UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
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☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended December 31, 2024
or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to |
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Commission file number 0-33169
Cross Country Healthcare, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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13-4066229
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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6551 Park of Commerce Boulevard, N.W.
Boca Raton, Florida 33487
(Address of principal executive offices, zip code)
Registrant’s telephone number, including area code: (561)
998-2232
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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CCRN
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The Nasdaq Stock Market LLC
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Securities registered pursuant to Section 12(g) of the act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
No ☑
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: Large accelerated
filer ☐ Accelerated filer ☑ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☑
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☑
Indicate by check mark whether the Registrant is a shell company (as defined by Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting stock held by non-affiliates of the Registrant, based on the closing price of Common Stock on June 28, 2024 of $13.84 as reported on the Nasdaq Global Select Market, was $428,130,754. This calculation does not reflect a determination that persons are affiliated for any other purpose.
As of March 31, 2025, 32,785,598
shares of Common Stock, $0.0001 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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Page
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PART III
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1
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Item 10. Directors, Executive Officers, and Corporate Governance
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1
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Item 11. Executive Compensation
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14
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
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49
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Item 13. Certain Relationships and Related Transactions and Director Independence
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51
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Item 14. Principal Accounting Fees and Services
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53
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PART IV
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56
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Item 15. Exhibits, Financial Statement Schedules
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56
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SIGNATURES
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57
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All references to “we,”
“us,” “our,” “the Company, ” or “Cross Country” in this Annual Report on Form 10-K means Cross Country
Healthcare, Inc., and its consolidated subsidiaries.
Cross Country Healthcare, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to amend its Annual Report on Form 10-K for the
fiscal year ended December 31, 2024 (“Fiscal 2024”) filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2025 (the “Original Report”). This Amendment is being filed for the purpose of including the information required by
Items 10 through 14 of Part III of Form 10-K not included in the Original Report.
This information required by Items 10 through 14 of Part III of Form 10-K was previously omitted from the Original Report in reliance on the SEC’s general
instructions to Form 10-K, which permit the information in the above referenced items to be incorporated by reference from a definitive proxy statement if such statement is filed no later than 120 days after a company’s fiscal year-end. The
Company is filing this Amendment to include the Part III information in the Original Report because the Company’s definitive proxy statement containing this information will not be filed before such date.
As such, this Amendment hereby amends and supplements Items 10 through 14 of Part III of the Original Report and amends and updates the Form 10-K cover page
(primarily to update the number of shares of Common Stock outstanding to March 31, 2025). In addition, in accordance with applicable SEC rules, Item 15 of Part IV of the Original Report has been supplemented to include currently dated
certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Except as described above, this Amendment does not amend, update, or change any other items or disclosures in the Original Report and does not purport to reflect any
information or events subsequent to the filing of the Original Report. As such, this Amendment speaks only as of the date the Original Report was filed, and the Company has not undertaken herein to amend, supplement, or update any information
contained in the Original Report to give effect to any subsequent events.ss
Deloitte & Touche LLP (“D&T”) issued opinions on the consolidated financial statements of the Company, and the effectiveness of the Company’s internal
control over financial reporting, within the Original Report. As this Amendment speaks to the date of the Original Report, D&T’s reports speak only as to March 5, 2025. The Company has made no substantive changes to the Original Report other
than those noted above.
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Item 10.
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Directors, Executive Officers, and Corporate Governance
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors (the “Board”) of the Company currently consists of seven directors. The Board previously consisted of eight directors; however, following the
passing of Mark Perlberg on March 11, 2025, the Board reduced the size of the Board from eight directors to seven directors. Biographical information regarding each of the directors currently serving on the Board is set forth below.
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Formerly:
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President, Chief Executive Officer and Director, Cross Country
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Healthcare, Inc. (2019–March 2022)
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Chair and Chief Executive Officer, Talivity, Inc. (2015–2018)
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Chair and Chief Executive Officer, OGH, LLC (2002–2015)
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Chair and Chief Executive Officer, Pinnacor Inc. (1999–2001)
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Chair and Chief Executive Officer, Poppe Tyson, Inc. (1996–1998)
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Chair and Chief Executive Officer, Cross Country, Inc. (1986–1994)
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Education:
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KEVIN C. CLARK, 64
Co-Founder and Chairman of the Board of Directors, Cross Country Healthcare
Director since 2019
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BBA, Florida Atlantic University
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Director-relevant skills, experiences, and attributes:
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Extensive experience building and leading health staffing, technology, and workforce solutions companies
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Institutional knowledge of Cross Country
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Governance experience based on prior and current board service
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Formerly:
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Global Digital Strategist, Microsoft Corp. (2019–2021)
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Vice President & Chief Information Officer, Masonite International (2017–2019)
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Chief Information Officer, Components, Cummins, Inc. (2011–2017)
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Executive Director, Global Applications Development & Support, Cummins, Inc. (2009-2011)
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Vice President, Information Technology, Fifth Third Bank (2003–2009)
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Various positions, including Vice President and Division Chief Information Officer, Corporate Services Technology, Wells Fargo & Company, Inc. (2001–2003)
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IT Director, Strategy & Planning, Marriott International (1996–1998)
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Education:
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DWAYNE ALLEN, 63
Chief Technology Officer, Unisys Corporation (2021-Present)
Director since 2023
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MBA, George Washington University
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BA, University of Virginia
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Director-relevant skills, experiences, and attributes:
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Over 25 years of leadership experience creating IT platforms and advancing digital strategy across industries
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Track record of promoting digital innovation to enhance businesses
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Experience leveraging advanced analytics and big data to
reduce friction and increase efficiencies
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Formerly:
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Investor and Strategic Advisor, Technology and Healthcare Companies (2022)
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Executive Vice President, Chief Financial Officer, McAfee Corp. (2020–2022)
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Executive Vice President, Chief Financial Officer, Providence St. Joseph Health (2017–2020)
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Managing Director, Business Development & Mergers & Acquisitions, Microsoft Corp. (2016–2017)
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Chief Financial Officer, Worldwide Enterprise Group, Microsoft Corp. (2011-2016)
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Chief Financial Officer, Operations & Technology, Microsoft Corp. (2004–2011)
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Various positions, including Senior Finance Director, Exodus Communications (1999–2004)
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VENKAT BHAMIDIPATI, 58
Retired Executive Vice President and Chief Financial Officer, McAfee Corp.
Director since 2022
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Various positions, including Controller, Sales, Hitachi Data Systems (1993–1999)
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Manager, Assurance, PricewaterhouseCoopers (1988-1990)
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Education:
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MBA, Kelly School of Business at Indiana University
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MA, Osmania University
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Director-relevant skills, experiences, and attributes:
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Led a comprehensive digital transformation process at Providence
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Instrumental in leading Microsoft’s cloud transition
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Deep background in finance, digital strategy, corporate development, operations, and supply chain management
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Seasoned investor and strategic advisor in technology and healthcare companies
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Formerly:
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Director, AAC Holdings, Inc. (OTC: AACH) (2017–2019)
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Various positions, including President of Financial Services, Chief Financial Officer and Director, Community Health Systems, Inc. (1997–2017)
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Vice President and Group Chief Financial Officer of Columbia/HCA Healthcare Corporation (1996–1997)
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Various positions, including Senior Vice President of Finance and Operations, Humana, Inc. (1973–1996)
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Education and awards:
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BS, University of Kentucky at Lexington
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Recognized as one of the top three CFOs in the healthcare sector by Institutional Investor magazine for eleven consecutive years during his tenure at Community Health Systems
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Director-relevant skills, experiences, and attributes:
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W. LARRY CASH, 76
Lead Independent Director
Retired President, Financial Services and Chief Financial Officer, Community Health Systems
Director since 2001
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Experienced financial and operations executive with a keen understanding of healthcare industry dynamics
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Long track record in the acute and managed care sectors
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Oversaw revenue growth from $700 million to over $18 billion at Community Health Systems
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Governance experience with prior service on the board of AAC Holdings, Inc.
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Formerly:
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Founder and Principal, TranSpend, Inc. (2003–2022)
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Director, Diebold Nixdorf, Inc. (NYSE: DBD) (1999–2019)
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President, QP Group, Inc. (1994–2000)
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Various positions, including Chair and Chief Executive Officer, Computer Task Group, Inc. (1991–2000)
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Various technical, marketing, and management positions, including Vice President, Professional Services, IBM, (1973–1991)
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Education:
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MA, Augustine Institute
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BA, Connecticut College
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Director-relevant skills, experiences, and attributes:
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GALE FITZGERALD, 74
Retired Principal of TranSpend, Inc.
