UAM Universal American Corp. New (delisted)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

AMENDMENT NO. 1

(Mark One)

x        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016

OR

o           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission file Number: 001-35149

44 South Broadway, Suite 1200, White Plains, New York 10601

(Address of principal executive offices and zip code)

(914) 934-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o   No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes  o   No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x   No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  o   No  x

The aggregate market value of the registrant’s voting common stock held by non-affiliates of the registrant on June 30, 2016, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $331 million (based on the closing sales price of the registrant’s common stock on that date). As of February 24, 2017, 59,428,232 shares of the registrant’s voting common stock were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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EXPLANATORY NOTE

As used in this report, “Universal American,” the “Company,” “UAM,” “we” “our,” and “us” refer to Universal American Corp. and its subsidiaries, except where the context otherwise requires or as otherwise indicated.

This Amendment No. 1 on Form 10-K/A (the “Amendment”) amends our Annual Report on Form 10-K for the year ended December 31, 2016, originally filed on February 28, 2017 (the “Original Filing”). We are filing this Amendment to include the information required by Part III and not included in the Original Filing, as we do not expect to file our definitive proxy statement within 120 days of the end of our fiscal year ended December 31, 2016 as a result of our pending sale to WellCare Health Plans, Inc. (“WellCare”).

In connection with the filing of this Amendment, we are including as exhibits currently dated certifications of our chief executive officer, chief financial officer and chief accounting officer. Accordingly, Item 15 of Part IV has also been amended and restated to reflect the filing of these currently dated certifications.

Except as described above, no other changes have been made to the Original Filing. Unless expressly stated, this Amendment continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events which occurred at a date subsequent to the filing of the Original Filing.

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We believe Mr. Gormley’s qualifications to serve as a director of the Company include Mr. Gormley’s experience as a private equity investor and investment banker that contributes his experience and expertise in capital markets, finance and related disciplines.

Dr. Mohit Kaushal has served as a director since August 17, 2016. Dr. Kaushal, trained as an emergency room physician, is a leader in healthcare information technology, serving as board member, advisor and investor in numerous healthcare information technology companies. He is an Adjunct Professor at Stanford University and a Scholar in Residence at the Duke Margolis Center for Health Policy. Dr. Kaushal previously served in the Obama administration as a member of the Health IT task force. Dr. Kaushal holds a MBA from Stanford University and an MD with distinction from Imperial College of Science, Technology and Medicine in London, England.

We believe Dr. Kaushal’s qualifications to serve as a director of the Company include Dr. Kaushal’s years of experience in the various aspects of the healthcare industry as discussed above.

Patrick J. McLaughlin, has served as a director since January 1995. Mr. McLaughlin is President of Emerald Capital Group, Ltd., an asset management and consulting firm specializing in the insurance industry, since April 1993. Prior to that, he was an Executive Vice President and Chief Investment Officer of Life Partners Group, Inc., Managing Director of Conning & Company and Senior Vice President and Chief Investment Officer of ICH Corporation. Mr. McLaughlin serves on the board of directors of American Independent Companies, Inc., Paraline Group, Ltd. and Engle Martin & Associates, Inc.

We believe Mr. McLaughlin’s qualifications to serve as a director of the Company include Mr. McLaughlin’s familiarity with the Company, as a result of his length of service as a member of the Board, coupled with his years of experience in various senior executive investment positions and as an asset management consultant for a number of companies in the insurance sector that contributes significant successful experience and expertise in investing and related disciplines.

EXECUTIVE OFFICERS

Biographical information concerning Richard A. Barasch, our Chief Executive Officer, who also serves as the chairman of our Board of Directors, is set forth above. Biographical information concerning our other executive officers is set forth below.

Steven H. Black, age 54, has served as Chief Administrative Officer since October 2012. Prior to joining Universal American, Mr. Black was Chief Operating Officer of Radisphere National Radiology Group, the largest national radiology services provider from 2007 to 2012. Mr. Black has also held senior leadership roles at United Healthcare, Oxford Health Plans, Health Net Health Plans and PHS Health Plans and served over six years with Accenture, specializing in the insurance industry and operation improvement projects.

