UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DCD.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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AMN HEALTHCARE SERVICES, INC.Healthcare Services, Inc.
(Name of Registrant as Specified in itsIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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AMN Overview
OUR ASPIRATION
We strive to be recognized as the most trusted, innovative, and influential force in helping healthcare organizations provide a quality patient care experience that is more human, more effective, and more achievable.
OUR MISSION
DELIVER | GIVE | CREATE |
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the best talent and insights to help healthcare organizations optimize their workforce | healthcare professionals opportunities to do their best work towards quality patient care | a values-based culture of innovation where our team members can achieve their goals |
A FOCUS ON CORE VALUES AND
CUSTOMER EXPERIENCE
OUR CORPORATE CULTURE |
We Value: Respect, Passion, Continuous Improvement, Trust, Customer Focus and Innovation |
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COST-EFFECTIVE TALENT SOLUTIONS | STAFFING EXPERTISE | LARGEST SUPPLY OF HEALTHCARE PROFESSIONALS | ||
AMN provides creative recruitment solutions to fill permanent and temporary healthcare professional roles and can act as your recruiting department. | AMN knows how to find the physicians, clinicians, and other healthcare professionals best suited for your needs. | Our broad and progressive continuum of disciplines, specialties and assignment lengths provide you with more options to fulfill your unique healthcare staffing needs. | ||
DEDICATED CUSTOMER SERVICE | CONSISTENT QUALITY | DIVERSITY& INCLUSION | ||
Our talented account managers, recruiters, quality assurance personnel and clinical liaisons are dedicated to clients’ specific talent and workforce needs. | Healthcare professionals recruited by AMN must complete a quality assessment process demonstrating competency standards. | Our commitment to the inclusion of many different backgrounds, experiences and perspectives enables our innovation and leadership in the healthcare services industry that benefits our clients and healthcare professionals. |
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A Letter from Our Independent Board
Chairman and Our CEO
Dear AMN Shareholders:
Dear Fellow Shareholders,
On behalf of the Board and the AMN Healthcare Servicesmanagement team, thank you for the confidence you placed in us during this unprecedented time. As we write this letter, the COVID-19 pandemic continues to ravage our communities, taking an unprecedented physical, emotional, and its Board of Directors, we are pleased to invite you to attend our Annual Meeting of Shareholderseconomic toll. Looking back on April 22, 2020 at our offices in Dallas, Texas. Throughout the past year, we have been acutely focused on positively impacting the health and safety of our healthcare professionals, team members, supplier partners, communities, clients, and their patients. We leveraged our experience, diverse talents, innovative spirit, digital capabilities, and purposeful passion to execute our mission and make an impact unlike any other in our history. We are proud of the progress we have made, which has been driven by our commitment to support the ongoing health crisis response, our human capital management strategy, and board quality.
COVID-19 Response & Commitment to Stakeholders
Over the past 12 tumultuous months, AMN has worked tirelessly to help “flatten the curve” and ensure the health and safety of our team members, healthcare professionals, clients, supplier partners, and communities. In March 2020, we supported our team members’ transition to remote work and implemented a COVID-19 response organizational structure to stay abreast of the rapidly changing healthcare landscape and proactively address the ongoing needs of our stakeholders. Additionally, we launched a 24/7 COVID-19 crisis hotline and published resources for team members, clinicians, healthcare facilities, and supplier partners to help navigate through the uncertain and changing landscape. With the need for healthcare professionals reaching historic levels during the pandemic, AMN made nearly 50,000 placements of healthcare professionals at hospitals and other facilities. We also deployed and expanded the use of our telehealth solutions to support access to healthcare across a variety of settings. We believe that these efforts and our commitment to our stakeholders has further advanced our position as the leader and most trusted partner for total talent solutions to healthcare organizations. We made
Human Capital Management Strategy
Being an innovator and the nation’s leader in total talent healthcare solutions during a public health crisis requires resilience and steadfast oversight of our most significant progress inrisks and opportunities, including those related to our missionculture and talent. Diversity, equality, equity, and inclusion are foundational elements of our culture and fundamental to deliver the best talentour human capital management strategy. Throughout 2020, we intensified our human capital efforts and insightsinitiatives focusing on employee engagement, diversity, inclusion and health and safety. Additionally, we took several steps to help healthcare organizations optimize their workforce, give healthcare professionals opportunities to do their best work towards quality patient carepromote social justice, including funding 100 minority-owned business certifications, launching an enterprise-wide 21-day racial equity and create a values-based culture of innovation where oursocial justice challenge, mentoring Black American-owned suppliers, providing Volunteer Time Off (VTO) for team members can achieve their goals.interested in civic engagement, and rolling out unconscious bias and inclusive communication training for all team members. We published an initial report on our corporate website that aligns with the Sustainability Accounting Standards Board’s framework for reporting pre-defined risks that are most likely to impact the operating performance or financial condition of a typical company within the professional and commercial services industry to clearly communicate how we actively manage some of our human capital risks.
2021 Proxy Statement | 1 |
Board Composition & Refreshment Strategy
Purpose, ProfitAs we respond to the needs and Culture
Wechallenges imposed by the COVID-19 pandemic, we recognize the integralcritical role that our corporate purposeBoard’s composition plays in our ability to execute our long-term strategy and culture playstrategic initiatives. Last October, we appointed Rear Admiral Sylvia Trent-Adams, PhD, RN, FAAN, as a new director to continue to strengthen the effectiveness of our Board. The addition of Ms. Trent-Adams, who is a distinguished leader in the Company’s abilityU.S. Public Health Service Commissioned Corps and previously served as Deputy Surgeon General and Acting Surgeon General of the United States, plays an integral role in our client and clinician engagement strategies. We are proud to generate sustainable profitshave an engaged, diverse, and makedeeply knowledgeable board that is more than 50% female and 20% racially diverse, with a positive impact in society. Webalance of tenured and relatively new directors. Following our 2021 Annual Meeting, we will have established a performancean average aggregate tenure for independent board directors of approximately eight years.
These topics and values-based culture that alignsother key issues of shareholder interest are discussed further within this proxy statement and will be addressed at our business strategy with2021 Annual Meeting of Shareholders on Wednesday, April 21, 2021, at 12:00 p.m. Central Time. To prioritize the developmenthealth and well-being of our greatest assets,meeting participants, we will conduct our people. To2021 meeting virtually, and we cordially invite you to join us and have included instructions for participating under the General Information Section of this end, we have an active strategy to enhance diversity, equality, and inclusion in our workplace, workforce, and marketplace.
Diversity, Equality & Inclusionproxy statement.
Diversity, equality, and inclusion is a foundational element of AMN’s culture and helps us sustain a competitive advantage. We are among a unique group of companies with 44% female representation on our Board and 50% of our executive team from historically underrepresented groups. This diversity extends through our organization from our team members to our affiliate partners and suppliers. AMN strives to be a catalyst for change in the healthcare and staffing industries and in our communities by regularly publishing and participating in surveys and white papers that highlight diversity issues. In 2019, and for the third consecutive year, AMN was recognized by the Bloomberg Gender Equality Index and the Human Rights Campaign’s Corporate Equality Index.
Sustainable Long-Term Growth
Our strategy and our actions every day are grounded in the belief that we can achieve our mission by unlocking the strength of the diverse backgrounds, experiences, and perspectives of all our stakeholders. We believe this philosophy and approach will help us prepare for anticipated risks, create a platform for long-term growth and demonstrates the effective leadership and governance principles that sustainable-minded investors seek.
Thank you for your continued support and investment in AMN Healthcare, and we hope to see you at our 2020 Annual Meeting.
Sincerely,Gratefully Yours,
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CHAIRMAN OF THE BOARD | PRESIDENT & CHIEF EXECUTIVE OFFICER |
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Susan Salka
TABLE OF CONTENTSTable of Contents
RECOMMENDATIONS |
2021 Proxy Statement | 3 |
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Notice of Annual Meeting of Shareholders
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The Annual Meeting of Shareholders (the “Annual Meeting”) of AMN Healthcare Services, Inc. will be held at our office located at 8840 Cypress Waters Boulevard, Suite 300, Dallas, Texas 75019 on Wednesday, April 22, 2020, at 8:30 a.m. Central Time, or at any subsequent time that may be necessary by any adjournment or postponement of the Annual Meeting. The purpose of the meeting is to:
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April 21, 2021 | www.virtualshareholdermeeting.com/AMN2021 | February 23, 2021 |
12:00 p.m. (Central Time) |
VOTING MATTERS
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1. | To elect eight directors to the Board of Directors | 11 | |
2. | To approve, by non-binding advisory vote, the compensation of our named executive officers | 42 | |
3. | To consider the frequency of the advisory vote on the compensation of our named executive officers | 78 | |
4. | To ratify the appointment of KPMG LLP to be our independent registered public accounting firm for the fiscal year ending December 31, 2021 | 79 | |
5. | To consider a shareholder proposal if properly presented at the 2021 Annual Meeting | 81 |
We will also take action upon any other business as may properly come before the 2021 Annual Meeting and any adjournments or postponements of that meeting.
HOW TO VOTE YOUR SHARES
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ONLINE | CALL | DURING THE MEETING | |
Please follow the | Please follow the telephone voting instructions sent to you and call 1 (800) 690-6903, any time up until 11:59 p.m. (Eastern Time) on April 20, 2021. | If you received printed materials, please mark, date and sign your proxy card per the instructions and return it by mail in the pre-addressed envelope provided. The proxy card must be received prior to the 2021 Annual Meeting to be counted. | You can also cast your vote at our |
YOUR VOTE IS IMPORTANT. PLEASE NOTE THAT IF YOUR SHARES ARE HELD BY A BANK, BROKER, OR OTHER RECORDHOLDER AND YOU WISH TO VOTE THEM AT THE MEETING, YOU MUST OBTAIN A LEGAL PROXY FROM THAT RECORDHOLDER. |
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The Board of Directors has fixed the close of business on February 24, 2020 as the record date for determining the shareholders of the Company entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. Representation of at least a majority of the voting power represented by all outstanding shares is required to constitute a quorum at the Annual Meeting. Accordingly, it is important that your shares be represented at the Annual Meeting.
We will be using the Securities and Exchange Commission’s Notice and Access model (“Notice and Access”), which allows us to make proxy materials available electronically, as the primary means of furnishing proxy materials. We believe Notice and Access provides shareholders with a convenient method to access our proxy materials and vote. It also allows us to conserve natural resources which aligns with our Corporate Social Responsibility strategy by reducing our environmental footprint as well as reducing the costs associated with printing and distributing our proxy materials. On or about March 11, 2020,10, 2021, we will commence mailing by sending a Notice of Internet Availability of Proxy Materials to our shareholders with instructions on how to access our proxy statement and 20192020 Annual Report, including the financial statements set forth in our annual report on Form 10-K, online and how to cast your vote. The Notice also contains instructions on how to receive a paper copy of the proxy statement and 20192020 Annual Report.
March 11, 2020
MARCH 10, 2021
By Order of the Board of Directors,
DeniseDENISE L. JacksonJACKSON
Chief Legal Officer and Corporate SecretaryCHIEF LEGAL OFFICER AND CORPORATE SECRETARY
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The summary below highlights certain information that may be found elsewhere in this proxy statement. We encourage you to read the entire proxy statement before casting your vote. Our proxy statement and related materials are first being made available to our shareholders on or about March 11, 2020.
Our Financial Performance10, 2021.
PROPOSAL 1 | ELECTION OF OUR DIRECTORS
OUR DIRECTOR NOMINEES
This year’s slate of director nominees to the Board of Directors (the “Board”) of AMN Healthcare Services, Inc. (the “Company” or “AMN”) includes a new
CURRENT BOARD COMPOSITION OUR KEY CORPORATE GOVERNANCE PRACTICES
Proxy Statement Summary 2020 ESG HIGHLIGHTS We aim to deliver long-term sustainable value to our stakeholders by promoting a diverse, inclusive, and supportive culture that inspires innovation and fosters trust at all levels of our organization and within the communities we serve. Our work focuses on investing and developing our talent and communities and reducing our environmental impact.
RECENT RECOGNITION
Proxy Statement Summary
OUR FINANCIAL PERFORMANCE
OUR TOTAL RETURN VS. RUSSELL 2000 AND S&P 500
Proxy Statement Summary CEO COMPENSATION PAY MIX The illustration below provides a summary of the
PAY FOR PERFORMANCE ALIGNMENT
CONSISTENTLY HIGH SAY-ON-PAY RESULTS Since 2014, our Say-on-Pay results have averaged 96%, which we believe reflects our pay-for-performance philosophy and level of engagement with our shareholders.
Proxy Statement Summary KEY EXECUTIVE COMPENSATION PRACTICES
PROPOSAL 1: ELECTION OF OUR DIRECTORS Eight directors are to be elected at our The proxy will be voted in accordance with the directions stated on the card, or, if no directions are stated, for election of each of the eight nominees listed below. Upon the recommendation of the Board’s Corporate Governance and Compliance Committee (the “Governance and Compliance Committee”), the Board has nominated for election the eight directors listed below, all of whom are currently serving as directors on our Board. The director nominees for election are willing to be duly elected and to serve. If any such nominee is not a candidate for election at the Annual Meeting, an event that the Board does not anticipate, the proxies may be voted for a substitute nominee(s). The business experience, board service, qualifications and affiliations of our director nominees are set forth below. We believe we have a slate of director nominees that are well-positioned to represent our shareholders and oversee the Company’s strategy, business operations and financial strength. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” EACH OF THE DIRECTOR NOMINEES AMN HEALTHCARE BOARD OF DIRECTORS The Board believes that incumbent directors should not expect to be re-nominated annually. In determining whether to recommend a director for re-election, the Governance and Compliance Committee considers the needs of the Company and the diversity of the Board and believes that our directors should satisfy several qualifications, including but not limited to, demonstrated integrity, a record of personal accomplishment, the director’s overall engagement in board activities, the results of the annual Board evaluation and other attributes that are discussed further in our Corporate Governance Guidelines (the “Governance Guidelines”) and in the “Evaluation of Board Composition and Director Nomination Process” section below. The Board also endeavors to represent a range of characteristics, skills and experiences in areas that are relevant to and contribute to the Board’s oversight of the Company’s strategic objectives. Following the biographical information for each director nominee, we describe the key experiences, qualifications, skills and attributes the director nominee brings to the board that, for reasons discussed in the chart below, are important to our businesses and strategic objectives. The Board considered these key experiences, qualifications, skills and attributes and the nominees’ other qualifications in determining to recommend that they be nominated for election.
Corporate Governance DIRECTOR NOMINEE SNAPSHOT The illustration below summarizes the key experience, qualifications and attributes for each director nominee and highlights the balanced mix of experience, qualifications and attributes of the Board as a whole. This high-level summary is not intended to be an exhaustive list of each director nominee’s skills or contributions to the Board. EVALUATION OF BOARD COMPOSITION & DIRECTOR NOMINATION PROCESS Our Governance and Compliance Committee understands the vital role that a strong board composition with a diverse set of skills and continuous refreshment plays in effective oversight. The Committee is committed to maintain a diverse board to effectively manage complex corporate issues by leveraging different experiences to support the Company’s long-term objectives and business strategy. With this purpose in mind, the Committee seeks out candidates with unique skills, experiences and characteristics, including individuals representing historically underrepresented groups and from different careers, industries, races, ethnicities or genders that align with our long-term strategic objectives. As part of the Board’s refreshment strategy and director candidate identification and nomination processes, the Governance and Compliance Committee actively and continuously evaluates its collective composition to identify and prioritize director characteristics, skills and experiences prior to nominating a new director candidate to the Board for review, approval and appointment. Below is an illustration of the Governance and Compliance Committee’s regular Board refreshment and director candidate identification process.
Corporate Governance DIRECTOR SEARCH PROCESS When assessing and prioritizing desired characteristics, skills and backgrounds, the Governance and Compliance Committee considers, among other things, the Board’s current skill set, the Company’s long-term strategic plan and objectives, shareholder discussions, current and past board service, commitment to corporate social responsibility and the director feedback provided in connection with the Board’s annual evaluation process. The Governance and Compliance Committee then establishes a pool of potential director candidates that it identified from various databases and sources, including recommendations from shareholders, consultants and industry experts, who possess the desired characteristics, skills and experiences. It may also engage a third party to conduct or assist with the search or evaluation. The Governance and Compliance Committee regularly evaluates its potential candidate pool and adds and eliminates individuals based on factors such as candidates’ professional affiliations and availability, director retirements, changing market conditions or strategic objectives and/or newly considered enterprise risks. The list provides a platform from which the Governance and Compliance Committee can quickly engage and nominate candidates, if necessary. Recently, the Board has appointed three new directors, each of whom has significantly added to the Board’s diversity of skills, background and experiences and strengthened its ability to support and oversee the Company’s strategic objectives. Our Board is also proud to currently be among a unique group of companies with more than 50% female representation.
Corporate Governance BEYOND THE BOARDROOM To increase each director’s engagement with and understanding of our strategy, each director participates in an extensive orientation program upon joining the board, including meeting with members of our executive leadership team and other key leaders of the Company to gain a deeper understanding of AMN’s businesses, operations, culture and values. Periodic briefing sessions are also provided to members of the board on subjects that would assist them in discharging their duties. Our Board’ aggregate board tenure policy reflects its commitment to consistently evaluate the composition of our Board to ensure that it collectively possesses the experience, skills, knowledge, and level of engagement necessary to serve the best interests of our shareholders. The terms of this policy, which is set forth below, was developed in part based on insight and feedback we received directly from shareholders in connection with our ongoing corporate governance shareholder engagement efforts. The Board does not believe in a specific limit for the overall length of time an independent director may serve. Directors who have served on the Board for an extended period can provide valuable insight into the operations and future of the Company based on their experience with, and understanding of, the Company’s history, policies, and objectives. The Board also believes that new directors will strengthen the diversity of the Board, provide fresh perspectives and value as the Company evolves. To achieve this balance, the Board will maintain an average Board tenure for independent board directors of less than ten years. Upon the conclusion of the Annual Meeting, the average aggregate tenure for our Board’s independent directors will be approximately 8 years. SHAREHOLDER RECOMMENDATIONS AND NOMINATIONS The Governance and Compliance Committee considers shareholder recommendations of qualified director candidates when such recommendations are submitted in writing to the Company’s Corporate Secretary at 12400 High Bluff Drive, Suite 100, San Diego, California 92130, Attn: Denise L. Jackson, Chief Legal Officer and Corporate Secretary. When evaluating any such shareholder recommendations, the Governance and Compliance Committee uses the evaluation methodology that is described in the “Evaluation of Board Composition & Director Nomination Process” above. To have a director nominee considered for election at our 2022 Annual Meeting of Shareholders, a shareholder must submit the nomination in writing to the attention of our Corporate Secretary and also satisfy the requirements set forth in our Bylaws regarding shareholder director nominees no later than January 21, 2022 and no sooner than December 22, 2021, assuming the date of the 2022 Annual Meeting of Shareholders does not change by more than 30 days from the first anniversary of the prior year’s annual meeting. To have a director nominee included in our 2022 proxy statement for election, a shareholder must submit the nomination in writing to the attention of our Corporate Secretary and also satisfy the requirements set forth in the “proxy access” provisions of our Bylaws no earlier than October 11, 2021 and no later than November 10, 2021. The Company received no recommendations for director nominees or director nominations from any shareholder for the director election to be held at the Annual Meeting.
Corporate Governance BOARD AND COMMITTEE SELF-EVALUATION PROCESS In line with our value of continuous improvement, each director conducts an evaluation of the performance of the Board and each committee for which they serve on an annual basis. Additionally, on a bi-annual basis, the Chair of our Governance and Compliance Committee conducts individual conversations with each director. Each step of the Board’s annual evaluation process is further illustrated below. The Board has determined that director nominees Mark G. Foletta, Teri G. Fontenot, R. Jeffrey Harris, Sylvia Trent-Adams, Martha H. Marsh, Daphne E. Jones and Douglas D. Wheat all meet our categorical standards for director independence described in our Governance Guidelines and the applicable rules and regulations of the New York Stock Exchange (“NYSE”) regarding director independence. Our CEO is the only member of our Board whom the Board has not deemed independent. When making director independence determinations, the Board considered a business relationship between LHC Group, Inc., of which Ms. Fontenot is an independent director, and the Company. We discuss this relationship in more detail in the “Certain Transactions” section below. The Board considered the nature of this relationship, the annual amount of payments we receive from LHC Group and the fact that the nature of this relationship resulted solely from Ms. Fontenot’s role as an independent director of LHC Group, Inc., and determined that the relationship did not preclude the Board from making an independence determination for Ms. Fontenot and that the relationship fell within our standards of independence. COMMUNICATIONS WITH THE BOARD OF DIRECTORS The Board has established the following procedure for shareholders and other interested parties to communicate with members of the Board, its Chair or the independent directors as a group. All such communications should be addressed to the attention of our Corporate Secretary at our offices located at 12400 High Bluff Drive, Suite 100, San Diego, California 92130. The Corporate Secretary opens, reviews, and maintains a log of all written communications to the Board, one of its committees or specific director(s) and promptly forwards to the Chair of the Board those that the Secretary believes require immediate attention. The Corporate Secretary will also periodically provide the Chair of the Board and the Company’s Chief Executive Officer (if appropriate) with a summary of all such communications and any actions taken if not previously forwarded to the Chair of the Board. Factors that will be considered when determining whether or not the matter requires immediate attention include, but are not limited to, whether the matter relates to a pressing governance matter, such as executive compensation or our Corporate Social Responsibility (“CSR”) strategy whether the topic is of broad concern such that the Board can publicly discuss, whether the matter could have a material impact on the Company’s performance or stock price, the size and/or number of shareholders making the request and any other factors the Governance and Compliance Committee deems relevant.
Corporate Governance DIRECTOR BIOGRAPHIES
The Board has concluded that Mr. Foletta is qualified to serve on the Board, because he brings considerable audit, financial, healthcare and enterprise risk management experience as both an executive officer and director of healthcare companies. The Board has designated Mr. Foletta as an audit committee financial expert and he serves as Chairman of the Audit Committee.
Corporate Governance
The Board has concluded that Ms. Fontenot is qualified to serve on the Board because she brings considerable audit, financial and healthcare experience. The Board has determined that Ms. Fontenot qualifies as an audit committee financial expert and appointed her as a member of its Audit Committee.
Corporate Governance
The Board has concluded that Mr. Harris is qualified to serve on the Board because he brings considerable mergers and acquisitions experience, which is a key component of AMN’s growth strategy. Additionally, Mr. Harris has experience serving as a director on public company compensation and corporate governance committees.
Corporate Governance
The Board has concluded that Ms. Jones is qualified to serve on the Board because she brings considerable information technology, global digital technology use, data management and privacy experience as a seasoned “C-Suite” executive with extensive experience in multinational corporations. Ms. Jones’ digital use and technology expertise and experience is critical to our successful execution of our technology and digital strategies.
Corporate Governance
The Board has concluded that Ms. Marsh is qualified to serve on the Board because she has extensive “C-Suite” leadership and expertise in the healthcare industry. Ms. Marsh’s experience and understanding of the challenges and opportunities of large healthcare facilities are immensely useful in directing our strategy to innovate and provide enhanced and expanded talent solutions service offerings to meet our clients’ evolving needs.
Corporate Governance
The Board has concluded that Ms. Salka is qualified to serve on the Board because she has nearly three decades of healthcare services industry experience, including 30 years of experience with us in various roles, including Chief Financial Officer and Chief Operating Officer. During her service to the Company, she has helped grow our business both organically and through acquisitions into the national industry leader we are today.
Corporate Governance
The Board has concluded that Ms. Trent-Adams is qualified to serve on the Board because she possesses significant healthcare industry and policy knowledge and expertise, which is critical to the successful design and implementation of our growth strategy.
Corporate Governance
The Board has concluded that Mr. Wheat is qualified to serve on the Board because he possesses significant healthcare staffing industry knowledge as well as extensive expertise in corporate finance and mergers and acquisitions, all of which are critical to the successful design and implementation of our growth strategy.
Corporate Governance RETIRING DIRECTOR
AMN and its Board would like to recognize and thank
Table of Contents
OUR CORPORATE GOVERNANCE PROGRAM
CORPORATE GOVERNANCE PROGRAM OVERVIEW Strong and effective corporate governance is essential to our
SHAREHOLDER CORPORATE GOVERNANCE OUTREACH
Accountability to AMN stakeholders is an essential component of our success, which is why we Over the past few years, With this customized strategy in place, we conduct a formal outreach ENGAGEMENT SUMMARY
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Although each of our shareholder’s particular focus canmay differ, AMN’s mission,purpose, long-term strategy, pay for performance approach to executive compensation and emphasis on corporate governance and social responsibility were well received. One of the focuses of our engagement with a large shareholder is tackling gender pay equality in the U.S. healthcare system, and we look forward to continuing our engagement on this important issue. Further information surrounding our shareholder engagement program is formalized in our Corporate Governance Guidelines, which we refer to as our Governance Guidelines and postposted on our Company website under the “Investor Relations” tab atwww.amnhealthcare.investorroom.com/governance-guidelineswww.amnhealthcare.com..
The chart on the following chart summarizespage outlines some of the specific actions our Board haswe have taken in recent years in response to feedback received from shareholders. In February 2019, our Board committed to maintain an average tenure for independent directors of less than ten years, commencing in 2020. Additionally, in response to shareholder feedback on board refreshment and in an effort to continue to diversify our Board’s collective composition to most effectively support the Company’s long-term strategic objectives, our Governance and Compliance Committee reviewed its Board composition evaluation and director candidate nomination process, which has resulted in the appointments of Ms. Daphne Jones and Ms. Teri Fontenot to the Board in 2018 and 2019, respectfully. The Board’s composition evaluation and director nomination processes are described in the “Board Composition Evaluation and Director Nomination Processes” section located on page6 above.
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Corporate Governance
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• For team members, made investments in
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Human Capital Management
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Our Human Capital Management Strategy
An essential element of our approach to effective corporate governance and social responsibility is our Human Capital Management Strategy. Our team members are critical assets that we must continually invest in and strategically manage to maximize their long-term value and potential. With this objective in mind, we identify and monitor a variety of risks and opportunities that are central to our long-term strategic objectives, such as, among others, our diversity, equality and inclusion program, team member engagement, professional development and employee health and safety to ensure we are delivering on our commitment to promote a values-based culture that is centered around business ethics and professional integrity. Our Board and executive management team is committed to fostering a strong ethical corporate culture and expect all team members to fulfill their responsibilities in accordance with the highest standards of professional and personal conduct.
Some actions that we have taken to uphold this commitment to further develop our Human Capital Management Strategy are listed below.
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Adopted a Human Rights Policy and a Vendor Code of Conduct that is incorporated into our Code of Conduct.
Launched a Corporate Social and Responsibility webpage that illustrates information and resources applicable to our strategy and the social objectives that we strive to achieve.
Evaluated and amended the Governance Guidelines to reflect corporate governance and human capital management best practices. The Governance Guidelines function as a critical component to the overall framework for the governance of our Human Capital Strategy.