Director since 2007
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Led a publicly traded, multinational IT staffing company for nearly a decade
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Co-founded a strategic consulting firm focused on business process improvements and supply chain optimization
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Deep understanding of corporate strategic planning and risk mitigation
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Governance experience from prior service on the board of Diebold Nixdorf, Inc.
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Formerly:
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Group President, Delivery, Cross Country Healthcare, Inc. (May 2021–April 2022)
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Group President, Nurse and Allied, Cross Country Healthcare, Inc. (February 2021–May 2021)
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Senior Vice President of Operations Strategy, Aya Healthcare, Inc. (2017–2020)
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Senior Vice President, General Manager, AMN Healthcare Services, Inc. (2015–2017)
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Various positions, including President, Onward Healthcare (2008–2015)
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Vice President, Access Nurses (2005–2008)
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Financial Advisor, Morgan Stanley (2004–2005)
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Various positions, including Vice President of Operations, The Et Al Group (1996–2004)
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Developer, UPS (1994–1996)
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Education:
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BA, William Peterson University
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Director-relevant skills, experiences, and attributes:
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JOHN A. MARTINS, 56
President and Chief Executive Officer, Cross Country Healthcare (April 2022–Present)
Director since 2022
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Keen understanding of developing and deploying digital innovation and technology in the healthcare staffing industry
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Extensive knowledge of travel nurse and allied, per diem, locum tenens, and education staffing services
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Institutional knowledge of Cross Country Healthcare
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Formerly:
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Various positions, including Chief Medical Officer and Chief Patient Safety Officer, ChristianaCare Health System (2002 – 2014)
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Director, Sidney Kimmel Medical College (1995 – 2002)
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Education and awards:
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MD, Sidney Kimmel Medical College at Thomas Jefferson University
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MPH, University of Pittsburgh
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BA, Harvard University
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Inducted into Delaware Women’s Hall of Fame in 2017
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Recognized among 100 Great Healthcare Leaders to Know by Becker’s Hospital Review in 2017
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Named the 2016 Woman of Distinction by the Girl Scouts of the Chesapeake Bay
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Director-relevant skills, experiences, and attributes:
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JANICE E. NEVIN, M.D., MPH, 64
President and CEO, ChristianaCare Health System (2014–Present)
Director since 2020
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Experience leading the operations of a large healthcare system with first-hand knowledge of healthcare staffing
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Nationally recognized as a pioneer and thought leader in value-based care and population health; selected by Modern Healthcare as one of its 50 Most Influential Clinical Executives in 2020, 2021, and 2022
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Developed the unique data-driven care coordination platform CareVio™ to proactively address patients’ social and behavioral health needs in addition to
their medical needs, a program which earned the 2017 John M. Eisenberg Patient Safety and Quality Award
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In addition to the Company’s President and Chief Executive Officer, John A. Martins, whose biographical information is included above under “Board of Directors,” the
Company’s current executive officers include:
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Name
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Age
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Position
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Susan E. Ball, JD, MBA, RN
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61
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EVP, Chief Administrative Officer, General Counsel and Secretary
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William J. Burns, MBA, CPA
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55
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EVP, Chief Financial Officer
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Cynthia A. Grieco
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50
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Vice President, Corporate Treasurer
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Marc Krug, JD, MBA
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57
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Group President
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Colin P. McDonald, MS
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57
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Chief Human Resources Officer
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Karen Mote
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60
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President, Cross Country Locums
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Phillip Noe
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54
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Chief Information Officer
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James V. Redd III, MBA, CPA
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55
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Chief Accounting Officer
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Formerly:
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Corporate Counsel, Cross Country Healthcare, Inc. (2002-2004)
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Attorney at Gunster, Yoakley & Stewart, P.A. (1998-2002)
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Attorney at Skadden, Arps, Slate, Meagher and Flom LLP (NY) (1996-1998)
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Registered nurse
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Education:
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MBA, Florida Atlantic University
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JD, New York Law School
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BS, The Ohio State University
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SUSAN E. BALL, 61
Executive Vice President, Chief Administrative Officer, General Counsel and Secretary
Joined Company in 2002
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Formerly:
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Chief Operating Officer, Cross Country Healthcare, Inc. (2018-2019)
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Chief Financial Officer, Cross Country Healthcare, Inc. (2014-2018)
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Group Vice President and Corporate Controller, Gartner, Inc. (2008-2014)
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Chief Accounting Officer, CA Technologies, Inc. (2006-2008)
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Various accounting and finance roles, Time Warner, Coty, Inc., Honeywell, and Adecco North America (1995-2006)
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Auditor and Senior Auditor, Deloitte & Touche, LLC (1992-1995)
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Education:
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MBA, New York University Stern School of Business
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BA, Queens College
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Certified Public Accountant
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WILLIAM J. BURNS, 55
Executive Vice President, Chief Financial Officer
Joined Company in 2014
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Formerly: |
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Vice President, Treasury Operations, Cross Country Healthcare, Inc. (2018-2022)
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Senior Director, Assistant Treasurer, Cross Country Healthcare, Inc. (2017-2018)
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Director, Treasury Operations, Cross Country Healthcare, Inc. (2016-2017)
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Various treasury positions, JM Family Enterprises (2001-2015)
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BBA, Florida Atlantic University
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CYNTHIA A. GRIECO, 50
Vice President, Corporate Treasurer
Joined Company in 2016
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Formerly
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Division President, Travel, Cross Country Healthcare, Inc. (2021-2022)
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Division President Travel and Local, Cross Country Healthcare, Inc. (2021)
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Senior Vice President, Travel Nurse and Allied Delivery, Cross Country Healthcare, Inc. (2020-2021)
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Senior Vice President, Travel Allied, Cross Country Healthcare, Inc. (2018-2020)
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Vice President, Allied, Cross Country Healthcare, Inc. (2017-2018)
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President, Jackson Therapy Partners (January 2016-November 2016)
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Executive Vice President, Noor Staffing Group (2011-2015)
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Attorney in Massachusetts
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Education:
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MBA, Boston College Carroll School of Management
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JD, New England School of Law
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BA, University of Massachusetts
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MARC KRUG, 57
Group President
Joined Company in 2017
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Formerly:
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Senior Vice President, Human Resources, Cross Country Healthcare, Inc. (2020 - 2022)
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Vice President, Human Resources & Labor Relations, Cross Country Healthcare, Inc. (2014 - 2020)
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Various human resources roles at Carnival Cruise Lines, RandCol Staffing and Citrix
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Education:
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MS, Mercy College
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BA, State University of New York at New Paltz
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COLIN MCDONALD, 57
Chief Human Resources Officer
Joined Company in 2014
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Formerly:
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Vice President, Cross Country Advanced Practice (2015-2019)
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Director, Cross Country Advanced Practice (2009-2014)
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Director, Medical Doctor Associates (2008-2009)
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Manager, Medical Doctor Associates (2001-2008)
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Staffing Consultant, Medical Doctor Associates (1998-2001)
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Education:
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Clinical Laboratory Degree, North Georgia Technical College
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KAREN MOTE, 60
President, Cross Country Locums
Joined Company in 2002
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Formerly:
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Chief Information Officer, Vaco, LLC (2018-2021)
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Chief Information Officer, Adecco Group, NA (2013-2018)
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Education:
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Master of Health Administration and Master of Information Management, Washington University
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BS, University of Florida
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PHIL NOE, 54
Chief Information Officer
Joined Company in 2021
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Formerly:
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Senior Vice President, Corporate Controller, Cross Country Healthcare, Inc. (2021-2022)
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Vice President, Assistant Corporate Controller, Cross Country Healthcare, Inc. (2017-2021)
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Assistant Controller, Vision Group Holdings (2016-2017)
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Accounting, SOX Compliance and SEC Reporting, Tyco and ADT (2011 - 2016)
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Deloitte and Touche, Audit and Assurance (2005-2011)
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Education:
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MBA, Florida Atlantic University
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Bachelor of Science, Randolph Macon College
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Certified Public Accountant
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JAMES V. REDD III, 55
Chief Accounting Officer
Joined Company in 2017
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There are no immediate family relationships between any of our directors or executive officers and any other directors or executive officers.