Theodore M. Carpenter, Jr., age 69, has served as Executive Vice President, Health Care Services since March 2013. Prior to that, he served as President of our Medicare Advantage division since May 2005, and was its Executive Vice President and Chief Operating Officer from 1999 to 2005. Prior to joining Heritage Health in 1999, Mr. Carpenter worked for Kaiser Permanente for over 20 years; his last five years as President of Kaiser Foundation Health Plan of North Carolina.

Erin G. Page, age 40, has served as President, Medicare since March 2013. Ms. Page joined the Company in 2001 and has held increasing levels of responsibility, most recently as Senior Vice President, Market Operations, responsible for managing the Company’s Texas and Southwest Medicare Advantage and Accountable Care Organization businesses.

Adam C. Thackery, age 45, has served as the Chief Financial Officer of the Company since May 2015. He joined the company in 2008 and has held jobs with increasing levels of responsibility, most recently as Senior Vice President, Financial Planning & Analysis for the company. Mr. Thackery has over 20 years of experience in finance, operations and business development, including previous financial leadership positions at Aveta (a Medicare Advantage plan in Puerto Rico), Reliant Pharmaceuticals, Vector Fund Management and Ernst & Young LLP.

Anthony L. Wolk, age 49, was promoted to Executive Vice President, General Counsel and Secretary on February 4, 2015. Prior to that, Mr. Wolk served as our Senior Vice President, General Counsel and Secretary since July 2010. Prior to joining Universal American, Mr. Wolk served as Senior Vice President, General Counsel & Secretary of Centennial

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Communications Corp., a publicly-traded telecommunications company from 1999 to 2010. Prior to that, Mr. Wolk was an attorney in private practice with the law firms of Gibson, Dunn & Crutcher LLP and Weil, Gotshal & Manges LLP.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC reports of ownership of our securities and changes in reported ownership. Executive officers, directors and greater than 10% stockholders are required by SEC rules to furnish us with copies of all Section 16(a) reports they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us, or written representations from the reporting persons that other reports were required, we believe that, during the fiscal year ended December 31, 2016, all Section 16(a) filing requirements applicable to our executive officers, directors, and greater than 10% beneficial owners were timely met with the exception of two failures to timely file by Ms. Page and one failure to timely file by Messrs. Barasch, Thackery, Black and Wolk.

Material Changes to Procedures for Shareholder Nominations

There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors since our last Proxy filed on April 28, 2016.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, and our subsidiaries’ directors, officers and employees, and all directors, officers and employees of any other entities controlled by us. In connection with our Code of Business Conduct and Ethics, on April 22, 2014 we adopted a Board of Directors Confidentiality Policy to clarify and establish procedures to implement the confidentiality requirements of our Code of Business Conduct and Ethics as applicable to directors. We also have adopted a Code of Ethics for Principal Executive and Senior Financial Officers that applies to our chief executive officer, chief financial officer and other principal officers designated by us, which was approved by the Board. Our Code of Business Conduct and Ethics, our Board of Directors Confidentiality Policy and our Code of Ethics for Principal Executive and Senior Financial Officers are posted on our website at www.universalamerican.com at the link entitled Investors, and are also available in print to any stockholder who requests a copy. We intend to disclose any substantive amendment to or waiver of the codes.

The Audit Committee

We established our Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The current members of our Audit Committee are Patrick J, McLaughlin (chair), Sally W. Crawford and Mark K. Gormley. The board of directors has determined that all members of the Audit Committee are independent, financially literate and that Mr. McLaughlin, chairman of our Audit Committee, qualifies as an “audit committee financial expert” as defined by Item 407(d) of Regulation S-K of the Exchange Act.

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Executive Summary

2016 Highlights

As previously announced, on November 17, 2016, we entered into a definitive agreement with WellCare Health Plans, Inc. (“WellCare”) under which WellCare will acquire Universal American in an all cash transaction valued at $10.00 per share of common stock (the “WellCare Transaction”) .