As discussed above, our Board and its committees regularly and carefully review these and other key governance documents to ensure they contain what we believe to be best practices the best practices and policies in support of our objectives and the values based culture we strive to promote. We publish these documents, among others, under the “Corporate Governance” section of the “Investors Relations” page on the Company’s website atwww.amnhealthcare.com. We also make these materials available in print to any shareholder upon request. Our Board closely monitors corporate governance developments and modifies the Governance Guidelines, Executive Compensation Philosophy, the Code of Conduct and our Code of Ethics for Senior Financial Officers regularly.
Our Corporate Social Responsibility Program
Corporate social responsibility (“CSR”) represents our commitment to economic and social progress by creating a positive impact on the health and development of our team members, healthcare professionals, local and global communities, and stakeholders at large while advancing the quality of our company through engagement in the world around us. CSR is fundamental to AMN’s aspiration to be the most trusted and utilized total talent solution partner for healthcare organizations in the country. Accordingly, we recognize that certain environmental, social and governance (“ESG”) issues can have real financial impacts over the long-term. This is why we are proactively working to better understand, manage and report more robustly and transparently on the ESG risks and opportunities that are relevant to our business and the industries we serve.
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For sustainability disclosure purposes, we have primarily leveraged the standards issued by the Global Reporting Initiative (“GRI”) because it provides a comprehensive framework that allows us to present all facets of our CSR program. We publish updates in our CSR report on an annual basis and took an opportunity last year to expand our reporting under the GRI framework in an effort to increase transparency surrounding our impact on our stakeholders and the world around us. Accordingly, we are excited to release our 2019 CSR report in March 2020. It will be available to view or download on AMN’s new CSR webpage we recently launched on the company’s website atwww.amnhealthcare.com/corporate-social-responsibility. Below is an illustration of AMN’s holistic CSR ecosystem, its key components and the stakeholders we serve.
Our dedication to build an industry-leading CSR program is further demonstrated by our high ESG ratings and our commitment to the United Nations Sustainable Development Goals (“SDGs”). In 2019, we achieved an “AA” ESG rating from MSCI ESG Research, which places us in the top 12% of companies within the health care provider and services industry. Under ISS’ ESG QualityScore, our Governance rating is “1” on a1-10 scale, with 1 being the highest score, a rating of “2” for the Social category and a “3” rating for Environment. We are supportive of the objectives of the SDGs and actively engage with shareholders on those relevant to our business and industry, such as (1) good health and well-being, (2) gender equality, and (3) decent work and economic growth.
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To further demonstrate our commitment to continuously improve our disclosures surrounding sustainability, we want to acknowledge that we are listening to our shareholders requests by making progress towards more robust reporting that aligns with the Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-related Financial Disclosures. Below we have reflected our industry specific disclosure topics that SASB has identified as most likely to impact the operating performance or financial condition of the typical company in the Professional and Commercial Services Industry as well as the initiatives or recognition we have received for our efforts to manage these opportunities.
Our Board’s Role in Risk OversightENTERPRISE RISK OVERSIGHT
The Board as a whole is responsible for overseeing our enterprise-wide risk exposure as part of determining a business strategy that generates long-term shareholder value. Themanagement program. In conjunction with this responsibility, the Board shapesaddresses our enterprise-widekey risks, risk capacity, appetite and tolerance levels that provide the foundation for our overall business strategy and direction, anddirection. The Board believes that overseeing processes for assessing and managing the various risks we face is one ofimportant to value creation and value preservation for our shareholders. As a result, the Board meets with executive management to oversee the Company’s enterprise risk governance framework and discuss how the Company’s identified key risk impact its most important responsibilities to our stakeholders.long-term strategies.
Purposeful and appropriate risk-taking in certain areascalculated risk taking is important for us to be competitive and to achieve our long-term goals. Our enterprise risk governance framework reflects a collaborative process wherebywhere the Board, executive management and other team members apply a consistent and rigorous approach to our strategic planning and operational decisions across the Company that is designed to balance the opportunities and threats to our business and consider the steps we are willing to take to capitalize on any business opportunities while mitigating against the key risks. The Board believes that oversight of risk management is a vital element of its responsibility. As a result, it meets with executive management at regular Board meetings and, if necessary, at other times to discuss the strategy and success in addressing our identified key risks.business.
As part of our annual strategic planning process, we maintain an Enterprise Risk Management Committee that assists the Board in identifying key risks. We typically focus on five to seven risks annually, which may relate to, among other things, business operations, competitive landscape, engagement and retention of quality healthcare professionals, talent management, technology systems, security and innovation. The Enterprise Risk Management
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Committee also assists the Board in determining our risk tolerance in light of our (1) existing risk capacity, (2) appetite, if any, to take on additional risk or lessen our risk, (3) risk velocity and (4) mitigation factors. The Board’s determination of our key risks and our tolerance for each ultimately influenceinfluences how we operate our business, including how we marshal ourallocate resources and make strategic and operational decisions.
To ensure that the Company operates within its risk appetite, executive management and other leaders establish and support a culture of integrity, ethical behavior and risk awareness for our team members. We also have designed and maintain internal processes and an internal control environment that further facilitates the identification and management of risks.
In addition to the foregoing, the responsibilities of each of the Board’s standing committees’ responsibilitiescommittees are designed to focus attention on risk areas implicated by its area of expertise, and each committee reports regularly to the Board on its identification and assessment of such risks. All committees play significant roles in carrying out the risk oversight function that typically focus in their areas of expertise.
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Corporate Governance
Below is an illustration of whichhow the Board, its committees orand the full Board, are responsible for overseeingCompany’s Enterprise Risk Management Committee collaborate to oversee the Company’s key enterprise risks identified by the Board.and related strategies.
BOARD RISK OVERSIGHT • Oversees our enterprise-wide risk assessments and strategies to generate long-term shareholder value | ENTERPRISE RISK MANAGEMENT COMMITTEE • Assists the Board in determining our risk tolerance in light of our: • existing risk capacity; • appetite, if any, to take on additional risk or lessen our risk; • risk velocity; and • mitigation factors. • Focuses on five to seven risks annually, typically relating to: • changing market dynamics; • business operations and transformations; • competitive landscape; • human capital management; • technology systems and security; • brand reputation; and • Innovation. | ||||||
• Key risks overseen: | |||||||
• Changing Market Dynamics (e.g., COVID-19 impacts and telehealth) • Operational Transformation • Client and Healthcare Provider Engagement | • Talent • Brand Reputation • Information Systems and Security | ||||||
COMMITTEE RISK OVERSIGHT | |||||||
Audit Committee • Financial Statements, Systems and Reporting • Information Technology Systems and Cybersecurity • Business Continuity • Investor Relations • Big Data Analytics • Capital Structure & Liquidity • Internal Financial Investigations | Corporate • Governance and Shareholder Engagement • CSR Strategy • Ethics and Privacy • Clinical Quality • Board and Leadership Succession Planning • Other Regulatory Compliance | Compensation • Executive Compensation • Human Capital Engagement and Retention • Compensation Philosophy & Equal Pay • Diversity, Equality & Inclusion | |||||
EXECUTIVE MANAGEMENT AND OTHER LEADERS | ||||
• Establish and support a culture of integrity, ethical behavior and risk awareness for our team members to ensure alignment with established risk appetite • Design and maintain internal processes and an internal control environment that further facilitates the identification and management of risks | • Regularly report to the Board and its Committees on key risks related to their respective oversight responsibilities |
BOARD OVERSIGHT OF COVID-19 IMPACT AND COMPANY RESPONSES
As the COVID-19 pandemic developed, the Board and its committees oversaw, and continue to oversee, its impact on the Company’s businesses, operations, team members, healthcare providers and clients and regularly reviews with management the various measures being taken to (1) protect the health and well-being of our team member and healthcare professionals, (2) maintain continuity of service for clients and healthcare professionals, (3) adapt and respond to the rapidly changing demand landscape and regulatory environment and (4) manage the Company’s financial performance. In addition to discussing the impact of COVID-19 and the Company’s strategic response to it at each regular Board meeting, the Board also convened two additional Board meetings to specifically discuss with management COVID-19’s impact on the Company and the measures the Company is taking, or considering to take, in response to the pandemic.
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Corporate Governance
AUDIT COMMITTEE RISK OVERSIGHT
The Audit Committee assists the Board in fulfilling its financial and internal controls oversight responsibilities, of our compliance with financial ethical requirements and certain other financially-related rules and regulations, as well as our processes to manage our business, financial, technology security and enterprise risk. In performing these functions, the Audit Committee meets periodically with the independent auditor, management, and internal auditors (including in private sessions) to review their work and confirm that they are properly discharging their respective responsibilities.
Among other things, the Audit Committee’s responsibilities include:
Overseeing the work of our independent auditors,
Reviewing and discussing with management significant technology strategic initiatives, operations and risks, including, business continuity planning, project performance, technical operations performance, major technology architecture decisions, internal IT controls and related regulatory risks, significant technology investments and trends in technology that may affect the Company’s strategic plans,
Reviewing and discussing with management key technology strategic initiatives and risks, including information security and cybersecurity incidents and any related disclosure obligations,
Reviewing and discussing with management the Company’s processes to manage major financial risk exposures to the Company and the steps management has or plans to take to monitor, control and manage such exposures, including our risk assessment and risk management guidelines and policies,
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Approving procedures for receiving complaints regarding accounting, internal accounting controls or auditing matters, and reviewing evidence of material violations of securities laws, breaches of fiduciary duty related to financial reporting and other financially-related disclosures,
Reviewing and discussing with management, our chief internal auditor, independent auditors orin-house counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant effect on our financial statements, and
Reviewing the results of significant financial or accounting investigations, examinations or reviews performed by regulatory authorities and management’s responses.
In 2019,2020, the Audit Committee did not identify any significant deficiencies or material weaknesses in the Company’s internal controls.controls over financial reporting. In addition, the Audit Committee determined that our processes to manage our enterprise, business and financial risks are effective and comply with applicable legal and ethical requirements as well as our internal policies and procedures.
INTERNAL AUDIT
The Company has an internal audit function that is responsible for providing assessments of internal controls, processes, identifying risks, promoting risk and controls awareness in the Company, and providing advice to the Company’s management and the Board’s Audit Committee on what policies, processes and controls are necessary to manage risk effectively and efficiently. The head of the internal audit function reports functionally directly to the Chair of the Audit Committee and administratively directly to the Company’s Chief Financial Officer. The Audit Committee Charter specifically provides that the head of the internal audit function is accountable to the Audit Committee and that the Audit Committee has the ultimate authority and responsibility to appoint, retain, evaluate and replace the head of the internal audit function.
COMPENSATION COMMITTEE RISK OVERSIGHT AND RISK RELATED TO EXECUTIVE COMPENSATION
The Compensation Committee is responsible for analyzing the risks associated with our compensation and human capital management practices. Among other things, the Compensation Committee’s responsibilities include:
Establishing the Company’s executive compensation philosophy and principles to ensure they (i) reflect the Company’s commitment to equal pay principles and its values-based culture, (ii) are designed and operating effectively to appropriately attract, incent and retain talent, and (iii) align with long-term shareholder interests;
Reviewing on an annual basis the corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation,
Reviewing and make recommendations to the Board on an annual basis with respect to the compensation of all of the Company’s executive officers,
Setting the composition of the group of peer companies used for comparison of executive compensation,
Overseeing the design and management of the various long-term incentive compensation, equity, savings, health and welfare plans that cover our employees,
Reviewing, and recommending to the Board, the compensation for ournon-employee directors; and
Overseeing the Company’s human capital management program strategy, including its talent recruitment, retention and engagement and inclusion initiatives.
Risk Related to Executive Compensation
The Compensation Committee designs our incentive compensation to reward officers and other key employees for committing to and delivering on financial goals that we believe are challenging, yet (i) reasonably achievable, (ii) require revenue and profitability performance to reach the target level, and (iii) require significant revenue and profitability growth to reach the maximum level. The financial performance required to reach the maximum level of compensation is developed within the context of budget planning and, while we believe difficult to achieve, is not viewed to be at such an aggressive level that it would induce bonus-eligible employees to take inappropriate risks that could threaten our financial and operating stability.
The Compensation Committee believes the use of a long-term incentive award program with targets that span aincludes awards with three-year performance periodperiods balances risk and reward by discouraging excessive risk that could threaten our long-term value but at the same time encourages innovation to build our value in thedrive short- and long-term.long-term value and performance. The Compensation Committee also reviews our program for design features that have been identified by experts as having the potential to encourage excessive risk-taking, such as: (A)(a) too much focusemphasis on equity, (B)(b) compensation mix overly weighted toward short-term results, (C)(c) highly leveraged payout curves and steep payout cliffs at specific performance levels that could encourage short-term actions to meet payout thresholds, and (D)(d) unreasonable goals or thresholds. After its consideration of the foregoing factors, the Compensation Committee has determined that our compensation programs and policies do not create risks that are reasonably likely to have a material adverse effect on us.the Company’s financial and operational performance.
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CORPORATE GOVERNANCE AND COMPLIANCE COMMITTEE RISK OVERSIGHT
The Governance and Compliance Committee considers theoversees risks associated with our corporate governance practices, leadership succession process, clinical quality program and our ethics and compliance programs, including our healthcare, clinical, employment and employmentprivacy regulatory compliance practices, and quality programs. Among other things,practices. As part of its oversight, the Governance and Compliance Committee’s responsibilities include:
Overseeing matters of corporate governance, including preparing and recommending to the Board the Governance Guidelines,
Overseeing director succession practices, including identifying potential director candidates for the Board and recommending director nominees to the Board for approval,
Reviewing our leadership succession programs and processes and our CEO succession plans,
Reviewing the organization, implementation and effectiveness of the Company’snon-financial compliance and quality programs, including the Company’s employment, healthcare and clinical compliance practices and risk oversight of the credentialing of candidates to ensure that the Company is placing qualified healthcare professionals,
Reviewing any significant events investigated under our compliance and ethics programs and the Company’s Code of Conduct (other than financial matters or misconduct that are reviewed by the Audit Committee), and
Overseeing the Company’s shareholder outreach program relating to corporate governance matters.
The Governance and Compliance Committee reviews the Company’s practices and approach with respectrelated to corporate governance, corporate social responsibility and regulatory compliance to ensure that its corporate governance and compliance structures provide a foundation for achieving sustainable performance and long-term shareholder value. This responsibility goes hand in hand with its oversight of the Company’s leadership succession process to not expose the Company to leadershiptalent gaps and the consequences flowing from such gaps.
The Governance and Compliance Committee also reviews and discusses with our management relevant quality metrics, performance improvement, compliance with certification standards and related laws and regulations as well as our enterprise risk management processes relating to the quality of our services and compliance with regulatory requirements. The Governance and Compliance Committee believes the Company’s sound corporate governance practices, ethics and compliance infrastructure, comprehensive leadership success program and extensive quality programs are designed to shield the Company from risk that is reasonably likely to have a material adverse effect on us.
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Table of ContentsDirector Independence
Corporate Governance
CORPORATE SOCIAL RESPONSIBILITY
We are committed to growing our business in a sustainable and socially responsible manner because it is fundamental to our aspiration to be the most trusted and influential force in helping healthcare organizations provide a quality patient care experience that is more human, effective and achievable. We realize that certain ESG issues can significantly impact our reputation and financial and operational performance over the long-term and interfere with the achievement of our vision, which is why we proactively work to mitigate these risks by continuing to evolve and build on our CSR infrastructure and strategies each year. In 2020, we increased our investments in diversity, equality, equity and inclusion to further demonstrate our commitment to social justice. We also responded to our shareholders call for transparency surrounding environmental and social risks by publishing new sustainability disclosures to our corporate website. Our corporate purpose and culture play an integral role in AMN’s ability to generate sustainable profits and make a positive impact on our stakeholders, so we strive to create a values-based culture of innovation that allows our team members and healthcare professionals achieve their personal and professional goals. To advance our mission and core values, we strive to promote a performance and values-based culture that aligns our business strategy with the development of our people and fosters a diverse and inclusive culture. Our commitment to a strong ethical culture starts at the top of our organization with the Board of Directors, and our executive management team sets the tone each and every day. The Company’s Code of Conduct is designed to help management preserve our ethical culture by serving as guide for our daily decisions and actions in alignment with our core values.
Our Board and its committees regularly and carefully review key governance documents to ensure they contain what we believe to be best practices and policies in support of our objectives and the values-based culture we strive to promote. We publish these documents, among others, under the “Governance” section of the “Investors Relations” page on the Company’s website at www.amnhealthcare. com. We also make these materials available in print to any shareholder upon request.
OUR CSR GOVERNANCE, STRATEGY AND PRACTICES
The Board has adopted categorical standardsoversees our CSR strategy and related ESG practices. Our management team is responsible for director independence,creating and fostering a culture that reflects the Company’s core values, ethics, purpose, vision and social responsibility as the foundation for advancing the Company’s overall long-term strategy. More specifically, we have established an enterprise-wide strategy to identify, manage and report on ESG risks and opportunities that involves oversight by the Board and management. To achieve this, key strategic and operational decisions are filtered through an ESG and sustainable business practices lens to ensure they align with our Company culture and the sustainability of our long-term operational and financial performance.
OUR CSR ECOSYSTEM
We believe that investing in our stakeholders promotes the long-term sustainability of our business, and we are committed to delivering sustainable value to all AMN stakeholders, which includes our healthcare professionals, team members, local and global communities, supplier partners, shareholders, clients and their patients. Corporate social responsibility represents our commitment to sustainable, economic and social progress by creating a positive impact on all AMN stakeholders. Below is an illustration of AMN’s holistic CSR ecosystem, its key components and the stakeholders we set forth in the Governance Guidelines and make available on our website. Under these standards, a director will not be considered independent if:serve.
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SUSTAINABILITY REPORTING
We have reported on our CSR programs since 2016 and each year we strive to report more robustly. Transparency and accountability surrounding our CSR infrastructure and key risk is critical to maintaining the trust and support of our stakeholders and demonstrates the effective leadership and governance principles that our shareholders expect. Last year, we responded to our shareholders’ call for companies to report more substantively on ESG risks by publishing new reports that align with frameworks established by the Task Force on Climate-Related Financial Disclosures (“TCFD”) and the Sustainability Accounting Standards Board (“SASB”). The Board does not considerCompany’s most recent SASB and TCFD disclosures can be found on the Company’s website and are incorporated into our 2020 Corporate Social Responsibility Report at the following relationshipslink: https://www.amnhealthcare.com/corporate-social-responsibility/.
Our TCFD disclosure details our approach to governance, strategy, risk management and targets surrounding climate change, including specific risks and opportunities associated with the transition to a lower-carbon economy. Our SASB disclosure addresses the sustainability issues identified by SASB as most likely to impact the operating performance or financial condition of the typical company in our industry regardless of location. As part of the professional and commercial services industry, our SASB disclosure discusses our approach to managing risks and opportunities related to (1) data security, (2) professional integrity and (3) workforce diversity and engagement.
Our commitment to building and sustaining an industry-leading CSR program is further demonstrated by our integration of the United Nations Sustainable Development Goals (“SDGs”) into our enterprise-wide CSR strategy beginning in 2021. To accomplish this, the Company’s leadership responsible for overseeing its ESG infrastructure evaluated each of the 17 SDGs and identified the SDGs illustrated below as the SDGs most aligned with the Company’s long-term strategy.
Beginning in 2022, we will begin disclosing our CSR long-term strategy, our targets and metrics and communicating our progress towards achieving these goals.
OUR HUMAN CAPITAL MANAGEMENT STRATEGY
A foundational element of our ESG infrastructure is our human capital management strategy. Our healthcare professionals and team members are key assets that we believe allow us to deliver long-term sustainable value to our stakeholders and the Board and management team strongly believe that AMN’s future success largely depends on the caliber of our talent and the full engagement and inclusion of our team members and healthcare professionals. With this objective in mind, we identify and monitor a variety of risks and opportunities that are central to our long-term strategic objectives, such as our diversity, equality and inclusion program, team member engagement, professional development and employee health and safety to ensure we are delivering on our commitment to promote a purpose-driven and values-based culture that is centered around business ethics and professional integrity.
AMN HEALTHCARE PROMOTES INCLUSION IN THE:
DIVERSITY, EQUALITY AND INCLUSION
Social and racial justice was an important issue in 2020 and continues to be material relationshipsat the top of mind of many Americans in 2021. Our diversity, equality and inclusion philosophy is grounded in the belief that would impairwe should respect all voices, seek diverse perspectives, and succeed when we act together as a director’s independence:positive force for all humanity. We have an opportunity to influence each other, our industry, and our communities by fostering a diverse team. We are committed to actively engaging in building an organization and society where equality is the norm, equity is achieved, and inclusion is universal so that we may all thrive. While AMN has long been known as a champion of diversity, equality and inclusion, we accelerated our efforts in response to the COVID-19 public health crisis and the racial injustice that transpired in 2020 to make a positive impact on our workplace, marketplace and the communities we serve. Justice is fundamental to our core values, so we took specific actions to demonstrate our commitment to diversity, equality and inclusion.
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Corporate Governance
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The Board has determined
Throughout 2020, we continued to expand our talent sourcing efforts to ensure that director nominees Mark G. Foletta, Teri G. Fontenot, R. Jeffrey Harris, Dr. Michael M.E. Johns, Martha H. Marsh, Daphne E. Joneswe are attracting a more diverse slate of candidates. To further this effort and Douglas D. Wheat all meetpromote transparency surrounding these initiatives, we disclose certain diversity metrics on our categorical standards for director independencecorporate website and measure our efforts through market surveys such as the Bloomberg Gender-Equality Index and the applicable rulesHuman Rights Campaign Corporate Equality Index, both of which have recognized AMN as a leader for at least three consecutive years. We also hold leadership accountable for diversity-related goals. Our team manages diversity metrics and regulationstracks annual goals at both an enterprise and department level, and progress against these goals is considered by our management when making compensation decisions for our leaders.
In 2021, we plan to capitalize on our 2020 efforts by encouraging more team members to engage through our expanded network of Employee Resource Groups (“ERGs”). Research indicates that team member engagement and retention is positively impacted if team members are involved in an ERG. To build an inclusive infrastructure of ERGs that closely aligns with the NYSEdiverse interests and federal securities laws regarding director independence. Our CEO is the only memberbackgrounds of our Board whoteam members, the BoardCompany has not deemed independent.invested into and dedicated the resources necessary for our team members to establish and build the ERGs. As of December 31, 2020, the Company actively supports seven ERGs and approximately 29% of our corporate team members are members of an ERG and we look forward to continuing to build on our ERG infrastructure and participation rate in 2021.
When making director independence determinations, the Board considered a business relationship between LHC Group, Inc., of which Ms. Fontenot is an independent director, and the Company. We discuss this relationship in more detail in the “Certain Transactions” section below. The Board considered the nature of this relationship, the annual amount of payments we receive from LHC Group, the fact that the nature of this relationship resulted solely from Ms. Fontenot’s role as an independent director of LHC Group, Inc., and determined that the relationship did not preclude the Board from making an independence determination for Ms. Fontenot and that the relationship fell within our standards of independence.
We separate the roles of Chairman of the Board and the Chief Executive Officer. Our CEO, Ms. Salka, is responsible for working with the Board in setting our strategic direction and ourday-to-day leadership and performance, while the Chairman of the Board, Mr. Wheat, leads the Board in overseeing our strategy, provides guidance to our CEO and presides over meetings of the Board. At this time the Board believes that having separate roles:
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Policies and Procedures Governing Conflicts of Interest and Related Party TransactionsPOLICIES AND PROCEDURES GOVERNING CONFLICTS OF INTEREST AND RELATED PARTY TRANSACTIONS
The Governance Guidelines, our Code of Conduct and the Company’s Related Party Transactions Policy adopted by the Board in December 2019 collectively establish the Company’s procedures related to conflicts of interest and related party transactions.
Under these policies, directors and executive officers must promptly notify the Company’s Chief Legal Officer of any potential “related party transaction” that the Company would be required to disclose publicly under Item 404 of RegulationS-K promulgated under the Securities Exchange Act of 1934. Potential related party transactions involving the Chief Legal Officer must be disclosed to the CEO. If the Chief Legal Officer or CEO, as the case may be, determines that a potential related party transaction would be an actual related party transaction, if consummated, such matter must be referred to the Governance and Compliance Committee for review and approval. The Committee may approve the transaction if it determines that consummation of the transaction is in the best interests of the Company’s shareholders.
Further, our policies require our directors and executive officers to avoid any action, position or interest that conflicts with an interest of the Company or gives the appearance of a conflict. Any potential conflict of interest involving our directors or executive officers must be reported in advance to the Chief Legal Officer, with potential conflicts of interest involving the Chief Legal Officer having to be reported in advance to the CEO. If the Chief Legal Officer or CEO, as the case may be, determines that an actual conflict of interest may exist, then the matter must be referred to the Governance and Compliance Committee for review. If the Governance and Compliance Committee determines that an actual conflict exists, the Company is required to implement guidelines and procedures necessary to remove the conflict.
Any conflict of interest issue involving any other employeeteam member is reviewed by an attorney in our Legal Department. If the attorney believes that an actual conflict of interest issue exists, then the attorney submits the conflict of interest issue to our Chief Legal Officer. If our Chief Legal Officer determines that an actual conflict exists, then the Chief Legal Officer decides what steps should be taken to remove the conflict.
Certain Transactions
CERTAIN TRANSACTIONS
In December 2019, the Governance and Compliance Committee evaluated a potential transaction involving the Company and Randstad North America pursuant to which the Company and Randstad North America would agree to jointly pursue and service third parties’ contingent staffing needs. The Governance and Compliance Committee evaluated this transaction as a potential “related party transaction” under Item 404 of RegulationS-K because Ms. Rebecca Henderson holds the position of CEO of Randstad Global Businesses, and Ms. Henderson is the spouse of the Company’s former President of Professional Services and Staffing, Mr. Ralph Henderson, who was an executive officer and will retire fromwhose employment with the Company ended on or around May 1, 2020. While the nature of the transaction does not currently contemplate any direct payments between the parties in excess of $120,000, the Governance and Compliance Committee believed the transaction will likely benefit each of the Company and Randstad in excess of this amount and evaluated the transaction under the Company’s Related Party Transaction Policy. The Company understands that Ms. Henderson is not directly compensated on the basis of the financial performance of Randstad North America, which is a Randstad portfolio company for which she is not responsible.
After reviewing and considering the terms of this proposed transaction, the Governance and Compliance Committee determined that its consummation is in the best interests of the Company’s shareholders, and it is being negotiated on anarm’s-length basis between the parties. The Governance and Compliance Committee also determined that, based on its review of the processes and guidelines in place to limit Mr. Henderson’s involvement in the proposed transaction, consummation of the proposed transaction and the Company’s performance under the transaction doesdid not constitute a conflict of interest involving Mr. Henderson. Subsequent to the review of this proposed transaction by the Governance and Compliance Committee, the parties entered into a definitive agreement on January 20, 2020 and are currently performing the terms of such agreement.
In determining whether directors are independent, the Board considered Ms. Fontenot’s role as an independent director at LHC Group, Inc. In 2019,2020, we continued a commercial relationship with LHC Group that existed before
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Ms. Fontenot joined the Board under which LHC Group provides home health contingent staffing services to the Company. The approximately $1.8 million in fees that we received from LHC Group in 20192020 were negotiated on anarm’s-length basis and are within the categorical independence standards that the Board has adopted. The relationship does not prevent Ms. Fontenot from qualifying as an independent director under the categorical independence standards, and the Board considers Ms. Fontenot to be an independent director.