CORPORATE GOVERNANCE
Our core governance frameworks and provisions are contained in our Governance Guidelines, Code of Conduct, and Business Ethics Policy. These can be found on our
website at
https://ir.crosscountryhealthcare.com/corporate-governance or provided in print, at no charge, upon request to our Corporate Secretary at 6551 Park of Commerce Boulevard, N.W., Boca Raton, Florida 33487. We will disclose any changes in, or waivers from, our Code of
Conduct and Business Ethics Policy by posting such information on the same website or by filing a Current Report on Form 8-K, in each case if such disclosure is required by the rules of the SEC or the Nasdaq Stock Market (“Nasdaq”).
There have been no changes to the procedures by which stockholders may recommend director nominees to our Board since our last disclosure of such procedures, which
appeared in the Definitive Proxy Statement on Schedule 14A for our 2024 Annual Meeting of Stockholders, which was filed with the SEC on April 1, 2024.
Delinquent Section 16(a) Reports
To our knowledge, based solely on our review of the Section 16(a) forms filed electronically with the SEC during Fiscal 2024 and written representations that no
other forms were required, with the exception of two inadvertently late Form 4 filings, reporting one transaction for each of August 28, 2017 and August 10, 2018, all reporting persons timely complied with the filing requirements of Section 16(a)
of the Exchange Act.
Our Board has three standing committees: the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee. Each committee operates
pursuant to a committee charter. The charters of the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee are on our website at https://ir.crosscountryhealthcare.com/corporate-governance.
The following chart provides a summary of the committees’ duties, responsibilities, and composition:
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Committee
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Responsibilities and Duties
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Members
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Meetings in 2024
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Audit Committee
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•
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The Audit Committee is the principal agent of the Board in overseeing (i) the quality and integrity of our financial statements, (ii) legal and regulatory compliance, (iii) the independence, qualifications, and performance of our
independent registered public accounting firm, (iv) the performance of our internal auditors, (v) the integrity of management and the quality and adequacy of disclosures to stockholders, (vi) the Company’s systems and disclosure
controls and procedures, (vii) risk management related to cybersecurity risks, and (viii) risk management related to environmental and climate risks.
|
|
|
Bhamidipati †*♦ (1)
Allen♦
Cash*♦
Nevin♦
|
12
|
| • |
The Audit Committee is responsible for hiring and terminating our independent registered public accounting firm and approving all auditing services, as well
as any audit-related and any other non-auditing services, to be performed by the independent registered public accounting firm. |
|
Committee
|
|
|
Responsibilities and Duties
|
|
|
Members
|
Meetings in 2024
|
| |
|
•
|
In carrying out its duties and responsibilities, the Audit Committee shall have the authority to engage outside legal, compliance, accounting, and other advisers and seek any information it requires from employees, officers, and
directors.
|
|
|
|
|
|
•
|
The Audit Committee may form and delegate authority to subcommittees consisting of one or more of its members, as the Audit Committee deems appropriate to carry out its responsibilities and exercise its powers, subject to such
reporting to, or ratification by, the Audit Committee, as the Audit Committee shall direct.
|
| |
|
|
|
|
|
|
|
|
Compensation
Committee
|
|
• |
The role of the Compensation Committee includes (i) reviewing and approving corporate goals and objectives relevant to Chief Executive Officer (“CEO”) compensation; (ii) evaluating the CEO’s performance in light of the approved goals
and objectives, and determining and approving the CEO’s compensation level based on this evaluation; (iii) making recommendations to the Board with respect to compensation, incentive compensation plans and equity-based plans for all
executive officers of the Company, and developing guidelines and reviewing compensation and overall performance of all executive officers of the Company; (iv) producing a Compensation Committee report on executive compensation, as
required by the SEC, to be included in the Company’s annual Proxy Statement or Annual Report on Form 10-K filed with the SEC; (v) evaluating on an annual basis the performance of the Compensation Committee in accordance with applicable
rules and regulations; (vi) annually reviewing and making recommendations to the Board regarding non-employee director compensation; (vii) overseeing the Company’s policies and procedures relating to human capital management and
retention risks; and (viii) overseeing the Company’s inclusion programs.
|
|
|
Cash(2)
Fitzgerald
|
4
|
| • |
Under icharter, the Compensation Committee has the authority and may, in its sole discretion, obtain advice and seek assistance from internal and external legal, accounting, and other consultants. The Compensation Committee has the
sole authority to select or receive advice from, and terminate, a compensation consultant or other advisor to the Compensation Committee (other than in-house legal counsel) to assist in the evaluation of the compensation of our CEO,
other executive officers, and directors, including sole authority to approve such firm’s fees and other retention terms, and we provide appropriate funding as determined by the Compensation Committee. In selecting advisers, the
Compensation Committee will take into consideration certain independence factors.
|
|
Committee
|
|
|
Responsibilities and Duties
|
|
|
Members
|
Meetings in 2024
|
|
|
• |
The Compensation Committee may establish one or more subcommittees consisting of one or more members of the Board to focus on specific aspects
of its duties and responsibilities and may delegate any of its responsibilities to any such subcommittee if it so chooses, provided that the subcommittee decisions are presented to the full Compensation Committee for ratification at its
next scheduled meeting. |
|
|
|
|
|
Governance and Nominating
Committee
|
|
•
|
The role of the Governance and Nominating Committee is to: (i) develop and recommend to the Board a set of corporate governance principles and review them at least annually;(ii) determine the qualifications for Board membership and
recommend nominees to the stockholders; (iii) ensure a robust and effective performance evaluation process is in place for the Board, the CEO, and senior management, as well as an effective succession planning process for these
positions; (iv) oversee the Company’s policies and procedures relating to governance, as well as risks relating to such policies and procedures; and (v) oversee the Board’s structure and organization.
|
|
|
Fitzgerald†(2)
Nevin
|
4
|
| • |
The Governance and Nominating Committee has the sole authority to retain and terminate external advisors to the extent additional expertise is deemed necessary in fulfilling the Governance and
Nominating Committee’s fiduciary responsibilities. |
| • |
The Governance and Nominating Committee may form and delegate authority to subcommittees consisting of one or more of its members, other Board members, and officers of the Company, as the Governance and Nominating Committee deems
appropriate and as permitted under applicable rules and regulations, in order to carry out its responsibilities.
|
|
*
|
Audit Committee Financial Expert, as defined in the applicable SEC regulations
|
|
♦
|
Possesses requisite financial sophistication required by Nasdaq Rule 5605(c)(2)(A)
|
|
(1)
|
Mr. Bhamidipati was appointed as Chairman of the Audit Committee in January 2024.
|
|
(2)
|
Until his passing on March 11, 2025, Mark Perlberg served as the Chairman of the Compensation Committee and as a member of the Governance and Nominating Committee
|
|
Item 11.
|
Executive Compensation
|
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis is designed to provide our stockholders with a clear understanding of our compensation philosophy and objectives,
compensation-setting process, and the compensation paid to our named executive officers (“NEOs”) in Fiscal 2024.
Our NEOs for Fiscal 2024 are:
|
Name
|
Position
|
|
John A. Martins
|
President and Chief Executive Officer
|
|
William J. Burns, MBA, CPA
|
EVP, Chief Financial Officer
|
|
Susan E. Ball, JD, MBA, RN
|
EVP, Chief Administrative Officer, General Counsel and Secretary
|
|
Marc Krug, JD, MBA
|
Group President
|
|
Phil Noe
|
Chief Information Officer
|
|
Daniel J. White(1)
|
Former Chief Commercial Officer
|
(1) Mr. White’s position was eliminated as part of a reorganization, and he ceased to be employed by the Company effective March 31, 2024.
