EHR Vendor Cerner Outlines Golden Parachute Compensation, Oracle Deal

EHR vendor Cerner has outlined golden parachute compensation for its top executives if they are forced out in the Oracle acquisition, according to a filing with the Securities and Exchange Commission (SEC).

Severance for the EHR vendor’s top executives if they are forced out in the Oracle deal is outlined as follows:

• David Feinberg, MD, president and CEO: $22 million
• Jerome Labat, EVP/CTO: $11 million
• Marc Erceg, EVP/CFO: $11 million
• Brent Shafer, former chairman and CEO: $21 million

Four other executives will potentially benefit from the change-in-control terms of their contracts.

The SEC filing also provides a timeline of Oracle’s acquisition offer.

On October 7, 2021, Oracle management emailed Cerner management requesting to meet to discuss possible partnerships and other areas of potential collaboration between the companies. A member of Cerner’s management responded to schedule a call with Oracle’s management the next day.

During the phone call, a member of Oracle’s management indicated that the company would be interested in exploring a potential acquisition of Cerner.

On October 8, 2021, a member of Cerner’s management emailed the Cerner Chairman summarizing Oracle’s October 7, 2021, email and the October 8, 2021, telephone conversation.

The Cerner Chairman directed management to continue discussions with Oracle to determine Oracle’s proposed next steps.

On October 11, 2021 and October 22, 2021, members of the EHR vendor’s management met via telephone with a representative of the private equity sponsor that previously contacted Cerner.

The representative of the private equity sponsor inquired whether the EHR vendor had interest in participating in a then-pending competitive process to acquire another healthcare asset. The members of Cerner’s management said that the company was not interested in engaging in that process.

On October 12, 2021, a member of Cerner’s management and a member of Oracle’s management met via videoconference. The member of Oracle’s management indicated an interest in exploring a potential acquisition of Cerner and requested a call to discuss such interest with a broader group of Cerner representatives.

The next day, members of management from both firms met via videoconference to discuss Oracle’s interest in a potential acquisition of Cerner, as well as potential topics for preliminary due diligence discussions.

On November 12, 2021, Oracle made a $92 per share offer.

Cerner’s board discussed opening up the sale process to private equity stakeholders on November 20, however the board expressed anxiety about long timelines, price uncertainty, and losing Oracle as a buyer.

They also worried that the deal size would require the participation of a consortium of private equity buyers which would complicate the sale, so they ruled out contacting potential strategic buyers.

On November 24, 2021, the EHR vendor told Oracle that its per-share offer was too low.

Oracle said that it needed the EHR vendor’s board to be specific about the price it sought. Cerner gave a price of “the upper $90’s” on November 29.

On December 1, 2021, Oracle offered $95. Oracle declined a Cerner executive who tried to increase the offer price, saying its price was its “best and final offer.”

On December 20, 2021, the firms each issued a press release announcing the execution of the merger agreement.