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Table of ContentsOur Board’s Aggregate Tenure Policy
Corporate Governance
In February 2019, our Board adopted an aggregate board tenure policy that reflects its commitment to consistently evaluate the composition of our Board to ensure that it collectively possesses the necessary experience, skills, knowledge, and level of engagement necessary to serve the best interests of our shareholders. The terms of the following policy were developed in part based on insight and feedback we received directly from shareholders in connection with our ongoing corporate governance shareholder engagement efforts.
The Board believeshas carefully considered its leadership structure, including whether the role of Chair should be a non-executive position or be combined with that directors should not expect to bere-nominated annually. In determining whether to recommend a director forre-election, the Governance and Compliance Committee considers the needs of the CompanyCEO. Following due consideration, the Board continues to conclude that maintaining an independent chair best positions the Board to promote shareholders’ interests and contribute to the diversityBoard’s overall efficiency and effectiveness. Our CEO, Ms. Salka, is responsible for working with the Board in setting our strategic direction and our day-to-day leadership and performance, while the Chair of the Board, as a whole, the director’s participation in and contributions to the activities ofMr. Wheat, leads the Board the results of the annual Board evaluationin overseeing our strategy, provides guidance to our CEO and past meeting attendance.
The Board does not believe in a specific limit for the overall length of time an independent director may serve. Directors who have served on the Board for an extended period can provide valuable insight into the operations and future of the Company based on their experience with, and understanding of, the Company’s history, policies, and objectives. The Board also believes that new directors will strengthen the diversity of the Board, provide fresh perspectives and provide value as the Company evolves. To achieve this balance, effective in 2020, the Board will maintain an average Board tenure for independent board directors of less than ten years.
Upon the conclusion of the Annual Meeting, the aggregate tenure for our Board’s independent directors will be slightly less than 9 years.
Board Meetings and Annual Meeting Attendance by Board Members
We expect each of our directors to attend each meeting of the Board and of the committees on which he or she serves. We also expect our directors to attend our annual meetings. Our Board has an excellent record of attendance and engagement.During 2019, the Board met six times, and took two actions by unanimous written consent. In 2019, no member of the Board attended fewer than 75%of the aggregate of (i) the total number ofpresides over meetings of the Board (held during the period for which he or she has been a director) and (ii) the numberBoard.
DUTIES OF OUR CHAIRMAN | ||||
• Serves as Chair of regular sessions of the Board and manages the overall Board process. • Leads the Board in anticipating and responding to crises. • Oversees and monitors Board engagement to ensure our directors are in-tune with issues of our dynamic industry and the evolving landscape. • Supports the Governance and Compliance Committee with director on-boarding and identification. • Models the culture and values expected of all directors. • Conducts individual meetings with other directors, including the CEO, and executive management team to encourage open communication, collaboration and differences in perspective. | • Evaluates overall Board effectiveness, with emphasis on identifying areas of enhancement, development and/or furtherance and communicating these observances to the Board for discussion. • Represents the Board on occasions where it is important for the Board to respond on matters independently from or in concert with the Company’s executive management team. • Provides guidance and direction to the CEO and executive management team. • Engages with shareholders and presides over the Company’s Annual Meeting of Shareholders. Also recommends to the Board an agenda to be followed at the Annual Meeting. | |||
CHAIR OF THE BOARD The Board has selected Douglas D. Wheat to serve as its independent Chair because he: • Brings unique and extensive board leadership experience that effectively allows him to lead our high-performing Board by keeping it focused on key areas of oversight, coordinating across committees and facilitating effective communication among directors and the Company’s executive management; • Fosters a productive relationship between the Board and the Company’s CEO by providing Ms. Salka with an experienced Chair sounding board and providing candid, constructive feedback from the Board to the Company’s executive management team; • Is deeply committed to our values and mission while driving long-term shareholder value; • Increases the independent oversight of the Company and partners with the Compensation Committee to oversee the performance and compensation of our CEO; and • Acts as an independent spokesperson for the Company to our shareholders. | |
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Committees of the BoardCorporate Governance
We have standing Audit, Corporate Governance and Compliance, and Compensation Committees. We also have an Executive Committee that meets periodically, as necessary, to oversee the Company’s business development strategy and Executive Committees.to approve related transactions. The Board committees are chaired by independent directors, each of whom report to the Board at meetings on the activities and decisions made by their respective committees. The Board makes committee assignments and designates committee chairs based on a director’s independence, knowledge and areas of expertise. We believe this structure helps facilitate efficient decision-making and communication among our directors and fosters efficient Board functioning at Board meetings.
In line with our value of continuous improvement, the directors conduct an evaluation of the performance of the Board and each of the committees on an annual
basis. Additionally, on abi-annual basis, the Governance and Compliance Chairman has individual conversations with the directors specifically regarding their board performance and board composition. We describe the current functions and members of each committee below. A more detailed description of the function,functions, duties and responsibilities of the Audit, Governance and Compliance and Compensation Committees is included in each Committee’s charter and available in the link entitled “Corporate Governance”“Governance” located within the “Investor Relations” tab of our website atwww.amnhealthcare.com. www.amnhealthcare.com.
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The table below provides current committee memberships and fiscal year 20192020 committee meeting information:
Director |
Audit (1) |
Compensation (2) |
Governance & Compliance(3) |
Executive | Audit(1) | Compensation(2) | Corporate Governance and Compliance(3) | Executive | ||||||||
Mark G. Foletta | Chair | Chair | ||||||||||||||
R. Jeffrey Harris | Chair | Member | Chair | Member | ||||||||||||
Michael M.E. Johns, M.D. | Member | Member | ||||||||||||||
Michael M.E. Johns, M.D.(4) | Member | Member | ||||||||||||||
Martha H. Marsh | Chair | Chair | ||||||||||||||
Susan R. Salka | Member | Member | ||||||||||||||
Andrew M. Stern(4) | Member | Member | ||||||||||||||
Teri G. Fontenot | Member | Member | Member | |||||||||||||
Sylvia Trent-Adams | ||||||||||||||||
Douglas D. Wheat | Chair | Chair | ||||||||||||||
Daphne E. Jones | Member | Member | Member | Member | ||||||||||||
Committee Meetings and Actions by Written Consent | Committee Meetings and Actions by Written Consent | Committee Meetings and Actions by Written Consent | ||||||||||||||
Total Committee Meetings | 9 | 6 | 5 | 2 | 9 | 7 | 5 | 1 | ||||||||
Actions by Written Consent | 0 | 0 | 0 | 4 | 0 | 3 | 0 | 2 |
(1) | The Board has determined that all Audit Committee members (A) are financially literate, and (B) meet the criteria for independence set forth in Rule10A-3 under the Exchange Act, and Section 303A of the NYSE Listed Company Manual. The Board further determined that Mark G. Foletta and Teri G. Fontenot are each an “Audit Committee Financial Expert” as defined by SEC Rules and Regulations. |
(2) | The Board has determined that all members of the Compensation Committee meet the standards for independence required by the NYSE. |
(3) | The Board has determined that all members of the Governance and Compliance Committee meet the standards for independence required by the NYSE. |
(4) |
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2021 Proxy Statement | 35 |
Corporate Governance
AUDIT COMMITTEE
Our Audit Committee Charter, which is reviewed annually, sets forth the duties of the Audit Committee. Generally, the Audit Committee is responsible for, among other things, overseeing our financial reporting process. In the course of performing its functions, the Audit Committee as provided by our Audit Committee Charter:
MEMBERS Mark G. Foletta (Chair) TOTAL COMMITTEE 9 ATTENDANCE 100% | The Audit Committee is responsible for, among other things, overseeing our financial reporting process. In the course of performing its functions, the Audit Committee: • reviews our internal accounting controls and audited financial statements, |
• reviews with our independent registered public accounting firm the scope of its audit, its audit report and its recommendations, |
• considers the possible effect on the independence of such firm in approvingnon-audit services requested of it, |
• reviews disclosures made by our CEO and CFO in connection with the certification of our periodic reports, |
• reviews and discusses with management significant technology strategic initiatives, operations and risk, |
• reviews and discusses with management the Company’s process to manage our major enterprise risk exposures and the steps taken to monitor, control and manage such exposures, and |
• appoints our independent registered public accounting firm, subject to ratification by our shareholders. |
CORPORATE GOVERNANCE AND COMPLIANCE COMMITTEE
Our Corporate Governance and Compliance Committee Charter sets forth the duties of the Governance and Compliance Committee. Generally, the Governance and Compliance Committee:
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KEY 2020 ACTIVITIES | ||
• Helped strengthen the Company’s balance sheet by overseeing two public debt offerings and | ||
• Oversaw the relationship between the Company’s finance team and its independent auditor to ensure an effective virtual audit process in response to the COVID-19 pandemic | ||
• Oversaw the deployment of the Company’s internal audit resources to ensure the effectiveness of the Company’s financial controls while also establishing controls and processes relative to new COVID-19 solutions |
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Corporate Governance
COMPENSATION COMMITTEE
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TOTAL COMMITTEE 7 ATTENDANCE 100%
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With respect to director nominee procedures, the Governance and Compliance Committee utilizes a broad approach for identification of director nominees and may seek recommendations from our directors, management or shareholders or it may choose to engage a search firm. A detailed discussion of our Board composition evaluation and director nomination process is described in the “Board Composition Evaluation and Director Nomination Processes“ section located on page 6 above.
In evaluating and determining whether to ultimately recommend a person as a candidate for election as a director, the Governance and Compliance Committee considers the qualifications set forth in our Governance Guidelines, including:
judgment, business and management experience,
leadership,
strategic planning,
reputation for honesty and integrity,
diversity, and
independence from management.
It also takes into account specific characteristics, skills and expertise that it believes will enhance the collective composition of the Board to most effectively support our long-term strategic objectives. The Governance and Compliance Committee may engage a third party to conduct or assist with the evaluation.
The Governance and Compliance Committee considers shareholder recommendations of qualified nominees when such recommendations are submitted in accordance with the procedures described in the Bylaws. To have a nominee considered by the Governance and Compliance Committee for election at the 2021 Annual Meeting of Shareholders, a shareholder must submit the recommendation in writing to the attention of our Corporate Secretary at our corporate headquarters no later than January 22, 2021 and no sooner than December 23, 2020. Any such recommendation must include the information set forth onExhibit A to this proxy statement (pageA-1).
The Governance and Compliance Committee received no recommendations for a director nominee from any shareholder for the director election to be held at the Annual Meeting.
COMPENSATION COMMITTEE
The Compensation Committee Charter, last amended in April 2019 to more effectively delineate the Committee’s oversight of the Company’s human capital management and equal pay strategies, sets forth the Committee’s duties. Among other things,performing its functions, the Compensation Committee:
• establishes the executive compensation philosophy for the Company, |
• designs executive compensation programs to attract, incent and retain executive talent, |
• reviews, and, when appropriate, administers and makes recommendations to the Board regarding (A) compensation of our CEO, |
• prepares the Compensation Committee Report and oversees the preparation of our compensation disclosure and analysis |
• recommends the proposals on |
• reviews our incentive compensation arrangements generally to determine whether they encourage excessive risk-taking, |
• evaluates the performance of our CEO, and |
• oversees the Company’s human capital management strategy, including talent recruitment, retention and engagement and its diversity, equality and inclusion initiatives. |
For further information about the responsibilities of the Compensation Committee, please see the Compensation Discussion and Analysis portion of this proxy statement below.
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• Closely monitored the impact from the COVID-19 pandemic on the Company’s compensation and benefits programs. The Committee did not modify the equity incentives for its named executive officers. | ||||||||
• Issued a new long-term equity award based on the Company’s achievement of certain annual adjusted EBITDA growth targets that it believes incentivizes bottom line growth and key talent retention over time | ||||||||
• Continued to oversee the development and execution of the Company’s human capital management strategies, including its diversity, equality and inclusion program and commitment to equal pay principles | ||||||||
Compensation Committee Interlocks and Insider ParticipationCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee, whose members are Ms. Marsh, Dr. Johns, and Ms. Jones consists exclusively ofnon-employee, independent directors, none of whom has a business relationship with us, other than in his or her capacity as director, or has any interlocking relationships with us that are subject to disclosure under the rules of the SEC related to proxy statements.
Compensation Committee Consultant Independence
COMPENSATION COMMITTEE CONSULTANT INDEPENDENCE
The Compensation Committee retains an independent consultant to assist it in fulfilling its responsibilities. Since 2008, the Compensation Committee has utilized Frederic W. Cook & Co., Inc. as its compensation consultant. Our compensation consultant advises the Compensation Committee on a variety of topics, including, among others, our equity compensation program, the design of our cash incentive program, the evaluation of the alignment of our compensation program with our shareholders’ interests, the risks presented by our executive compensation program structure, the assessment of the program compared to our peers and director and executive compensation trends.
In retaining and utilizing Frederic W. Cook & Co., the Compensation Committee considers (1) our directors’ experience with its employees and representatives while serving on other boards, (2) knowledge and experience in executive compensation program design, corporate finance and legal and regulatory issues, (3) experience providing consultative services to boards, as well as its analysis of our existing program and proposal of key considerations in evaluating and strengthening our program and (4) factors affecting independence, including factors set forth by the NYSE for evaluating the independence of advisors. In connection with its consideration of Frederic W. Cook & Co.’s independence, the Compensation Committee factored in that Frederic W. Cook & Co. does provide consulting services to other companies that have a director who is also a director of ours, but it does not have any other relationship with or provide any other services to us. As a result of the Compensation Committee’s review of the factors affecting independence, it has determined that Frederic W. Cook & Co. is independent and has no conflicts of interest with us.
2021 Proxy Statement | 37 |
Corporate Governance
CORPORATE GOVERNANCE AND COMPLIANCE COMMITTEE
MEMBERS R. Jeffrey Harris (Chair) TOTAL COMMITTEE 5 ATTENDANCE 100% | The Corporate Governance and Compliance Committee is responsible for, among other things, overseeing our board composition and refreshment strategies, corporate governance practices, ESG reporting strategies and ethics and compliance programs. In the course of performing its functions, the Corporate Governance and Compliance Committee: • identifies and recommends qualified individuals with diverse backgrounds and experiences to become members of the Board, • oversees the Company’s ESG strategies and practices, including its governance of reporting frameworks and climate-related risks and opportunities, • periodically evaluates the Code of Conduct and the Governance Guidelines, • reviews the performance of the Board and its committees on an annual basis, • oversees all aspects of the Company’s ethics and compliance programs, including the Company’s healthcare, employment and privacy regulatory compliance and risk oversight with respect to the credentialing of candidates, • reviews and evaluates succession planning for the CEO and other members of our executive management team, • recommends potential successors to the CEO, oversees our shareholder engagement program as it relates to corporate governance issues and considers feedback provided by our shareholders, and • reviews and discusses with our executive team relevant quality metrics, compliance with certification standards and related laws and regulations as well as our enterprise risk management process relating to the quality of our services. | |
KEY 2020 ACTIVITIES | ||
• Continued to execute the Board’s refreshment and composition strategy by identifying and onboarding Sylvia Trent-Adams • Helped guide the Company’s COVID-19 response by overseeing strategies related to its healthcare provider and client experience efforts, including ensuring that our healthcare providers who are quarantined or infected with COVID-19 continue to be paid full wages and have access to appropriate medical care and resources • Oversaw the continued development of the Company’s CSR strategies, including the development of its initial SASB and TCFD disclosures |
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Corporate Governance
EXECUTIVE COMMITTEE
MEMBERS Douglas D. Wheat (Chair) TOTAL COMMITTEE 1 ATTENDANCE 100% | The Executive Committee exercises the power of the Board between its meetings, including the approval of certain acquisitions within established parameters. |
KEY 2020 ACTIVITIES | |
• Oversaw the Company’s Stratus Video acquisition • Continued to oversee and develop the Company’s business development strategies and evaluate acquisition targets • Oversaw the Company’s private offering of approximately $550 million in unsecured senior notes |
We expect each of our directors to attend each meeting of the Board inand of the interval betweencommittees on which he or she serves. We also expect our directors to attend our annual meetings. Our Board has an excellent record of attendance and engagement. During 2020, the Board met 8 times, and took 3 actions by unanimous written consent. In 2020, no member of the Board attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board including(held during the approvalperiod for which he or she has been a director) and (ii) the number of certain acquisitions within established parameters.meetings held by all committees of the Board (during the periods that he or she served on such committees). All of our then-serving directors attended our 2020 Annual Meeting of Shareholders.
Executive Sessions ofNon-Management DirectorsEXECUTIVE SESSIONS
The Board has executive sessions at each regularly scheduled Board meeting during the year, for which our management director, Ms. Salka, is not present.
2021 Proxy Statement | 39 |
Communications with the BoardTable of DirectorsContents
Corporate Governance
The Board has established the following procedure for shareholders and other interested parties to communicate with members of the Board, the presiding director, or the independent directors as a group. All such communications should be addressed to the attention of our Corporate Secretary at our offices located at 12400 High Bluff Drive, Suite 100, San Diego, California 92130. The Corporate Secretary collects and maintains a log of each such communication and forwards any that the Corporate Secretary believes requires immediate attention to the appropriate members of the Board, who then determine how such communication should be addressed.
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OWNERSHIP GUIDELINES
Members of the Board who are not employees of the Company (“Independent Directors”), receive compensation for their service in the form of cash and equity. We refer to these directors as “Independent Directors.” Each form of compensation is evaluated by the Compensation Committee on an annual basis. The Compensation Committee believes director pay should be aligned with the long-term interests of shareholders, so it has historically given substantial weight to the equity component, which represented approximately 66% of our Independent Directors median total compensation in 2019. As part of their annual review process, the Compensation Committee evaluates a variety of sources and benchmarks the compensation we pay our Independent Director’s against our peer group and relevant market data. It also consults with an independent compensation consulting firm, Frederic W. Cook & Co., Inc., prior to issuing a recommendation to the Board, which it has historically done in April. Following this process provides the Compensation Committee with more visibility into director pay trends based on the most recently disclosed public filings of peer companies included in its analysis.
DIRECTOR COMPENSATION PHILOSOPHY AND PROCESS The Compensation Committee believes director pay should be aligned with the long-term interests of our shareholders, so it gives substantial weight to the equity component, which represented approximately 65% of our Independent Directors median total compensation in 2020. As part of their annual review process, the Compensation Committee evaluates a variety of sources and benchmarks the compensation we pay our Independent Directors against our executive compensation peer group and relevant market data. It also consults with our independent compensation consulting firm, Frederic W. Cook & Co., Inc., prior to issuing a recommendation to the Board, which it has historically done in April. Following this process provides the Compensation Committee with more visibility into director pay trends based on the most recently disclosed public filings of peer companies included in its analysis. |
We pay our independentIndependent Directors an annual cash retainer.retainer that is paid in advance on a quarterly basis. We do not pay any meeting fees to our directors. The Chairman of the Board, Committee Chairpersons and one Executive Committee member receive an additional annual retainer for their services. We also reimburse directors forout-of-pocket expenses incurred in connection with their service. Annual retainers are paid in four equal quarterly installments. The table on the right sets forth the
current annual retainer schedule for our Independent Directors.
Position | ||||
Annual Retainer ($) | ||||
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| 70,000 | ||
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Chairperson of the Board | 100,000 | |||
Chairperson of Audit Committee | 30,000 | |||
Chairperson of Compensation Committee | 15,000 | |||
Chairperson of Corporate Governance and Compliance Committee | | 15,000 | (1) |
(1) | On April 1, 2020, we increased the annual cash retainer from $10,000 to $15,000. |
In response to the impact that COVID-19 had on the Company’s financial and operational performance during this past spring and summer, the Board, at the recommendation of its Compensation Committee, |
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Director Equity CompensationDIRECTOR EQUITY COMPENSATION
We typically grant full-value equity awards tonon-management directors Independent Directors upon appointment or election to the Board, and annually thereafter during the director’s term. WeBecause we believe that director compensation should be weighted in equity, we anticipate that we will continue to grant annual equity awards to our independentnon-management directors at some levelIndependent Directors for the foreseeable future. The aggregate grant date fair value, which we refer to as AGD Fair Value, of such equity awards is $140,000, which we believe aligns with the market for independent director compensation.
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Corporate Governance
On April 17, 2019,22, 2020, each independentnon-management directorIndependent Director received an equity award of 2,9072,826 restricted stock units, which we refer to as RSUs. The RSU awards issued to independent directorsour Independent Directors vest on the earlier of theone-year anniversary of the grant date or the 20202021 annual meeting of shareholders, provided such director remains in service, and each director was given the option to defer receipt of the shares underlying the RSUs until his or her separation of service.service from the Board. Independent Directors that are elected to the Board at a time other than in connection with our annual meeting of shareholders receive an equity award upon election in an amount equal to the pro rata annual grant value approved for Independent Directors for the anticipated service time from his or her date of election through the Company’s next annual meeting of shareholders. The chart below illustrates a breakdown of the current annual compensation our Independent Directors, excluding committee retainers.
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Director Compensation TableDIRECTOR COMPENSATION TABLE
The following table reflects compensation that our directors earned during fiscal year 2019.2020. The table does not include Ms. Salka, who received no additional compensation for her service as a director.
Name | Fees Paid in Cash ($) | Fees Paid in Stock ($)(1) |
Total ($) | Fees Paid in Cash ($) | Fees Paid in Stock ($)(1) | Total ($) | ||||||||||||
Mark G. Foletta |
| 100,000 |
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| 140,001 |
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| 240,001 |
| 97,375 | 140,028 | 237,403 | ||||||
R. Jeffrey Harris |
| 77,500 |
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| 140,001 |
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| 217,501 |
| 81,125 | 140,028 | 221,153 | ||||||
Michael M.E. Johns, M.D. |
| 72,500 |
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| 140,001 |
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| 212,501 |
| 67,375 | 140,028 | 207,403 | ||||||
Martha H. Marsh |
| 85,000 |
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| 140,001 |
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| 225,001 |
| 82,375 | 140,028 | 222,403 | ||||||
Andrew M. Stern |
| 70,000 |
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| 140,001 |
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| 210,001 |
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Paul E. Weaver (2) |
| 23,270 |
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| 23,270 |
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Andrew M. Stern(2) | 21,731 | — | 21,731 | |||||||||||||||
Sylvia Trent-Adams | 17,500 | 70,001 | 87,501 | |||||||||||||||
Douglas D. Wheat |
| 170,000 |
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| 140,001 |
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| 310,001 |
| 167,375 | 140,028 | 307,403 | ||||||
Daphne E. Jones |
| 70,000 |
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| 140,001 |
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| 210,001 |
| 67,375 | 140,028 | 207,403 | ||||||
Teri G. Fontenot |
| 20,222 |
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| 75,489 |
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| 95,711 |
| 67,375 | 140,028 | 207,403 |
(1) | The amount set forth in this column represents the AGD Fair Value of the |
(2) | Mr. |
Director Equity Ownership RequirementDIRECTOR EQUITY OWNERSHIP REQUIREMENT
Our Board believes that all directors should maintain a meaningful personal financial stake in the Company to further align their long-term interests with our shareholders. Accordingly, it is the Board’s desire that eachnon-management director will hold Common Stock and vested but unsettled RSUs of the Company equal to a value of at least five times the director’s annual cash retainer (i.e.(i.e., $350,000). The Company does not take into account the value of unvested RSUs and vested or unvested stock appreciation rights (“SARs”) and options in determining whether a director meets our director equity ownership guidelines. As of December 31, 2019, all of our directors, with the exception of Ms. Jones and Ms. Fontenot, who were appointed to the Board in July 2018 and September 2019, respectfully, satisfy our director equity ownership guidelines.
As of December 31, 2020, all AMN directors satisfy our director equity ownership guidelines, except for our newest three directors, Ms. Jones, Ms. Fontenot and Ms. Trent-Adams, who were appointed to the Board in July 2018, September 2019 and October 2020, respectively. | ||||||
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Executive Compensation |
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 14A of the Exchange Act, as amended by the Dodd-Frank Act, enables our shareholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. As previously disclosed, the Board has determined that it will hold an advisory vote on executive compensation on an annual basis, and the next shareholder advisory vote will occur at our 2021 Annual Meeting of Shareholders.
As described in detail in the Compensation Discussion and Analysis section below, we design our executive compensation programs to, among other things, attract, motivate, and retain our named executive officers, who are critical to our success. Under these programs, we reward our named executive officers for the Company’s successful performance, the achievement of specific annual, long-term and strategic goals, and the realization of increased value for our shareholders. The executive compensation packages paid to our named executive officers are substantially tied to our strategic objectives, financial plan and total shareholder return, and align with the interests of our shareholders. The Compensation Committee closely monitors evolving best practices as well as the compensation programs and pay levels of executives at peer companies to ensure that our compensation programs fall within the normal range of relevant market practices.
We ask that you support the compensation of our named executive officers as disclosed in our Compensation Discussion and Analysis and the accompanying tables contained in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2021 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table and the other related tables and narrative disclosure.”
Because your vote is advisory, it will not bind us, the Compensation Committee, or our Board. However, our Board and our Compensation Committee value the opinions of our shareholders and will review the voting results and take them into consideration when making future decisions regarding our executive compensation programs and policies.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC. |
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Executive Compensation
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
2020 was an extraordinary year for AMN. Beginning in the first quarter, the COVID-19 pandemic disrupted the entire globe and impacted the Company’s performance in certain businesses to varying degrees. When the pandemic hit, the Company took steps to offset its impact on the Company’s 2020 financial performance by implementing cost saving measures to preserve financial flexibility amid uncertainty. Temporary cost saving measures consisting of reduced discretionary spending, reduction in third party contractors, unpaid time off for executives, furloughs and suspension of the Company’s 401(k) and deferred compensation matching contributions were taken during the second quarter to ensure the Company maintained an appropriate cost structure. In addition, more permanent measures were taken, such as reductions in our office space portfolio and small reductions in force. As the pandemic progressed and infection rates rose, demand for nursing and allied professionals hit record levels as clients and communities fought to provide care for infected patients. As a result of the Company’s financial flexibility and strong operational response to the pandemic, during the latter half of 2020 the Company was able to restore its previously implemented temporary cost savings measures and bring back team members previously furloughed or let go earlier in the year. The Compensation Committee believes that the Company’s effective response to the COVID-19 pandemic was central to the Company’s strong 2020 performance by establishing the flexibility structure necessary to navigate the volatile environment, serve its healthcare clients and professionals and continue to execute its long-term strategy.
In 2019,February 2020, the Company furtheredalso continued to execute on its long-term strategic objective to continue to diversify our portfolio of talent solutions. Through our acquisitions of Silversheet and b4health, we expanded our suite of technology solutions offered to clientsgrowth strategy by acquiring Stratus Video (currently known as a total talent management and workforce solutions partner. Additionally, ourAMN Language Services), an industry leading language services provider. The Compensation Committee believes that the strategic acquisition of Advanced Medical allowedStratus Video uniquely positioned the Company to expandprovide its footprint into schoolsclients with additional telehealth capabilities and other nonacute settings, which are strategically significantsolutions that have played a pivotal role in serving the needs of healthcare organizations and their patients during the pandemic.
