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EXHIBIT 10.02
WELLPOINT HEALTH NETWORKS INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
PURPOSE
The purpose of the WellPoint Health Networks Inc. Supplemental Executive
Retirement Plan is to provide additional retirement benefits to selected
executives of WellPoint Health Networks Inc and its affiliates and to provide
additional incentives for them to remain in employment with WellPoint and its
affiliates. The Plan is adopted effective June 1, 2000.
This Plan is intended to be a plan that is unfunded and that is maintained
by WellPoint Health Networks Inc. primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees within the meaning of the Employee Retirement Income Security Act of
1974 ("ERISA").
ARTICLE II
DEFINITIONS
In this Plan, the following terms have the meanings indicated below:
2.1 "COMMITTEE" means the Compensation Committee of the Board of Directors
of the Company, as constituted from time to time. The Committee has full
discretionary authority to administer and interpret the Plan, to determine
eligibility for Plan benefits, to select employees for Plan participation, and
to correct errors. The Committee may delegate its duties and responsibilities
and, unless the Committee expressly provides to the contrary, any such
delegation will carry with it the Committee's full discretionary authority to
accomplish the delegation. Decisions of the Committee and its delegate will be
final and binding on all persons.
2.2 "COMPANY " means WellPoint Health Networks Inc. and any successor to
substantially all of the assets or business of WellPoint Health Networks Inc.
that, by appropriate action, adopts this Plan.
2.3 "FINAL AVERAGE PAY" means for each Participant the average annual
salary and target annual bonus for the last five (5) Years of Benefit Service
(or the total Years of Benefit Service if fewer than five (5)).
2.4 "OTHER PLAN OFFSET AMOUNT" means the benefit which is payable to a
Participant (or his or her spouse) from (i) the WellPoint Health Networks Inc.
Pension Accumulation Plan, as amended from time to time, (ii) the Supplemental
Pension Benefit portion of the WellPoint Health Networks Inc. Comprehensive
Executive Non-Qualified Retirement Plan, as amended from time to time, (iii) any
other defined benefit pension plan maintained at any time by a WellPoint Company
or an entity that is or was acquired by a WellPoint Company, or which merges or
consolidates with a WellPoint Company, or which acquires a WellPoint Company,
(iv) if determined by the Committee at the time that an individual commences
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participation in the Plan, under a defined benefit pension plan of a predecessor
employer of the Participant or (v) any annuity contract acquired under or upon
termination of such plan. If any such benefit is payable other than in the form
of a single life annuity or at a different time than the benefits payable under
this Plan, the Other Plan Offset attributable thereto will be adjusted using the
applicable actuarial assumptions that would be in effect under the WellPoint
Health Networks Inc. Pension Accumulation Plan with respect to that Participant'
s benefits on the date that benefits under this Plan become payable.
2.5 "PARTICIPANT" means a current or former officer of a WellPoint Company
who has been selected by the Committee for participation in this Plan and has
received written notice of such participation. An individual who becomes a
Participant shall remain a Participant so long as he or she retains an accrued
benefit under the Plan, but further accrual of benefits will be subject to the
terms of the Plan.
2.6 "PLAN" means this WellPoint Health Networks Inc. Supplemental
Executive Retirement Plan, as amended from time to time.
2.7 ""WELLPOINT COMPANY" means the Company and any other entity while that
entity is a parent or a subsidiary of the Company.
2.8 "YEARS OF BENEFIT SERVICE" means the total of a Participant's Years of
Service, provided that (i) when the individual first becomes a Participant, the
Committee may exclude certain Years of Service rendered before he or she becomes
a Participant, (ii) the Committee may include all or a portion of a
Participant's service rendered to an entity before it becomes a WellPoint
Company, and (iii) the Committee may at any time cease future accrual of Years
of Benefit Service for a Participant. A Participant may be credited with
fractional Years of Benefit Service.
2.9 "YEAR OF SERVICE" means each 365 days of service rendered by a
Participant for a WellPoint Company.
2.10 "YEAR OF VESTING SERVICE" means each Year of Service rendered by a
Participant for a WellPoint Company after the later of January 1, 2000 or the
date that the individual commences participation in the Plan.
