HEALTH NET INC
CERTAIN COMPENSATION ARRANGEMENTS
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<TYPE>EX-10.1
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<DESCRIPTION>CERTAIN COMPENSATION ARRANGEMENTS
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.1 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>CERTAIN COMPENSATION ARRANGEMENTS </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>WITH HEALTH NET, INC.&#146;S </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>NON-EMPLOYEE DIRECTORS </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>AS AMENDED AND RESTATED ON JULY 12, 2005 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Upon recommendation of the Governance Committee of the Board of Directors of Health Net, Inc. (the &#147;Company&#148;), the Board of Directors of the
Company (the &#147;Board&#148;) has approved the following compensation arrangements with each non-employee director of the Board in respect of his/her service on the Board: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P>
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<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">an annual retainer of $45,000 per year for each non-employee director; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">an annual retainer of $10,000 per year for the Chair of each of the Compensation Committee, Governance Committee and Finance Committee; </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">an annual retainer of $15,000 for the Chair of the Audit Committee; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">meeting fee of $2,000 for each meeting of the Board of Directors attended, and a $1,000 fee for each committee meeting attended, other than the Audit Committee, which meeting fee is
$2,000 for each audit committee meeting attended; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">in lieu of the above listed retainer and meeting fees, the Chairman of the Board receives $16,667 per month for his services;</FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP>1</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"> and </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">&#149;</FONT></TD>
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<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">reimbursement of customary expenses for attending Board, committee and shareholder meetings. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">In addition, the non-employee directors of the Company are eligible to participate in the Company&#146;s Third Amended and
Restated Non-Employee Director Stock Option Plan (the &#147;Director Plan&#148;) and the Company&#146;s 1998 Stock Option Plan (the &#147;1998 Plan&#148;). Under the Director Plan, 500,000 shares of Common Stock are reserved for initial grants of
nonqualified stock options to directors when they join the Company&#146;s Board and automatic annual grants of nonqualified stock options on each year such director is re-elected to the Company&#146;s Board. Each non-employee director grant entitles
the optionee to purchase the granted number of shares of Common Stock (which number is determined pursuant to grant formula provisions in the Director Plan) at an exercise price equal to the fair market value of Common Stock on the date of such
grant. Each grant vests as to 33<FONT SIZE="1"><SUP>&nbsp;1</SUP></FONT><FONT SIZE="2">/</FONT><FONT SIZE="1">3</FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">% of the shares each year on the anniversary of the date of the grant,
provided that the options become immediately exercisable in the event of a &#147;change in control&#148; of the Company, as defined in the Director Plan and 1998 Plan, as applicable. </FONT></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Furthermore, the Company maintains a deferred compensation plan pursuant to
which non-employee directors are eligible to defer up to 100% of their compensation. The compensation deferred under such plan is credited with earnings or losses measured by the rate of return on investments elected by plan participants. Each plan
participant is fully vested in all deferred compensation and earnings credited to his or her account. </FONT></P><HR WIDTH="8%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left">
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>1</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">The Chairman of the Board is currently serving as Chairman of the Governance Committee. The Chairman of the Board receives $16,667 per month for his services in lieu
of any retainer or meeting fees. There has been no increase in the compensation paid to the Chairman of the Board for his services to the Company. The Company had previously reported that the Chairman of the Board receives $15,833 per month for his
services. The correct amount, as reported herein, is $16,667 per month. </FONT></TD></TR></TABLE>
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