COMPENSATION PHILOSOPHY AND OBJECTIVES
|
What we do
|
|
What we don’t do
|
|
☑ Majority of compensation is incentive-based and at-
|
X
|
No guaranteed incentive payments
|
|
risk, with a significant portion tied to Company
|
|
|
|
performance
|
|
|
|
☑ Engage independent compensation consultants
|
X
|
No 280G excise tax gross-ups
|
|
☑ Engage in peer group benchmarking to ensure NEO
|
X
|
No supplemental executive pension or
|
|
target pay remains competitive and within
|
|
retirement plans
|
|
reasonable levels
|
|
|
|
☑ Due diligence in setting compensation targets and
|
X
|
No option repricing
|
|
goals to tie incentives to multiple performance
|
|
|
|
metrics over multiple time horizons, with capped
|
|
|
|
award opportunities
|
|
|
|
☑ Periodically assess the compensation programs to
|
X
|
Limited perquisites
|
|
ensure that they are not reasonably likely to
|
|
|
|
incentivize employee behavior that would result in
|
|
|
|
any material adverse risks to the Company
|
|
|
|
☑ Severance payments require double-trigger in the
|
X
|
No pledging and no hedging
|
|
event of change in control
|
|
|
|
☑ Maintain policy allowing for recoupment of equity
|
|
|
|
and cash incentive payments in the event of a
|
|
|
|
qualifying restatement
|
|
|
|
☑ Stock ownership guidelines: Chief Executive
|
|
|
|
Officer (CEO) (3x base salary) and other senior
|
|
|
|
executives (1x base salary), to be accumulated over
|
|
|
|
three years
|
|
|
The philosophy of our executive compensation program is to align pay with performance and key strategic objectives, keep overall compensation competitive, and ensure
that we can recruit, motivate, and retain high quality executive officers. Accordingly, our NEOs’ compensation is heavily weighted toward compensation that is performance-based and/or equity-based. Our NEO compensation design for Fiscal 2024
reflects this commitment, as do incentive award funding outcomes, with short-term incentive payouts well below target for Fiscal 2024 and performance shares below target for the three-year measurement period ending December 31, 2024.
The Compensation Committee structured the Fiscal 2024 executive compensation program with the goal of ensuring that total direct compensation levels were
sufficiently competitive to attract, motivate, and retain high quality executives, that performance-based, “at-risk” incentive compensation was a substantial portion of total compensation opportunities, and that long-term incentive compensation
aligned NEOs’ interests with our stockholders’ interests to create long-term stockholder value. The Compensation Committee structured Fiscal 2024 long-term incentives with the goals of retaining key NEOs and linking a meaningful portion of NEO
total compensation opportunities to longer-term sustainable performance and value creation. In addition, the Compensation Committee also designed equity-based incentive compensation to reinforce the Company’s near-term and longer-term strategic
objectives and to provide NEOs with the opportunity to acquire a stake in our growth and prosperity. The executive compensation program was also structured to incentivize and reward NEOs for making sound business decisions, developing a high
performance team environment, accomplishing strategic and operational objectives, and increasing stockholder value, all of which we believe are essential to improving our financial performance and creating success.
Our NEOs’ compensation for Fiscal 2024 consisted of a base salary, an annual cash incentive (or bonus), and long-term equity awards, 50% of which were time-based
restricted share awards that vest over three years and 50% of which were performance-based share awards that are earned based on the achievement of certain predetermined performance measures. In Fiscal 2024, the performance-based restricted share
awards were based on two performance metrics: (i) three-year cumulative Adjusted EBITDA (a non-GAAP financial measure) (weighted 75%) and (ii) three-year cumulative Adjusted EPS (a non-GAAP financial measure) (weighted 25%). See Annex A of this
Amendment for a reconciliation of non-GAAP financial measures to our results as reported under GAAP.
For Fiscal 2024, 79% of target total direct compensation for our CEO, and an average of approximately 63% of target total direct compensation for our other NEOs, was
performance-based or equity-based. We do not provide defined benefit pension, supplemental retirement benefits, or executive perquisites to our NEOs, as they are not tied to performance.
Our compensation philosophy serves as the basis of the Compensation Committee’s decisions regarding each of the following three components of pay, each of which is
discussed below:
|
• |
short-term (annual) incentive compensation; and
|
|
• |
long-term (equity) compensation.
|
Consideration of Say-on-Pay Vote
As part of its compensation setting process, the Compensation Committee also considers the results of the prior year’s say-on-pay vote, which provides useful
feedback regarding the perceived effectiveness of our executive compensation program and the program’s ability to align pay with performance and stockholder interests. For the thirteenth straight year, our executive compensation program received
substantial stockholder support, with 95.3% of the votes cast in favor of the 2023 compensation of our NEOs at the 2024 Annual Meeting of Stockholders. As our Compensation Committee believes that the results of the vote reflected our
stockholders’ strong support of the compensation decisions made by the Compensation Committee, our Compensation Committee did not approve any significant changes to our NEOs’ 2024 compensation program design as a result of the say-on-pay vote at
the 2024 Annual Meeting of Stockholders.
DETERMINATION OF COMPENSATION
Role of the Compensation Committee
The Compensation Committee is composed solely of independent directors and is responsible for determining the compensation of our CEO and other NEOs. The
Compensation Committee receives assistance from its independent compensation consultant, Pearl Meyer & Partners, LLC (“Pearl Meyer”).
Our NEO compensation program is reviewed throughout the year and typically is approved annually during the first quarter, which coincides with the completion of our
annual financial statement audit and release of annual earnings, as well as the approval of the budget for the then-current year. Award funding levels for any completed short-term and long-term incentive performance cycles are determined by the
Compensation Committee and paid out, to the extent earned, during the first quarter of the following year. Current year target objectives are also established and any adjustments to base salaries are typically determined by the Compensation
Committee during the first quarter.
When making NEO compensation decisions, the Compensation Committee takes many factors into account, including benchmarking, the NEO’s individual performance, the
financial and operational results of individual business units, our financial and operational results as a whole, the NEO’s historical compensation, internal pay equity, and any retention concerns. As part of the process, the CEO provides the
Compensation Committee with the CEO’s assessment of the other NEOs’ performance and other factors used in developing the CEO’s recommendation for the other NEOs’ compensation, including salary adjustments, cash incentives, and equity grant levels
for the then-current year. In looking at historical compensation, the Compensation Committee considers the progression of salary increases over time, each NEO’s actual versus planned performance and corresponding incentives earned, the potential
realizable value of any outstanding equity grants, total overall compensation, and an evaluation of historical performance, overall economic outlook, and our stock performance. The Compensation Committee uses the same general factors in
evaluating the CEO’s performance and compensation as it uses for the other NEOs; provided, however, that the CEO does not participate in the assessment or compensation deliberations and decisions with respect to the CEO.
Upon receipt of the information discussed above, the Compensation Committee discusses proposed compensation decisions for the CEO and other NEOs. Pursuant to our
Governance Guidelines, the Compensation Committee is required to approve annually the compensation goals and objectives for the CEO and other NEOs and evaluate their performance in light of these goals before setting their salaries, bonus, and
other incentive and equity compensation. The Compensation Committee works to ensure that each NEO’s individual objectives are aligned with the business strategy, specific, measurable and set within an established timeframe. The Compensation
Committee believes that maintaining the flexibility to make upward or downward adjustments to the various components of the NEOs’ compensation programs allows the Compensation Committee to appropriately provide incentives to the NEOs and ensures
the alignment of the NEOs’ interests with those of our stockholders.
The CEO provided the Compensation Committee with the CEO’s assessment of the other NEOs’ performance and other factors used in developing the CEO’s recommendation
for the other NEOs’ compensation, including salary adjustments, cash incentives and equity grant guidelines for the other NEOs’ compensation. After considering the CEO’s recommendations, the Compensation Committee made all decisions regarding the
Fiscal 2024 compensation of our NEOs. The CEO did not participate in the assessment of or compensation deliberations and decisions with respect to the CEO.
Role of the Compensation Consultant
Annually, the Compensation Committee evaluates the Company’s executive compensation design, competitiveness, and effectiveness. Pearl Meyer assists the Compensation
Committee with its evaluation by regularly participating in meetings and periodically conducting external market reviews and updates on executive pay trends and regulatory developments. No external market review was conducted in 2023 due to
then-current economic conditions and the Compensation Committee’s decision not to modify NEO pay opportunities for Fiscal 2024. During Fiscal 2024, the Compensation Committee engaged Pearl Meyer to review the compensation components for our NEOs
against our 2024 Peer Group and market data of like-sized companies. Pearl Meyer’s study did not impact Fiscal 2024 pay opportunities for NEOs.
At the beginning of the executive compensation setting process each year, the Compensation Committee, in consultation with Pearl Meyer, determines the process by
which it will work to ensure that the Company’s compensation programs are competitive. For Fiscal 2024, the Compensation Committee, upon the recommendation of Pearl Meyer, determined that it would be appropriate to maintain the group of peer
companies which it had established in 2023. Accordingly, the peer group used in Fiscal 2024 was the same as that used in Fiscal 2023 and is composed of companies from both the healthcare services and staffing and general staffing industry
sectors, and includes the following twelve companies (the “2024 Peer Group”):
| |
Addus HomeCare Corporation
|
|
Kelly Services, Inc.
|
|
Paycom Software, Inc.
|
| |
Amedisys, Inc.
|
|
Kforce, Inc.
|
|
Pediatrix Medical Group, Inc.
|
| |
AMN Healthcare Services, Inc
|
|
Korn/Ferry International
|
|
R1 RCM Inc.
|
| |
Heidrick & Struggles Int’l Inc.
|
|
National Healthcare Corporation
|
|
ZipRecruiter, Inc.
|
The Compensation Committee determined, in consultation with Pearl Meyer, that the 2024 Peer Group reflects companies falling within a generally comparable size range
and that we compete with for business, executive talent, and investor capital.
