Centene settles with activist Politan, overhauls board, CEO to exit

FILE PHOTO: Michael F. Neidorff, Chairman and Chief Executive Officer of Centene Corporation, attends the World Economic Forum (WEF) annual meeting in Davos
FILE PHOTO: Michael F. Neidorff, Chairman and Chief Executive Officer of Centene Corporation, attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 24, 2018 REUTERS/Denis Balibouse/File Photo

December 14, 2021

By Svea Herbst-Bayliss

BOSTON (Reuters) -Centene Corp reached a deal with activist investment firm Politan Capital Management where five new directors will join the managed care company’s board and its chief executive will retire in 2022 having served for a quarter of a century.

Six board members will be leaving and Michael Neidorff, 77, who has led Centene since 1996 will retire as CEO next year, the company said. He will become executive chairman but will not keep that position beyond 2022.

Two of the incoming directors were proposed by Politan, a new firm founded by veteran investor Quentin Koffey over the last months. Politan will also have a say in appointing the fifth director who has yet to be named.

James Dallas will become the board’s independent chairman in 2022.

The new board will be responsible for appointing a new CEO and will look at internal and external candidates, the company said in a release.

As part of a sweeping set of changes, the company will also require board members to retire at the age of 75.

Politan, which owns a roughly $900 million stake in Centene which is valued at $46 billion, had held discussions with the St. Louis-headquartered company to express concerns about the sluggish stock price and push for new board members to be added.

Centene has previously attracted interest from activist hedge funds when Corvex Management, Sachem Head Capital Management and Third Point all pushed for it to consider selling itself.

Among the incoming directors are Kenneth Burdick, a former chief executive at WellCare Health Plans Inc., which Centene bought last year, and Wayne DeVeydt, a former chief financial officer at health insurer Anthem Inc. Christopher Coughlin and Theodore Samuels will also join the board. Dallas, who will become lead independent director immediately and independent chair next year, worked for Burdick at WellCare and has been a Centene board member for two years.

(Reporting by Svea Herbst-Bayliss, Editing by Louise Heavens and Chizu Nomiyama)