As discussed in greater detail in the following Compensation and Discussion Analysis, the Company has two shareholder approved performance incentive vehicles to our long-term growth objectives as patient care continues to extend beyond the traditional hospital walls.reward strong operational and financial performance; cash bonus and equity plans. The Compensation Committee believes that these vehicles are effective to motivate, retain and reward our executives, which is why they make up a majority of the pay the Company provides to its executives. As a result of this pay-for-performance focused structure, the Company’s named executive officers realized an amount at or slightly above their 2020 target compensation.
Driven by its 2020 strategic achievements and its strong response to the COVID-19 pandemic, the Company’s 2020 revenue and pre-bonus adjusted EBITDA performance exceeded the Company’s 2020 financial plan by approximately $23.5 million (1%) and $39.9 million (13.5%), respectively. The Company’s 2020 financial plan, established in December 2019, excluded the financial impact of the Company’s B4Health and Stratus Video businesses. Excluding the impact of these acquired businesses, the Company fell shy of its revenue and adjusted EBITDA targets by approximately 4% and 3%, respectively. In an effort to reward what the Compensation Committee believes to have been significant advances against the Company’s long-term strategy, which includes acquisitions to expand its technology solutions portfolio, the Company’s extremely strong 2020 operational performance, and incentivize our executive talent, the Compensation Committee included B4Health’s and Stratus Video’s revenue and adjusted EBITDA performance when approving the Company’s 2020 Senior Management Incentive Bonus Plan (the “Bonus Plan”) payouts but capped the payouts for the financial component of the Bonus Plan at 100% for the Company’s named executive officers. The Company’s Bonus Plan performance measures and targets are described in more detail in the following Compensation Discussion and Analysis.
The Compensation Committee believes that the Company’s pay-for-performance structure appropriately incents executives without excessive risk and is comfortable that the outcomes under the Company’s incentive compensation plans reasonably reflect the balance of short- and long-term performance and that management continuesthe Company’s named executive officers continue to take the necessary actions today to achieve the Company’s long-term strategic plan and deliver shareholder value.
Our total shareholder return performance restricted stock units paid out at the maximum
2021 Proxy Statement | 43 |
TheExecutive Compensation Committee has historically set stretch, but realistic, targets to achieve performance incentive payouts under its Senior Management Incentive Bonus Plan, which we refer to as the Bonus Plan. Thus, despite all of the strategic achievements that the Company delivered in 2019 and its strong TSR, the Company’s financial performance, excluding the financial impact of its largest 2019 acquisition, Advanced Medical, did not satisfy the levels necessary to achieve target payouts under our Bonus Plan or the adjusted EBITDA margin equity performance awards. The Company’s financial performance was negatively impacted by the disruption in our Locum Tenens segment from organization and technology changes in 2018 and a challenging nurse supply market. Our Bonus Plan performance measures and the adjusted EBITDA margin targets are described in more detail in the following Compensation Discussion and Analysis.
APPROVAL OF PERFORMANCE GOALS FOR 20202021
Looking to 2020, in connection with the review of the long and short-term goals,2021, the Compensation Committee established financial goals for performance-based compensation with thresholds, targets and maximums for Bonus Plan compensation. We set Bonus Plan targets based on our annual operating plan and intend that the achievement of our annual targets will contribute to achievement of our long-term strategy. The Compensation Committee determined there was a reasonable likelihood that our executives could achieve the goals and earn Bonus Plan compensation at the target performance level based on the Company’s 2020 annual operating plan, while at the same time encouraging stretch performance.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis that follows with management,Management and has recommended to the Board that it be included in this proxy statement.
Compensation Committee Members Martha H. Marsh
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COMPENSATION DISCUSSION AND ANALYSIS
TheThis Compensation Discussion and Analysis, which we refer to as the CD&A, provides a detailed description of the compensation objectives, philosophy, design, practices and programs for ourAMN’s named executive officers.officers that are listed below. The Compensation Committee takes great care in the development and refinement of a comprehensive package that reflectsexercising its oversight responsibility relatingof the design of our comprehensive compensation program to attracting, retainingattract, retain and incentingproviding incentives for talent to lead our organization to achievein a manner consistent with our core values and that aligns with shareholders’ interests and the achievement of our short- and long-term strategic goals.
More specifically, this CD&A provides clear details related to each of the following aspects of the total rewards program for our named executive officers: (1) the objectives and philosophy, (2) the processes and criteria in place for proper oversight, (3) the design and components of our named executive officers’ total rewards program, and (4) how each component fits into our Compensation Committee’s overall objective to supportsupports the Company’s business strategy.
The Compensation Committee believes that our named executive officers are collectively a strong, valuable, experienced, talented and innovative team, with a passion for the Company, its core values and delivering sustainable returns for our shareholders. Our named executive officers for the 2019 fiscal year are listed below.
Name | Title | |
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Susan R. Salka | Chief Executive Officer | |
Brian M. Scott | Chief Financial Officer, Chief Accounting Officer and Treasurer | |
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Denise L. Jackson | Chief Legal Officer and Corporate Secretary |
Ourpay-for-performance focused executive compensation program is designed to motivate our leaders to build long-term shareholder value. Among other things, the Compensation Committee premises our executive compensation on the following guiding principles:
support the attainment of our short- and long-term financial objectives in alignment with our business strategy;
attract, retain and motivate talented and innovative executives who will extend our leadership position as the driver of quality and innovation within our industry; align pay with performance, with variable pay constituting a significant portion of total compensation;
create commonality of interest between our executives and shareholders by tying realized compensation directly to increases in shareholder value; and
foster a culture of integrity, equality and ethics where team members are treated with respect and appreciation for their contributions.
To support AMN’s objectives, the Compensation Committee has designed a total rewards program for our named executive officers that includes the following primary features, which constitute the majority of our named executive officers total pay: (1) base salary; (2) annual bonuses; and (3) long-term incentive awards.
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Below is a summary relating to our named executive officers’ total rewards compensation program.
Chief Information and Digital Officer | ||
Ralph S. Henderson(1) |
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2019 Financial, Operational and Stock Performance Highlights
A long-standing principle of our executive compensation program is linking pay to performance. Accordingly, when making compensation decisions, we analyze our financial, operational and stock performance and execution on strategic initiatives. The Company delivered revenue, profitability and share growth in 2019(1) and continued to make significant progress on our short- and long-term objectives and overall business strategy.
Some of our 2019 highlights include:
Our TSR ranked in the 81st percentile for the three-year period ended December 31, 2019 among companies comprising the Russell 2000 Index as of December 31, 2016 with a cumulative total shareholder return of 73.5%.
The price of our common stock increased 10% in 2019 to $62.31, the closing price on December 31, 2019.
Execution of our long-term strategic plan by consummating the following acquisitions:
In January 2019, we acquired Silversheet Inc., which we refer to as Silversheet, anall-in-one healthcare provider credentialing and privileging SaaS solution. We often hear from clients that the credentialing and privileging processes are some of their largest pain points, and we believe that our acquisition of Silversheet will help our clients solve some of the inefficiencies associated with these processes.
In June 2019, we acquired Advanced Medical Personnel Services, Inc., which we refer to as Advanced Medical. A key to achieving our long-term growth strategies is expanding our service footprint into nonacute settings. Our acquisition of Advanced Medical furthers this objective by expanding our offerings to include the placement of therapists and nurses in contract positions across multiple healthcare settings, including schools, clinics, skilled nursing facilities, home health and telehealth environments. Our acquisition of Advanced Medical also bolsters our clinician supply in a competitive labor market, which we has helped alleviate some of the supply challenges the Company has experienced in 2019.
In December 2019, we acquired B4Health, LLC, which we refer to as b4health. b4health is an innovative technology company and leading provider of aweb-based internal float pool management solution and vendor management system for healthcare facilities. Our acquisition of b4health further diversifies of our workforce solutions offerings by providing technology aimed at automating communication, time management, and scheduling for clients to increase their clinician fill rates. It also further differentiates our suite of total workforce solutions by offering float pool and independent contractor management capabilities.
We believe these acquisitions will allow us to continue to strengthen our position as the industry’s most trusted total talent solution partner by diversifying our offerings and expanding our footprint into nonacute care settings.
Increased our consolidated revenue year over year by approximately 4% from approximately $2.14 billion to approximately $2.22 billion.
Our Allied Staffing Solutions business was our best-performing staffing line in 2019, reaching $323 million in annual revenue, 29% higher than the previous year including 9% in year over year organic growth.
Revenue for our Other Workforce Solutions segment reached a record $477.5 million for 2019, with consolidated growth of 9% over 2018. Within this segment, we consolidated our interim leadership and permanent placement businesses into one Leadership Solutions division. This move strengthened ourgo-to-market strategy and bolstered support of key brands in leadership and physician permanent placement.
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Capitalized on a favorable capital markets environment to make a private offeringTable of $300 million of Senior Notes due in 2027 to provide for additional liquidity to pursue strategic acquisitions and other investments that we believe enhance long-term shareholder value.
Continued to return value to our shareholders through the repurchase of approximately 395,212 shares of our common stock.
Continued execution of our digital and analytical strategic initiatives to improve the recruitment, engagement and retention of healthcare professionals through development of mobile capabilities, scheduling applications and artificial intelligence.
The following charts compare our year-over-year performance on key financial metrics that we utilized in makingContents
compensation decisions for our named executive officers in 2019.Executive Compensation
The Compensation Committee placed considerable emphasis on our total shareholder return as well as financial and operational performance over the past 12 months in determining our CEO’s 2019 cash bonus as well as her 2019 equity awards. Because certain compensation information included in this proxy statement spans the last three fiscal years, we have set forth below our cumulative total shareholder return and compound annual growth rate for theone-,two- and three-year periods ended December 31, 2019.
Period | Cumulative Total Shareholder Return (1) |
Compound Annual Growth Rate
| Common Stock Price at Beginning of Period | |||||||||
One-Year Period Ended December 31, 2019 |
| 5% |
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| N/A |
| $ | 55.65 |
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Two-Year Period Ended December 31, 2019 |
| 30% |
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| 27% |
| $ | 49.60 |
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Three-Year Period Ended December 31,2019 |
| 73% |
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| 17% |
| $ | 39.20 |
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(1) The price of our common stock on December 31, 2019 (the last trading day of the year) was $62.31. Unlike the total return values illustrated in the Proxy Statement Summary section above on page 1, which calculates the return using the closing price of our common stock on the first and last date of an applicable measurement period, the cumulative total shareholder return illustrated in this column is based upon the provisions of the Company’s TSR performance equity awards agreements, which measure the percentage increase in the 90 day average closing price of our common stock on the trading day at the end of the relevant investment period from the 90 day average closing price of our common stock on the last trading day of the year preceding the beginning of the applicable period. We did not pay any dividends during the periods set forth in this table.
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2019 Compensation for Our Named Executive Officers
Numerous factors played a role in our 2019 compensation decisions with the overarching goal of closely linking pay to performance. In 2019, performance-based cash incentives and equity compensation (which is inherently linked to performance) comprised 80% of our CEO’s compensation, and 68% - 73% of the total compensation for each of our other named executive officers.
To illustrate this, the chart set forth below reflects the percentage breakdown of our CEO’s 2019 compensation as set forth in the Summary Compensation Table.
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As the Compensation Committee has consistently done throughout the past several years, it based its 2019 compensation decisions around financial goal setting for 2019 and other actions influencing executive compensation based on the expectation that (1) we would achieve targeted revenue and adjusted EBITDA growth on a consolidated basis, and (2) our named executive officers would lead their teams to successfully execute our business strategy in a manner that reflected our core values. As a result of our 2019 operational performance and financial results, each named executive officer earned approximately 69% of his or her target bonus that was tied to the Company’s 2019 financial performance. Below is a breakdown of each of our named executive officer’s compensation for 2019.OUR COMPENSATION PROGRAM PHILOSOPHY AND OBJECTIVES
Response to 2019Say-on-Pay Vote
At our 2019 Annual Meeting of Shareholders held on April 17, 2019, we received more than 97% support on our“say-on-pay” proposal regarding the compensation of our named executive officers. Our compensation program has remained consistent with that set forth in our 2019 proxy statement and we believe the following four themes remain important among our investors: (1) compensation should correlate to company performance, (2) performance awards should constitute an important component of long-term incentive awards, (3) performance measures beyond total shareholder return should be considered, and (4) variable compensation should be designed to motivate, reward and retain executives.
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The Compensation Committee believes that our executive compensation program in 2019 satisfied each of the four themes identified above. In 2019, the Compensation Committee took the following actions:
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Our Compensation Program Philosophy and Objectives
A guiding principle of our Executive Compensation Philosophy isstates that compensation realized by executives should (i) align with shareholders’ interests;interests, (ii) reflect the individual skills and contributions of the executive in achieving the strategic, financial and operational goals of the Company and (iii) reflect the leadership they demonstrate in promoting our values-based culture. Additionally, corporate governance best practices, input received from shareholders through our engagement discussions andThe principles described below are the annual shareholder advisory vote on executive compensation are also considered in the designfoundation of our executives’ total rewards package. Our philosophy embraces the following principles:Executive Compensation Philosophy.
Pay-for-performance, with variable pay constituting a significant portion of total compensation,OUR COMPENSATION PROGRAM OBJECTIVES
Create commonality of interest between our executives and shareholders by tying realized compensation directly to changes in shareholder value,
OUR COMPENSATION PROGRAM OBJECTIVES | ||
Pay-for-performance, with variable pay constituting a significant portion of total compensation | ||
Focus on propelling growth and the attainment of our long-term financial and strategic objectives | ||
Provide equal pay based on performance without regard to legal status and classification | ||
Build a strong talent base to reinforce our succession planning objectives | ||
Maximize the financial efficiency of the overall program from, including but not limited to tax, accounting, and cash flow perspectives | ||
Create commonality of interest between our executives and shareholders by tying realized compensation directly to changes in shareholder value | ||
Reward our executives for long-term improvement in shareholder value | ||
Attract, retain and motivate highly skilled and innovative executives that embrace and promote AMN’s values-based culture that fosters innovation, diversity and inclusion | ||
Be competitive with companies in our executive compensation peer group | ||
Conform with established corporate governance practices and avoid excessive risk | ||
Focus on propelling growth in the attainment of our long-term financial and strategic objectives,
Reward our executives for long-term improvement in shareholder value,
Provide equal pay based on performance without regard to legal status and classification,
Attract, retain and motivate highly skilled and innovative executives that embrace and promote AMN’s values-based culture that fosters innovation, diversity and inclusion,
Build a strong talent base to reinforce our succession plan objectives,
Be competitive with companies in our peer group,
Maximize the financial efficiency of the overall program from, including but not limited to tax, accounting, and cash flow perspectives, and
Ensure that corporate governance practices and the impact of oursay-on-pay proposals are upheld.
With these principles as our foundation,in mind, we have designed and continually evaluate and modify, as necessary, our executive compensation program to support our strategic objectives of achieving above-market growth in revenue and profitability by (1) being the leader and innovator in healthcare total talent solutions and services, (2) growing our overall revenue mix from strategic workforce solutions and technology and (3) delivering a superior customer experience through operational excellence and agility.
To support AMN’s objectives, the Compensation Committee has designed a total rewards program for our named executive officers, including the following primary features that constitute the majority of our named executive officers total compensation: (1) base salary; (2) annual bonuses; and (3) long-term incentive awards.
2021 Proxy Statement | 45 |
Executive Compensation
EXECUTIVE COMPENSATION PRACTICES
WHAT WE DO | WHAT WE DON’T DO | |
Executive Compensation Philosophy that reflects our commitment to equal pay and fostering a culture of ethics. Align Pay with Performance. In 2020, actual variable pay constituted 81% of our CEO’s total compensation and more than 68% for each of our other named executive officers. Reward for Increases in Shareholder Value. We grant performance restricted stock units, which we refer to as PRSUs, based on absolute and relative total shareholder return over a three-year performance period to reward named executive officers for above-market stock performance (relative to the Russell 2000 Index). Focus on Our Long-term Goals. We utilize PRSUs that vest three years from grant and the amount that vest is based on the Company’s achievement of certain long-term adjusted EBITDA growth and margin expansion objectives. Ownership Guidelines. We have robust stock ownership guidelines for our directors and executive officers. Cap Incentive Awards. We cap payouts for our annual bonus awards. Incentives to Achieve Objective Key Financial Metrics. 70% of our cash bonus target is based on annual revenue and adjusted EBITDA targets, two key financial metrics for the Company. Appropriate Peer Group Selection. We review our executive compensation peer group on an annual basis to ensure that our compensation program is properly aligned with the companies we compete with for talent and business. Independent Compensation Consultant. Our Compensation Committee utilizes the services of an independent and reputable compensation consultant, Frederic W. Cook, to provide pay recommendations. “Double-trigger” Change in Control Provisions. Our equity award agreements include “double-trigger” mechanics. | No Risky Elements. We do not engage in compensation elements that create undue risk. No Pledges or Hedges No New Tax Gross-ups No Options or Stock Appreciation Rights No Excessive Perquisites |
2020 FINANCIAL, OPERATIONAL AND STOCK PERFORMANCE HIGHLIGHTS
A long-standing principle of our executive compensation program is linking pay to performance. Accordingly, when making compensation decisions, we analyze our financial, operational and stock performance and execution on strategic initiatives. The primaryCompany delivered revenue, profitability and share growth in 2020(1) and continued to make significant progress on our short- and long-term objectives and overall business strategy. We describe some of our 2020 highlights below.
OUR ACQUISITION OF STRATUS VIDEO, AN INDUSTRY LEADING LANGUAGE SERVICES PROVIDER
Our acquisition of Stratus Video furthered our growth strategy by expanding our suite of technology and telehealth solutions, a key strategic objective, and allowed us to more effectively respond to the COVID-19 pandemic by providing our clients with a valuable digital language and interpretation telehealth solution.
AN EFFECTIVE COVID-19 OPERATIONAL RESPONSE
When the COVID-19 pandemic hit, we took prompt action to offset its impact on our 2020 financial performance to preserve financial flexibility. We took temporary cost saving measures consisting of reduced discretionary spending, furloughs and suspension of the Company’s 401(k) and deferred compensation matching contributions during the second quarter to ensure we maintained an appropriate cost structure. In addition, we took more permanent measures, such as eliminating unnecessary office space and small reductions in force. As a result of the financial flexibility that the cost savings measures and strong operational response to the pandemic created, during the second half of 2020 we were able to restore the temporary cost savings measures and bring back team members that we had previously furloughed or let go earlier in the year. We believe that our effective response to the COVID-19 pandemic was central to delivering strong 2020 performance by establishing the flexibility structure necessary to navigate the volatile environment, serve our healthcare clients and professionals and continue to execute on our long-term strategy.
(1) | For more detail regarding our financial results, please see our 2020 annual report on Form 10-K filed by us with the SEC on February 26, 2021 and provided to you concurrently with this proxy statement. We provide the summary financial information in this proxy statement solely to help you in your evaluation and review of our CD&A. It should not be used as a substitute for a review of the detailed financial information in our 2020 annual report on Form 10-K. |
46 |
Executive Compensation
Increased our consolidated REVENUE year over year by APPROXIMATELY 8% from approximately $2.22 billion to approximately $2.39 billion. | Reported NET INCOME of APPROXIMATELY $70.7 million | Reported RECORD ADJUSTED EBITDA(2) of $320.7 million | ||||
Our Nurse and Allied Solutions segment was our best-performing operating segment in 2020, reaching approximately $1.7 BILLION in annual revenue, 9% higher than 2019. | Capitalized on a favorable capital markets environment to make private offerings of approximately $550 MILLION of senior unsecured notes due to payoff secured debt and provide for additional liquidity to pursue strategic transactions. | Continued execution of our DIGITAL AND TELEHEALTH strategic initiatives through the acquisition of Stratus Video and the development of mobile capabilities, scheduling applications and artificial intelligence. | ||||
The following charts compare our year-over-year performance on key financial metrics that we utilized in making compensation decisions for our named executive officers in 2020.
The Compensation Committee placed considerable emphasis on our financial and operational performance over the past 12 months as well as our total shareholder return when determining our CEO’s 2020 cash bonus and equity awards. Because certain compensation information included in this proxy statement spans the last three fiscal years, we have set forth below our cumulative total shareholder return and compound annual growth rate for the one-, two- and three-year periods ended December 31, 2020.
Period | Cumulative Total Shareholder Return(3) (%) | Compound Annual Growth Rate (%) | Common Stock Price at Beginning of Period ($) |
One-Year Period Ended December 31, 2020 | 10 | N/A | 62.11 |
Two-Year Period Ended December 31, 2020 | 16 | 10 | 55.65 |
Three-Year Period Ended December 31, 2020 | 44 | 11 | 49.60 |
(2) | For information on adjusted EBITDA, which means adjusted earnings before interest, taxes, depreciation and amortization, and a reconciliation of it from our 2020 net income, please see Exhibit A to this proxy statement (page 91). |
(3) | The price of our common stock on December 31, 2020 (the last trading day of the year) was $68.25. The cumulative total shareholder return illustrated in this column is based upon the provisions of the Company’s TSR performance equity awards agreements, which measure the percentage increase in the 90-day average closing price of our common stock on the trading day at the end of the relevant investment period from the 90-day average closing price of our common stock on the last trading day of the year preceding the beginning of the applicable period. We did not pay any dividends during the periods set forth in this table. |
2021 Proxy Statement | 47 |
Executive Compensation
2020 COMPENSATION ELEMENTS
The illustration below provides an overview of the principal components of our executive compensation program - (1) base salary, (2) annual cash performance bonuses,aimed at driving long-term shareholder value and (3) long-term equity incentive awards - reflect the implementation of our executive compensation philosophy. The Compensation Committee is provided with benchmarking information of each of these components at the 25th percentile, the medianrewarding strong financial and 75th percentile utilizing companies, including all members of our peer group, that are similar to us in terms of business type, revenue and market capitalization. The Compensation Committee considers benchmarking data as a reference point rather than determinative data. Compensation for specific individuals may vary upward or downward from the median for individual named executive officers based on, among other things, individual performance, tenure, experience, scope of responsibilities, internal parity considerations, the recommendations of our CEO (for compensation other than her own) and succession considerations.operational performance.
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Key Features | ||||||||
Base Salary |
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The illustration below provides a high level summary of the primary components of our executive compensation program.
Other NEOs (Average): | ||||
| Attract and retain talent |
| • Fixed base of cash compensation • Reviewed and approved annually • Benchmarked annually to the median of our peer group and other companies of similar revenue size
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Annual Cash Incentive Bonus | ||||
CEO: | Other NEOs (Average): | Drive achievement of annual strategic and financial objectives | •
• Consolidated revenue (35%) • Consolidated adjusted EBITDA (35%) • 30% of target values are directly tied to non-financial factors • One-year performance • Payout Range: 0-200% of
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Long-Term Incentive | ||||
CEO: | Other NEOs (Average): | |||
| Align with shareholders’ interests and drive achievement of our long-term strategic objectives | • Mix of: • Time-vested restricted stock units (35%) • Performance-based restricted stock units based on total shareholder return (30%) • Performance-based restricted stock units based on annual adjusted EBITDA growth (35%) • Three-year performance/vesting period • Actual payout can range dependent upon performance • To promote retention by providing long-term value |
Numerous factors played a role in our 2020 compensation decisions with the overarching goal of closely linking pay to performance. In 2020, performance-based cash incentives and equity compensation (which is inherently linked to performance) comprised 81% of our CEO’s compensation, and 66% - 74% of the total compensation for each of our other current named executive officers.
48 |
Executive Compensation
To illustrate this, the chart set forth below reflects the percentage breakdown of our CEO’s actual 2020 compensation as set forth in the Summary Compensation Table below on page 69.
CEO COMPENSATION AT RISK (81% AT RISK)
As the Compensation Committee has consistently done, it based its 2020 compensation decisions on the Company’s 2020 financial goals and other actions influencing executive compensation based on the expectation that (1) we would achieve targeted revenue and adjusted EBITDA growth on a consolidated basis, and (2) our named executive officers would lead their teams to successfully execute our business strategy in a manner that reflected our core values. Below is a breakdown of our current named executive officers’ actual compensation for 2020, as set forth in the Summary Compensation Table on page 69 below.
• Performance generally covers
2021 Proxy Statement | 49 |
Executive Compensation
NAMED EXECUTIVE OFFICER COMPENSATION IN 2020
RESPONSE TO 2020 SAY-ON-PAY VOTE
At our 2020 Annual Meeting of Shareholders held on April 22, 2020, we received approximately 95% support (based on shares voting) on our advisory “say-on-pay” proposal regarding the compensation of our named executive officers. Our compensation program has remained consistent with that set forth in our 2020 proxy statement and we believe the following four themes remain most important to our shareholders: (1) compensation should correlate to company performance, (2) performance awards should constitute an important component of long-term incentive awards, (3) performance measures beyond total shareholder return should be considered, such as achievement of operational and strategic measures, and (4) variable compensation should be designed to motivate, reward and retain executives.
The Compensation Committee believes that our executive compensation program in 2020 satisfied each of the four themes identified above. In 2020, the Compensation Committee took the following actions:
1. | Issued PRSUs tied to total shareholder return and annual adjusted EBITDA growth over a three-year period, |
2. | Established performance goals of 6.7% and 4% year-over-year consolidated revenue and adjusted EBITDA growth, respectively, for the named executive officers to receive their target bonuses, and |
3. | Slightly adjusted base salaries to more closely align with industry and executive compensation peer group pay practices, retain our talent and reward strong performance |
50 |
Executive Compensation
PRINCIPAL COMPONENTS OF OUR COMPENSATION PROGRAM
In line with our core value of continuous improvement, we (1) listen to our shareholders, (2) review the latest trends in executive compensation practices, (3) evaluate whether shareholders or proxy advisory services view certain pay practices with disfavor and (4) review our pay practices to ensure that we have designed and implemented compensation programs that we believe will create value for our shareholders that appropriately balances short- and long-term incentives.
PRINCIPAL COMPONENTS OF OUR EXECUTIVE COMPENSATION PROGRAM | ||
base salary,
long-term incentive awards in the form of restricted stock units and performance restricted stock units, We also provide: a non-qualified deferred compensation plan as well as benefits generally available to all of our employees, reimbursement for each named executive officer up to $25,000 for certain financial, estate planning and personal health and wellness expenses, and for our CEO, an employment agreement with severance provisions and, for our other named executive officers, severance arrangements. | ||
BASE SALARY
Base salary serves as the first principal component of our executive compensation program. In setting base salaries, the Compensation Committee considers several factors.
FACTORS CONSIDERED BY THE COMPENSATION COMMITTEE IN SETTING BASE SALARIES | ||
the market salary for similarly situated executives within our peer group and other companies of similar revenue size and market capitalization, our operational and financial performance, our stock performance, individual performance, skills, knowledge, tenure, experience and responsibilities, and for those executives that report to her, the recommendations of our CEO. |
We manage salary changes to fall within our annual budget. We evaluate our operational and financial performance in light of our annual strategic objectives, our annual operating plan and the healthcare workforce solutions and staffing industry performance. We evaluate our stock performance against our executive compensation peer group and the Russell 2000 Index. Our CEO bases her recommendations for our named executive officers on the same factors the Compensation Committee considers for her as CEO, and her recommendations are particularly helpful for the Compensation Committee to evaluate the other executive officers’ performance, knowledge, skills, experience and responsibilities.