As previously reported, our reported net income for the full year 2016 was $55.4 million, or $0.78 per share. Adjusted net income for the full year 2016 was $1.6 million, or $0.02 per share, which excludes the following after-tax items:

·                   $6.2 million, or $0.09 per share, of losses associated with our Management Services Organization (MSO) segment which includes our Accountable Care Organization (ACO) business;

·                   $1.5 million, or $0.02 per share, of net realized investment gains;

·                   $1.4 million, or $0.02 per share, of non-cash interest on our Convertible Notes;

·                   $0.6 million, or $0.01 per share, of tax benefit;

·                   $61.7 million or $0.87 per share of income from discontinued operations, including our Traditional Insurance and Total Care Medicaid businesses, which were sold in August 2016, and the APS Healthcare businesses, which were sold in 2015; and

·                   $2.4 million or $0.03 per share, of development-related transaction costs, including the pending WellCare Transaction.

Total revenues from continuing operations for full year 2016 were approximately $1.4 billion.

During 2016, we also made solid progress in certain key areas:

·                   The enrollment-weighted Star rating for our Medicare Advantage membership increased from 3.98 in 2016 to 4.15 Stars in 2017, including an improvement to 4.5 Stars in our flagship Southeast Texas HMO.

·                   Our Medicare Advantage operating results for 2016 demonstrated improvement over 2015, including a return to profitability of our Northeast plans.

·                   The results of our ACO business for performance year 2015 demonstrated significant improvement over the results for performance year 2014.

·                   We consummated key transactions in 2016, including: (i) the sale of our Traditional Insurance business in August 2016, (ii) the sale of our TotalCare Medicaid health plan in August 2016, (iii) in June 2016, we issued $115 million of convertible senior notes and used the proceeds, together with cash on hand, to repurchase approximately 18.1 million shares from significant shareholders at a price of $6.80 per share, and (iv) in September 2016, we entered into an agreement to fully resolve the litigation arising from our acquisition of APS Healthcare in 2012 by acquiring all of the 6,272,104 shares of common stock held by the defendants for an aggregate payment of $13.0 million (the “ APS Litigation Settlement ”).

2016 Compensation Decisions

The following actions were taken with respect to named executive officer compensation during 2016:

·                   Base Salaries:  Messrs. Black and Wolk and Ms. Page each received base salary increases of 2.0% to reflect a standard cost of living adjustment compared to a 2.7% increase that was applicable to Company employees generally. Mr. Thackery received a base salary increase of 6.1%, in consideration of performance and increased responsibilities. Mr. Barasch received no adjustment to his base salary for 2016.

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·                   Annual Incentive Awards:  For 2016, each named executive officer received an annual bonus equal to 100% of  such officer’s target bonus payment.

·                   Long-Term Incentive Awards:  In February 2016, we awarded stock options and restricted stock to our named executive officers. The table below sets forth the grant date fair value of the 2016 equity grants as a percentage of the named executive officer’s base salary.

Governance

Our executive compensation program reflects our strong commitment to good governance, as follows:

·                   We maintain a diversified compensation program that balances long-term vs. short-term, fixed vs. variable, and cash vs. equity compensation. A substantial portion of the compensation of our named executive officers is “at risk.”

·                   We maintain a claw-back/forfeiture right in our equity plan documents.

·                   We do not maintain significant perquisites for our executives.

·                   Our Compensation Committee engages only independent compensation consultants that do not provide any services to the Company.

·                   All members of the Compensation Committee are independent according to SEC and NYSE independence standards.

·                   In general, we do not provide tax gross-ups to our executives, including Section 280G excise tax gross-ups.

Our Compensation Philosophy

Our compensation practices are designed to meet the following key objectives:

·                   ensure that the financial interests of our executives are aligned with those of our stockholders;

·                   attract and retain talented executives who can drive an organization to succeed in the rapidly-changing and highly-competitive healthcare industry;

·                   motivate and reward executives to deliver superior business performance without encouraging excessive risk taking; and

·                   balance rewards for both short-term results and long-term results to ensure sustained business performance over time.

We believe that executives should be rewarded for current performance and further incentivized in recognition of their contributions to our long-term performance, and that the financial interests of our executives should be aligned with the interests of our stockholders. To promote this philosophy and in recognition of the fact that the dynamic nature of our business requires a constantly evolving outlook on compensation, we take a flexible approach to determining the amount and composition of the compensation paid to our executive team, allowing us to effectively and efficiently attract, motivate, reward and retain outstanding executives. While we consider compensation paid by our peers, as well as certain formulas to fund our annual bonus incentive pool, decisions regarding compensation are ultimately made in the discretion of the Compensation Committee and Board of Directors which we believe has the expertise to effectively judge and evaluate Company performance and appropriate resulting compensation.