Factors such as revenue, business mix, profitability, business strategy, compensation philosophy, and incentive plan design vary among the peer companies and such
differing factors affect the compensation that they provide to their executives. While informative to the Compensation Committee, such peer practices are not the only factors that influence the Compensation Committee’s NEO compensation decisions.
The Compensation Committee also makes decisions based on the collective experience and knowledge of its members. Generally, our policy has been to position NEOs’ base salaries and target total direct compensation opportunities at or near the 50th percentile of market values for comparable positions at industry peers. Pearl Meyer’s 2024 analysis found that target total direct compensation (sum of base salary
plus target short-term and long-term incentives) opportunities were below 50th percentile market values for all current NEOs, and below a competitive range (defined
as 85% to 115%) of the 50th percentile for three of the five NEOs excluding Mr. White, who was not included in the study due to his departure on March 31, 2024.
COMPONENTS OF FISCAL 2024 NEO COMPENSATION PROGRAM
The Compensation Committee uses various compensation elements to provide an overall competitive total compensation and benefits package to the NEOs that is designed
to create stockholder value, commensurate with our financial results, and align with our business strategy. The Compensation Committee’s specific rationale, design, reward, process, and related information is outlined below.
We provide the NEOs with a base salary to compensate them for services rendered during the fiscal year. The NEOs’ salaries are determined based on each NEO’s
position, performance, and level of responsibility and are reviewed annually. Peer group and market data from like-sized companies are utilized in the Compensation Committee’s review. Merit increases for NEOs are considered based on periodic
external market studies and annual performance review, and are adjusted only as needed, not necessarily annually. We generally seek to position NEO base salaries within a competitive range, defined as 90% to 110% of median market values for
comparable roles at our industry peers and other companies of like size.
For 2024, the Compensation Committee decided to maintain base salaries at 2023 levels for all NEOs, based on its review of benchmarking information as described
above.
| |
NEO
|
2024 Base Salary ($)
|
|
2023 Base Salary ($)
|
|
% Increase vs Prior Year
|
|
| |
John A. Martins
|
875,000
|
|
875,000
|
|
0%
|
|
| |
William J. Burns
|
550,000
|
|
550,000
|
|
0%
|
|
| |
Susan E. Ball
|
500,000
|
|
500,000
|
|
0%
|
|
| |
Marc Krug
|
450,000
|
|
450,000
|
|
0%
|
|
| |
Phillip L. Noe
|
411,950
|
|
411,950
|
|
0%
|
|
| |
Daniel White
|
450,000
|
|
450,000
|
|
0%
|
|
Annual Cash Incentive Program
The Annual Cash Incentive Program is a core component of our “pay-for-performance” philosophy. The program is heavily weighted on our financial results for the
Company or relevant business units and the goals are closely linked to our business strategy. The components of this program have historically included the incentive award opportunity (expressed as a percentage of base salary) and performance
metrics determined by the Compensation Committee. To ensure the integrity of the performance metrics and minimize the risk of unanticipated outcomes, each performance metric has a minimum, target, and maximum performance range with corresponding
percentages for award payout opportunities. The Compensation Committee may adjust performance measures for certain special, unusual, or non-recurring items at its sole discretion. See 2024 discussion below.
Each annual target cash incentive award opportunity is expressed as a percentage of the NEO’s base salary, which may be earned based on both the achievement of
certain financial objectives (the “Objective Bonus” component, representing 80% of target award opportunities) and individual subjective considerations that are tied primarily to individual objectives (the “Subjective Bonus” component,
representing 20% of target award opportunities). If results fall below pre-established threshold levels, no cash award is payable under the Objective Bonus component, although a Subjective Bonus may still be paid at the discretion of the
Compensation Committee. If results exceed pre-established outstanding goals, the maximum cash award payable under the Objective Bonus component is capped at 200% of the target award opportunity. The Compensation Committee believes that having a
maximum cap disincentivizes excessive risk taking, reduces the likelihood of windfalls, and manages the Annual Cash Incentive Program’s costs. The award opportunity is established for each NEO with the desired emphasis on at-risk, variable pay
(more at-risk, variable pay for senior executives) and internal pay equity (comparably positioned executives should have comparable award opportunities).
The Subjective Bonus opportunity is capped at a maximum amount of 100% of the target award opportunity for that component, subject to the sole discretion of the
Compensation Committee. The Subjective Bonus may include various pre-established quantitative and qualitative goals for each NEO. The use of subjective criteria enables the Compensation Committee to consider a variety of subjective factors
relative to each NEO’s specific responsibilities. This process allows the Compensation Committee to evaluate performance and to recognize individual contributions in light of our changing needs and strategic priorities, and to continue
incentivizing sustainable profitable growth.
Consistent with the prior year, the Compensation Committee determined that the Objective Bonus component performance metrics for Fiscal 2024 would be Company Annual
Revenue and Company Annual Adjusted EBITDA (a non-GAAP measure). Incentive payouts under the Annual Cash Incentive Program, at a reduced threshold level, begin upon achievement of a predetermined percentage of targeted objectives (generally 80%
or higher for Company Annual Adjusted EBITDA and 90% for Company Annual Revenue), which can vary from year to year and from one performance metric to another, based on our internal business plan, current macroeconomic conditions, and market
volatility. For Fiscal 2024, incentive award funding for threshold performance was set at 20% of corresponding target award opportunities. Payouts may exceed 100% (up to 200%) of target award opportunities if performance exceeds 100% of the
target objectives as described above and set forth in the table below. Straight-line interpolation is used to determine award funding for performance results between minimum (or threshold), target, and maximum levels. We believe that an “all or
nothing” approach could provide a disincentive compared to our variable funding approach that is better aligned with our overall operating objectives and ensures that pay varies in proportion to performance.
Historically, the Compensation Committee has established performance metrics and the weighting of each metric during its first Compensation Committee meeting of each
year. The process for setting the performance metrics begins with the management team establishing preliminary goals based on the prior year’s results, the budget, strategic initiatives, industry performance, and projected economic conditions.
The Compensation Committee assesses the difficulty of the goals and their implications for share price appreciation, revenue growth, and other related factors. For Fiscal 2024, Company Annual Adjusted EBITDA (a non-GAAP financial measure) and
Company Annual Revenue targets for Fiscal 2024 were set at $80 million and $1.475 billion, respectively.
The table below sets forth the percentages of the portion of the Fiscal 2024 annual incentive bonus that was payable upon achievement of the minimum, target, and
maximum levels (with interpolation between levels) of the applicable performance metrics for each of our NEOs, except for Mr. White, as he did not participate in the Fiscal 2024 Annual Cash Incentive Program.
| |
Performance Metric
|
Attainment Range
(Minimum/ Target/ Maximum)
|
Payout Percentage
(Minimum/ Target/ Maximum)
|
Martins
|
Burns
|
Ball
|
Krug
|
Noe
|
| |
Company Annual Revenue
(Objective Bonus)
|
90%/100%/105%
|
20%/100%/200%
|
20%
|
20%
|
20%
|
20%
|
20%
|
| |
|
|
|
|
|
|
|
|
| |
Company Annual Adjusted EBITDA*
(Objective Bonus)
|
80%/100%/120%
|
20%/100%/200%
|
60%
|
60%
|
60%
|
60%
|
60%
|
| |
|
|
|
|
|
|
|
|
| |
Individual Objectives
(Subjective Bonus)
|
n/a
|
0%/100%/**
|
20%
|
20%
|
20%
|
20%
|
20%
|
| |
|
|
|
|
|
|
|
|
| |
Totals
|
|
|
100%
|
100%
|
100%
|
100%
|
100%
|
| * |
This is a non-GAAP measure. See Annex A of this Amendment for further discussion regarding how Company Annual Adjusted EBITDA was calculated from our Consolidated Financial Statements and a reconciliation of Company Annual Adjusted
EBITDA to our results as reported under GAAP.
|
| ** |
As noted above, payout in excess of 100% of the Subjective Bonus is solely at the discretion of the Compensation Committee.
|
During the second quarter of Fiscal 2024, the Compensation Committee introduced an additional element to the Annual Cash Incentive Plan that was designed to allow
management to realize up to 65% of their individual incentive tied to the Company Annual Adjusted EBITDA. The threshold for minimum attainment was established at $50 million with a goal of achieving $60 million for the full year 2024, utilizing
linear interpolation to determine the actual payout. In making its determination to make this one-time adjustment to the Annual Cash Incentive Plan, the Compensation Committee considered the extremely challenging market conditions, the
probability of attaining the previously approved targets, and the need to preserve the motivational impact of the annual cash incentive program.