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ARTICLE III
AMOUNT OF BENEFIT
3.1 RETIREMENT BENEFIT.
(a) NORMAL RETIREMENT. If a Participant terminates employment on or
after attaining age sixty-two (62) and completing five (5) Years of Vesting
Service, the Participant shall be entitled to receive an annual retirement
benefit for life, payable in monthly installments beginning on the first day of
the month on or after such termination that, before reduction for the Other Plan
Offset Amount, equals (i) his or her Applicable Retirement Percentage multiplied
by (ii) his or her Final Average Pay and (iii) if the Participant has less than
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fifteen (15) Years of Benefit Service, multiplied by a fraction the numerator of
which is the Participant's full Years of Benefit Service and the denominator of
which is fifteen (15). The Applicable Retirement Percentage for each Participant
shall be either fifty (50%) or sixty (60%) as designated by the Committee at the
time that the Participant is selected for participation in the Plan; provided
that the Committee may, in its sole discretion after participation commences,
either change the Applicable Percentage applicable to future Years of Benefit
Service from 50% to 60% or vice versa or increase the percentage from 50% to 60%
applicable to all Years of Benefit Service.
(b) EARLY RETIREMENT. If a Participant terminates employment before
attaining age sixty-two (62), but after completing five (5) full Years of
Vesting Service, the Participant may elect to receive benefits on the first day
of any month beginning on or after later of the date of termination or
attainment of age fifty-five (55), but not later than the first day of the month
on or after attainment of age sixty-two (62). The annual retirement benefit
(before reduction for the Other Plan Offset Amount) shall be the benefit
computed in accordance with subsection (a), based on the number of Years of
Benefit Service the Participant has actually completed as of commencement of
retirement benefits, reduced by 6.75% for each year (or .5625% for each full
calendar month) that benefits commence before the first day of the month on or
after the Participant would attain age sixty-two (62).
(c) OTHER PLAN OFFSET AMOUNT. The amount of the single life annuity
payable to a Participant pursuant to subparagraph (a) or (b) above shall be
further reduced by the Other Plan Offset Amount.
3.2 OTHER TERMINATIONS. Except as provided in Section 3.3 below, if a
Participant terminates employment with all WellPoint Companies before completing
five (5) full Years of Vesting Service, no benefits shall be payable under the
Plan to or on behalf of such Participant.
3.3 CERTAIN TERMINATIONS. If a Participant's employment is terminated
under circumstances that would make such Participant eligible for benefits under
the WellPoint Health Networks Inc. Change-in-Control Plan, as in effect on the
date of adoption of this Plan, then such Participant shall be deemed to have
five (5) full Years of Vesting Service at the time of such termination for
purposes of Sections 3.1 and 3.2.
ARTICLE IV
DISTRIBUTIONS
4.1 DISTRIBUTION OF BENEFITS. A Participant must elect the manner in which
his or her benefits will be paid out by following the procedures described below
and by satisfying such additional requirements as the Committee may reasonably
determine.
(a) ELECTIONS. When a Participant first confirms his initial
participation in the Plan, the Participant must elect, in writing, which of the
distribution options described below will govern payment of the Participant's
benefits.
(b) TIMING. A Participant's benefits will be distributed, based on
the Participant's election under (a) above, beginning with the first day of the
month beginning after
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the later of the Participant's termination of employment with all WellPoint
Companies or attainment of age fifty-five (55) or, if later, the date, if any,
specified by the Participant in his election. Any date specified by the
Participant must be at least twelve (12) full calendar months from the date of
the election and in no event later than the date on which the Participant would
attain age sixty-two (62).
(c) FORM. A Participant's benefits will be distributed, based on the
Participant's election under (a) above, in one of the following forms: (i) a
single life annuity payable to the Participant during his or her lifetime and
ending with the date of the Participant's death; or (ii) a joint and survivor
annuity payable to the Participant during his or her lifetime and ending with
the date of the Participant's death, with provision for the continuance of
retirement benefits to the spouse to whom the Participant is married on the date
that benefit distributions begin under this Plan during the lifetime of such
spouse in an amount equal to fifty percent (50%) or one hundred percent (100%)
of the monthly benefit paid to the Participant prior to the Participant's death.