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Compensation Committee and Process

Our Compensation Committee meets regularly throughout the year, both in executive session and with members of management and third-party advisors present. Our Compensation Committee seeks to set compensation for our named executive officers that fits within our compensation philosophy, addresses our strategic needs, and is competitive. While our Board of Directors has delegated to our Compensation Committee substantial authority over compensation decisions, our full Board considers and ratifies many decisions of the Compensation Committee that are made with respect to the named executive officers and certain of our other officers. Our Compensation Committee generally bases its determinations in respect of any given year, as described in more detail below, on reports prepared by compensation consultants, analysis by our Chief Executive Officer and other members of the senior executive team, our Compensation Committee’s overall assessment of qualitative and quantitative corporate and individual criteria, and our broad-based compensation goals of reasonableness and appropriateness.

Executive Participation

The Compensation Committee finds it important to regularly solicit input from our Chief Executive Officer and other members of senior management, whose understanding of the strategic needs of our business makes them a necessary resource to assist the Compensation Committee in establishing competitive pay packages that are in our best interests and the best interests of our stockholders.

Our senior management has a unique understanding of the needs of our business as a result of their day-to-day interaction with each other and our business, as well as their oversight roles, and thus provides valuable insight to our Compensation Committee in determining the compensation of our named executive officers. As such, our Compensation Committee considers the recommendations of our Chief Executive Officer with respect to compensation for our senior management team. In general, our Chief Executive Officer attends at least a portion of all regular meetings of our Compensation Committee, and from time to time the Compensation Committee consults other members of senior management, including the General Counsel, for their input and insight. The Chief Executive Officer does not play a role in determining his own compensation and is not present during Compensation Committee or Board deliberations as to his compensation. Despite important executive participation, all named executive officer compensation decisions are ultimately made by the Compensation Committee in its discretion. With respect to base salary, annual bonus awards and annual equity award grants, the Compensation Committee typically presents its recommendations to the full Board of Directors for final approval.

Compensation Consultant

Our Compensation Committee has the authority to employ outside advisors, experts and professionals to assist it in setting executive compensation. Our Compensation Committee has obtained and considered, and continues to obtain and consider, the expert advice of third-party independent compensation consultants. During 2016, the Company engaged Frederic W. Cook & Co., Inc. (“Fred Cook”) as its independent compensation consultant.  Fred Cook assisted the Committee with respect to certain 2016 compensation matters.  Fred Cook does not provide any services to the Company other than executive compensation services and the Compensation Committee concluded that Fred Cook is free of conflicts of interest.

Benchmarking

Although our Compensation Committee does not believe that it is appropriate to establish compensation levels based solely on benchmarking, we recognize that our compensation practices must be competitive in the marketplace. In connection with our consideration of competition for executive talent, we consider the fact that there are relatively few available executives with the requisite experience and knowledge of our business, which limits the size of the pool of replacements for our existing executives and increases the need for retention of them. Our Compensation Committee determines annually the appropriate combination of cash and equity-based compensation for our executives and considers the competitiveness of overall compensation paid to our executives in relation to our peer group and others. In addition, we structure our compensation so that executives understand that we expect them to contribute to the growth in value of the Company, and have therefore constructed our long-term incentive plan to provide appropriate rewards for growth in value.

We benchmark our compensation practices to other publicly traded companies that are comparable to us based upon various factors such as their lines of business, size based on both revenues and market capitalization and industry. With respect to  compensation decisions, the following five publicly-traded companies were deemed to be appropriate peers for benchmarking purposes:

·                   Centene Corporation

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·                   Magellan Health Services, Inc.

·                   Molina Healthcare, Inc.

·                   Triple-S Management Corporation

·                   WellCare Health Plans, Inc.

Elements of Compensation

General

The primary elements of our executive compensation program consist of (i) base salaries, (ii) annual bonus awards and (iii) long term equity awards. While not a significant part of our program, we also offer our executives limited perquisites and some other benefits generally offered to all employees.

