We've had a very nice 20% run up in the past week! Not to be a pig, I sold the majority of my long position today. After all, we went up 6.6% today on low volume and last Friday the share price tanked going into the weekend after a Thursday run-up. As such, my sentiment may be a little biased. Even so, I do not think this "retention bonus" SEC filing will help the PPS.
The retention bonus basically says to me that employees may be leaving Wellcare's uncertain work environment for something more stable. If that were not true, I think management would simply grant the stock options they mentioned in the filing to say, "Thanks for putting up with the additional stresses we have due to the federal investigations."
"The ongoing investigations have caused various uncertainties that have, among other things, increased retention risk for employees of the Company and its subsidiaries. In light of these uncertainties, the Company's board of directors has adopted a retention program and a severance program, each on a Company-wide basis, to, among other things, encourage the continued employment of certain employees who provide services to the Company and its subsidiaries, and to provide economic security to employees in the event of specified terminations of employment."
"Under the retention program, substantially all employees will be eligible to receive a one-time bonus of 20 percent to 50 percent of the employee's base salary in effect on Dec. 31, 2008....WellCare will pay about $35 million, to be expensed over three years."
"The company's severance program provides benefits in the event that an employee at the manager level or above is terminated between Nov. 28, 2007 and Dec. 31, 2009 due to position elimination or reduction in force...."