If the Participant elects a joint and survivor annuity, the amount payable
during the Participant's lifetime and the amount on which the continuing
survivor benefit will be based will be determined using the actuarial
assumptions that would be in effect for the Participant under the WellPoint
Health Networks Inc. Pension Accumulation Plan on the date that benefits under
this Plan become payable.
(d) SUBSEQUENT ELECTIONS. Subject to approval by the Committee and to
the requirements of Sections 4.1(b) and 4.1(c) above, a Participant may change a
distribution election as to timing or form by submitting the change to the
Committee in writing. A subsequent election will be valid only if the
distribution commences more than twelve (12) months after the date of such
subsequent election and if the prior specified distribution date would have
commenced more than twelve (12) months after the date of the election change.
(e) DEFAULT. If the Committee does not have a proper distribution
election on file for a Participant, the Participant's benefits will begin in the
form of a single life annuity on the first day of the month beginning after the
later of the Participant's termination of employment with all WellPoint
Companies or the Participant's attainment of age fifty-five (55).
4.2 WITHHOLDING. The Company will deduct from Plan payouts, or from other
compensation payable to a Participant or his or her spouse, amounts required by
law to be withheld for taxes with respect to benefits under this Plan.
ARTICLE V
PRE-RETIREMENT Death Benefit
If a Participant who has completed at least five (5) full Years of Vesting
Service dies before commencement of retirement benefits under the Plan, the
spouse (if any) to whom the Participant is married on the date of his or her
death shall be entitled to receive an annual survivor benefit payable in monthly
installments beginning on the first day of the month beginning after the later
of the date of the Participant's death or the date the Participant would have
attained age fifty-five (55) and ending with the date of the surviving spouse's
death. The annual survivor benefit will be equal to the survivor benefit that
the spouse would have received
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had the Participant commenced receipt of benefits on the date that such survivor
benefits begin in the form of a fifty percent (50%) joint and survivor annuity.
ARTICLE VI
NON-COMPETITION REQUIREMENT
Notwithstanding any other provision of the Plan, if a Participant at any
time without the prior written approval of the Committee, engages, directly or
indirectly (including, but not limited to, as a director, principal, partner,
venturer, employee, consultant or agent), or has any direct or indirect
interest, in any business competitive with that being carried on by a WellPoint
Company or affiliate at the time of the Participant's termination of employment
in any area of the world where any WellPoint Company or an affiliate carries on
such business, no further benefit payments shall be made under the Plan to the
Participant or his or her spouse after the Participant first so engages in, or
acquires an interest, in such business. Included within the meaning of an
indirect interest for purposes of this Article VI is, by way of example only, an
interest in a trust, corporation, venture or partnership which, in turn, owns an
interest in any such business, or an interest in any such business through a
nominee, agent, option or other device. However, nothing in this Article VI will
prevent a Participant from serving on boards of companies for which he serves as
a director on the date that he or she becomes a Participant, or from owning an
interest in a mutual fund or an interest of no more than one percent (1%) of the
outstanding equity interest of a corporation whose stock is listed on a national
stock market. If any of the provisions of this Article VI would contravene or be
invalid under any applicable law, such contravention or invalidity shall not
invalidate all of the provisions of this Article VI, but rather this Article VI
shall be construed insofar as such law is concerned as not containing the
particular provision or provisions held to be invalid in said state and the
rights and obligations shall be construed and enforced accordingly.
ARTICLE VII
MISCELLANEOUS
7.1 LIMITATION OF RIGHTS. Participation in this Plan does not give any
individual the right to be retained in the service of any entity. Subject to the
terms of any written employment agreement executed by both parties thereto, both
the WellPoint Companies and each Participant reserve the right to terminate the
Participant's employment at any time for any or no reason and with or without
advance notice.