ANNUAL CASH PERFORMANCE BONUS
Annual cash performance bonus opportunities serve as the second principal component of our executive compensation program and are designed to incent and reward performance. The Company’s Senior Management Incentive Bonus Plan, which we refer to as the Bonus Plan in this CD&A, is the mechanism by which the Compensation Committee provides cash bonus opportunities as a strong incentive for our executive officers to achieve annual financial targets that support our strategic objectives. Although certain details of the Bonus Plan may change from year to year, its principal elements remain consistent and include specific consolidated revenue and consolidated adjusted EBITDA financial goals tied to our annual operating plan. We refer to these financial metrics of the Bonus Plan as the Financial Component. The Compensation Committee sets threshold, “target” (i.e., 100% payout) and maximum amounts for bonuses and a weight for each metric that corresponds to the level of achievement required to trigger a threshold, target or maximum bonus for the named executive officer under such metric.
2021 Proxy Statement | 51 |
Executive Compensation
The threshold level for each metric typically starts at a minimum performance level (i.e., 90% of targeted consolidated adjusted EBITDA). The maximum bonus typically requires a performance level of 110% to 120% of the target amount for each metric. We have typically used incremental hurdles (usually 1% increments for adjusted EBITDA and one-half percent increments for revenue) of performance between the threshold level and the maximum level that increase the amount of bonus that can be earned on a straight-line basis depending on the hurdle ultimately achieved. The leadership component of the bonuses, which we refer to as the Leadership Component in this CD&A, has been based on non-financial factors, such as performance relative to direct competition, leadership, achievement of strategic objectives, including Company’s diversity-related objectives, and effective leadership in line with our core values and executive leadership competencies.
In setting each named executive officer’s target bonus, the Compensation Committee evaluates benchmarking data for comparable positions generally and within our executive compensation peer group, the recommendations of our CEO (except with respect to her target bonus), individual performance, knowledge, experience and responsibilities, and the amount of the potential bonus under various performance scenarios.
PRINCIPLES GOVERNING THE DESIGN OF CASH INCENTIVE BONUSES | ||
the metrics must be tied to key indicators of our success and our annual objectives, the performance goals must be reasonably achievable and viewed as fair, while at the same time encouraging stretch performance, the metrics must be simple to understand and can be influenced by the executive, the portion of an individual’s target annual cash compensation attributable to target annual bonus should increase with successively higher levels of responsibility, and payouts should reflect our performance as well as the performance of the executive, including performance relative to the Company’s diversity, equality and inclusion objectives and furtherance of its culture of ethics. |
The Compensation Committee may amend the Bonus Plan at any time and may also amend any outstanding award granted under the Bonus Plan.
LONG-TERM INCENTIVES
Long-term incentives in the form of equity awards are the third principal component of our executive compensation program and serve to align the interests of our named executive officers with our shareholders. Under the Company’s 2017 Equity Plan, which we refer to in this CD&A as the Equity Plan, we grant equity awards with various vesting parameters, typically three years in length, to named executive officers and key employees to incentivize the achievement of our long-term strategic objectives. We also use them as an employee retention tool. We utilize PRSUs as part of our long-term incentive structure to strengthen the performance-based component of the long-term incentive component. In 2020, we utilized PRSUs that payout based on the Company’s total shareholder return over three years and adjusted EBITDA growth PRSUs that vest and payout at the end of three years but accrue value annually during each of the award based on the Company’s achievement of annual year-over-year adjusted EBITDA growth targets. We refer to these awards as our TSR PRSUs and Adjusted EBITDA Growth PRSUs, respectively. In general, we believe long-term equity incentive opportunities should be targeted to approximately the market median so that when combined with base salary and target annual bonus, the named executive officer’s total compensation falls around the median of market levels.
PRINCIPLES GOVERNING THE DESIGN OF LONG-TERM INCENTIVES | ||
performance periods should cover multiple years to create balance between short- and long-term objectives, long-term incentives should function to (a) align executive and shareholder interests, (b) enhance focus on
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52 |
Executive Compensation
OUR COMPENSATION DETERMINATION PROCESS
ROLES AND RESPONSIBILITIES
Responsible Party | Primary Roles and Responsibilities Relating to Compensation Decisions | ||||
CompensationCommittee (Comprised solelyof independentdirectors) | The primary responsibilities of the Compensation Committee include oversight of our executive compensation programs. Specifically, they include:
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Our Compensation Program OversightChief Executive Officer;
RESPONSIBILITIES OF THE COMPENSATION COMMITTEE
The primary responsibilities of the Compensation Committee include oversight of our executive compensation programs. Specifically, they include:
determining the compensation of our CEO and, in partnership with our CEO, establishing the compensation of all other executive officers, including salary, cash incentives and equity awards,
designing our incentive compensation programs and administering our Equity Plan and Bonus Plan,
establishing the financial metrics and performance targets under our Equity Plan and Bonus Plan, and
as set forth more fully above (see page 25 above), analyzing the risk associated with our compensation practices.
• Conduct an annual evaluation of our Chief Executive Officer’s performance and review such evaluation with the independent members of the Board; • Approve the annual compensation of our other named executive officers and executives that directly report to our CEO (we refer to this group of executives, including the Chief Executive Officer, as the CEO Committee), including salary, cash incentives and equity awards as well as performance metrics and goals for performance-based long-term and short-term incentive compensation; • Independently hire the Company’s independent compensation consultant; and • Approve all changes to the composition of our executive compensation peer group. | ||||
IndependentMembers of theBoard | • Participate in and consider the Compensation Committee’s annual evaluation of our Chief Executive Officer’s performance; and • Consider the Committee’s actions regarding the compensation of our Chief Executive Officer and, if deemed appropriate or necessary, ratify such actions.
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IndependentCompensationConsultant (Frederic W. Cook &Co., Inc.) | • Provide the Compensation Committee with advice regarding the design of all elements of the Company’s executive compensation program;
• Provide advice and recommendations to the Compensation Committee regarding the composition of the compensation peer groups; • Provide expert knowledge of marketplace trends and best practices relating to executive compensation and competitive pay levels; • Provide advice and recommendations regarding the compensation of the Company’s named executive officers; and • Regularly attend and actively participate in meetings of the Compensation Committee, including executive sessions.
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Chief ExecutiveOfficer | • Approve annual performance goals and objectives for the CEO Committee (other than herself);
• Make recommendations to the Compensation Committee with respect to the compensation of the members of the CEO Committee (other than herself) based on the final assessment of their performance.
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The Compensation Committee reviews all components of compensation of the named executive officers and other officers that directly report to our CEO (we refer to this group of executives as the CEO Committee) on an annual basis and will consider changes at other times if a change in the scope of an officer’s responsibilities justifies such consideration. In so doing, the Compensation Committee uses the services of an independent compensation consultant, Frederic W. Cook & Co., and considers the analysis and advice of its compensation consultant in discharging its responsibilities. Representatives of Frederic W. Cook & Co. attend Compensation Committee meetings and have direct access to the Compensation Committee members without management involvement. The Compensation Committee has the sole authority to hire and terminate its compensation consultant.
The Compensation Committee generally conducts its salary and bonus structure review for a particular year in the last quarter of the previous year or early in the subject year. At that time, the Compensation Committee evaluates compensation by, among other things, reviewing (1) peer benchmarking information, (2) the individual’s performance, duties and experience, (3) analysis and advice from its compensation consultant, (4) our financial and operational performance, and (5) the recommendations of our CEO (who does not provide a recommendation for herself).
2021 Proxy Statement | 53 |
Executive Compensation
With respect to our Bonus Plan, the Compensation Committee determines the performance metrics for the award each year. Prior to or at the beginning of each fiscal year,In December, the Board setsapproves our annual operating plan and financial targets for the upcoming year. Once our performance. Thereafter,annual operating plan is approved, the Compensation Committee sets the range of financial performance and corresponding targets for theour named executive officers’ cash incentive compensationofficers under the Bonus Plan.Plan in early January of each year. These financial targets set by the Compensation Committee correspond to our annual operating plan financial targets approved by the Board.
The Compensation Committee also grants annual equity awards under our Equity Plan. In addition to annual grants, the Compensation Committee utilizes the Equity Plan to grant equity awards to key employees upon their initial employment, promotion or as special retention awards. To further serve this purpose, the Board also adopted our 2014 Employment Inducement Plan under which we may issue up to 200,000 shares of our common stock to certain prospective employees. The Company did not make any equity grants from this plan in 2019.2020. In the Compensation Committee’s discretion, it may authorize our CEO to grant equity awards to employees that do not serve on the Company’s CEO Committee within certain individual and aggregate thresholds.thresholds that the Compensation Committee approved. The Compensation Committee regularly reviews any awards granted by our CEO.
OUR 2019
PEER GROUP
The duties of
On an annual basis, the Compensation Committee require knowledge regardingreviews potential peer companies to help assess the competitiveness of compensation and practices for our executives and approves an appropriate executive compensation market.peer group. Accordingly, to understand our position within the marketplace for management talent and to assist the Compensation Committee in makingmake compensation decisions that will help attract and retain a strong management team, the Compensation Committee reviews (1) compensation information for companies comparable in size and industry, (2) our financial performance against our internal financial targets, our designated peer group and the Russell 2000, and (3) internal compensation comparability among senior executives.
Because the Compensation Committee compares our performance against that of our peer group as part of its oversight responsibilities, it must determine our peer group.
The Compensation Committee believes that one of the most important factors it must consider in ensuring that our compensation program remains competitive, is the proper identification and selection of our peers,executive compensation peer group, as we often compete for executive talent with such peers. Accordingly, thepeer companies. The Compensation Committee evaluates the members of our peer group annually. We selectselects peers from the healthcare, commercial and professional services industries, and target thosetargets companies operating in the healthcare and employment services, healthcare technology and diversified support services sectors. Like us, many of our peers are in both the S&P SmallCap 600 Index and the S&P Composite 1500 Index. Our 20192020 executive compensation peer group, as determined by our Compensation Committee, was as follows:
OUR 2020 EXECUTIVE COMPENSATION PEER GROUP | |||
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Allscripts Healthcare Solutions, Inc. | Korn/Ferry International | ||
Amedisys, Inc. | LHC Group, Inc. | ||
Cross Country Healthcare, Inc. | MEDNAX, Inc. | ||
Healthcare Services Group, Inc. | ASGN Incorporated | ||
TriNet Group, Inc. | Premier, Inc. | ||
Insperity, Inc. | Robert Half International Inc. | ||
Kforce, Inc. | TrueBlue, Inc. |
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Our 2019 peer group ranged from approximately$800 million to $6 billion in revenues based on each peer’s most recently reported four fiscal quarters, and from approximately $425 million to $7.3 billion in market capitalization. For purposes of comparison, our consolidated revenue for our most recently reported last four fiscal quarters equaled $2.2 billion and our market capitalization as of December 31, 2019 equaled approximately $2.9 billion, placing us seventh in our 2019 peer group for revenue and sixth for market capitalization.
Annually, inEach July the Compensation Committee evaluates our executive compensation peer group for the upcoming year primarily using industry, annual revenue and market capitalization as well as competitors and otherof companies from whom the Company recruits talents.AMN competes for talent. When evaluating our 2020 executive compensation peer group, the Compensation Committee reviewed (1) our 20192020 executive compensation peer group, (2) the peers utilized bythat Institutional Shareholder Services lists for us that were not in our 20192020 executive compensation peer group, (3) peers utilized bythat Glass Lewis lists for us that were not in our 20192020 executive compensation peer group, (4) companies that were not in our 20192020 executive compensation peer group that disclosed us in their proxy statement as part of their peer group, and (5) companies within our GICS code that met Institutional Shareholder Services’ recommended revenue and market capitalization band criteria. Based on its evaluation, the Compensation Committee decided not to make changes to our 20192020 peer group for 2020.2021.
Our 2020 executive compensation peer group of 14 companies ranged from approximately $836 million to $5.3 billion in revenues based on each company’s trailing twelve months as of September 30, 2020, and from approximately $333 million to $9.6 billion in market capitalization. For purposes of comparison, our consolidated revenue for our trailing twelve months as of September 30, 2020 was $2.3 billion and our market capitalization as of December 31, 2020 was approximately $3.2 billion, placing us sixth in our 2020 executive compensation peer group for revenue and seventh for market capitalization.
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Executive Compensation
TRAILING TWELVE MONTHS REVENUE ($MM) AS OF SEPTEMBER 30, 2020
MARKET CAPITALIZATION ($MM) AS OF DECEMBER 31, 2020
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Components of Our Compensation Program
BENCHMARKING
In line with our core value of continuous improvement, we (1) listen to our shareholders, (2) review the latest trends in executive compensation practices, (3) evaluate whether certain pay practices are viewed with disfavor by shareholders or proxy advisory services and (4) review our pay practices to ensure that we have designed and implemented compensation programs that we believe will create value for our shareholders with a balance of short- and long-term incentives.
The principal components of our executive compensation program include:- (1) base salary, (2) annual cash performance bonuses, and (3) long-term equity incentive awards - reflect the implementation of our executive compensation philosophy. The Compensation Committee receives benchmarking information for each of these components at the 25th percentile, the median and 75th percentile utilizing a blend of companies, including those within our executive compensation peer group, that are similar to us in terms of business type, revenue and market capitalization. The Compensation Committee considers benchmarking data as a reference point rather than determinative data. Compensation for specific individuals may vary upward or downward from the median for individual named executive officers based on, among other things, individual performance, tenure, experience, scope of responsibilities, internal parity considerations, the recommendations of our CEO (for compensation other than her own) and succession planning considerations.
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Executive Compensation
OUR 2020 COMPENSATION PROGRAM AND RESULTS
Our named executive officers’ 2020 direct compensation consisted of: (1) a base salary; (2) cash incentive bonus based on performance; (3) long-term equity incentives; (4) reimbursement for certain financial and estate planning and personal health and wellness expenses and (5) certain other additional compensation, such as matching deferred compensation contributions. We discuss each component of our 2020 compensation program for our named executive officers in more detail below.
2020 BASE SALARY
In late 2019, the Compensation Committee reviewed annual base salary levels for the named executive officers and, after careful consideration, approved increases effective January 1, 2020 ranging from zero to eight percent from the previous year, as reflected in the table below. In making its determinations, the Compensation Committee considers, among other things, (1) the market salary for similarly situated executives within our executive compensation peer group and other companies of similar revenue size and market capitalization, (2) Company operational and financial performance and (3) individual performance.
When benchmarking Ms. Salka’s 2020 base salary, it was slightly above the median among other CEOs among our 2020 executive compensation peer group.
Named Executive Officer | 2019 Salary ($) | 2020 Salary ($) | Increase % |
Susan R. Salka | 1,000,000 | 1,030,000 | 3 |
Brian M. Scott | 505,000 | 520,000 | 3 |
Ralph S. Henderson | 505,000 | 505,000 | 0 |
Mark C. Hagan(1) | 463,000 | 500,000 | 8 |
Denise L. Jackson | 430,000 | 440,000 | 2 |
(1) |
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2020 BONUS PLAN
TARGET BONUS LEVELS
In December 2019, the Compensation Committee reviewed the 2020 target bonus levels for our named executive officers, which we express as a percentage of annual base salary. In furtherance of the Company’s pay-for-performance philosophy, the Compensation Committee maintained the existing bonus percentage target for each named executive officer in 2020.
The table below shows 2020 target bonus information for each named executive officer both in dollar amount and as a percentage of salary together with, for comparative purposes, the same figures for 2019.
Named Executive Officer | 2019 Bonus Target (% of Salary) | 2020 Bonus Target (% of Salary) | 2019 Bonus Target ($) | 2020 Bonus Target ($) |
Susan R. Salka | 120 | 120 | 1,200,000 | 1,236,000 |
Brian M. Scott | 100 | 100 | 505,000 | 520,000 |
Ralph S. Henderson | 100 | 100 | 490,000 | 505,000 |
Mark C. Hagan | 75 | 75 | 347,250 | 375,000 |
Denise L. Jackson | 75 | 75 | 322,500 | 330,000 |
The dollar amount of Ms. Salka’s 2020 cash bonus target also fell slightly above the median among CEOs within our 2020 executive compensation peer group based on the most recent proxy statements filed by our executive compensation peer group, which the Compensation Committee believed was appropriate.
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Executive Compensation
STRUCTURE OF OUR BONUS PLAN
In 2020, and consistent with previous years, the Financial Component comprised 70% of our named executive officers’ total target bonuses and the Leadership Component comprised the remaining 30%.
For 2020, consistent with prior years’ practice, the Compensation Committee tied the Financial Component of the Bonus Plan to the achievement of our 2020 annual operating plan revenue and pre-bonus adjusted EBITDA targets. We use pre-bonus adjusted EBITDA, which we refer to as Pre-Bonus AEBITDA(1), solely to determine bonuses. Pre-bonus adjusted EBITDA excludes from Adjusted EBITDA the payment of bonuses and certain increases to the Company’s legal expense accruals not contemplated by its 2020 annual operating plan. For information on the calculation of Pre-Bonus AEBITDA, and a reconciliation of our 2020 net income to adjusted EBITDA and Pre-bonus AEBITDA, please see Exhibit A to this proxy statement (page 91).
In 2020, the weighting of the performance metrics reflected below were consistent for each of our named executive officers:
Consolidated Revenue | Pre-Bonus AEBITDA | Leadership Component |
35% | 35% | 30% |
RATIONALE FOR ANNUAL BONUS PERFORMANCE OBJECTIVES
In 2020, the Compensation Committee continued to utilize the Financial and Leadership Components as the annual performance metrics under the Bonus Plan for a variety of reasons, which are described in more detail below.
• | Financial Component |
• | Consolidated Revenue (35%): The Compensation Committee believes revenue remains one of the most reliable measurements to evaluate the success of our strategy, entry into new markets and growth in our existing businesses. It also selected revenue because investors focus on revenue growth as a metric when evaluating our performance. | |
• | Pre-Bonus AEBITDA (35%): The Compensation Committee chose Pre-Bonus AEBITDA because adjusted EBITDA is widely accepted among management, the Board, shareholders and financial analysts as a measurement of our profitability and performance. Revenue and adjusted EBITDA are routinely areas of focus during our earnings calls and meetings with investors. Furthermore, the Compensation Committee believes Pre-Bonus AEBITDA remains an objective measure of management’s performance because it excludes items over which management has less control, such as amortization, interest expense and taxes. | |
• | The actual consolidated revenue and consolidated Pre-Bonus AEBITDA targets that the Compensation Committee established as the basis for paying “target” payouts under the 2020 Financial Component for each named executive officer represented growth that the Compensation Committee believed was at or above organic growth rates in the markets we serve. | |
• | The threshold for a named executive officer to receive a bonus under the Financial Component required achievement of 90% of our 2020 annual operating plan target for each of Pre-Bonus AEBITDA and consolidated revenue. Receipt of the target bonus amount for each of the consolidated revenue and Pre-Bonus AEBITDA metrics required the Company to meet 100% of our 2020 annual operating plan for that metric, which represented roughly 6.7% year-over-year consolidated revenue growth and 4% Pre-Bonus AEBITDA growth, respectively. | |
• | The Company’s lower consolidated Pre-Bonus AEBITDA growth target for 2020 relative to its annual consolidated revenue growth target reflects the Company’s decision to make strategic investments in its digital and workforce solutions technology offerings necessary to drive long-term shareholder value and achieve the Company’s long-term strategic objectives. | |
• | Leadership Component (30%): The Compensation Committee uses the Leadership Component to, among other things, distinguish among individuals with respect to non-financial metrics. While the metrics may differ slightly for each named executive officer, we generally measure the Leadership Component based upon our named executive officers’ leadership, personal performance, achievement of diversity-related objectives, and execution on our strategic and operational initiatives. |
(1) | Under no circumstances should Pre-Bonus adjusted EBITDA be used to substitute for any other financial metric and is used by us solely to determine bonus amounts. |
2021 Proxy Statement |
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Executive Compensation
2020 BONUS PLAN PAYOUTS |
FINANCIAL COMPONENT |
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BASE SALARY
Base salary serves asWe have included a table below ($ in thousands) that summarizes how we performed against the first componenttarget financial performance metrics that we utilized when determining the Financial Component portion of our named executive compensation program. In setting base salaries,officers’ bonuses for 2020.
Metric | 2020 Target | 2020 Results | $ Variance From 2020 Target | % Variance From 2020 Target |
Consolidated Revenue | 2,370,222 | 2,393,714 | 23,492 | 1 |
Pre-Bonus AEBITDA | 295,882 | 335,753 | 39,872 | 13.5 |
LEADERSHIP COMPONENT
With respect to the Leadership Component, the Compensation Committee considersbelieves our named executive officers demonstrated strong leadership in 2020 resulting in solid financial and operational results for the Company. Specifically, we (i) successfully continued to execute, on our long-term strategic plan to expand and diversify our telehealth offerings by acquiring Stratus Video, (ii) effectively responded to the COVID-19 pandemic and established the flexible structure necessary to navigate the volatile environment, serve our healthcare clients and professionals and continue to execute our long-term strategy, (iii) capitalized on a numberfavorable capital markets environment to make private offerings of factors, including:approximately $550 million of senior unsecured notes that allowed us to pay off our secured debt and provide additional liquidity to pursue strategic acquisitions and other investments that we believe enhance long-term shareholder value, and (vi) continued our strategic development of mobile technology platforms and artificial intelligence aimed at improving the recruitment, engagement and retention of healthcare professionals.
PAYOUTS |
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We manage salary changes to fall within our annual budget. We evaluate our operationalThe Company’s 2020 revenue and financial performance in light of our annual internal objectives and ourPre-Bonus AEBITDA results exceeded its 2020 annual operating plan and the healthcare workforce solutionsrevenue and staffing industry performance. We evaluate our stock performance against our peer group and the Russell 2000 Index. Our CEO bases her recommendations on the same factorsPre-Bonus AEBITDA Bonus Plan targets approved by the Compensation Committee considers,in January 2020 by 1% and her recommendations are particularly helpful for13.5%, respectively. When the Compensation Committee to evaluateBoard approved the other executive officers’ performance, knowledge, skills, experience and responsibilities.
ANNUAL CASH INCENTIVE BONUS
Annual cash incentive bonus opportunities serve as the second component of our executive compensation program. The Bonus Plan is the mechanism byCompany’s 2020 annual operating plan in December 2019, which the Compensation Committee provides such opportunities. We intend ouruses to determine the Financial Component Bonus Plan targets, it did not contemplate the financial impact of the Company’s B4Health and Stratus Video businesses that we acquired in December 2019 and February 2020, respectively. Excluding the impact of these acquired businesses, the Company fell shy of its revenue and adjusted EBITDA targets by approximately 4% and 3%, respectively. In an effort to provide areward what the Compensation Committee believes to have been significant advances against the Company’s long-term strategy, the Company’s strong incentive for2020 operational performance and COVID-19 response, and to incentivize and retain our executive officers to achieve annualtalent, the Compensation Committee included B4Health’s and Stratus Video’s revenue and adjusted EBITDA performance when approving the 2020 Bonus Plan payouts but capped the payouts for the financial objectives that support our strategic objectives. Although certain detailscomponent of the annual bonus incentive may change from yearBonus Plan at 100% of target for the Company’s named executive officers.
Based on outcomes, the Company and its Compensation Committee believe that the Bonus Plan is working as designed and intended. The illustrations below demonstrate the Company’s reported performance compared to year, key components include specific financial goals set forth in our annual operating plan such as consolidated revenuetarget for each of the elements of the Financial Component together with an illustration of the Company’s 2020 bonus payout compared to the Financial Component targets.
The tables below set forth metrics and consolidated adjusted EBITDA. Thesummary calculations for each named executive officer’s bonus amounts under the Leadership Component together with the final amounts under the Financial Component, which made up 70% of the total target bonus amount. We do not reflect Mr. Henderson in the tables below because his employment terminated prior December 31, 2020 and he did not receive an annual cash incentive bonus.
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Executive Compensation
MS. SALKA’S BONUS METRICS
MR. SCOTT’S BONUS METRICS
2021 Proxy Statement | 59 |
Executive Compensation
MR. HAGAN’S BONUS METRICS
MS. JACKSON’S BONUS METRICS
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Executive Compensation
LONG-TERM INCENTIVE COMPENSATION
2020 LONG-TERM INCENTIVE EQUITY AWARDS
In 2020, the Compensation Committee sets threshold, “target” (i.e., 100%) and maximum amounts for bonuses and a weight forgranted equity awards to each metric that corresponds to the level of achievement we require to trigger a threshold, target or maximum bonus for the named executive officer under such metric.
The threshold level for each metric typically starts at a minimum performance level (e.g., 90% of targeted consolidated adjusted EBITDA). The maximum bonus typically requires a performance level of 110% to 120% of the target amount for each metric. We have typically used incremental hurdles (usually 1% increments for adjusted EBITDA andone-half percent increments for revenue) of performance between the threshold level and the maximum level that increase the amount of bonus that can be earned onCommittee believes these awards serve as a straight-line basis depending on the
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hurdle ultimately achieved. The leadershipkey component of the bonuses,their total compensation package. Consistent with prior years, we used a mix of time-based restricted stock units, which we refer to as RSUs in this CD&A, and PRSUs. All equity awards that we granted to our named executive officers (1) provide for “double trigger” vesting mechanics in the Leadership Component, have been based onnon-financial factors, suchevent of a change in control of the Company, and (2) allow for continued vesting of outstanding equity awards if a grantee terminates his or her employment after satisfying certain age and service time requirements, which our equity agreements refer to as performance relative“retirement.”
Ms. Salka and Ms. Jackson each satisfy the requirements for retirement eligibility under their respective 2020 equity awards.
AGGREGATE GRANT DATE FAIR VALUE
The chart below reflects the aggregate grant date fair value, which we refer to direct competition, leadership, achievementas AGD Fair Value, of strategic objectives, effective leadership in line with our core values and executive leadership competencies and total shareholder return.
In settingeach equity award type that we granted to each named executive officer’s target bonus,officer in 2020.
Named Executive Officer | AGD Fair Value of 2020 TSR PRSU Award ($) | AGD Fair Value of 2020 Adjusted EBITDA Growth PRSU Award ($) | AGD Fair Value of 2020 RSU Award ($) | Total AGD Fair Value of 2020 Awards ($) |
Susan R. Salka | 1,049,998 | 1,224,993 | 1,357,461 | 3,632,452 |
Brian M. Scott | 329,999 | 385,007 | 385,007 | 1,100,012 |
Ralph S. Henderson | 302,992 | 353,484 | 353,484 | 1,009,960 |
Mark C. Hagan | 189,133 | 220,655 | 420,617 | 830,405 |
Denise L. Jackson | 198,031 | 231,016 | 231,016 | 660,064 |
PRSUs represented 65% of the AGD Fair Value of all 2020 equity awards for each of Mr. Scott, Mr. Henderson and Ms. Jackson. In addition to 3,535 RSUs awarded to Mr. Hagan in January 2020, he also received an additional equity award of 2,603 RSUs on March 9, 2020 in connection with his promotion to Chief Information and Digital Officer. As a result, PRSUs represented 49% of the AGD Fair Value of all Mr. Hagan’s 2020 equity awards.