The following table shows the percentage mix of the three different forms of compensation awarded to our named executive officers for 2016:

Base Salaries

Competitive salaries are essential to recruiting and retaining qualified employees. Consistent with the process described above and with the aim of maintaining a reasonable level of internal pay equity, the Compensation Committee generally reviews base salaries in the first quarter of each year. Salary changes for our named executive officers, if any, are typically determined during the first quarter of each fiscal year and normally take effect on or about April 1 st  of the applicable year. To maintain flexibility, we do not target base salary at any particular percent of total compensation. In 2016, our Compensation Committee determined that Mr. Barasch’s base salary should remain unchanged, Messrs. Wolk and Black and Ms. Page should receive an increase in base salary of 2.0% from 2015 to reflect a standard cost of living adjustment. Mr. Thackery received a base salary increase of 6.1% in consideration of performance and increased responsibilities. A 2.7% salary increase was generally applicable to Company employees.

Annual Bonuses

Consistent with our philosophy of rewarding contributions to Company performance, a significant component of executive compensation is our annual bonus program, which ensures that a meaningful portion of compensation is “at risk.” The bonus program for 2016 consisted of the following:

1.                                       50% of an officer’s bonus is tied to five company performance metrics. The metrics and weightings are listed below:

2.                                       50% of an officer’s bonus is tied to individual performance.

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This program serves to reward and motivate achievement of financial and other performance goals which is at the core of our pay-for-performance philosophy. Target bonus amounts as a percentage of base salary for the named executive officers for 2016 were 150% for Mr. Barasch, 60% for Mr. Thackery, 80% for Ms. Page and 75%, for Messrs. Wolk and Black. Target bonus percentages were consistent with 2015, with the exception of Mr. Thackery and Ms. Page, who received increases in their target bonus percentages of 10% and 5%, respectively, in recognition of increased responsibilities and performance. The target bonus amounts were established with the competitiveness of the executives’ total pay package as a principal objective and consistent with the philosophy of the Compensation Committee to make a significant portion of the named executive officers’ compensation based on performance.

The Company’s performance against the five Company performance metrics is set forth below.

·                   Financial Performance . During 2016, the Company exceeded the target financial performance metrics set by the Board.

·                   Medicare Advantage core membership growth . During 2016, the Company fell slightly short of the Medicare Advantage membership target set by the Board.

·                   ACO Profitability . At this time, the Company has not received the final data from CMS regarding performance year 2016. However, it was agreed that bonus amounts need not be deferred pending final ACO results.

·                   Medicare Advantage Star Ratings . During 2016, the Company improved its overall Star ratings and this target was met.

·                   Compliance . During 2016 the Company continued to make improvements in compliance, particularly Medicare compliance, and this target was met.

Based on the foregoing and the significant positive developments that occurred during 2016, including the WellCare Transaction, the Compensation Committee approved the following bonuses for 2016 for the named executive officers:

·                   Mr. Barasch received 100% of his 2016 target bonus which was paid in February 2017. Messrs. Thackery, Wolk and Black and Ms. Page each received 100% of their 2016 target bonus which was paid in December 2016.

·                   In addition to the above, Messrs. Wolk and Thackery earned an additional bonus of $100,000 and $75,000, respectively, based on their performance related to various strategic transactions that were accomplished during 2016.

Equity Compensation

We believe that a significant portion of our named executive officers’ compensation should be in the form of long-term equity-based awards that align our executives’ interests with those of our stockholders. We grant equity-based compensation to our named executive officers pursuant to the 2011 Equity Plan because it directly links the value of compensation to the long-term results achieved for our stockholders. While we consider the level of past grants in making current equity award decisions, we generally do not consider wealth accumulation from the appreciation of past awards because we believe that wealth accumulation is the proper reward for an executive’s contributions to our performance and should not be offset against any incentives for future performance. We generally make annual equity grants to our named executive officers and other employees during the first quarter of our fiscal year. In February 2016, the Compensation Committee awarded stock options, and restricted stock to our named executive officers as follows:

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In general, the fair value of the 2016 equity grants to the named executive officers was approximately 25% in stock options and 75% in restricted stock. 50% of the stock options granted in 2016 have four-year time vesting and the other 50% have performance based vesting tied to stock price appreciation. Similarly, 50% of the restricted shares granted in 2016 have four-year time vesting and the other 50% have performance based vesting tied to stock price appreciation. The performance based grants, both stock options and restricted stock, are collectively referred to as the “Performance Awards.” The four-year time vested awards, both stock options and restricted stock, are collectively referred to as the “Time-Vested Awards.” The Performance Awards vest ratably over a four-year period, but only if our stock price meets specified targets at the vesting dates. Performance Award vesting is cumulative, such that if a stock price target is missed on a vesting date, but a subsequent stock price target is met on a future vesting date, all previously unvested shares would then vest. In the event of a Change in Control (as defined in the 2011 Equity Plan) which would include the WellCare Transaction, the Performance Awards (stock options and restricted stock) will no longer vest in accordance with the performance-based criteria but instead shall vest as if such grants were originally granted as four-year time vested grants where 25% of such awards would vest on each of the first four anniversaries of the date of grant.

Perquisites and Other Benefits

We do not view perquisites as a significant portion of our named executive officers’ compensation package. Historically, we have not provided our named executive officers with a significant number of perquisites or other benefits; however, we believe that the perquisites and other benefits that we do provide assist our named executive officers in the performance of their duties and contribute to a well-rounded, competitive pay package. In addition to perquisites that are unique to one or more named executive officers, such as car allowances, we offer the following benefits to our named executive officers and to all of our other eligible employees:

·                   a Company matching contribution under our 401(k) plan equal to 100% of the employee’s first 1% of contributions, plus 50% of the employee’s next 4% of contributions, up to a maximum matching contribution of 3% of the employee’s eligible compensation,

·                   standard medical, dental, and life and disability insurance coverage, and

·                   vacation and other paid time off.

Say-on-Pay Advisory Vote on Executive Compensation

At the Company’s annual meeting held in May 2012, our stockholders voted to hold the non-binding, advisory vote regarding the frequency of the voting with respect to the compensation of our named executive officers on an annual basis with approximately 96% of the votes cast in favor of such annual say-on-pay vote. In addition, at last year’s annual meeting, our stockholders voted their approval of the compensation of our named executive officers with approximately 99% of the votes cast. The Compensation Committee has considered the results of these advisory votes in determining the Company’s compensation policies and decisions and has determined that these policies and decisions are appropriate.

Severance and Change-in-Control Benefits

We believe severance and change-in-control benefits are essential to recruiting and retaining qualified senior management. The terms of such agreements depend on the benefits negotiated with the individual executives upon him or her joining the Company or as subsequently negotiated thereafter. The material terms of the severance benefits for our named executive officers are discussed elsewhere in this filing under the caption “ Potential Payments upon Termination or Change-in-Control .”

Tax and Accounting Implications of Compensation

Section 162(m) of the Internal Revenue Code imposes a limit on the deductibility of compensation paid to named executive officers of public companies unless the compensation meets requirements for “performance-based compensation.”

Our Compensation Committee believes that it is important for us to retain maximum flexibility in designing compensation programs that most effectively promote the achievement of our stated objectives. Therefore, while considering tax deductibility as one of the factors in determining compensation, we do not generally limit the amount of compensation to levels or types simply on account of potential deductibility. Our Compensation Committee does, however, consider alternative forms of compensation where available in order to preserve deductibility and promote tax and accounting efficiency consistent with our ultimate compensation goals.

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Risk Management

In conjunction with our risk management processes, our Compensation Committee reviews executive compensation and our company-wide compensation programs and policies to seek to eliminate or mitigate potential risks arising from such programs and policies, and to ensure that our compensation, structure, elements, and incentives are not reasonably likely to have a material adverse effect on the Company or result in excessive risk taking. The Compensation Committee also seeks to ensure that our compensation programs are consistent with our general risk management practices and to ensure the safety and soundness of our Company over the market cycles that characterize our industry.

Policy on Ownership of Stock and Options

Our directors and their affiliated companies and our executive officers collectively own approximately 19% of our outstanding common stock. Given this significant ownership interest, we do not currently have any policy regarding levels of equity ownership by our named executive officers or directors.

