Enticing OffersWellCare's new leaders won't have to pinch their pennies, though. With Moszkowski calling the shots, WellCare will continue to reward its management team quite well. Take a look at the company's contract with recently installed Executive Chairman Charles Berg, for example. Berg already struck it rich in the health insurance arena by
Warm FarewellWellCare has extended some generosity toward its ousted executives as well. Based on WellCare's latest proxy statement, those three executives could demand only their unused vacation pay if they wound up terminated for cause. For Farha, the proxy shows, that amount comes to about $7,700. For the other two outgoing executives -- former CFO Paul Behrens and former General Counsel Thaddeus Bereday -- the amounts are even less. All three executives resigned "without good reason, which WellCare has equated with being "terminated for cause" for compensation purposes. The company has accused none of the men of wrongdoing, however. WellCare continues to pay them in the meantime. They have agreed to stay on in nonexecutive positions "to assist in an orderly transition" through the end of March. Farha will continue to "make himself reasonably available" for another three months after that, pocketing some $500 per hour for his services. As CEO, Farha's base salary allotted him less than half that amount. The generosity does not end there. Despite resigning without good reason, Farha is poised to cash in 200,000 stock options and 70,000 shares of restricted stock by the time that he departs. Going forward, if he and the company are cleared of wrongdoing, he can claim up to 130,000 additional "performance shares" as well. Behrens and Bereday are entitled to smaller equity awards of their own. All three men rank as multimillionaires already, thanks to massive stock sales executed during WellCare's glory days. Farha has pocketed almost $50 million, with Behrens and Bereday scoring more than $10 million apiece, from shares they've sold over the past two years alone. Their final transactions came just weeks before the raid that sent the stock spiraling 63% in one day.
Mixed RecordWellCare directors -- including every member of the compensation committee and the new special investigation team -- took part in that selling spree as well. Moszkowski stands out as the last insider to sell WellCare stock ahead of the government probe. That transaction, carried out just eight days before the Oct. 24 raid, netted Moszkowski $1.13 million in his largest personal sale to date. Before then, Moszkowski's investment firm had been selling massive chunks of WellCare for years. With Moszkowski serving as managing director, Soros Private Equity Partners purchased WellCare for a song back in mid-2002 and took it public a couple of years later. When Moszkowski bought Soros' private-equity business the following year, he held onto shares of wildly successful WellCare. He escaped from some others, such as Internet retailer BlueFly ( BFLY) and discount airline JetBlue ( JBLU), in the process. With Internet stocks soaring in mid-1999, Soros coughed up millions to become BlueFly's largest shareholder. Moszkowski personally expressed confidence in the company's management team at that time. Within two years, however, BlueFly was crashing along with the rest of the so-called "dot-bombs." Despite generous help from Soros, BlueFly remains a penny stock today. JetBlue at least took off. Won over by young JetBlue founder David Neeleman, who had already sold one airline to Southwest ( LUV), Moszkowski backed JetBlue despite misgivings about the airline industry overall. JetBlue's stock did soar for a while, peaking at a split-adjusted $30 in 2003, but it has long since crashed back to Earth. It languishes in the single digits right now.