As it has done historically, the Compensation Committee evaluates benchmarking dataelected to wait to consider a grant of RSUs for comparable positions generally and within our peer group,Ms. Salka for 2020 until the recommendationsend of 2020 when it had better visibility of our CEO (except with respect to her target bonus), individualyear-end financial, operational and stock performance. Based on our financial, operational and stock performance knowledge, experience and responsibilities, and the amount of the potential bonus under various performance scenarios. As with base salary,in 2020, the Compensation Committee considers these factorsgranted Ms. Salka 19,625 RSUs with an AGD Fair Value of $1,357,461 on December 16, 2020. This RSU grant reflects the number of RSUs that Ms. Salka would have received in January 2020, which is the time when all other named executive officers received annual RSU grants, based on the 2020 AGD Fair Value and award mix that the Compensation Committee set for Ms. Salka in January 2020. Due to this timing (December 2020 rather than January 2020), Ms. Salka received PRSUs that represented 63% of her total 2020 equity award value. To provide further clarity on our equity compensation practices, the chart below reflects the change in the contextAGD Fair Value of each individual’s total cash compensationall 2020 equity awards that we granted to our named executive officers against the AGD Fair Value of all 2019 equity awards.
The Compensation Committee approved the 7% increase in our CEO’s AGD Fair Value in 2020 from 2019 in part due to the Company’s strong financial and operational performance in 2020, significant advancements against our long-term strategic plans as well as peer group and other compensation benchmarking. We believe that the AGD Fair Value of her equity awards placed her below the median among CEOs within our 2020 executive compensation peer group for long-term incentive compensation.
Named Executive Officer | AGD Fair Value of 2019 Equity Awards ($) | AGD Fair Value of 2020 Equity Awards ($) | Variance ($) | % Increase |
Susan R. Salka | 3,382,836 | 3,632,452 | 249,616 | 7 |
Brian M. Scott | 1,009,959 | 1,100,012 | 90,053 | 9 |
Ralph S. Henderson | 1,009,959 | 1,009,960 | 1 | 0 |
Mark C. Hagan | 619,989 | 830,405 | 210,416 | 34 |
Denise L. Jackson | 645,036 | 660,064 | 15,028 | 2 |
Total | 6,667,779 | 7,232,893 | 565,114 | 8 |
2021 Proxy Statement | 61 |
Executive Compensation
TSR PRSUs
TSR PRSUs represented approximately 30% of the total compensation package (i.e.,2020 equity grant value that we awarded to each named executive officer, based on the AGD Fair Value, and cash) generally.
As set forth inwill be earned at the end of an approximately three-year performance period based on our Executive Compensation Philosophy, the principles governing the annual design include the following:stock performance against two measures:
1. | |
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2. | an absolute total shareholder return basis, which we refer to |
We refer to the determination of our Relative TSR and Absolute TSR collectively as the TSR Measurement. The number of PRSUs earned if the Company’s Relative TSR exceeds the 50th percentile but its Absolute TSR is negative is capped at the target number of PRSUs granted.
The table below discloses the percentage of the 2020 target PRSUs that may be earned depending on the actual results of the Company’s TSR Measurement as of December 31, 2022.(1)
Relative TSR Percentile Rank | % of 2020 TSR PRSUs Earned if Absolute TSR Is Negative(2) | % of 2020 TSR PRSUs that Are Earned if Absolute TSR Is Positive |
<25.0% | 0 | 0 |
25.0% | 25.00 | 25.00 |
37.5% | 62.50 | 62.50 |
50.0% | 100.00 | 100.00 |
62.5% | 100.00 | 137.50 |
75.0% | 100.00 | 175.00 |
(1) | As set forth in the Grants of Plan-Based Awards Table, the target number of TSR PRSUs that we granted in 2020 for each named executive officer is as follows: (i) for Ms. Salka, 13,335; (ii) for Mr. Scott, 4,191; (iii) for Mr. Henderson, 3,848; (iv) for Mr. Hagan, 2,402 and (v) for Ms. Jackson, 2,515. |
(2) | For each one percentile above the |
ADJUSTED EBITDA GROWTH PRSUs
In 2020, the Compensation Committee determined it best to dedicate a significant portion of the PRSUs to focus our named executive officers on achieving annual year-over-year adjusted EBITDA growth rate targets of 5%, 4% and 4% in 2020, 2021, and 2022, respectively,(1) by issuing Adjusted EBITDA Growth PRSUs. For these awards, the number of shares that could ultimately be earned ranges from 0% to 200% of the target number of PRSUs depending on actual annual year-over-year adjusted EBITDA growth performance during each of 2020, 2021 and 2022.
(1) | As set forth in the |
TIME-VESTED RSUs |
RSUs that we granted in 2020 vest ratably on each of the first three anniversaries of the grant date. RESULTS OF OUR 2018 PERFORMANCE RESTRICTED STOCK UNIT AWARDS In early 2021, the |
The Compensation Committee may amendperformed the Bonus Plan at any timeTSR Measurement for the 2018 TSR PRSU awards for the period January 1, 2018 through December 31, 2020 and may also amend any outstanding award granteddetermined the Company’s 2020 adjusted EBITDA margin for the purposes of determining performance under the Bonus Plan, provided it may not amend the Bonus Plan without the approval of our shareholders if the amendment would affect the tax deduction of payments made under it.
LONG-TERM INCENTIVES
Long-term incentives in the form of equity awards serve as the third component of our executive compensation program. Under our Equity Plan, we grant equity awards with various vesting parameters, typically three years in length, to named executive officers and key employees as an incentive to have a long-term perspective in supporting and developing our strategic objectives. We also use them as an employee retention tool. We utilize PRSUs as part of our long-term incentive structure to strengthen the performance-based component of the long-term incentive program. In 2019, we utilized TSR PRSUs and2018 adjusted EBITDA margin PRSUs for performance-based equity for allthat payout in shares of the Company’s stock based on the Company’s 2020 adjusted EBITDA margin (we refer to these PRSUs as the Adjusted EBITDA Margin PRSUs). Based on these results, our named executive officers.officers received the following PRSUs:
In general, we believe long-term equity incentive opportunities should be targeted to approximately the market median so that when combined with base salary and target annual bonus, total compensation falls around the median of market levels.
The following principles govern the design of our long-term incentives:2018 TSR PRSUs:
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Executive Compensation
Named Executive Officer |
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2018 TSR PRSUs Earned | ||||
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20,174 | ||||||||
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Ralph S. Henderson(1) | - | |||||||
Mark C. Hagan(2) | - | |||||||
Denise L. Jackson | 3,442 |
(1) | Mr. Henderson forfeited his 2018 TSR PRSU award upon his separation from service on May 1, 2020. | ||
(2) | Mr. Hagan was not employed by the Company when it issued the 2018 TSR PRSUs and therefore did not have any of these awards. |
2018 ADJUSTED EBITDA MARGIN PRSUs:
Named Executive Officer | Number of 2018 Adjusted EBITDA Margin PRSUs Earned |
Susan R. Salka | 12,549 |
Brian M. Scott | 4,980 |
Ralph S. Henderson(1) | - |
Mark C. Hagan(2) | - |
Denise L. Jackson | 2,141 |
(1) | Mr. Henderson forfeited his 2018 Adjusted EBITDA Margin PRSUs upon his separation from service on May 1, 2020. |
(2) | Mr. Hagan was not employed by the Company when it issued the 2018 Adjusted EBITDA Margin PRSUs and therefore did not receive this award. |
ADDITIONAL COMPENSATION PRACTICES
OTHER COMPENSATION ELEMENTS
RETIREMENT AND HEALTH PLANS
Retirement plans and other customary employee benefits serve as the fourth component of our executive compensation program. We adopted our 2005 Amended and Restated Executive Nonqualified Excess Plan, which we refer to as the Deferred Compensation Plan, primarily as a result of a market review that indicated that a deferred compensation plan was a significant component of executive compensation. We exclude our named executive officers from participating in our 401(k) plan, primarily to assist us in satisfying discrimination testing performed on our 401(k) plan. The Deferred Compensation Plan serves as the only retirement plan for our named executive officers. The Deferred Compensation Plan is not intended to be tax qualified. We describe the Deferred Compensation Plan more fully in the section entitled “Nonqualified Deferred Compensation” below.
We also offer healthcare insurance and other employee benefit programsbenefits to our named executive officers, which are generally the same as those programs provided to all eligible employees. We offer these plans to support our objective of attracting and retaining strong talent.
2021 Proxy Statement | 63 |
Executive Compensation
PERQUISITES
In addition to the benefits detailedwe detail above, the Company reimburses each named executive officer up to $25,000 in connection with annual expenses incurred in connection with financial, estate planning and personal health and wellness services. The approval ofCompensation Committee approved these limited perquisites, by the Compensation Committee, all of which were new beginning in 2019, was made to attract and retain talent and provide market competitive compensation. The Compensation Committee believes that its approval of these perquisites remains consistent with the Company’s philosophy and commitment to align pay with performance.
In addition, in 2019, the Company continued to pay Mr. Henderson a monthly housing allowance in connection with his 2018 relocation to our Dallas, Texas office to provide increased executive leadership to our more than 700 employees located there. In 2019, the Company paid $33,231 in housing allowances to Mr. Henderson. Mr. Henderson’s housing stipend ended as of May 31, 2019.
EMPLOYMENT AND SEVERANCE AGREEMENTSARRANGEMENTS
Severance arrangements serve as the fifth component of our executive compensation program. We are party to an employment agreement with our CEO, which contains severance provisions, and have entered into severance agreements with each of our other named executive officers. We entered into these agreements in support of our objectives regarding attraction and retention of strong management. In determining the appropriate severance levels, we considered survey data, advice from our compensation consultant and the Compensation Committee’s experience. We describe the terms of these agreements more fully in the section entitled “Termination of Employment and Change in Control Arrangements” below.
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Our 2019 Compensation Program and Results
Our named executive officers’ 2019 direct compensation consisted of: (1) a base salary; (2) cash incentive bonus based on performance; (3) long-term equity incentives, (4) reimbursement for certain financial and estate planning and personal health and wellness expenses and (4) certain other additional compensation, such as matching deferred compensation contributions. We discuss each component of our 2019 compensation program for our named executive officers in more detail below.
BASE SALARY
In late 2018, the Compensation Committee reviewed annual base salary levels for the named executive officers, and after careful consideration, approved increases effective January 1, 2019 ranging from three
to elevenpercentfrom the previous year, as set forth in the table immediately to the right. In December 2019, the Compensation Committee considered base salaries of our named executive officers for 2020. In making determinations, the Compensation Committee considers, among other things, peer group benchmarking, individual and Company performance.
When benchmarking Ms. Salka’s 2019 base salary, it was slightly above the median among other CEOs among our peers.
Named Executive
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2018 Salary ($)
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2019 Salary ($)
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Increase %
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Susan R. Salka |
| 900,000 |
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| 1,000,000 |
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| 11 |
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Brian M. Scott |
| 490,000 |
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| 505,000 |
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| 3 |
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Ralph S. Henderson |
| 490,000 |
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| 505,000 |
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| 3 |
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Denise L. Jackson |
| 409,500 |
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| 430,000 |
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| 5 |
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BONUS PLAN
Target Bonus. In January 2019, the Compensation Committee reviewed the target bonus level for each named executive officer, which we express as a percentage of annual base salary. After careful consideration of peer group data and other benchmarking information, the Compensation Committee decided to maintain the existing bonus percentage target for each of Ms. Salka and Messrs. Henderson and Scott while increasing the target percentage for Ms. Jackson.
The table below shows 2019 target bonus information for each named executive officer both in dollar amount and as a percentage of salary together with, for comparative purposes, the same figures for 2018.
Named Executive Officer
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2018 Bonus Target (% of Salary)
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2019 Bonus Target (% of Salary)
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2018 Bonus Target ($)
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2019 Bonus Target ($)
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Susan R. Salka |
| 120 |
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| 120 |
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| 1,080,000 |
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| 1,200,000 |
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Brian M. Scott |
| 100 |
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| 100 |
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| 490,000 |
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| 505,000 |
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Ralph S. Henderson |
| 100 |
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| 100 |
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| 490,000 |
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| 505,000 |
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Denise L. Jackson |
| 60 |
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| 75 |
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| 245,700 |
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| 322,500 |
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We believe that Ms. Salka’s 2019 dollar bonus target fell around the median among CEOs within our 2019 executive compensation peer group based on our peers’ filed 2019 proxy statements, which the Compensation Committee believed was appropriate.
Structure of Our Bonus Plan. In 2019, and consistent with previous years, the Financial Component of our bonus plan comprised 70% of our named executive officers’ totaltarget bonuses, and the Leadership Component comprised the remaining 30%.
For 2019, the Compensation Committee tied the Financial Component of the bonus to the achievement of financial targets in our 2019 annual operating plan. At the time we established this plan, we believed that it reflected above market growth for our three business segments on a consolidated basis.
In 2019, the weighting of the performance metrics was consistent for each of our named executive officers:
Consolidated
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Consolidated AEBITDA
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Leadership Component
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35% | 35% | 30% |
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Rationale for Annual Bonus Performance Goals. The Compensation Committee has continued to utilize financial, performance and leadership goals in its annual incentive bonus program over the last several years, including 2019, for a variety of reasons. It chose revenue because it believes it remains one of the most reliable measurements to evaluate the success of our strategy, entry into new markets and growth in our existing businesses. It also selected revenue because investors focus on revenue growth as a metric when evaluating our performance. The Compensation Committee chose adjusted EBITDA because of its widespread acceptance among management, the Board, shareholders and analysts as a measurement of our profitability and performance. Both revenue and adjusted EBITDA are routinely areas of focus during our earnings calls. Furthermore, the Compensation Committee believes adjusted EBITDA remains an objective measure of management’s performance, and it excludes items over which management has less control, such as amortization, interest expense and taxes. The Compensation Committee uses the Leadership Component to, among other things, distinguish among individuals with respect tonon-financial metrics, such as leadership, personal performance, contributions and execution on our strategic and operational initiatives.
The actual consolidated revenue and consolidated adjusted EBITDA targets that the Compensation Committee originally established as the basis for paying the Financial Component of the 2019 bonuses required the Company to reach the 100% target level and represented growth that the Compensation Committee believed was at or above organic growth rates in the markets we serve. The threshold for a named executive officer to receive a bonus on the consolidated financial metrics required achievement of 90% of our 2019 annual operating plan target for each ofpre-bonus adjusted EBITDA,(3)which we refer to asPre-Bonus AEBITDA,and consolidated revenue. For information on the calculation ofPre-Bonus AEBITDA, and a reconciliation of our 2019 net income to adjusted EBITDA, please seeExhibit B to this proxy statement (pageB-1). Receipt of the target bonus amount for each financial metric required the Company to meet 100% of our 2019 annual operating plan for that metric, which represented roughly 5% year-over-year consolidated revenue growth and 2.5% consolidated adjusted EBITDA growth. The Company’s lower consolidated adjusted EBITDA growth target for 2019 relative to its annual consolidated revenue growth target is reflective of the Company’s decision to make strategic investments in its digital and workforce solutions technology offerings necessary to drive long-term shareholder value and achieve the Company’s long-term strategic objectives.
2019 Bonus Plan Payouts. The 2019 annual operating plan did not reflect the potential financial impact of any acquisitions. As such, the Compensation Committee elected not to include the financial impact of the Company‘s Silversheet, Advanced Medical acquisitions when determining the Company’s 2019 bonus plan revenue and adjusted EBITDA performance. In addition, because the Company’s acquisition of b4health occurred in late December, it did not have an impact on the Company’s 2019 bonus plan revenue and adjusted EBITDA performance.
We have included a table below ($ in thousands) that summarizes how we performed against the target financial performance metrics that we utilized (i.e., the Company’s annual operating plan plus the estimated revenue and earnings before interest, taxes, depreciation and amortization contributions of the acquisitions) when determining the Financial Component portion of our named executive officers’ bonuses for 2019.
Metric | 2019 Target | 2019 Results | $ Variance From 2019 Target | % Variance From 2019 Target | ||||||||||||
Consolidated Revenue | 2,250,319 | 2,138,719 | (111,600 | ) | (5 | ) | ||||||||||
Pre-Bonus AEBITDA | 284,501 | 277,567 | (6,934 | ) | (2.4 | ) |
With respect to the Leadership Component, the Compensation Committee believes our named executive officers demonstrated strong leadership in 2019 resulting in solid financial and operational results for the Company on both an absolute and relative basis compared against the Russell 2000, as we delivered a cumulative three-year total shareholder return of 73%, which places our performance in the 81st percentile compared to the Russell 2000, respectively.
(3) We usePre-Bonus adjusted EBITDA solely to determine bonuses.Pre-Bonus adjusted EBITDA excludes from Adjusted EBITDA the payment of bonuses and other extraordinary items not contemplated in our 2019 annual operating plan. Under no circumstances shouldPre-Bonus adjusted EBITDA be used to substitute for any other financial metric and is used by us solely to determine bonus amounts.
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Additionally, we (i) successfully continued to execute on our long-term strategic plan to expand and diversify our talent solutions offerings and expand our footprint into nonacute care settings by acquiring Silversheet, Advanced Medical and b4health, (ii) capitalized on a favorable capital markets environment to make a private offering of $300 million of Senior Notes due 2027 to provide for additional liquidity to pursue strategic acquisitions and other investments that we believe enhance long-term shareholder value, and (iii) continued our strategic development of mobile technology platforms and artificial intelligence aimed at improving the recruitment, engagement and retention of healthcare professionals.
Based on outcomes, the Bonus Plan is working as designed and intended, with the payout of the Financial Component of the 2019 annual incentive bonus having been in line with performance. The illustrations below demonstrate the Company’s performance to annual operating plan target for each of the elements of the Financial Component together with an illustration of the Company’s 2019 bonus payout compared to the Financial Component targets.
The tables below set forth metrics and summary calculations for each named executive officer’s bonus amounts under the Leadership Component together with the final amounts under the Financial Component, which makes up 70% of the total bonus amount.
MS. SALKA’S BONUS METRICS | ||||||||||||||||||||||||||||||||
Pre-Bonus AEBITDA | Revenue | Leadership | ||||||||||||||||||||||||||||||
Levels | % of Target | | Pre-Bonus AEBITDA ($ in 1000’s) |
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| % of Target | | Revenue ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | Target ($) | ||||||||||||||||
Maximum | 120 | 341,401 | 840,000 | 120 | 2,475,351 | 840,000 | 200 | 720,000 | ||||||||||||||||||||||||
Target | 100 | 284,501 | 420,000 | 100 | 2,250,319 | 420,000 | 100 | 360,000 | ||||||||||||||||||||||||
Threshold | 90 | 256,051 | 210,000 | 90.5 | 2,036,539 | 210,000 | None | N/A | ||||||||||||||||||||||||
MS. SALKA’S BONUS METRICS ACHIEVED AND BONUS EARNED | ||||||||||||||||||||||||||||||||
Achieved | 87.8 | 277,567 | 368,817 | 50.4 | 2,138,719 | 211,710 | 150 | $ | 540,000 | |||||||||||||||||||||||
Total Bonus Earned: $1,120,527 |
| | % of Target Bonus Earned under Financial Component: 69.1% |
| | % of Target Bonus Earned under Leadership Component: 150% |
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MR. SCOTT’S BONUS METRICS | ||||||||||||||||||||||||||||||||
Pre-Bonus AEBITDA | Revenue | Leadership | ||||||||||||||||||||||||||||||
Levels | % of Target | | Pre-Bonus AEBITDA ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | | Revenue ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | Target ($) | ||||||||||||||||
Maximum | 120 | 341,401 | 353,500 | 110 | 2,475,351 | 353,500 | 200 | 265,125 | ||||||||||||||||||||||||
Target | 100 | 284,501 | 176,750 | 100 | 2,250,319 | 176,750 | 100 | 151,500 | ||||||||||||||||||||||||
Threshold | 90 | 256,051 | 88,375 | 90.5 | 2,036,539 | 8,837 | None | N/A | ||||||||||||||||||||||||
MR. SCOTT’S BONUS METRICS ACHIEVED AND BONUS EARNED | ||||||||||||||||||||||||||||||||
Achieved | 87.8 | 277,567 | 155,210 | 50.4 | 2,138,719 | 89,095 | 190 | 287,850 | ||||||||||||||||||||||||
Total Bonus Earned: $532,155 |
| | % of Target Bonus Earned under Financial Component: 69.1% |
| | % of Target Bonus Earned under Leadership Component: 190% |
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MR. HENDERSON’S BONUS METRICS | ||||||||||||||||||||||||||||||||
Pre-Bonus AEBITDA | Revenue | Leadership | ||||||||||||||||||||||||||||||
Levels | % of Target | | Pre-Bonus AEBITDA ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | | Revenue ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | Target ($) | ||||||||||||||||
Maximum | 120 | 341,401 | 353,500 | 110 | 2,475,351 | 353,500 | 200 | 265,125 | ||||||||||||||||||||||||
Target | 100 | 284,501 | 176,750 | 100 | 2,250,319 | 176,750 | 100 | 151,500 | ||||||||||||||||||||||||
Threshold | 90 | 256,051 | 88,375 | 90.5 | 2,036,539 | 8,837 | None | N/A | ||||||||||||||||||||||||
MR. HENDERSON’S BONUS METRICS ACHIEVED AND BONUS EARNED | ||||||||||||||||||||||||||||||||
Achieved | 87.8 | 277,567 | 155,210 | 50.4 | 2,138,719 | 89,095 | 100 | 151,500 | ||||||||||||||||||||||||
Total Bonus Earned: $395,805 |
| | % of Target Bonus Earned under Financial Component: 69.1% |
| | % of Target Bonus Earned under Leadership Component: 100% |
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MS. JACKSON’S BONUS METRICS | ||||||||||||||||||||||||||||||||
Pre-Bonus AEBITDA | Revenue | Leadership | ||||||||||||||||||||||||||||||
Levels | % of Target | | Pre-Bonus AEBITDA ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | | Revenue ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | Target ($) | ||||||||||||||||
Maximum | 120 | 341,401 | 225,750 | 110 | 2,475,351 | 197,531 | 200 | 169,313 | ||||||||||||||||||||||||
Target | 100 | 284,501 | 112,875 | 100 | 2,250,319 | 112,875 | 100 | 96,750 | ||||||||||||||||||||||||
Threshold | 90 | 256,051 | 56,438 | 90.5 | 2,036,539 | 5,644 | None | N/A | ||||||||||||||||||||||||
MS. JACKSON’S BONUS METRICS ACHIEVED AND BONUS EARNED | ||||||||||||||||||||||||||||||||
Achieved | 87.8 | 277,567 | 99,119 | 50.4 | 2,138,719 | 56,897 | 190 | 183,825 | ||||||||||||||||||||||||
Total Bonus Earned: $339,842 |
| | % of Target Bonus Earned under Financial Component: 69.1% |
| | % of Target Bonus Earned under Leadership Component: 190% |
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LONG-TERM INCENTIVE COMPENSATION
In 2019, the Compensation Committee granted equity awards to each named executive officer and believes it serves as a key component of our named executive officer’s compensation package. The chart below reflects the aggregate grant date fair value, which we refer to as AGD Fair Value, of each equity award type granted to each named executive officer. For all equity awards granted in 2019, our Compensation Committee approved changes to all of our equity grant agreements for our named executive officers to (1) provide for “double trigger” vesting mechanics in the event of a change in control of the Company, and (2) allow for continued vesting of outstanding equity awards if a grantee terminates his or her employment after satisfying certain age and service time requirements, which the agreements refer to as “retirement.”
Commencing in October 2019 and December 2019, Ms. Salka and Ms. Jackson will, respectfully, satisfy the requirements for retirement eligibility under their 2019 equity awards.
Named Executive Officer | AGD Fair Value of 2019 TSR PRSU Award ($) | AGD Fair Value of 2019 AEBITDA PRSU Award ($) | AGD Fair Value of 2019 RSU Award ($) | Total AGD Fair Value of 2019 Awards ($) | ||||||||||||
Susan R. Salka | 989,992 | 1,155,016 | 1,237,828 | 3,382,836 | ||||||||||||
Brian M. Scott | 302,982 | 353,489 | 353,489 | 1,009,959 | ||||||||||||
Ralph S. Henderson | 302,982 | 353,489 | 353,489 | 1,009,959 | ||||||||||||
Denise L. Jackson | 193,492 | 225,772 | 225,772 | 645,036 |
TSR PRSUs
TSR PRSUs represented approximately 30% of the total 2019 equity grant value that was awarded to each named executive officer, based on the AGD Fair Value, and will be earned at the end of an approximately three-year performance period based on our stock performance against two measures: (1) a relative basis (which we refer to as Relative TSR) against a broader market (companies in the Russell 2000 Index at the beginning of the performance period) and (2) an absolute total shareholder return basis (which we refer to as Absolute TSR). We
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refer to the determination of our Relative TSR and Absolute TSR collectively as the TSR Measurement. The number of PRSUs earned if the Company’s Relative TSR exceeds the 50th percentile but its Absolute TSR is negative is capped at the target number of PRSUs granted. For each one percentile above the 25th percentile, an additional 3% of the PRSUs vest, and the maximum payout cannot exceed 175% if Absolute TSR is positive or 100% if the Absolute TSR is negative.
The table set forth below discloses the percentage of the 2019 target PRSUs that may be earned depending on the actual results of the Company’s TSR Measurement as of December 31, 2021.(4)
Relative TSR Percentile Rank |
% of 2019 TSR PRSUs Earned if Absolute TSR Is Negative(1)
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% of 2019 TSR PRSUs that Are Earned if Absolute TSR Is Positive
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<25.0% | 0 | 0 | ||||||||
25.0% | 25.00 | 25.00 | ||||||||
37.5% | 62.50 | 62.50 | ||||||||
50.0% | 100.00 | 100.00 | ||||||||
62.5% | 100.00 | 137.50 | ||||||||
75.0% | 100.00 | 175.00 |
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Adjusted EBITDA PRSUs
In 2019, the Compensation Committee once again determined it best to dedicate a significant portion of the restricted stock units to focus our named executive officers on achieving a 13.3% adjusted EBITDA margin for 2021.(5) The number of shares that could ultimately be earned ranges from 0% to 200% of the target number of adjusted EBITDA margin PRSUs depending on actual adjusted EBITDA margin performance for 2021.
Time-Vested RSUs
Restricted stock unit grants, which we refer to as RSUs, granted in 2019 vest ratably on each of the first three anniversaries of the grant date. As it has done historically, the Compensation Committee elected to wait to consider a grant of RSUs for Ms. Salka for 2019 until the end of 2019 when it had better visibility of ouryear-end financial, operational and stock performance. Based on our financial, operational and stock performance in 2019, the Compensation Committee granted Ms. Salka 20,755RSUs with an AGD Fair Value of $1,237,828on December 16, 2019.
