XML 107 R21.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Stockholders' Equity | 12 Months Ended
--- | ---
Dec. 31, 2019
Equity [Abstract] |
Stockholders' Equity | Stockholders' Equity Stock Purchase Program In early December 2019, our board of directors authorized the purchase of up to $500 million, in the aggregate, of our common stock. This program is funded by existing cash on hand and extends through December 31, 2021. The exact timing and amount of any repurchase is determined by management, based on market conditions and share price, in addition to other factors, and subject to the restrictions relating to volume, price, and timing under applicable law. Under this program, pursuant to a Rule 10b5-1 trading plan, we purchased approximately 400,000 shares of our common stock for $54 million in December 2019 (average cost of $135.30 per share), including approximately 55,000 shares purchased for $7 million in late December 2019, and settled in early January 2020. Subsequent Event In January 2020 through February 7, 2020, we purchased 1,533,000 shares for $203 million (average cost of $132.69 per share). 1.125% Warrants In connection with the Call Spread Overlay transaction described in Note 12, “Derivatives,” in 2013, we issued 13.5 million of the 1.125% Warrants with a strike price of $53.8475 per share. Under certain circumstances, beginning in April 2020, if the price of our common stock were to exceed the strike price of the 1.125% Warrants, we would be obligated to issue shares of our common stock subject to a share delivery cap. The 1.125% Warrants could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the 1.125% Warrants. Refer to Note 3, “Net Income (Loss) Per Share,” for dilution information for the periods presented. We will not receive any additional proceeds if the 1.125% Warrants are exercised. Following the transactions described below, approximately 310,000 of the 1.125% Warrants were outstanding at December 31, 2019. As described in Note 12, “Derivatives,” in the year ended December 31, 2019, we entered into privately negotiated termination agreements with each of the Counterparties to partially terminate the Call Spread Overlay, in notional amounts corresponding to the aggregate principal amount of the 1.125% Convertible Notes purchased. In the year ended December 31, 2019, we paid $514 million to the Counterparties for the termination of 5.9 million of the 1.125% Warrants outstanding which resulted in a reduction of additional paid-in-capital for the same amount. Share-Based Compensation Total share-based compensation expense is presented in the following table. Except as described in the note to the table, we record share-based compensation as “General and administrative expenses” in the accompanying consolidated statements of operations.
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
| (In millions)
| Pretax Charges |  | Net-of-Tax Amount |  | Pretax Charges |  | Net-of-Tax Amount |  | Pretax Charges (1) |  | Net-of-Tax Amount
RSAs, PSAs and PSUs (defined below) | $ | 29 |  |  | $ | 28 |  |  | $ | 17 |  |  | $ | 17 |  |  | $ | 39 |  |  | $ | 35 |
Employee stock purchase plan and stock options | 10 |  |  | 9 |  |  | 10 |  |  | 9 |  |  | 7 |  |  | 5 |
Total | $ | 39 |  |  | $ | 37 |  |  | $ | 27 |  |  | $ | 26 |  |  | $ | 46 |  |  | $ | 40 |
_______________________
(1) | Includes $23 million relating to acceleration of share-based compensation for former executives in the year ended December 31, 2017. This amount is reported in “Restructuring costs” in the accompanying consolidated statements of operations.
Equity Incentive Plans In the second quarter of 2019, our stockholders approved the Molina Healthcare, Inc. 2019 Equity Incentive Plan (the “2019 EIP”). The 2019 EIP provides for awards, in the form of restricted and performance stock awards (“RSAs” and “PSAs”), performance units (“PSUs”), stock options, and other stock– or cash–based awards, to eligible persons who perform services for us. The 2019 EIP will remain in effect until its termination by the board of directors; provided, however, that all awards will be granted no later than May 8, 2029. Concurrent with the adoption of the 2019 EIP, the Molina Healthcare, Inc. 2011 Equity Incentive Plan was amended, restated and merged into the 2019 EIP. A maximum of 2.9 million shares of our common stock may be issued under the 2019 EIP. Stock-based awards. RSAs, PSAs and PSUs are granted with a fair value equal to the market price of our common stock on the date of grant, and generally vest in equal annual installments over periods up to four years from the date of grant. Certain PSUs may vest in their entirety at the end of three-year performance periods, if their performance conditions are met. We generally recognize expense for RSAs, PSAs and PSUs on a straight-line basis. Activity for stock-based awards in the year ended December 31, 2019 is summarized below:
| RSAs |  | PSAs |  | PSUs |  | Total Shares |  | Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2018 | 399,795 |  |  | 3,132 |  |  | 201,383 |  |  | 604,310 |  |  | $ | 71.50 |
Granted | 243,353 |  |  | — |  |  | 146,425 |  |  | 389,778 |  |  | 136.23 |
Vested | (139,828 | ) |  | (3,132 | ) |  | (10,528 | ) |  | (153,488 | ) |  | 73.98 |
Forfeited | (55,640 | ) |  | — |  |  | (13,202 | ) |  | (68,842 | ) |  | 90.45 |