Recovery of Previously Paid Incentive Compensation

The 2011 Equity Plan and award agreements issued to holders of awards permit the Committee to clawback and/or cancel equity awards under certain circumstances, including fraud or other conduct contributing to any financial restatements or accounting irregularities. In such an event, the matter would be referred to the Compensation Committee or Board for analysis and recommendation. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, guidelines will be forthcoming concerning required clawbacks of incentive compensation. When these guidelines are finalized, we intend to amend our programs, as necessary, to comply with the new requirements.

Compensation Committee Report

Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its reviews and discussion with management, our Compensation Committee recommended to our Board of Directors, and our Board has approved, that the Compensation Discussion and Analysis be included in this filing.

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(1)                                  Salary amounts in this table reflect the actual base salary payments earned in the year indicated. Non-equity incentive plan compensation amounts reflect the amounts earned by each named executive officer during the indicated year under our annual incentive bonus plan. Mr. Barasch received 100% of his annual target bonus which was paid in February 2017. Messrs. Thackery, Wolk and Black, and Ms. Page received 100% of their annual target bonus which was paid in December 2016. In addition, Messrs. Wolk and Thackery earned an additional bonus of $100,000 and $75,000, respectively, based on their performance related to various strategic transactions that were accomplished during 2016. These amounts are included in the table above. In addition, as part of Mr. Wolk’s 2015 bonus, he earned an additional 10% bonus of $31,875 upon the close of the sale of the Company’s Traditional Insurance business in August 2016. Such amount is excluded from this table.

The amounts included for 2015 for non-equity incentive plan compensation represent the total amount of the 2015 annual bonuses that were awarded to the named executive officers and were paid in cash in March 2016. Ms. Page and Messrs. Thackery, Wolk and Black received 50% of their target bonuses in March 2016. Mr. Barasch was paid 15% of his target bonus in March 2016.

The amounts included for 2014 for non-equity incentive plan compensation represent the total amount of the 2014 annual bonuses that were awarded to the named executive officers and were paid in cash in March 2015. Ms. Page and Messrs. Wolk and Black received 100% of their target bonuses in March 2015. Mr. Barasch was paid 53.75% of his target bonuses in March 2015.

(2)                                  The amounts reported as Stock Awards represent the grant date fair value of restricted stock grants awarded to our named executive officers during the indicated year, computed in accordance with ASC 718. Restricted stock vests ratably over four years at each anniversary of the grant. Performance-based restricted stock vests ratably over a four-year period, but only if our stock price meets specified targets at the vesting dates. Vesting is cumulative, such that if a stock price target is missed on a vesting date, but a subsequent stock price target is met on a future vesting date, all previously unvested shares would then vest. We determined the grant date fair value for the restricted stock awards by multiplying the number of restricted shares granted by the closing market price of a share of our common stock on the date of grant, except in the case of performance-based awards, which we value using a Monte Carlo valuation approach. For additional discussion, see Note 15—Stock-Based Compensation in our Annual Report on Form 10-K for the year ended December 31, 2016. In addition, the amounts shown in the table for 2015 for Stock Awards do not include 143,267; 57,307; 93,124 and 85,960 shares of restricted stock that were awarded to Ms. Page and Messrs. Thackery, Wolk and Black, respectively, in November 2015. These shares vest automatically on the six-month anniversary of a Change in Control. Under ASC 718, the grant date fair value of the awards is $0.

(3)                                  The amounts reported as Option Awards represent the grant date fair value of stock option grants awarded to our named executive officers during the indicated year computed in accordance with ASC 718. The exercise price of these

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stock options was initially set as the closing market price of a share of our common stock on the grant date. As a result of the $0.75 special dividend approved by the Board of Directors on October 8, 2015 to shareholders of record on October 19, 2015, the exercise price for all options awarded prior to the record date was reduced by the amount of the special dividend. The option grants vest in four equal annual installments, starting with the first anniversary of the grant date and expire after five years. Performance options vest similarly, but only if our stock price meets specified targets at the vesting dates. Vesting is cumulative, such that if a stock price target is missed on a vesting date, but a subsequent stock price target is met on a future vesting date, all previously unvested options would then vest. We determined the grant date fair value for the option awards using the Black Scholes method, except in the case of performance-based awards, which we value using a Monte Carlo valuation approach. Assumptions used in the calculation of the grant date fair value of the stock options are included in Footnote 15 to the Company’s audited financial statements for the fiscal year ended December 31, 2016, including in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2017.