Aggregate Grant Date Fair Value
PRSUs represented 65% of the AGD Fair Value of all 2019 equity awards for our named executive officers, other than our CEO. Due to the timing of Ms. Salka’s RSU award in December 2019 (rather than January 2019), she received PRSUs that represented 37% of her total 2019 equity award value. To provide further clarity on our equity compensation practices, the chart below details the change of the AGD Fair Value of all 2019 equity awards granted to our named executive officers against the AGD Fair Value of all 2018 equity awards.
The 17% increase in our CEO’s AGD Fair Value in 2019 from 2018 is driven in part by the Company’s strong financial, operational and stock performance in 2019, as well as peer group and other compensation benchmarking.We believe that the AGD Fair Value of her equity awards placed her below the median among CEOs within our 2019 peer group for long-term incentive compensation. On an aggregate basis, the combined AGD Fair Value of our named executive officers’ equity awards increased 69% in 2019 from 2018.
(4) As set forth in the Grant of Plan-Based Awards Table, the target number of TSR PRSUs granted in 2019 for each named executive officer is as follows: (1) for Ms. Salka, 13,400; (2) for Mr. Scott, 4,101; (3) for Mr. Henderson, 4,101; and (4) for Ms. Jackson, 2,619.
(5) As set forth in the Grant of Plan-Based Awards Table, the target number of adjusted EBITDA PRSUs granted in 2019 for each named executive officer is as follows: (i) for Ms. Salka, 20,755; (ii) for Mr. Scott, 6,352; (iii) for Mr. Henderson, 6,352; and (iv) for Ms. Jackson, 4,057.
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Named Executive Officer | AGD Fair Value of 2018 Equity Awards($) | AGD Fair Value of 2019 Equity Awards($) | Variance ($) | % Increase | ||||||||||||
Susan R. Salka | 2,888,030 | 3,382,836 | 494,806 | 17 | ||||||||||||
Brian M. Scott | 1,000,046 | 1,009,959 | 9,913 | 1 | ||||||||||||
Ralph S. Henderson | 1,000,046 | 1,009,959 | 9,913 | 1 | ||||||||||||
Denise L. Jackson | 430,001 | 645,036 | 215,035 | 50 | ||||||||||||
Total | 5,318,123 | 6,047,7903 | 729,667 | 69 |
RESULTS OF OUR 2017 PERFORMANCE RESTRICTED STOCK UNIT AWARDS
2017 TSR PRSU Award TSR Measurement
On January 6, 2020, the Compensation Committee performed the TSR Measurement for the 2017 TSR PRSU awards. Our Relative TSR was at the 81st percentile of the Russell 2000 Index and our Absolute TSR was 73.45% during the measurement period from January 1, 2017 through December 31, 2019. Accordingly, each named executive officer received the maximum (175%) of his or her target amount of 2017 TSR PRSUs. Specifically, Ms. Salka, Mr. Scott, Mr. Henderson and Ms. Jackson earned 20,701, 7,245, 7,245 and 4,242 PRSUs, respectively.
2017 Adjusted EBITDA PRSU Award Measurement
On February 13, 2020, the Compensation Committee determined that our 2019 adjusted EBITDA margin equaled 12.5%. Accordingly, each named executive officer received 25% of his or her target amount of 2017 adjusted EBITDA margin PRSUs. Specifically, Ms. Salka, Mr. Scott, Mr. Henderson and Ms. Jackson earned 4,496, 1,574, 1,574 and 922 PRSUs, respectively.
Equity Ownership Requirements, Clawback and No Pledging PoliciesEQUITY OWNERSHIP, CLAWBACK AND NO PLEDGING POLICIES
We maintain meaningful equity ownership requirements as well as clawback and no pledging policies to which our named executive officers are subject. We have set forth a summary of these requirements and policies below. Additional details related to these requirements and policies are contained in the Governance Guidelines.
EQUITY OWNERSHIP REQUIREMENTS
The Board believes that all named executive officers should maintain a meaningful personal financial stake in the Company to align their long-term interests with those of our shareholders. Accordingly, our equity ownership requirements require the following our named executive officers and other executives to maintain the following:
Level | Requirement | |
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Board of Directors | 5x Annual Cash Retainer | |
Chief Executive Officer | 5x Base Salary | |
Named Executive Officers | 2x Base Salary | |
Other CEO Committee Members | 1.5x Base Salary |
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The value of unvested RSUs and vested or unvested SARsstock appreciation rights and options areis not taken into account in determining whether a named executive officer satisfies our equity ownership requirements. Individuals subject to the equity ownership requirements above who have not met the applicable ownership requirements are required to retain 50% of net vested shares from equity awards issued subsequent to the initial assessment of ownership until they have reached the applicable ownership requirement. As of the close of business on February 24, 2020,23, 2021, all of our named executive officers satisfysatisfied our equity ownership requirements.requirements, with the exception of Mr. Hagan, whose employment with the Company began on June 27, 2018, and he was appointed an executive officer on March 8, 2020.
CLAWBACK POLICY
Under the Governance Guidelines, if we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirements under the securities laws caused by misconduct, we can seek recoupment from all of our current or former executive officers who participated in the misconduct of:
1. | all or any portion of the bonus and equity or cash incentive compensation received by such individuals during the12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such defective financial statement; and |
2. | any profits realized by such individuals from the sale of securities of the Company during that12-month period. |
NO PLEDGING POLICY
The Governance Guidelines prohibit named executive officers (and directors) from pledging, hypothecating or otherwise placing a lien on any shares of our common stock (or any other equity interests) that they own.
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Tax DeductibilityTable of Contents
Executive Compensation
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Prior to December 22, 2017, when the Tax Cuts and Jobs Act of 2017, which we refer to as the TCJA, was signed into law, Section 162(m) of the Internal Revenue Code generally disallowed a tax deduction to publicly held companies for compensation paid to certain executive officers in excess of $1 million per officer in any year that did not qualify as performance-based. We refer to the Internal Revenue Code as the Code.
Under the
The TCJA repealed the performance-based exception, has been repealed and the $1 million deduction limit now applies to anyone serving as the chief executive officer or the chief financial officer at any time during the taxable year and the top three other highest compensated executive officers serving at fiscalyear-end. The new rules generally apply to taxable years beginning after December 31, 2017, but do not apply to remuneration provided pursuant to a written binding contract in effect on November 2, 2017 that is not modified in any material respect after that date. The Compensation Committee believes that shareholders’ interests are best served by not restricting its discretion and flexibility in structuring compensation, even though doing that may result in certain non-deductible compensation expenses. Because many different factors influence a well-rounded, comprehensive executive compensation program, some of the compensation we provide to our named executive officers is likely not to be fully deductible for tax purposes due to Section 162(m).
Overview of Our 2020 Executive Compensation ProgramOUR 2021 EXECUTIVE COMPENSATION PROGRAM
Overall, the Compensation Committee believes the Company performed well during 20192020 and continued to execute on the Company’s long-term strategic plan. We achieved year-over-year consolidated revenue and consolidated adjusted EBITDA growth of approximately 4%8% and 3%16%, respectively. Performance of our common stock continued its strong performance in 2019, delivering a 10% price appreciation. The Compensation Committee believes it has designed the 20202021 compensation structure to provide for important short- and long-term performance components that are aligned with shareholders,shareholders’ interests, consistent with the market environment and tailored specifically to us.
BASE SALARY
The Compensation Committee approved the annual base salaries for the named executive officers for 20202021 as follows:
Named Executive Officer | 2019 Salary ($) | 2020 Salary ($) | % Increase | |||||||||
Susan R. Salka | 1,000,000 | 1,030,000 | 3 | |||||||||
Brian M. Scott | 505,000 | 520,000 | 3 | |||||||||
Ralph S. Henderson (1) | 505,000 | 505,000 | 0 | |||||||||
Denise L. Jackson | 430,000 | 440,000 | 2 |
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Named Executive Officer | 2020 Salary ($) | 2021 Salary ($) | % Increase |
Susan R. Salka | 1,030,000 | 1,030,000 | 0 |
Brian M. Scott | 520,000 | 520,000 | 0 |
Mark C. Hagan | 500,000 | 510,000 | 2 |
Denise L. Jackson | 440,000 | 440,000 | 0 |
The base salaries of our named executive officers reflect a 0% to 3%2% increase. The 20202021 base salary for our named executive officers is based on executive compensation peer group benchmarking analyses and the Compensation Committee’s recognition that the Company’s 20192020 organic growth and core business performance did not meet targeted expectations and its commitment to maintain a pay for performance environment.
BONUS PLAN
Target Bonus.
TARGET BONUS
In January 2020,2021, the Compensation Committee reviewed the target bonus level for each named executive officer, which we express as a percent of annual base salary. After careful consideration, the Compensation Committee determined thatnot to increase the 20202021 bonus target as a percentage of salary should not be increased for our namedMs. Salka and Mr. Scott but determined to increase the bonus targets for Mr. Hagan and Ms. Jackson based on their strong 2020 operational performance and contributions, executive officers.compensation peer group and market benchmarking data and their assumption of additional responsibilities. We set forth below the 20202021 target bonuses for each named executive officer as a percentage of salary, which remained unchanged from 2019.salary.
Named Executive Officer | 2019 Bonus Target (% of Salary) | 2020 Bonus Target (%of Salary) | ||||||||
Susan R. Salka | 120 | 120 | ||||||||
Brian M. Scott | 100 | 100 | ||||||||
Ralph S. Henderson | 100 | 100 | ||||||||
Denise L. Jackson | 75 | 75 |
2021 Proxy Statement | 65 |
Executive Compensation
Named Executive Officer | 2020 Bonus Target (% of Salary) | 2021 Bonus Target (% of Salary) |
Susan R. Salka | 120 | 120 |
Brian M. Scott | 100 | 100 |
Mark C. Hagan | 75 | 90 |
Denise L. Jackson | 75 | 90 |
STRUCTURE
After careful consideration of the factors set forth above in the subsection of this CD&A entitled “Components“Principal Components of Our Compensation Program — Annual Cash Incentive Performance Bonus,” the Compensation Committee decided to use the same bonus structure for each named executive officer as it did in 2019.2020. The target goals for each of the financial metrics are consistent with the targets under our 20192021 annual operating plan and generally require growth that exceeds our estimate of anticipated industry performance. For our CEO, we believe her 20192021 bonus target in dollar amount falls near the median among CEOs within our 20192021 peer group.
LONG-TERM EQUITY INCENTIVES
The Compensation Committee continues to believe that aligning its pay for performance philosophy, goals and objectives is the foundation upon which it evaluates its annual long-term incentive award strategy. In January 2020, it approved the issuance of a new long-term incentive award that vests at the end of a three year-period and accrues certain value annually during each year of the award based on the Company’s annual adjusted EBITDA growth rate. We refer to these awards as adjusted EBITDA growth PRSUs. In 2020, these adjusted EBITDA growth PRSUs replaced the use of the adjusted EBITDA margin PRSUs, which vested after three years based on the Company’s adjusted EBITDA margin at the end of the last year of the award. The Compensation Committee believes that the adjusted EBITDA growth PRSUs allows management to effectively manage the Company’s
long-term adjusted EBITDA growth objectives over a three-year period and serves as a talent retention and engagement tool by allowing a portion of the awards to accrue each year with the vesting occurring on the third anniversary of the grant date.
In 2020,2021, the Compensation Committee utilized a combination of (1) TSR PRSUs, (2) time-vested RSUs and (3) adjusted EBITDA growth PRSUs which replaced adjusted EBITDA margin PRSUs. Theand slightly modified its allocation among these equity award types compared to 2020. In 2021, the Compensation Committee continued to targettargeted an allocation of 30% TSR PRSUs, 35%25% adjusted EBITDA growth PRSUs and 35%45% time-vested RSUs (as a percentage of the AGD Fair Value of all 20202021 equity awards) in 2020.2021. For each named executive officer, other than Ms. Salka, approximately 65%55% of the AGD Fair Value of the January 20202021 equity awards consisted of PRSUs, and the remaining 35%45% consisted of time-vested RSUs. All of Ms. Salka’s January 20202021 equity awards were PRSUs, as the Compensation Committee will make their decision on her equity grant of time-vested RSUs in the fourth quarter of 20202021 when it has better visibility of the Company’s 20202021 performance.
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Executive Compensation
EXECUTIVE COMPENSATION DISCLOSURE
Our named executive officers for the 2019 fiscal yearas of December 31, 2020 are listed below. We provide information regarding the business experience, qualifications and affiliations of our currently employed named executive officers who are not directors below. For Ms. Salka’s experience, qualifications and affiliations, please see page 1521 above.
DENISE L. JACKSON | 56 Chief Legal Officer and Corporate Secretary Ms. Jackson joined us as General Counsel and Vice President of Administration in October 2000. Ms. Jackson is responsible for our legal, corporate governance, compliance, ethics, risk management, real estate and corporate social responsibility functions. We appointed her as our Secretary in May 2003 and Senior Vice President in November 2004. From 1995 to September 2000, Ms. Jackson worked for The Mills Corporation serving as Vice President and Senior Counsel from 1998 to 2000. Ms. Jackson serves on the Board of Tractor Supply Company (TCSO: Nasdaq), the largest retailer of rural lifestyle products in the United States, and is Chair of its Corporate Governance Committee and is a member of its Audit Committee. Ms. Jackson holds a Juris Doctorate degree from the University of Arizona, a Master of Public Health from The George Washington University and a Bachelor of Science in Liberal Studies from the University of Arizona. Ms. Jackson is licensed as an attorney in California, the District of Columbia, Arizona and New York. |
BRIAN M. | SCOTT | 51 Chief Financial Officer, Chief Accounting Officer and Treasurer | |
OurNon-Director Executive Officers
Ralph S. Henderson
Age: 59
President, Professional
Services and Staffing
Business Experience,
Qualifications and Affiliations:
Mr. Henderson joined us as President, Nurse Staffing in September 2007. In February 2009, we appointed him President, Nurse and Allied Staffing and in February 2012, named him President, Healthcare Staffing. In January 2016, we appointed Mr. Henderson President, Professional Services and Staffing. He is responsible for leading the sales and financial performance of our nurse and allied solutions segment and our locum tenens solutions segment. Prior to September 2007, Mr. Henderson served as Senior Vice President, Group Executive for Spherion, Inc., one of the largest commercial and professional staffing companies in the United States. Mr. Henderson started with Spherion in 1995 and held several leadership positions, including Regional Vice President and General Manager, Vice President of National Accounts, and Senior Vice President, Western Division. Prior to Spherion, Mr. Henderson was employed by American Express for nine years where in his last role he served as Vice President of Sales and Account Management in the Travel Management Services Division. Mr. Henderson holds a Bachelor of Science degree in Business Administration from Northern Arizona University.
Denise L. Jackson
Age: 55
Chief Legal Officer and
Corporate Secretary
Business Experience,
Qualifications and Affiliations:
Ms. Jackson joined us as General Counsel and Vice President of Administration in October 2000. Ms. Jackson is responsible for our legal, corporate governance, compliance, ethics, risk management, real estate and corporate social responsibility functions. We appointed her as our Secretary in May 2003 and Senior Vice President in November 2004. From 1995 to September 2000, Ms. Jackson worked for The Mills Corporation serving as Vice President and Senior Counsel from 1998 to 2000. Ms. Jackson serves on the Board of Tractor Supply Company, the largest retailer of rural lifestyle products in the United States, is Chair of its Corporate Governance Committee and is a member of its Audit Committee. Ms. Jackson holds a Juris Doctorate degree from the University of Arizona, a Masters of Public Health from The George Washington University and a Bachelor of Science in Liberal Studies from the University of Arizona. Ms. Jackson is licensed as an attorney in California, the District of Columbia, Arizona and New York.
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Mr. Scott joined us in December 2003. We appointed him Chief Prior to his appointment as Chief Financial Officer, Chief Accounting Officer and Treasurer, Mr. Scott served in a variety of financial and operational roles for us including most recently as Senior Vice President of Operations, Finance and Business Development, in which capacity he oversaw our corporate financial planning and analysis, capital funding and business development activities. He has also served as President of our pharmacy staffing division and as Director, Senior Director and Vice President of Finance, where his roles have included overseeing all accounting operations and SEC reporting. Mr. Scott started his career in San Francisco with KPMG LLP and later became a partner in a mid-sized CPA firm. He also served as controller of a biotechnology company. Mr. Scott serves on the Board of Nova Health, a private equity-backed chain of urgent care centers in the Pacific Northwest. He also serves on the non-profit boards of the YMCA of San Diego County and the RC Baker Foundation. Mr. Scott is a certified public accountant (inactive) in California and received his bachelor’s degree in accounting from California Polytechnic State University, San Luis Obispo and a Master of Business Administration from the McCombs School of Business at the University of Texas at Austin. |
Financial Officer, Chief Accounting Officer, and Treasurer in January 2011. In his role, Mr. Scott oversees the Company’s accounting, finance, investor relations and internal audit functions as well as certain shared services operations. Prior to his appointment as Chief Financial Officer, Chief Accounting Officer and Treasurer, Mr. Scott served in a variety
2021 Proxy Statement | 67 |
Executive Compensation
MARK C. HAGAN | 52 Chief Information and Digital Officer Mark Hagan joined us as Chief Information Officer in June 2018. In March 2020, Mr. Hagan was promoted to Chief Information and Digital Officer and is responsible for our digital strategy, technology R&D, enterprise information technology infrastructure, operations, development, security, and program management operations. Mr. Hagan brings a tremendous amount of experience to AMN in systems integration and platform rationalization, innovation, and leading the enterprise technology execution and evolution for multiple acquisitions. Prior to joining AMN, from 2014-2018, Mr. Hagan was Chief Information Officer and Mr. Hagan has experience driving and supporting major deployments of core business applications, leading digital transformations, and developing and launching new software products. He is also dedicated to innovation, having introduced robotic process automation, natural language processing, artificial intelligence, and other forms of innovation to evolve and streamline operations. Mr. Hagan currently serves as a director of M&M Properties Colorado LLC and Wonolo, Inc. |
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funding and business development activities. He has also served as President of our pharmacy staffing division and as Director, Senior Director and Vice President of Finance, where his roles have included overseeing all accounting operations and SEC reporting. Mr. Scott started his career in San Francisco with KPMG and later became a partner in amid-sized CPA firm. He also served as controller of a biotechnology company. Mr. Scott serves on the Board of Nova Health, a private equity-backed chain of urgent care centers in the Pacific Northwest. He also serves on thenon-profit boards of the YMCA of San Diego County and the RC Baker Foundation. Mr. Scott is a certified public accountant (inactive) in California, and received his bachelor’s degree in accounting from California Polytechnic State University, San Luis Obispo and a Masters of Business Administration from the McCombs School of Business at the University of Texas at Austin.Executive Compensation
Summary Compensation TableSUMMARY COMPENSATION TABLE
The following table shows the compensation earned or accrued by our named executive officers for the three fiscal years ended December 31, 2020, 2019 2018 and 2017.2018.
Named Executive Officer and Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||
Susan R. Salka | 2019 | 996,154 | — | 3,382,836 | (5) | 1,120,527 | 127,289 | 5,626,806 | ||||||||||||||||||||
PEO,(6) President & CEO | 2018 | 897,592 | — | 2,888,030 | (7) | 1,105,721 | 197,689 | 5,089,032 | ||||||||||||||||||||
| 2017 | 835,577 | — | 2,299,955 | (8) | 548,078 | 197,357 | 3,880,967 | ||||||||||||||||||||
Brian M. Scott | 2019 | 504,423 | — | 1,009,959 | (10) | 532,155 | 60,416 | 2,106,953 | ||||||||||||||||||||
PFO,(9) CFO, CAO & Treasurer | 2018 | 489,038 | — | 1,000,046 | (11) | 480,324 | 50,941 | 2,020,349 | ||||||||||||||||||||
| 2017 | 464,423 | — | 699,969 | (12) | 235,174 | 84,643 | 1,484,209 | ||||||||||||||||||||
Ralph S. Henderson | 2019 | 504,423 | — | 1,009,959 | (10) | 395,805 | 93,647 | 2,003,834 | ||||||||||||||||||||
President, Professional Services & Staffing | 2018 | 489,038 | — | 1,000,046 | (11) | 480,324 | 113,605 | 2,083,013 | ||||||||||||||||||||
| 2017 | 464,423 | — | 699,969 | (12) | 235,174 | 75,587 | 1,475,153 | ||||||||||||||||||||
Denise L. Jackson | 2019 | 429,212 | — | 645,036 | (13) | 339,842 | 44,013 | 1,458,103 | ||||||||||||||||||||
Chief Legal Officer & Corporate Secretary | 2018 | 408,750 | — | 430,001 | (14) | 270,596 | 38,570 | 1,147,917 | ||||||||||||||||||||
| 2017 | 389,423 | — | 409,978 | (15) | 139,230 | 49,449 | 988,080 |
Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | |||||||||
Named Executive Officer and Position | Year | ($)(1) | ($) | ($)(2) | ($)(3) | ($)(4) | ($) | |||||||
Susan R. Salka PEO,(6) President & CEO | 2020 | 1,027,692 | — | 3,632,452(5) | 1,236,000 | 129,155 | 6,025,299 | |||||||
2019 | 996,154 | — | 3,382,836(7) | 1,120,527 | 127,289 | 5,626,806 | ||||||||
2018 | 897,592 | — | 2,888,030(8) | 1,105,721 | 197,689 | 5,089,032 | ||||||||
Brian M. Scott PFO,(9) CFO, CAO & Treasurer | 2020 | 522,846 | — | 1,100,012(10) | 535,600 | 60,572 | 2,219,031 | |||||||
2019 | 504,423 | — | 1,009,959(11) | 532,155 | 60,416 | 2,106,953 | ||||||||
2018 | 489,038 | — | 1,000,046(12) | 480,324 | 50,941 | 2,020,349 | ||||||||
Ralph S. Henderson President, Professional Services & Staffing | 2020 | 194,231 | — | 1,009,960(13) | 0 | 748,339 | 1,952,530 | |||||||
2019 | 504,423 | — | 1,009,959(11) | 395,805 | 93,647 | 2,003,834 | ||||||||
2018 | 489,038 | — | 1,000,046(12) | 480,324 | 113,605 | 2,083,013 | ||||||||
Mark C. Hagan Chief Information & Digital Officer | 2020 | 498,731 | — | 830,405(14) | 386,250 | 114,692 | 1,830,078 | |||||||
Denise L. Jackson Chief Legal Officer & Corporate Secretary | 2020 | 442,615 | — | 660,064(15) | 339,900 | 55,529 | 1,498,108 | |||||||
2019 | 429,212 | — | 645,036(16) | 339,842 | 44,013 | 1,458,103 | ||||||||
2018 | 408,750 | — | 430,001(17) | 270,596 | 38,570 | 1,147,917 |
(1) | Salary includes all salary amounts deferred by the named executive officers under theDeferred Compensation |
(2) | This column reflects the dollar amounts for the years shown of the AGD Fair Value of RSUs and PRSUs granted to our named executive officers. For PRSUs, which are subject to performance conditions, we report the grant date fair value based upon the probable outcome of such conditions and that value is consistent with the estimate of aggregate compensation cost to be recognized over the service period as of the grant date, excluding the effect of estimated forfeitures. For additional information on the valuation assumptions used in the calculation of these amounts, refer to notes 1(o) and 11 to the financial statements included in our annual report on Form10-K for the fiscal year ended December 31, |
(3) | This column consists of cash awards paid to our named executive officers pursuant to our Bonus Plan and generally sets forth bonus amounts in the year in which they are earned, although we typically pay them in the following fiscal year. |
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This column consists of compensation received by our named executive officers in the form of matching contributions to the Deferred Compensation Plan and Company-paid life insurance | |
(5) | 19,625 RSUs with an AGD Fair Value of $1,357,461, 13,335 TSR PRSU with an AGD Fair Value of $1,049,998 and 19,625 adjusted EBITDA margin PRSUs with an AGD Fair Value of $1,224,993, comprise the amount of Ms. Salka’s 2020 stock awards. Assuming the highest level of performance conditions will be achieved for |
(6) | “PEO” refers to |
20,755 RSUs with an AGD Fair Value of $1,237,828, 13,400 TSR |
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22,187 RSUs with an AGD Fair Value of $1,250,016, 11,528 TSR PRSUs with an AGD Fair Value of $756,006 and 17,927 adjusted EBITDA margin PRSUs with an AGD Fair Value of $882,008, comprise the amount of Ms. Salka’s 2018 stock awards. Assuming the highest level of performance conditions will be achieved for the 11,528 TSR PRSU award and the 17,927 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal |
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(10) | 6,168 RSUs with an AGD Fair Value of |
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6,352 RSUs with an AGD Fair Value of $353,489, 4,101 TSR PRSUs with an AGD Fair Value of $302,982 and 6,352 adjusted EBITDA margin PRSUs with an AGD Fair Value of $353,489 comprise the amount of Mr. Scott’s and Mr. Henderson’s 2019 stock awards. Assuming the highest level of performance conditions will be achieved for the 4,101 TSR PRSU award and the 6,352 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal $530,237 and $706,978, respectively. |
7,114 RSUs with an AGD Fair Value of $350,009, 4,575 TSR PRSUs with an AGD Fair Value of $300,029, 7,114 adjusted EBITDA margin PRSUs with an AGD Fair Value of $350,009 comprise the amount of Mr. Scott’s and Mr. Henderson’s 2018 stock awards. Assuming the highest level of performance conditions will be achieved for the 4,575 TSR PRSU award and the 7,114 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal |
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3,535 RSUs with an AGD Fair Value of $220,655, 2,603 RSUs with an AGD Fair Value of $199,962, 2,402 TSR PRSUs with an AGD Fair Value of $189,133 and 3,535 adjusted EBITDA margin PRSUs with an AGD Fair Value of $220,655 comprise the amount of Mr. Hagan’s 2020 stock awards. Assuming the highest level of performance conditions will be achieved for the 2,402 TSR PRSU award and the 3,535 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal $330,944 and $441,309, respectively. | |
(15) | 3,701 RSUs with an AGD Fair Value of $231,016, 2,515 TSR PRSUs with an AGD Fair Value of $198,031 and 3,701 adjusted EBITDA margin PRSUs with an AGD Fair Value of $231,016 comprise the amount of Ms. Jackson’s 2020 stock awards. Assuming the highest level of performance conditions will be achieved for the 2,515 TSR PRSU award and the 3,701 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal $346,535 and $462,033, respectively. |
(16) | 4,057 RSUs with an AGD Fair Value of $225,772, 2,619 TSR PRSUs with an AGD Fair Value of $193,492 and 4,057 adjusted EBITDA margin PRSUs with an AGD Fair Value of $225,772 comprise the amount of Ms. Jackson’s 2019 stock awards. Assuming the highest level of performance conditions will be achieved for the 2,619 TSR PRSU award and the 4,057 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal $338,592 and $451,544, respectively. |
3,059 RSUs with an AGD Fair Value of $150,502, 1,967 TSR PRSUs with an AGD Fair Value of $128,996 and 3,059 adjusted EBITDA margin PRSUs with an AGD Fair Value of $150,503 comprise the amount of Ms. Jackson’s 2018 stock awards. Assuming the highest level of performance conditions will be achieved for the 1,967 TSR PRSU award and the 3,059 adjusted EBITDA margin PRSU award, the AGD Fair Value of such awards would equal |
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Executive Compensation
Grants of Plan-Based AwardsGRANTS OF PLAN-BASED AWARDS
The following table contains information concerning grants of plan-based awards to our named executive officers under our cash and equity plans during the year ended December 31, 2019.2020.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | All Other Stock Awards: # of Shares | Grant Date Fair Value of Stock | |||||||||||||||||||||||||||||||||||||||||||
Name and Type of
Equity Award
| Estimated Future Payouts UnderNon-Equity Incentive Plan Awards
| Estimated Future Payouts Under Equity Incentive Plan Awards(1)
| All Other Awards: # of Stock or Units
| Grant Date Fair Value of Stock Awards ($)(8)
| Grant Date | Threshold ($)(2) | Target ($)(3) | Maximum ($)(4) | Threshold (#)(5) | Target (#)(6) | Maximum (#)(7) | of Stock or Units | Awards ($)(8) | |||||||||||||||||||||||||||||||||
Grant Date
| Threshold ($)(2)
| Target ($)(3)
| Maximum ($)(4)
| Threshold (#)(5)
| Target (#)(6)
| Maximum (#)(7)
| ||||||||||||||||||||||||||||||||||||||||
Susan R. Salka |
| 249,000 | 1,200,000 | 2,400,000 |
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| 237,930 | 1,236,000 | 2,472,000 | |||||||||||||||||||||||||||||||||
TSR PRSU | 1/3/2019 |
|
|
| 3,350 | 13,400 | 23,450 |
| 989,992 | 1/6/2020 | 3,334 | 13,335 | 23,336 | 1,837,496 | ||||||||||||||||||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
|
|
| 5,189 | 20,755 | 41,510 |
| 1,155,016 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA PRSU | 1/6/2020 | 4,906 | 19,625 | 39,250 | 2,449,985 | |||||||||||||||||||||||||||||||||||||||||
RSU | 12/16/2019 |
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| 20,755 (9) | 1,237,828 | 12/16/2020 | 19,625(9) | 1,357,461 | ||||||||||||||||||||||||||||||||||
Brian M. Scott |
| 104,788 | 505,000 | 1,010,000 |
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| 100,100 | 520,000 | 1,040,000 | |||||||||||||||||||||||||||||||||
TSR PRSU | 1/3/2019 |
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| 1,025 | 4,101 | 7,177 |
| 302,982 | 1/6/2020 | 1,048 | 4,191 | 7,334 | 541,854 | ||||||||||||||||||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
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| 1,588 | 6,352 | 12,704 |
| 353,489 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA PRSU | 1/6/2020 | 1,542 | 6,168 | 12,336 | 770,013 | |||||||||||||||||||||||||||||||||||||||||
RSU | 1/3/2019 |
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| 6,352 (9) | 353,489 | 1/6/2020 | 6,168(9) | 385,007 | ||||||||||||||||||||||||||||||||||
Ralph S. Henderson |
| 104,788 | 505,000 | 1,010,000 |
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| 97,212 | 505,000 | 1,010,000 | |||||||||||||||||||||||||||||||||
TSR PRSU | 1/3/2019 |
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| 1,025 | 4,101 | 7,177 |
| 302,982 | 1/6/2020 | 962 | 3,848 | 6,734 | 497,508 | ||||||||||||||||||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
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| 1,588 | 6,352 | 12,704 |
| 353,489 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA PRSU | 1/6/2020 | 1,416 | 5,663 | 11,326 | 630,292 | |||||||||||||||||||||||||||||||||||||||||
RSU | 1/3/2019 |
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| 6,352 (9) | 353,489 | 1/6/2020 | 5,663(9) | 353,484 | ||||||||||||||||||||||||||||||||||
Mark C. Hagan | 72,187 | 375,000 | 750,000 | |||||||||||||||||||||||||||||||||||||||||||
TSR PRSU | 1/6/2020 | 601 | 2,402 | 4,204 | 310,555 | |||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA PRSU | 1/6/2020 | 884 | 3,535 | 7,070 | 441,309 | |||||||||||||||||||||||||||||||||||||||||
RSU | 1/6/2020 | 3,535(9) | 162,479 | |||||||||||||||||||||||||||||||||||||||||||
RSU | 3/9/2020 | 2,603(10) | 199,962 | |||||||||||||||||||||||||||||||||||||||||||
Denise L. Jackson |
| 66,919 | 322,500 | 645,000 |
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| 63,525 | 330,000 | 660,000 | |||||||||||||||||||||||||||||||||
TSR PRSU | 1/3/2019 |
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| 655 | 2,619 | 4,583 |
| 193,492 | 1/6/2020 | 629 | 2,515 | 4,401 | 346,535 | ||||||||||||||||||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
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| 1,014 | 4,057 | 8,114 |
| 225,772 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDA PRSU | 1/6/2020 | 925 | 3,701 | 7,402 | 462,033 | |||||||||||||||||||||||||||||||||||||||||
RSU | 1/3/2019 |
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| 4,057 (9) | 225,772 | 1/6/2020 | 3,701(9) | 231,016 |
(1) | The columns comprising the “Estimated Future Payouts Under Equity Incentive Plan Awards” set forth information regarding PRSUs granted to our named executive officers in |
(2) | The amount set forth in this column represents the minimum amount that a named executive officer would receive under our Bonus Plan if we met our |
(3) | The amount set forth in this column represents the amount that a named executive officer would receive under our Bonus Plan if the named executive officer met the target of each metric upon which his or her bonus is based. |
(4) | The Compensation Committee set the maximum bonus for |
(5) | For TSR PRSUs awards, the number of shares set forth in this column assumes that under the TSR Measurement, our relative TSR percentile rank equaled at least 25%, which establishes the minimum amount of performance that we must achieve for our named executive officers to earn a portion of the award. We describe Relative TSR in our CD&A above. For adjusted EBITDA margin PRSU awards, the number of shares set forth in this column assumes that |
(6) | For TSR PRSUs, the number of PRSUs set forth in this column assumes that under the TSR Measurement, our relative TSR percentile rank equaled at least 50%. For adjusted EBITDA margin PRSU awards, the number of shares set forth in this column assumes that the Company will achieve annual adjusted EBTIDA performance equal to 100% of the Company’s |
(7) | The number of TSR PRSUs set forth in this column assumes that under the TSR Measurement each of the following conditions has been satisfied: (1) Relative TSR percentile equals at least 75% and (2) Absolute TSR exceeds zero. For adjusted EBITDA margin |
(8) | This column represents the grant date fair value, calculated in accordance with SEC rules, of each equity award. For PRSUs, which are subject to performance conditions, we report the grant date fair value based upon the probable outcome of such conditions and that value is consistent with the estimate of aggregate compensation cost to be recognized over the service period as of the grant date, excluding the effect of estimated forfeitures. These amounts do not necessarily correspond to the actual value that will be realized by our named executive officers. For additional information on the valuation assumptions used in the calculation of these amounts, refer to notes 1(o) and 10 to the financial statements included in our annual report on Form10-K for the fiscal year ended December 31, |
(9) | The RSUs underlying this award vest in three tranches on each of the first, second and third anniversaries of the Grant |
(10) | The RSUs underlying this award vest on the third anniversary of the Grant Date and the Grantee’s provision of three periods of Credited Service. |
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Executive Compensation
Outstanding Equity Awards at Fiscal Year EndOUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table represents equity interests held by the named executive officers as of December 31, 2019,2020, which is comprised of RSU and PRSU awards.