Unvested balance as of December 31, 2019 | 447,680 |  |  | — |  |  | 324,078 |  |  | 771,758 |  |  | $ | 102.01 |
As of December 31, 2019, total unrecognized compensation expense related to unvested RSAs and PSUs was $49 million, which we expect to recognize over a remaining weighted-average period of 2.2 years, and 1.6 years, respectively. This unrecognized compensation cost assumes an estimated forfeiture rate of 15.9% for non-executive employees as of December 31, 2019, based on actual forfeitures over the last 4 years. The total grant date fair value of awards granted and vested is presented in the following table:
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
| (In millions)
Granted: |  |  |  |  |
RSAs | $ | 33 |  |  | $ | 28 |  |  | $ | 20 |
PSUs | 20 |  |  | 16 |  |  | 16 |
Total granted | $ | 53 |  |  | $ | 44 |  |  | $ | 36 |
Vested: |  |  |  |  |
RSAs | $ | 19 |  |  | $ | 15 |  |  | $ | 23 |
PSAs | — |  |  | 3 |  |  | 15 |
PSUs | 2 |  |  | — |  |  | 9 |
Total vested | $ | 21 |  |  | $ | 18 |  |  | $ | 47 |
Stock Options. Stock option awards generally have an exercise price equal to the fair market value of our common stock on the date of grant, vest in equal annual installments over periods up to four years from the date of grant, and have a maximum term of ten years from the date of grant. Stock option activity for the year ended December 31, 2019 is summarized below:
| Shares |  | Weighted Average Exercise Price |  | Aggregate Intrinsic Value |  | Weighted Average Remaining Contractual term
|  |  |  |  | (In millions) |  | (Years)
Stock options outstanding as of December 31, 2018 | 405,000 |  |  | $ | 64.79 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | — |  |  | — |  |  |  |  |
Stock options outstanding as of December 31, 2019 | 405,000 |  |  | 64.79 |  |  | $ | 29 |  |  | 7.4
Stock options exercisable and expected to vest as of December 31, 2019 | 405,000 |  |  | 64.79 |  |  | $ | 29 |  |  | 7.4
Exercisable as of December 31, 2019 | 280,000 |  |  | 63.65 |  |  | $ | 20 |  |  | 7.3
The weighted-average grant date fair value per share of stock options awarded in 2017 was $41.43. We estimate the fair value of each stock option award on the grant date using the Black-Scholes option pricing model. To determine the fair value of the stock options awarded in 2017 we applied a risk-free interest rate of 2.3%, expected volatility of 38.4%, dividend yield of 0% and expected life of 8.4 years. No stock options were granted in 2019 and 2018. As of December 31, 2019, total unrecognized compensation expense related to unvested stock options was $4 million, which we expect to recognize over a weighted-average period of 0.8 years. The total intrinsic value of options exercised during the year ended December 31, 2017 was $2 million. No stock options were exercised in 2019 and 2018. The following is a summary of information about stock options outstanding and exercisable at December 31, 2019:
| Options Outstanding |  | Options Exercisable
| Number Outstanding |  | Weighted Average Remaining Contractual Life (Years) |  | Weighted-Average Exercise Price |  | Number Exercisable |  | Weighted-Average Exercise Price
Range of Exercise Prices |  |  |  |  |  |  |  |  |
$33.02 | 30,000 |  |  | 3.2 |  | $ | 33.02 |  |  | 30,000 |  |  | $ | 33.02 |
$67.33 | 375,000 |  |  | 7.8 |  | 67.33 |  |  | 250,000 |  |  | 67.33 |
Total | 405,000 |  |  |  |  |  |  | 280,000 |  |  |
Employee Stock Purchase Plans (“ESPPs”) In the second quarter of 2019, our stockholders approved the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan (the “2019 ESPP”), which superseded the Molina Healthcare, Inc. 2011 Employee Stock Purchase Plan (the “2011 ESPP”). A maximum of 3.0 million shares of our common stock may be issued under the 2019 ESPP, the terms of which are substantially similar to the 2011 ESPP. The 2019 ESPP will continue until the earliest of: termination of the 2019 ESPP by the board of directors (which may occur at any time); issuance of all of the shares reserved for issuance under the 2019 ESPP; or May 8, 2029. Under our ESPPs, eligible employees may purchase common shares at 85% of the lower of the fair market value of our common stock on either the first or last trading day of each six-month offering period. Each participant is limited to a maximum purchase of $25,000 (as measured by the fair value of the stock acquired) per year through payroll deductions. We estimate the fair value of the stock issued using the Black-Scholes option pricing model. For the years ended December 31, 2019, 2018, and 2017, the inputs to this model were as follows: risk-free interest rates of approximately 0.6% to 2.3%; expected volatilities ranging from approximately 31% to 45%, dividend yields of 0%, and an average expected life of 0.5 years. We issued approximately 142,000, 216,000 and 351,000 shares of our common stock under the ESPPs during the years ended December 31, 2019, 2018, and 2017, respectively. In connection with our employee stock plans, approximately 242,000 shares and 365,000 shares of common stock were purchased or vested, net of shares used to settle employees’ income tax obligations, during the years ended December 31, 2019, and 2018, respectively.

X
- References No definition available. + Details
Name: | us-gaap_EquityAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
Name: | us-gaap_StockholdersEquityNoteDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration