EXECUTIVE COMPENSATION (continued)
Our Board has historically determined our executive officers’ compensation and has typically reviewed and discussed management’s proposed compensation with our chief executive officer for all executives other than our chief executive officer. Based on those discussions and its discretion, our Board then determined the compensation of each executive officer.
Following our IPO, generally the Compensation Committee, rather than the full Board, approves the compensation of each executive officer (other than our Chief Executive Officer) and follows the process outlined above. The Compensation Committee reviews the performance of our Chief Executive Officer and makes recommendations to the Board with respect to his compensation, and our Board will retain the authority to make compensation decisions relative to our Chief Executive Officer.
Annual Base Salary
Base salaries for our executive officers are initially established through arm’s-length negotiations at the time of the executive officer’s hiring, taking into account such executive officer’s qualifications, experience, the scope of his or her responsibilities and competitive market compensation paid by other companies for similar positions within the industry and geography. Base salaries are reviewed periodically, typically in connection with our Compensation Committee’s annual performance review process, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience.
In making decisions regarding2022, in response to the uncertainty created by the DOJ investigation and the various claims audits initiated by various third-party payors, the Compensation Committee determined not to change the base salary increases, we may also draw upon the experience of memberscompensation of our boardNEOs from the prior year.
| Christian Gormsen | | | $550,000 | |
| William Brownie | | | 390,000 | |
| Adam Laponis | | | 390,000 | |
Annual Performance-Based Compensation
Annual bonus opportunities are intended to motivate our executives to achieve short-term performance goals, which the Compensation Committee believes ultimately serves to advance our overall long-term strategic objectives and creation of directors with executives at other companies.stockholder value. The 2020 base salaries for our named executive officers were as follows: (a) $502,170 for Mr. Gormsen, inclusive of a monthly housing allowance, (b) $300,000 for Mr. Brownie, and (c) $300,000 for Mr. Laponis.
In April 2020, as part of company-wide salary reductions, the base salaries2022 annual target bonus amounts for each of Mr. Gormsen, Mr. Brownie and Mr. Laponis were reducedset at 80%, 60% and 50%, of their respective salary levels. These amounts remained unchanged from the prior year.
Actual bonuses paid to our executive officers have historically been based on achievement of pre-established corporate performance goals approved by 20%, effective through December 31, 2020. The salary reductions were reversed effective January 1, 2021.
In January 2021 and February 2021, the Compensation Committee and Board at the Board of Directors approved 2021 base salaries for our named executive officers as follows: (1) $550,000 for Mr. Gormsen, (b) $390,000 for Mr. Brownie, and $390,000 for Mr. Laponis.
Bonuses and Non-Equity Incentive Plan Compensation
Our named executive officers are each eligible to receive a discretionary annual bonus based on individual and company performance. However, no cash bonuses were awarded based on services provided during 2019.
In connection with the salary reductions implemented in April 2020, our Board approved a cash bonus plan, payable in the discretionbeginning of the Board based on company performance during 2020,fiscal year. In 2022, due to the ongoing impact of, cash bonuses up to 50% of the reduced salary level for Mr. Gormsen and up to 35% of the respective reduced salary levels for Mr. Brownie and Mr. Laponis.
In April 2020 our Board approved a one-time special cash bonus opportunity for each of our employees, including Mr. Gormsen, Mr. Brownie and Mr. Laponis, by increasing each employee’s target bonusuncertainty created by, the percentage of his or her respective salary reductions, which was 20% for each of Mr. Gormsen, Mr. Brownie and Mr. Laponis, payable in the discretion of the Board based on company performance during 2020.
Additionally, in January 2021 and February 2021,DOJ investigation, the Compensation Committee and Board modified such corporate performance goals following the Boardissuance of Directors approved$100 million in convertible notes to Patient Square Capital in June 2022. For 2022, actual bonuses paid to our NEOs were based on 100% achievement of milestones in 2022 related to debt reduction. Each NEO earned 100% of the NEO’s target annual bonus amountsopportunity, which was $440,000, $234,000, and $195,000 for Mr. Gormsen, Mr. Brownie and Mr. Laponis, of 80%, 60% and 50%, respectively, of their respective salary levels.respectively.
Equity-BasedLong-Term Incentive Compensation—Equity-based Incentive Awards
Our equity-basedLong-term equity incentive awardsgrants are designed to align our interests and thosea meaningful retentive component of our stockholderscompensation program. Our equity incentives are also intended to promote an ownership culture while aligning the long-term interests of our executive officers with those of our employees and consultants, including our named executive officers.
We have historically usedstockholders. For 2021, NEOs were granted equity awards with a mix of 50% stock options as the principal equity incentive award for long-term compensation to our named executive officers because the return on the options is tied to an increase in ourand 50% restricted stock price. We may grant equity awards at such times as our Board or Compensation Committee determines appropriate. Additional grants may occur periodically in order to specifically incentivize executivesunits (“RSUs”) with respect to achieving certain corporate goals or to reward executives for exceptional performance.the total number of underlying shares.
Prior to our IPO, all of the equity incentive awards we granted were made pursuant to our 2010 Plan. Following the IPO, the Company grants equity incentive awards under the terms of our 2020 Plan. See note 8 to our audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 16, 2021, for a discussion of our 2010 Plan and our 2020 Plan.
AllStock options are granted with an exercise price per share that is no less thanbased on the fair market valueclosing price of ourthe Company’s common stock on the date of grant (as quoted on the Nasdaq). Historically, the stock option and RSU grants have vested generally over a four-year period, subject to continued service and accelerated vesting terms in the event of certain qualifying terminations of employment, including in connection with a change in control of the Company. The value of these awards that may be realized by our NEOs will vary depending on the price of our common stock and may differ from the amounts reported above and in the Summary Compensation Table above.
In 2022, in response to the uncertainty created by the DOJ investigation and the various claims audits initiated by various third-party payors, we did not make any grants of equity awards to our NEOs.
In February 2023, the Compensation Committee approved stock option grants to employees, including the NEOs (the “February 2023 Grants”), with vesting of 50% of the grant amounts tied to attainment of a pre-established stock price hurdle in addition to service-vesting conditions and 50% of the grant amount tied to service-vesting conditions. The service-vesting portion of each stock option grant vests as to 20% of the shares subject to the stock option on February 15, 2024, with the remainder vesting in 16 equal quarterly installments thereafter subject to continued service through each such award.date. The remaining 50% of each grant is performance-based and vests in full upon attainment of a 360-day VWAP (volume-weighted average price) of $20 for our common stock between January 27, 2024 and February 15, 2028, subject to continued service through such date. In Augustaddition, if the amendment to the 2020 Plan (see Proposal No. 4) is not approved by stockholders at the Annual Meeting, the portion of the February 2023 Grants awarded under the additional reserve being requested under the amendment to the 2020 Plan will be forfeited.
Other Benefits
Like other employees, our NEOs are eligible to participate in orderthe benefit plans made generally available to retain and properly incentivize our employees to continueon the same terms and conditions as our growth, we approved aemployees, including comprehensive medical, dental and vision insurance, life and disability insurance, commuter benefit program and 401(k) plan. We have not made any matching contributions under our 401(k) plan. We generally do not