The Compensation Committee determined that for Fiscal 2024, the Company did not achieve its minimum performance threshold for Company Annual Adjusted EBITDA of $64
million under the Annual Incentive Plan or $50 million pursuant to the additional element added during the year, but did slightly exceed the threshold performance hurdle of $1.33 billion for Company Annual Revenue. As a result of the below-target
results, our NEOs earned 29.0% of the target award opportunity for the Annual Revenue portion of the Objective Bonus component for Fiscal 2024. Individual objectives may differ between NEOs, and the Compensation Committee assesses specific NEO
attainment both qualitatively and quantitatively, with consideration given to factors such as business conditions and competing priorities or other significant individual contributions. For Fiscal 2024, individual objectives included, but were
not limited to, continuing to advance our technology roadmap, implementing Phase I of our enterprise resource planning (ERP) implementation, improving productivity across the business, managing overall costs and improving cash collections, as
well as various organizational goals and other special projects that align with our strategy. The Compensation Committee determined that for Fiscal 2024, our NEOs met or exceeded all of their respective individual objectives, each earning 119.5%
of the target award for this component. Resulting total awards for our NEOs were 29.7% of total target annual incentive award opportunities, as noted below, well below payouts earned in Fiscal 2021 and Fiscal 2022 but similar to those in Fiscal
2023. In approving these awards, the Compensation Committee took into consideration our NEOs’ strong contributions to protect and manage the business and seamlessly maintain operations during a time of cost-cutting measures by healthcare
facilities, and the overall uncertainty of the economy.
| |
NEOs
|
Target Bonus
Opportunity
|
Annual Incentive
Bonus Earned
|
|
% of Base Salary
|
$
|
% of Target
Bonus
Opportunity
Earned
|
$
|
| |
John A. Martins
|
100%
|
875,000
|
29.7%
|
259,875
|
| |
William J. Burns
|
85%
|
467,500
|
29.7%
|
138,848
|
| |
Susan E. Ball
|
75%
|
375,000
|
29.7%
|
111,375
|
| |
Marc Krug
|
100%
|
450,000
|
29.7%
|
133,650
|
| |
Phillip L. Noe
|
50%
|
205,975
|
29.7%
|
61,175
|
Long-Term Incentive Compensation
The Company uses equity-based awards to focus NEOs on long-term performance, to align NEOs’ financial interests with those of stockholders, and to create retention
platforms. Equity-based awards for NEOs are generally made based on each NEO’s position, experience and performance, and competitive equity-based compensation levels. Further, the Compensation Committee determines the terms and conditions of
equity grants taking into account market practices and the objectives of the compensation program. Retaining key talent is a significant factor for the Compensation Committee in determining the level of equity awards and the vesting schedule.
In Fiscal 2024, 50% of the equity awards granted to the NEOs were in the form of time-based restricted share awards (“RSAs”) and 50% were in the form of
performance-based share awards (“PSAs”) under our 2020 Omnibus Incentive Plan, as amended (the “2020 Plan”). This target value mix was used to enhance NEO retention and equity stakes, while also tying a meaningful portion of NEO compensation to
specific longer-term financial performance goals and to focus management on maximizing stockholder value. The total targeted long-term opportunities and mix for our NEOs, except with respect to Mr. White, for Fiscal 2024 are set forth in the
following table:
| |
Name
|
RSA Component
(50% Weighting in 2024)
|
PSA Component
(50% Weighting in
2024)
|
Total Target LTI
Opportunity
|
|
$ Value
|
% of
Salary
|
$ Value
|
% of Salary
|
$ Value
|
% of Salary
|
| |
John A. Martins
|
$1,203,125
|
137.5%
|
$1,203,125
|
137.5%
|
$2,406,250
|
275.0%
|
| |
William J. Burns
|
$412,500
|
75.0%
|
$412,500
|
75.0%
|
$825,000
|
150.0%
|
| |
Susan E. Ball
|
$287,500
|
57.5%
|
$287,500
|
57.5%
|
$575,000
|
115.0%
|
| |
Marc Krug
|
$191,250
|
42.5%
|
$191,250
|
42.5%
|
$382,500
|
85.0%
|
| |
Phillip L. Noe
|
$102,987
|
25.0%
|
$102,987
|
25.0%
|
$205,975
|
50.0%
|
The Compensation Committee approves the number of RSAs and the target number of PSAs to be granted to the NEOs on March 31st of each year. If March 31st falls on a weekend or holiday, the grant date value is based on the immediately preceding business day. The grant date values of the RSAs and PSAs granted in Fiscal 2024
are set forth below and were based on the closing price of our Common Stock on the grant date. Awards are based on a percentage of each NEO’s respective base salary at the time the awards were granted, with target award opportunities unchanged
from Fiscal 2023 levels. The percentages and eligibility are based on the terms of employment for certain NEOs or as may be determined by the Compensation Committee. In Fiscal 2024, the RSA and PSA target award values were each equally weighted.
| |
Name
|
Grant Date
Value of RSAs
(per share)
|
Number of RSAs
|
Grant Date Value
of PSAs at Target
(per share)
|
Target Number
of PSAs
|
| |
John A. Martins
|
$18.72
|
64,270
|
$18.72
|
64,270
|
| |
William J. Burns
|
$18.72
|
22,036
|
$18.72
|
22,036
|
| |
Susan E. Ball
|
$18.72
|
15,358
|
$18.72
|
15,358
|
| |
Marc Krug
|
$18.72
|
10,217
|
$18.72
|
10,217
|
| |
Phillip L. Noe
|
$18.72
|
5,502
|
$18.72
|
5,502
|
All of the RSAs granted to the NEOs in Fiscal 2024 provide for vesting of 33.33% of the award on each of the first, second and third anniversaries of the grant date,
subject to the NEO’s continued employment with the Company through the vesting date.
Consistent with Fiscal 2023, the PSAs granted to the NEOs in Fiscal 2024 provide for the issuance of a number of shares based on the level of attainment of
cumulative Adjusted EBITDA (a non-GAAP financial measure) (weighted 75%) and cumulative Adjusted EPS (a non-GAAP financial measure) (weighted 25%), both measured over the three-year performance period ending December 31, 2026, as follows:
| |
Performance Level
|
3-year Cumulative
Adjusted
EBITDA*
Achieved (in
thousands) ($000s)
|
Percentage of the
Target Shares
Earned
|
3-year Cumulative
Adjusted EPS*
Achieved
|
Percentage of
the Target
Shares Earned
|
| |
Below Threshold
|
Less than $243,750
|
0%
|
Less than $3.42
|
0%
|
| |
Threshold
|
$243,750
|
25%
|
$3.42
|
25%
|
| |
Target
|
$325,000
|
100%
|
$4.56
|
100%
|
| |
Maximum
|
$406,250
|
175%
|
$5.70
|
175%
|
| * |
This is a non-GAAP measure. See Annex A of this Amendment for a reconciliation of non-GAAP financial measures to our results as reported under GAAP.
|
On December 3, 2024, we entered into a Merger Agreement with Aya Healthcare, Inc. (“Aya”) and certain of its subsidiaries, pursuant to which a subsidiary of Aya will
merge with and into the Company, with the Company surviving the merger as a wholly-owned indirect subsidiary of Aya (the “Aya Merger”). The completion of the Aya Merger is currently expected to occur in the second half of 2025, subject to the
satisfaction of customary closing conditions, including regulatory approvals. The Aya Merger was approved by our stockholders at a special meeting held on February 28, 2025. Following the completion of the Aya Merger, the Company will become a
private company, and its common stock will no longer trade on Nasdaq. Upon the completion of the Aya Merger, the RSAs that are outstanding immediately prior to the closing of the Aya Merger, other than certain RSAs granted after March 28, 2025
(which will be forfeited upon the closing of the Aya Merger) will vest in full, and the 2022 PSA grants that are outstanding immediately prior to the closing of the Aya Merger will be deemed vested at 75.5% of target and the 2023 and 2024 PSA
grants that are outstanding immediately prior to the closing of the Aya Merger will be deemed vested at 50% of target, in each case contingent upon the closing of the Aya Merger.
