Two veteran health insurance executives are set to get a payday with the sale of home health company Apria Healthcare Group to the private-equity firm Blackstone Group.
Under the terms of the $1.6 billion proposed sale, Blackstone will pay $21 in cash per share, or $921.1 million, to shareholders, and assume Aprias debt of $671 million, to take the Lake Forest, Calif.-based company private (June 23, p. 16).
Two of the eight members of Aprias board of directors, who unanimously approved the sale, are well-known insurance executives who will get some reward in the deal, which is subject to shareholder approval.
Norman Payson, former chairman and chief executive officer of Oxford Health Plans, and Terry Bayer, chief operating officer of Molina Healthcare, a managed-care company, both joined the Apria board in 2006. Each own 24,000 shares or options on shares in the company, according to SEC filings. Paysons stock and option awards were valued at $204,525, while Bayers stock and option awards were valued at $130,275 as of Dec. 31, 2007, according to SEC filings.
Both board members were awarded some options with strike prices listed at slightly higher than the $21 per share deal made with the Blackstone Group, meaning some of the options may have significantly less or no value. Aprias stock has slid from $29 per share a year ago to less than $16 per share on June 18, the day before the acquisition was announced. Aprias stock closed July 3 at $19.03.
Updated board compensation details wont be available until the company files its proxy statement with the SEC, which will likely happen in the next few weeks, said Lisa Getson, an Apria spokeswoman. She confirmed that some options issued to board members and executives are underwater. She said she was not aware of board members receiving additional compensation in the sale. They are just eight members of the board and they have to think about the long-term future of the company and whats best for the employees, Getson said.
The Apria payout is small compared with what Payson and Bayer have been paid elsewhere. Bayer was paid $933,551 at Molina last year in salary and stock awards, including her annual salary of $405,000 and bonuses of $155,000, according to SEC filings.