You have requested that the Company provide draft disclosure for its 2010 proxy statement. Pursuant to Item 402(a)(3) of Regulation S-K, Herbert A. Fritch, Chief Executive Officer, Karey L. Witty, Executive Vice President and Chief Financial Officer, and Kevin M. McNamara, former Executive Vice President and Chief Financial Officer, will each qualify as a “named executive officer” for purposes of the Company’s 2010 proxy statement. The Company will not be able to determine with certainty its other named executive officers for purposes of 2010 proxy statement disclosures until after the Company’s compensation committee meets in February 2010 to consider and approve, among other matters, 2009 cash bonuses. In order to respond to your comment, however, the Company has assumed that Gerald V. Coil, Executive Vice President and Chief Innovation Officer; Mark A. Tulloch, Executive Vice President — Enterprise Operations; Scott C. Huebner, Executive Vice President and President — Texas HealthSpring; J. Gentry Barden, Senior Vice President and General Counsel; and M. Shawn Morris, Executive Vice President and President — HealthSpring of Tennessee, all of whose compensation was discussed in the 2009 proxy statement, will be named executive officers for purposes of its 2010 proxy statement. Please note, however, that the Company will modify the 2010 proxy statement draft disclosures below to reflect actual compensation committee determinations and otherwise to reflect only the compensation of the actual named executive officers in accordance with Item 402 of Regulation S-K.
Beginning of draft disclosure
2009 Cash Bonuses for Messrs. Tulloch, Huebner, Barden, and Morris.
In March 2009, the compensation committee approved 2009 cash bonus opportunities, as a percentage of base salary, of up to 50% with respect to Messrs. Tulloch, Huebner, Barden, and Morris. The compensation committee directed that cash bonuses for these executives be based on Company-wide performance, specific plan performance (with respect to Messrs. Huebner and Morris), and individual performance, all as determined in the subjective discretion of, and as recommended to the compensation committee for approval by, the Chief Executive Officer or President (as applicable, depending on lines of reporting). During the second quarter of 2009, the Chief Executive Officer and President determined that cash bonuses for these executives would be based on the following components:
| Business Unit | ||||||||||||
| Name | Corporate Performance | Performance | Individual Performance | |||||||||
| Mark A. Tulloch | 50 | % | 50 | % | ||||||||
| Scott C. Huebner | 33 | % | 33 | % | 33 | % | ||||||
| J. Gentry Barden | 50 | % | 50 | % | ||||||||
| M. Shawn Morris | 33 | % | 33 | % | 33 | % | ||||||
Mr. Jeffrey Riedler
Securities and Exchange Commission
December 17, 2009
Page 3
Securities and Exchange Commission
December 17, 2009
Page 3
The Chief Executive Officer and President confirmed that corporate performance for each executive would be based on the Company’s achievement of financial results as compared to the 2009 earnings per share, or EPS, guidance range of $2.00 – $2.20, as publicly announced to the investment community in February 2009, in substantially the same manner that the compensation committee had previously established for the Chief Executive Officer and President.1 With respect to business unit performance, the President determined that Mr. Huebner would be evaluated based on the achievement of financial results for the Texas plan as compared to 2009 budgeted EBITDA of $[***],2 and Mr. Morris would be evaluated based on the achievement of financial results for the Tennessee, Alabama, and Illinois plans as compared to 2009 budgeted EBITDA of $[***],2 $[***],2 and $[***],2 respectively. With respect to individual performance, no specific quantitative goals were established. Rather, the Chief Executive Officer and President determined that each executive would be subjectively evaluated on his performance in the areas of compliance, contributions to the enterprise as a whole, and individual leadership.
2009 Cash Bonuses for Messrs. Coil, Witty, and McNamara.
Mr. Coil’s bonus target was contractually fixed at 75% of base salary and whether his performance merited a cash bonus was in the subjective discretion of the Company’s President.
Effective July 1, 2009, Mr. Witty was appointed as the Company’s new Executive Vice President and Chief Financial Officer. In connection with his appointment, the compensation committee approved a guaranteed cash bonus for 2009 of 75% of Mr. Witty’s base salary, prorated for actual days of employment.
Mr. McNamara, who resigned effective May 31, 2009, was ineligible to receive a bonus for 2009.
End of draft disclosure
The Company confirms that its 2010 proxy statement will discuss the achievement of the goals referenced above and how the level of achievement affected the actual bonuses paid to each named executive officer.
2. Please file a copy of your 2009 performance cash bonus plan.
| 1 | Preceding this draft disclosure in the Company’s 2010 proxy statement will be a discussion of 2009 cash bonus payments to the Company’s Chief Executive Officer and President. This discussion will include the following draft disclosure: “The compensation committee adopted the 2009 performance cash bonus plan in March 2009 and established incentive bonus target payouts based on the 2009 EPS guidance range of $2.00 to $2.20 that was publicly announced to the investment community in February 2009. The EPS goals were targeted on a sliding scale and allowed for payouts ranging from 50% to 200% of the target bonus amount based on actual 2009 EPS. No bonus pursuant to this plan would have been be payable for EPS below $2.00 and the maximum 200% percentage payout was at a 2009 EPS level above $2.20, the high end of the announced guidance range. The committee was authorized to make adjustments to reported 2009 EPS for unusual or nonrecurring events.” | |
| 2 | The Company will provide the 2009 budgeted plan-level EBITDA targets in its 2010 proxy statement. |
Mr. Jeffrey Riedler
Securities and Exchange Commission
December 17, 2009
Page 4
Securities and Exchange Commission
December 17, 2009
Page 4
Response:
As requested, the Company intends to file a copy of its 2009 cash bonus plan as an exhibit to its Form 10-K for the year ending December 31, 2009. The material features of the 2009 cash bonus plan were described in the Company’s Form 8-K that was filed with the Commission on March 25, 2009.
In connection with responding to your comments, we acknowledge that:
| • | The Company is responsible for the adequacy and accuracy of the disclosure in the filing; | ||
| • | Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and | ||
| • | The Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
If you have any questions concerning our responses to your questions and comments, please do not hesitate to contact me at (615) 263-6140.
Sincerely,
/s/ J. Gentry Barden
J. Gentry Barden
Senior Vice President and General Counsel
Senior Vice President and General Counsel
| cc: | Jennifer Riegel, Securities and Exchange Commission |