7.2 CLAIMS PROCEDURE. If a Participant or his or her spouse ("Claimant")
believes that he or she is entitled to a greater benefit under the Plan, the
Claimant may submit a signed, written application to the Committee. The Claimant
will generally be notified of the approval or denial of this application within
90 days of the date that the Committee receives the application. If the claim is
denied, the notification will state specific reasons for the denial and the
Claimant will have 60 days to file a signed, written request for a review of the
denial with the Committee. This request will include the reasons for requesting
a review, facts supporting the request and any other relevant comments. The
Committee, operating pursuant to its discretionary authority to administer and
interpret the Plan and to determine eligibility for
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benefits under the terms of the Plan, will generally make a final, written
determination of the Claimant's eligibility for benefits within 60 days of
receipt of the request for review.
After satisfaction of the claims procedures described above, any remaining
dispute shall be subject to arbitration.
7.3 ASSIGNMENT. To the fullest extent permitted by law, benefits under the
Plan and rights thereto are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant or his spouse.
7.4 INABILITY TO LOCATE RECIPIENT. If a benefit under the Plan remains
unpaid for two years from the date it becomes payable, solely by reason of the
inability of the Committee to locate a Participant or his or her spouse entitled
to the payment, the benefit shall be treated as forfeited. Any amount forfeited
in this manner shall be restored without interest upon presentation of an
authenticated written claim by the person entitled to the benefit.
7.5 AMENDMENT AND TERMINATION. The Company may amend or terminate the Plan
at any time, provided that no amendment or termination may adversely affect a
Participant's rights under the Plan with respect to benefits already accrued
based on Years of Benefit Service rendered before, and Final Average Pay
determined as of, the date of such amendment or termination, without the
Participant's written consent. Notwithstanding the above, upon termination of
the Plan, the Company may satisfy its obligations to each Participant hereunder
by making a current single sum cash payment equal to the present value of the
Participant's then accrued benefit, based on reasonable actuarial assumptions
adopted by the Committee. In addition, the Company may amend the Plan to
restrict a Participant's right to change his or her election with respect to the
timing and form of benefit, if and to the extent that the Company deems
necessary to avoid the constructive receipt of benefits by Participants for tax
purposes before actual distribution of benefits. Any amendment to the Plan must
be made in writing; no oral amendment will be effective.
7.6 APPLICABLE LAW. To the extent not governed by Federal law, the laws of
the State of California govern the Plan. If any provision of the Plan is held to
be invalid or unenforceable, the remaining provisions of the Plan will continue
to be fully effective.
7.7 NO FUNDING. The Plan constitutes a mere promise by the Company to make
payments in the future in accordance with the terms of the Plan. A Participant
and his or her surviving spouse shall have the status of general unsecured
creditors of the Company. Except to the extent provided below in Section 7.8,
Plan benefits will be paid from the general assets of the Company and nothing in
the Plan will be construed to give a Participant or any other person rights to
any specific assets of the WellPoint Companies. In all events, it is the
intention of the WellPoint Companies that the Plan be treated as unfunded for
tax purposes and for purposes of Title I of ERISA.
7.8 TRUST. Except to the extent the Committee determines otherwise before
a benefit is credited under the Plan, Plan benefits will be paid from the assets
of a grantor trust (the "Trust") established by the Company to assist it in
meeting its obligations and, to the extent that
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such assets are not sufficient, by the Company. The Trust shall conform to the
terms of the Internal Revenue Service Model Trust as described in Internal
Revenue Service Procedure 92-64.
7.9 PLAN YEAR. The Plan Year of the Plan shall be the calendar year.
7.10 PREDECESSOR EMPLOYER BENEFITS. Each Participant shall identify the
amount and provide the Committee or its delegate with written materials from any
predecessor employer showing the calculation of benefits payable to the
Participant under the predecessor's defined benefit pension plan, if benefits
from such plan are to be included in the Other Plan Offset Amount.
IN WITNESS WHEREOF, WellPoint Health Networks Inc. has caused this Plan to
be executed by its duly authorized representative on the date indicated below.
WELLPOINT HEALTH NETWORKS INC.
By: /s/ JULIE A. HILL July 6, 2000
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Date
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