OTHER COMPENSATION AND BENEFITS
Nonqualified Deferred Compensation Plans
We maintain the 2003 Deferred Compensation Plan and the 2017 Nonqualified Deferred Compensation Plan, each a non-qualified deferred compensation arrangement,
intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
Under the deferred compensation plans, designated employees, including our NEOs, may elect to defer the receipt of a portion of their annual base salary, bonus, and
commission to our deferred compensation plans. We may also make a discretionary contribution to the deferred compensation plans on behalf of certain participants. Discretionary contributions to the 2003 Deferred Compensation Plan generally become
vested three years from the date such contribution is made to the plan, upon the occurrence of a change in control, or upon a participant’s retirement, death during employment, or disability. Discretionary contributions to the 2017 Nonqualified
Deferred Compensation Plan are subject to such vesting period as determined by the Company at the time of the contribution. We did not make any discretionary contributions to the plans in Fiscal 2024. Generally, payments under the deferred
compensation plans automatically commence upon a participant’s retirement, termination of employment, or death during employment. Under certain limited circumstances described in the deferred compensation plans, participants may receive
distributions during employment. To enable us to meet our financial commitment under the deferred compensation plans, assets may be set aside in a corporate-owned vehicle, which assets remain available to all our general creditors in the event of
our insolvency. Participants of the deferred compensation plans are our unsecured general creditors with respect to the deferred compensation plan benefits.
401(k) Plan and Other Benefits
We maintain a 401(k) plan. The plan permits eligible employees, including the NEOs, to make voluntary, pre-tax contributions to the plan, up to a specified
percentage of compensation, subject to applicable tax limitations. We may make a discretionary matching contribution to the plan equal to a pre-determined percentage of an employee’s voluntary, pre-tax contributions and may make an additional
discretionary profit-sharing contribution to the plan, subject to applicable tax limitations. Our NEOs are eligible for matching contributions, subject to regulatory limits on contributions to 401(k) plans. Eligible employees who elect to
participate in the plan are generally vested in any matching contribution after three years of service with us and fully vested at all times in their employee contributions to the plan. The plan is intended to be tax-qualified under Section
401(k) of the Code, so that contributions to the plan and income earned on plan contributions are not taxable to employees until withdrawn from the plan, and so that our contributions, if any, will be deductible by us when made.
In addition to the 401(k) plan, we provide our NEOs with the opportunity to elect health and dental coverage, company-paid group term life insurance, disability
insurance, paid time off, and paid holidays programs applicable to other employees in their locality. These benefits are designed to be competitive with overall market practices and are in place to attract and retain the necessary talent in the
business.
Our NEOs are not entitled to any perquisites that are not otherwise available to all of our employees. Additionally, we do not provide defined benefit pension
arrangements, post-retirement health coverage, or similar benefits for our executives or employees.
Mr. Martins, President and Chief Executive Officer
2022 Employment Agreement
On January 14, 2022, the Company appointed Mr. Martins as President and Chief Executive Officer (“CEO”) and as a member of the Board effective March 31, 2022 (the
“Effective Date”), and entered into a new employment agreement (the “Martins Employment Agreement”) with Mr. Martins, setting forth the terms of his employment and compensation as President and CEO of the Company. The initial term (the “Initial
Term”) of the Martins Employment Agreement was three years, commencing on April 1, 2022 and expiring on March 31, 2025. Thereafter, the Martins Employment Agreement automatically renews for successive one-year terms, unless either party has given
at least 90 days prior written notice of such party’s intention not to renew the Martins Employment Agreement.
The Martins Employment Agreement provided for an initial base salary of $725,000 per annum, which was increased to $825,000 following the first anniversary of the
Effective Date. In Fiscal 2023, the Board increased Mr. Martins’ base salary to $875,000 to align more closely with 50th percentile market values. The Board, in consultation with the Compensation Committee, will review Mr. Martins base salary on
an annual basis, and will determine, in its sole discretion, whether to increase (but not decrease) his base salary. Pursuant to the Martins Employment Agreement, Mr. Martins is eligible to participate in the Company’s annual bonus plan and
receive an annual incentive cash bonus with a target award opportunity equal to no less than 100% of his base salary and a maximum opportunity equal to 180% of his base salary as determined by the Compensation Committee. In addition, during the
Initial Term of the Martins Employment Agreement, Mr. Martins received an annual equity award pursuant to the 2020 Plan; the target value of the annual equity award was required to be equal to 200% of his base salary for the first year and 275%
of his base salary for the second and third years. Mr. Martins is also entitled to four weeks of paid vacation and is eligible to participate in all benefit plans and fringe benefit arrangements generally available to the Company’s senior
executives.
Pursuant to the Martins Employment Agreement, if Mr. Martins’ employment is terminated by the Company without cause (as defined in the Martins Employment Agreement)
or by Mr. Martins for good reason (as defined in the Martins Employment Agreement), he will be entitled to receive the following payments and benefits: (i) any unpaid base salary through the date of termination; (ii) reimbursement for
unreimbursed business expenses incurred through the termination date; (iii) any unpaid bonus for the year immediately preceding the year in which such termination occurs; (iv) payment of unused vacation and sick time in accordance with the
Company’s policy; (iv) all other applicable payments or benefits provided for by any applicable compensation arrangement or benefit, equity, or fringe benefit plan or program; and (v) subject to his execution of a release, a severance payment
equal to the sum of (a) two years of his base salary plus (b) an amount equal to two times the average actual bonus paid in the immediately prior three calendar years or, in the event Mr. Martins was not an employee during such three-year period,
an amount equal to two times the bonus he would have earned during the year in which the termination occurs (but not less than two times 50% of his target bonus for the year of termination) plus, (c) payment in lieu of continued benefits elected
by Mr. Martins at the time of such termination, in accordance with the Company’s policies, for a period of 24 months. Additionally, any and all of Mr. Martins’ unvested stock appreciation rights, restricted stock, performance share awards (at
target level performance), stock options, or other equity will immediately vest upon such termination.
In the event that Mr. Martins’ employment is terminated because the Company has provided notice of non-renewal of the Martins Employment Agreement, he will be
entitled to receive items (i) through (iv) in the immediately preceding paragraph and, subject to his execution of a release of claims, continued payments of his base salary for a period of 18 months.
Pursuant to the Martins Employment Agreement, during Mr. Martin’s employment and for a period of two years thereafter, Mr. Martins may not compete with the Company
in any jurisdiction in which the Company’s business is conducted nor may he intentionally interfere with the Company’s relationship with any of its suppliers, customers, or employees.
Mr. Martins is entitled to participate in the Company’s Executive Severance Plan Amended and Restated as of May 28, 2010 (the “Executive
Severance Plan”);
provided,
however that any severance payments or benefits that would become due under the Martins Employment Agreement described above, to the extent the same as the payments and benefits owed under the Executive
Severance Plan, will be paid or provided to Mr. Martins on the same schedule as under the Martins Employment Agreement and any payments or benefits under the Executive Severance Plan that are in excess of payments or benefits that would be paid
or provided under the Martins Employment Agreement will be paid or provided to Mr. Martins in accordance with the terms of the Executive Severance Plan. In all cases severance relating to base salary and bonuses will be paid in equal installments
in accordance with the Company’s payroll practices during the 24 month period following Mr. Martins’ termination date.
Mr. Burns, Executive Vice President and Chief Financial Officer
On February 1, 2019, the Company amended its employment agreement with Mr. Burns to appoint him as its Executive Vice President and Chief Financial Officer. Mr.
Burns previously served as the Company’s Chief Operating Officer from January 2018 to February 2019 and as the Company’s Chief Financial Officer from April 2013 to January 2018. The agreement provides for a minimum base salary of $525,000 per
year, subject to annual review by the Compensation Committee. His base salary was increased to $550,000 beginning in Fiscal 2022. He is eligible to participate in the Company’s annual bonus plan with a target bonus of 75% of his base salary, and
85% of his base salary beginning in Fiscal 2022, based on achieving performance goals to be established by the Compensation Committee. Per the agreement, Mr. Burns is also eligible to participate in the Company’s long-term incentive plan and
receive target awards valued at 125% of his base salary, increased to 150% of his base salary beginning in Fiscal 2022, based on the level of achievement of performance goals as Chief Financial Officer to be established by the Compensation
Committee.