(4)                                  Amounts reported reflect, as applicable, car allowance, our matching contributions into the Universal American Corp. 401(k) Savings Plan and dividends earned on restricted stock that vested after the Company’s special cash dividends of October 2015 ($0.75 per share), August 2013 ($1.60 per share) and November 2012 ($1.00 per share) were paid. These dividends were accrued at the time of the special dividend award and are paid as the underlying shares of restricted stock vest.

The amounts reported in 2016:

·                   For Mr. Barasch, the amount reported reflects $7,243 car allowance, $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $171,558 in dividends on vested restricted stock.

·                   For Mr. Thackery, the amount reported reflects $7,200 car allowance, $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $15,493 in dividends on vested restricted stock.

·                   For Ms. Page, the amount reported reflects $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $23,600 in dividends on vested restricted stock.

·                   For Mr. Wolk, the amount reported reflects $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $28,625 in dividends on vested restricted stock.

·                   For Mr. Black, the amount reported reflects $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $22,344 in dividends on vested restricted stock.

The amounts reported in 2015:

·                   For Mr. Barasch, the amount reported reflects $6,625 car allowance, $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $97,000 in dividends on vested restricted stock.

·                   For Mr. Thackery, the amount reported reflects $7,200 car allowance, $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $13,216 in dividends on vested restricted stock.

·                   For Ms. Page, the amount reported reflects $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $18,322 in dividends on vested restricted stock.

·                   For Mr. Wolk, the amount reported reflects $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $23,884 in dividends on vested restricted stock.

·                   For Mr. Black, the amount reported reflects $7,950 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $10,801 in dividends on vested restricted stock.

The amounts reported in 2014:

·                   For Mr. Barasch, the amount reported reflects $7,243 car allowance, $7,800 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $97,000 in dividends on vested restricted stock.

·                   For Ms. Page, the amount reported reflects $7,800 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $15,949 in dividends on vested restricted stock.

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·                   For Mr. Wolk, the amount reported reflects $7,800 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $15,750 in dividends on vested restricted stock.

·                   For Mr. Black, the amount reported reflects $7,800 Company matching contributions into the Universal American Corp. 401(k) Savings Plan and $10,875 in dividends on vested restricted stock.

Grants of Plan-Based Awards

The following table sets forth the awards granted pursuant to our equity and non-equity incentive plans in fiscal year 2016.

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(1)                                      Represents target payout levels for each of the named executive officers under our annual incentive bonus plan for 2016. There is no threshold or maximum payout level under such plan, although the Compensation Committee and Board of Directors maintain ultimate authority in approving bonuses to ensure reasonableness. The actual amount of incentive bonus earned by each Named Executive Officer for 2016 is reported under the Non-Equity Incentive Plan Compensation column in the “Summary Compensation Table.” Additional information regarding our annual incentive bonus plan is included under Compensation Discussion and Analysis.

In addition to the non-equity incentive plan discussed above, an equity incentive plan is also available to our named executive officers, although there are no threshold, target or maximum amounts of grants. Please see the “Compensation Discussion and Analysis” section of this filing for a discussion of equity incentive compensation for our named executive officers.

(2)                                      The amounts reported as Stock Awards represent the number of shares of restricted stock awarded during 2016.

(3)                                      Represents Time-Vested Awards. See Compensation Discussion and Analysis—Equity Compensation, for a discussion of the vesting provisions.

(4)                                      Represents Performance Awards. See Compensation Discussion and Analysis—Equity Compensation, for a discussion of the vesting provisions.

(5)                                      The amounts reported as Option Awards represent the number of shares underlying the stock option grants awarded during 2016.

(6)                                      See the footnotes to the Summary Compensation Table for a description of the calculation of the grant date fair value for the equity awards.

Outstanding Equity Awards at Fiscal 2016 Year-End

The following table sets forth the equity awards held by our named executive officers pursuant to our equity incentive plans that were outstanding at December 31, 2016.

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