Mr. Burns is eligible to participate in the Company’s equity incentive plan, as well as all benefit plans and fringe benefit arrangements available to our senior
executives. If Mr. Burns’ employment is terminated by the Company without cause (as defined in his employment agreement) or Mr. Burns terminates his employment for good reason (as defined in his employment agreement), and if he is not otherwise
entitled to receive severance benefits under our Executive Severance Plan, subject to his execution of a release, he will be entitled to a severance payment equal to one year’s base salary and health insurance benefits.
During Mr. Burns’ employment and for a period of two years thereafter, Mr. Burns may not compete with the Company in any jurisdiction in which the Company’s business
is conducted nor may he intentionally interfere with the Company’s relationship with any of its suppliers, customers, or employees.
Ms. Ball, Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary
Ms. Ball joined the Company as its Corporate Counsel pursuant to the terms and conditions of an offer letter entered into on March 18, 2002 (the “Ball Offer
Letter”). The Company most recently amended the Ball Offer Letter on February 22, 2021 to increase her base salary to $430,000 and change her title to include Chief Administrative Officer. Her base salary is reviewed for increase on an annual
basis by the Board or the Compensation Committee. Beginning in Fiscal 2022, her base salary was increased to $500,000. For each calendar year during the term, Ms. Ball is eligible to participate in the Company’s annual bonus plan with a target
bonus of 75% of her base salary, based on achieving performance goals to be established by the Compensation Committee. In addition, for each calendar year during the term, Ms. Ball is eligible to participate in the Company’s long-term incentive
plan and receive target awards valued at 100% of her base salary, increased to 115% of her base salary beginning in Fiscal 2022. Such awards are based upon terms and conditions determined by the Compensation Committee. Ms. Ball is also eligible
to participate in all other benefit plans and fringe benefit arrangements available to the Company’s senior executives.
If Ms. Ball’s employment is terminated by the Company without cause (as defined in the Ball Offer Letter) or if Ms. Ball terminates her employment for good reason
(as defined in the Ball Offer Letter) she will be entitled to the following payments and benefits: (i) any unpaid base salary through the date of termination; (ii) reimbursement for unreimbursed business expenses incurred through the termination
date; (iii) payment of unused vacation and sick time, in accordance with the Company’s policy; (iv) all other benefits under any applicable compensation arrangement or benefit, equity, or fringe benefit plan, program or grant, pursuant to the
terms and conditions of such plans; and (v) continued payments of base salary in effect at the time of termination in accordance with the Company’s regular payroll practices for a period of twelve months following the date of termination.
Ms. Ball is entitled to participate in the Company’s Executive Severance Plan; provided, however, that if she is or becomes eligible to receive
severance benefits under such plan, she will cease to be eligible for severance payments under the Ball Offer Letter described above and the Company’s sole obligation will be to pay her the amounts and benefits provided in the Executive Severance
Plan, subject to the terms and conditions thereof.
During Ms. Ball’s employment and for a period of one year thereafter, she may not, among other things, compete with the Company in any jurisdiction in which the
Company’s business is conducted nor may she intentionally interfere with the Company’s relationship with any of its suppliers, customers, or employees.
Mr. Krug, Group President
Mr. Krug joined the Company as Vice President, Advanced Practice pursuant to the terms and conditions of an offer letter entered into on March 24, 2017 (the “Krug
Offer Letter”). The Company most recently amended the Krug Offer Letter on April 1, 2022, when Mr. Krug was promoted to Group President, with an increase of his annual base salary to $430,000, which is subject to annual review by the Compensation
Committee. Beginning in Fiscal 2023, the Board increased Mr. Krug’s base salary to $450,000 to align more closely with 50th percentile market values. Beginning in Fiscal 2023, Mr. Krug’s target bonus was increased to 100% of his base salary,
based on achieving performance goals to be established by the Compensation Committee. In addition, beginning in Fiscal 2023, Mr. Krug’s target long-term incentive award opportunity was increased to 85% of his base salary. Such awards will be upon
terms and conditions determined by the Compensation Committee. Mr. Krug is also eligible to participate in all other benefit plans and fringe benefit arrangements available to the Company’s senior executives.
Mr. Krug is entitled to participate in the Company’s Executive Severance Plan. During Mr. Krug’s employment and for a period of one year thereafter, he may not,
among other things, compete with the Company in any jurisdiction in which the Company’s business is conducted nor may he intentionally interfere with the Company’s relationship with any of its suppliers, customers, or employees.
Mr. Noe, Chief Information Officer
Mr. Noe joined the Company as Chief Information Officer pursuant to the terms and conditions of an offer letter entered into on April 5, 2021 (the “Noe Offer
Letter”). Mr. Noe’s annual base salary is $385,000, with a 7% increase in March 2022, and is subject to annual review by the Compensation Committee. Mr. Noe’s target bonus is 50% of his base salary, based on achieving performance goals to be
established by the Compensation Committee. In addition, Mr. Noe’s target long-term incentive award opportunity is 50% of his base salary. Such awards will be upon terms and conditions determined by the Compensation Committee. Mr. Noe is also
eligible to participate in all other benefit plans and fringe benefit arrangements available to the Company’s senior executives.
Mr. Noe is entitled to participate in the Company’s Executive Severance Plan. During Mr. Noe’s employment and for a period of one year thereafter, he may not, among
other things, compete with the Company in any jurisdiction in which the Company’s business is conducted nor may he intentionally interfere with the Company’s relationship with any of its suppliers, customers, or employees.
Mr. White, Former Chief Commercial Officer
On February 14, 2024, the Company entered into a separation agreement (the “Separation Agreement”) with Mr. White. As part of the Company’s commitment to growth and
efficiency, the Company restructured the organization and Mr. White’s position was eliminated. Mr. White continued to be employed through March 31, 2024 (the “Effective Date”) and assisted with the realignment and transition of certain
responsibilities pursuant to the Company’s restructuring strategy. The Separation Agreement provided for continued payment of Mr. White’s base salary for a period of six months following the Effective Date. Refer to the section below, “Potential
Payments Upon Termination or Change in Control,” for additional information regarding Mr. White’s departure from the Company.
Severance & Change of Control Arrangements
We maintain an Executive Severance Plan pursuant to which, subject to executing a release, each NEO is entitled to receive certain severance payments and benefits
if, within 90 days prior to, or within 18 months after, a “Change of Control” (as defined in the Executive Severance Plan) of the Company, such NEO is terminated without cause or incurs an “involuntary termination” (i.e., a resignation for good
reason). The Executive Severance Plan provides for a “double-trigger” policy, which means that (1) the “Change of Control” must occur and (2) the NEO must be terminated without Cause (as defined in the
Executive Severance Plan) or the NEO terminates for “Good Reason” (as defined in the Executive Severance Plan).
Under the Executive Severance Plan, as of December 31, 2024, Messrs. Martins and Burns, and Ms. Ball are entitled to receive continued base salary for a period of
two years following termination, plus two times the amount of their applicable target bonus for the year in which a Change of Control occurs; and Messrs. Krug and Noe are entitled to receive continued base salary for a period of one year
following termination, plus one times the amount of their applicable target bonus of the year in which a Change of Control occurs. In addition, during such two or one year period, as applicable, we would continue to make group health, life, or
other similar insurance plans available to such NEO and his or her dependents pursuant to the terms of our Executive Severance Plan, and we would pay for such coverage to the extent we paid for such coverage prior to the termination of
employment. The severance benefits payable under the Executive Severance Plan are subject to the execution of a release and subject to reduction to avoid any excise tax on “parachute payments” if the NEO would benefit from such reduction as
compared to paying the excise tax.
Under our general severance pay policy for all of our eligible employees, if an NEO (other than Messrs. Martins and Burns and Ms. Ball, whose arrangements are
included in their respective employment agreements or offer letters) is terminated without Cause (as defined in our general severance pay policy) other than in connection with a Change of Control (as defined in the Executive Severance Plan), the
NEO, subject to executing a release, would be entitled to one week’s base salary for each full year of continuous service with us.
The Form DEFM14A, filed by the Company with the SEC on January 22, 2025, discusses potential severance and change of control benefits that the NEOs may be entitled
to in connection with the completion of the Aya Merger. These benefits are consistent with our Executive Severance Plan (and the executive’s employment agreement, as applicable) as described above.