OPTION AWARDS | STOCK AWARDS(1) | |||||||||||||||||||||||||||||||||||
Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Option Exercise Price ($) | Option Expiration Date | RSU or PRSU Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Plan Awards: Number of Unearned Shares, Other Rights That Have Not Vested (2) | Equity Plan Awards: Market or of Unearned Shares, Other Rights That Have Not Vested ($) (2) | |||||||||||||||||||||||||||
Susan R. Salka |
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| 1/4/2017(3) |
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| 20,701 (4) | 1,289,879 | |||||||||||||||
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| 1/4/2017(5) |
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| 4,496 (6) | 280,146 | |||||||||||||||
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| 12/19/2017(7) | 13,687 | 852,837 |
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| 1/5/2018(8) |
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| 20,174 (9) | 1,257,042 | |||||||||||||||
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| 1/5/2018(10) |
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| 4,482 (11) | 279,273 | |||||||||||||||
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| 12/17/2018(17) | 14,865 | 926,238 |
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| 1/3/2019(13) |
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| 13,400 (14) | 834,954 | |||||||||||||||
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| 1/3/2019(15) |
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| 5,189 (16) | 323,327 | |||||||||||||||
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| 12/16/2019(17) | 20,755 | 1,293,244 |
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Brian M. Scott |
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| 1/4/2017(3) |
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| 7,245 (4) | 451,436 | |||||||||||||||
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| 1/4/2017(5) |
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| 1,574 (6) | 98,076 | |||||||||||||||
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| 1/4/2017(13) | 2,077 | 129,418 |
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| 1/5/2018(8) |
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| 8,006 (9) | 498,854 | |||||||||||||||
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| 1/5/2018(10) |
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| 1,779 (11) | 110,849 | |||||||||||||||
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| 1/5/2018(17) | 4,766 | 296,969 |
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| 1/3/2019(13) |
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| 4,101 (14) | 255,533 | |||||||||||||||
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| 1/3/2019(15) |
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| 1,588 (16) | 98,948 | |||||||||||||||
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| 1/3/2019(17) | 6,352 | 395,793 |
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| |||||||||||||||
Ralph S. Henderson |
|
|
|
|
|
|
|
|
|
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| 1/4/2017(3) |
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| 7,245 (4) | 451,436 | |||||||||||||||
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| 1/4/2017(5) |
|
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| 1,574 (6) | 98,076 | |||||||||||||||
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| 1/4/2017(13) | 2,077 | 129,418 |
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| |||||||||||||||
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| 1/5/2018(8) |
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| 8,006 (9) | 498,854 | |||||||||||||||
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| 1/5/2018(10) |
|
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| 1,779 (11) | 110,849 | |||||||||||||||
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| 1/5/2018(17) | 4,766 | 296,969 |
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| |||||||||||||||
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| 1/3/2019(13) |
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| 4,101 (14) | 255,533 | |||||||||||||||
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| 1/3/2019(15) |
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| 1,588 (16) | 98,948 | |||||||||||||||
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| 1/3/2019(17) | 6,352 | 395,793 |
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| |||||||||||||||
Denise L. Jackson |
|
|
|
|
|
|
|
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| 1/4/2017(3) |
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| 4,242 (4) | 264,319 | |||||||||||||||
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|
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| 1/4/2017(5) |
|
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| 922 (6) | 57,450 | |||||||||||||||
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| 1/4/2017(13) | 1,216 | 75,769 |
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| |||||||||||||||
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| 1/5/2018(8) |
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| 3,442 (9) | 214,471 | |||||||||||||||
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|
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|
|
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| 1/5/2018(10) |
|
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| 765 (11) | 47,667 | |||||||||||||||
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| 1/5/2018(17) | 2,050 | 127,736 |
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| |||||||||||||||
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| 1/3/2019(13) |
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| 2,619 (14) | 163,190 | |||||||||||||||
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| 1/3/2019(15) |
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| 1,014 (16) | 63,182 | |||||||||||||||
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| 1/3/2019(17) | 4,057 | 252,792 |
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|
Option Awards | Stock Awards(1) | |||||||||||||||||
Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Option Exercise Price ($) | Option Expiration Date | RSU or PRSU Award Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |||||||||
Susan R. Salka | 1/5/2018(3) | 20,174(4) | 1,376,876 | |||||||||||||||
1/5/2018(5) | 12,549(6) | 856,469 | ||||||||||||||||
12/17/2018(7) | 7,543 | 514,810 | ||||||||||||||||
1/3/2019(9) | 20,100(10) | 1,371,825 | ||||||||||||||||
1/3/2019(11) | 20,755(12) | 1,416,529 | ||||||||||||||||
12/16/2019(7) | 13,906 | 949,085 | ||||||||||||||||
1/6/2020(14) | 20,003(15) | 1,365,205 | ||||||||||||||||
1/6/2020(16) | 19,625(17) | 1,339,406 | ||||||||||||||||
12/16/2020(7) | 19,625 | 1,339,406 | ||||||||||||||||
Brian M. Scott | 1/5/2018(3) | 8,006(4) | 546,410 | |||||||||||||||
1/5/2018(5) | 4,980(6) | 339,885 | ||||||||||||||||
1/5/2018(8) | 2,348 | 160,251 | ||||||||||||||||
1/3/2019(9) | 6,152(10) | 419,874 | ||||||||||||||||
1/3/2019(11) | 6,352(12) | 433,524 | ||||||||||||||||
1/3/2019(13) | 4,256 | 290,472 | ||||||||||||||||
1/6/2020(14) | 6,287(15) | 429,088 | ||||||||||||||||
1/6/2020(16) | 6,168(17) | 420,966 | ||||||||||||||||
1/6/2020(13) | 6,168 | 420,966 | ||||||||||||||||
Ralph S. Henderson(18) | — | — | — | — | ||||||||||||||
Mark C. Hagan | 6/27/2018(13) | 5,629 | 384,179 | |||||||||||||||
1/3/2019(9) | 3,777(10) | 257,780 | ||||||||||||||||
1/3/2019(11) | 3,899(12) | 266,107 | ||||||||||||||||
1/3/2019(13) | 2,612 | 178,269 | ||||||||||||||||
1/6/2020(14) | 3,603(15) | 245,905 | ||||||||||||||||
1/6/2020(16) | 3,535(17) | 241,264 | ||||||||||||||||
1/6/2020(13) | 3,535 | 241,264 | ||||||||||||||||
3/9/2020(19) | 2,603 | 177,655 | ||||||||||||||||
Denise L. Jackson | 1/5/2018(3) | 3,442(4) | 234,917 | |||||||||||||||
1/5/2018(5) | 2,141(6) | 146,123 | ||||||||||||||||
1/5/2018(8) | 1,009 | 68,864 | ||||||||||||||||
1/3/2019(9) | 3,929(10) | 268,154 | ||||||||||||||||
1/3/2019(11) | 4,057(12) | 276,890 | ||||||||||||||||
1/3/2019(7) | 2,718 | 185,504 | ||||||||||||||||
1/6/2020(14) | 3,773(15) | 257,507 | ||||||||||||||||
1/6/2020(16) | 3,701(17) | 252,593 | ||||||||||||||||
1/6/2020(7) | 3,701 | 252,593 |
(1) | ||||
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|
|
|
These columns consist of RSUs and PRSUs granted under the Equity Plan. |
(2) | The market value of stock awards and the equity incentive plan awards represents (i) the number of shares that had not vested as of December 31, |
(3) | These PRSUs vested on January |
71 |
Executive Compensation
(4) | The Compensation Committee performed the TSR Measurement for this award for the measurement period ended December 31, |
(5) | The adjusted EBITDA margin PRSUs underlying this award vested on January |
(6) | Because the number of shares earned under this award was based on the Company’s |
(7) | The RSUs underlying this award vest in three tranches on |
|
|
|
|
The RSUs underlying this award vest in three tranches on each of the first, second and third anniversaries of the Grant Date and the Grantee’s provision of three periods of |
The TSR PRSUs underlying this award vest on the date on which the Compensation Committee performs the TSR Measurement, which shall occur within 30 days after December 31, 2021. We describe the TSR Measurement in detail in the CD&A |
The ultimate number of TSR PRSUs that vest under this award depends on the results of the TSR Measurement. The target amount for each of Ms. Salka, Mr. Scott, Mr. | |
The adjusted EBITDA PRSUs underlying this award vest on January 3, 2022. The settlement date and the determination of the amount of shares earned under the award will take place when the Compensation Committee determines our 2021 adjusted EBITDA margin, which we believe will occur in February 2022. | |
(12) | Pursuant to the instructions set forth to Item 402(f)(2) of Regulation S-K, which provides that the number of shares reported in this column shall be based on achieving target performance goals because our 2020 adjusted EBITDA margin of 13.4% exceeds the 2021 target adjusted EBITDA margin, we set forth the number of shares representing the target amount for the award in this column. |
(13) | The RSUs underlying this award vest in three tranches on each of the first, second and third anniversaries of the Grant Date and the Grantee’s provision of three periods of credited service. |
(14) | The TSR PRSUs underlying this award vest on the date on which the Compensation Committee performs the TSR Measurement, which shall occur within 30 days after December 31, 2022. We describe the TSR Measurement in detail in the CD&A section above. |
(15) | The ultimate number of TSR PRSUs that vest under this award depends on the results of the TSR Measurement. The target amount for each of Ms. Salka, Mr. Scott, Mr. Hagan and Ms. Jackson for his or her equity incentive plan award granted on January 6, 2020 is 13,335, 4,191, 2,402 and 2,515, respectively. For the target amount of TSR PRSUs to be earned, Relative TSR under the TSR Measurement would need to equal the 50th percentile. The range of TSR PRSUs that may be earned by the identified named executive officer under this award is zero up to an amount equal to the product of (i) the target amount for such executive, multiplied by (ii) 1.75. The threshold amount equals 25% of the target amount. If we were to have conducted the TSR Measurement on December 31, 2020, Relative TSR would have measured at the 65th percentile. Based on those results, TSR PRSUs equal to the target amount would have been earned. |
The adjusted EBITDA margin PRSUs underlying this award vest on January |
Pursuant to the instructions set forth to Item 402(f)(2) of RegulationS-K, which provides that the number of shares reported in this column shall be based on achieving the | |
(18) | Mr. Henderson was not |
The RSUs underlying this award vest |
|
|
|
|
Option Exercises and Stock VestedOPTION EXERCISES AND STOCK VESTED
The following table shows information regarding exercises of option awards to purchase our Common Stock and vesting of stock awards held by our named executive officers during 2019,2020, as of December 31, 2019.2020.
OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||
Susan R. Salka |
| 193,949 |
|
| $8,571,772 |
|
| 74,587 |
|
| 4,226,424 |
| — | — | 53,055 | 3,528,662 | ||||||||
Brian M. Scott |
| — |
|
| — |
|
| 59,148 |
|
| 3,304,694 |
| — | — | 15,410 | 975,739 | ||||||||
Ralph S. Henderson |
| — |
|
| — |
|
| 59,148 |
|
| 3,304,694 |
| — | — | 15,410 | 975,739 | ||||||||
Denise L. Jackson |
| — |
|
| — |
|
| 13,046 |
|
| 727,690 |
| ||||||||||||
Mark C. Hagan | — | — | 6,751 | 319,860 | ||||||||||||||||||||
Denise. L. Jackson | — | — | 8,760 | 554,876 |
(1) |
|
We calculate the “Value Realized on Vesting” by multiplying (i) the gross number of shares acquired on vesting prior to shares being withheld to cover taxes and (ii) the closing price of our Common Stock on the applicable vest dates. |
72 |
Table of ContentsNonqualified Deferred
Executive Compensation
NONQUALIFIED DEFERRED COMPENSATION
We adopted and maintain our Deferred Compensation Plan, which provides our executives, including our named executive officers, with the opportunity to defer up to 80% of their base salary and up to 90% of their bonus. The Deferred Compensation Plan also permits executives to defer the settlement date of their RSUs or PRSUs. Our named executive officers are excluded from participating in our 401(k) plan. In 2019,2020, we matched up to 50% of the first 6% and 100% of the next 4% of the executive’s eligible compensation for a maximum match of 7% of the executive’s cash compensation.compensation through April 30, 2020 when the match was suspended for the remainder of 2020. Additionally, we made a one-time employer contribution in the amount of $1,500 for anyone who made a deferral between January 1 and September 30, 2020. The Deferred Compensation Plan credits deferrals (other than deferrals of RSUs or PRSUs) with earnings or losses based upon the executive’s selection of 12 publicly traded mutual funds, which may change from time to time. The current list of measurement funds, through September 30, 2019 were: Vanguard VIF Total Bond Marketwhich were available throughout all of 2020 are as follows: Hartford Small Cap Growth Y, Principal MidCap S&P 400 Index Fidelity VIP Investment Grade Bond, PIMCO VIT Real Return Portfolio, MFS VIT Value, Dreyfus StockInst, Principal SmallCap S&P 600 Index American Funds IS Growth, JPMorgan IT Mid Cap Value, Janus Henderson VIT Enterprise, DFA VA U.S. Targeted Value, Vanguard VIF Small Company Growth, American Funds IS International and NVIT Government Money Market. Starting on October 1, 2019, the measurement funds are: BNY Mellon Bond Market Index, PGIM Total Return Bond Z, Invesco Diversified Dividend R5,Inst, Principal LargeCap Growth I R5, MassMutual Select Mid Cap Growth R5, MFS Mid Cap Value R4, MassMutual Select MidPrincipal Large Cap Growth R5,S&P 500 Index Inst, Victory Sycamore Small Company Opp I, Hartford Small Cap Growth Y and Principal International Equity Index.Index Inst, Dodge & Cox International Stock, Invesco Diversified Dividend R5, PGIM Total Return Bond Z, BNY Mellon Bond Market Index I. In addition to these, there is a series of target date funds, which include the following underlying funds: T. Rowe Price New Horizons, T. Rowe Price Small-Cap Stock, T. Rowe Price Small-Cap Value, T. Rowe Price Growth Stock, T. Rowe Price Mid-Cap Growth, T. Rowe Price Equity Index 500, T. Rowe Price Mid-Cap Value, T. Rowe Price International Stock, T. Rowe Price US Large-Cap Core, T. Rowe Price Overseas Stock, T. Rowe Price Real Assets, T. Rowe Price Value, T. Rowe Price International Value Eq, T. Rowe Price Emerging Markets Stock, T. Rowe Price Em Mkts Discv Stk Z, T. Rowe Price High Yield, T. Rowe Price Emerging Markets Bond, T. Rowe Price US Treasury Long-Term, T. Rowe Price Floating Rate, T. Rowe Price Intl Bd USD Hdgd, T. Rowe Price New Income, T. Rowe Price Dynamic Global Bond Inv, T. Rowe Price Ltd Dur Infl Focus Bd, T. Rowe Price US Treasury Money.
Executives may change their election of measurement funds on a daily basis. Additionally, beginning in 2014, the Deferred Compensation Plan permitted executives to invest in a Deferred Compensation Fixed Rate Fund, which provides an annual fixed rate of return that is generally set by the Company on January 1 of each year at 120% of the long-term Applicable Federal Rate. For 2019,2020, the Company set the rate of return at 3.1%2.5% per annum. In 2019, the Company changed the rate of return to 3.9% per annum.
Benefits under the Deferred Compensation Plan are payable in a lump sum or in annual installments for a period of up to ten years beginning sixseven months after the named executive officer’s separation from service. Executives may also select at the time of deferral to be paid upon separation from service, a change in control or a fixed distribution date, which must be at least two years after the date of deferral. Benefits under the Deferred Compensation Plan are also payable if the executive experiences an unforeseen financial emergency. Deferrals of RSUs or PRSUs are settled in shares upon a fixed date selected by the executive or upon a separation from service or change in control.
The following table reflects contributions made by the named executive officers and matching contributions made by us under the Deferred Compensation Plan in fiscal year 20192020 as well as the named executive officers’ aggregate earnings, withdrawals and balance information.
Name | Executive Contribution in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals or Distributions ($) | Aggregate Balance at FYE ($)(4) | |||||
Susan R. Salka | 214,937 | 106,087 | 759,813 | — | 13,123,364(5) | |||||
Brian M. Scott | 142,634 | 51,210 | 281,869 | — | 2,016,517 | |||||
Ralph S. Henderson | 48,558 | 98,951 | 200,775 | 2,299,918 | 0 | |||||
Mark C. Hagan | 529,509 | 38,804 | 191,841 | — | 1,357,873 | |||||
Denise L. Jackson | 78,284 | 35,608 | 187,735 | — | 2,167,218 |
(1) | ||||
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|
|
|
NONQUALIFIED DEFERRED COMPENSATION TABLE
Name | Executive Contribution in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last FY ($) (3) | Aggregate Withdrawals or Distributions ($) | Aggregate Balance at FYE ($) (4) | |||||||||||||||
Susan R. Salka | 197,483 | 126,820 | 792,386 | — | 11,441,143 | (5) | ||||||||||||||
Brian M. Scott | 96,063 | 60,182 | 274,248 | — | 1,540,803 | |||||||||||||||
Ralph S. Henderson | 179,404 | 60,182 | 236,264 | — | 1,951,635 | |||||||||||||||
Denise L. Jackson | 62,581 | 43,807 | 344,449 | — | 1,865,590 |
The |
(2) | We include the matching contributions made by us set forth in this column in the |
(3) | Aggregate earnings are not reflected in the Summary Compensation Table. Additionally, any changes in the value of Common Stock underlying deferred vested awards are not included in this column. |
(4) | To the extent our named officers made contributions or we made matching contributions to our named executive officers for the periods set forth in the Summary Compensation Table, such amounts are included (subject to increases or decreased earnings on such amounts) in this column. |
(5) | This amount includes |
2021 Proxy Statement | 73 |
TerminationTable of Employment and Change in Control ArrangementsContents
Executive Compensation
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
MS. SALKA’S EMPLOYMENT AGREEMENT
We are party to an employment agreement with Ms. Salka dated May 4, 2005, as amended February 6, 2008. The employment agreement provides that Ms. Salka will serve as our President and CEO. For her services in that capacity, Ms. Salka (1) receives a base salary that we may increase annually at our discretion, (2) is eligible to receive an annual bonus subject to meeting certain performance-based criteria, and (3) is eligible to participate in our equity plans, employee benefit plans and other benefits programs provided in the same manner and to the same extent as our other senior management. The term of Ms. Salka’s employment agreement ends May 4, 20202022 and automatically renews unless a party gives notice 120 days prior to the expiration date that such party does not wish to extend the term of the employment agreement.
The employment agreement provides that Ms. Salka will receive severance benefits under the following three circumstances:
1. | Death or |
recent fiscal years (“Average Bonus”) by her (payable when bonuses are paid to our other executive officers). |
2. | Termination for Reason Other than for Cause or Resignation for Good |
3. | Change in |
(1) | ||||||
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|
|
|
Additionally, under each of the above scenarios, Ms. Salka and her eligible dependents are entitled to continue to participate for two years in our medical, life, dental and disability insurance plans to the extent such plans permit continued participation (with Ms. Salka continuing to pay premiums in respect of such coverage that she was paying prior to termination).
Under some circumstances, amounts payable under Ms. Salka’s employment agreement are subject to a full“gross-up” payment to make her whole if she is deemed to have received “excess parachute payments” under Section 4999 of the Code. The
employment agreement has not been amended in recent years; however, in 2009, we committed to cease entering into employment agreements with taxgross-ups. Payment of all or a portion of the amounts set forth above may be delayed six months following her termination, if necessary to comply with the requirements of Section 409A of the Code. The employment agreement requires Ms. Salka to release any claims against us. The employment agreement also contains a confidentiality provision and a provision requiring Ms. Salka not to solicit our employees during its term and for a period of two years thereafter.
“Cause” is defined in the employment agreement as a termination of employment by us due to Ms. Salka’s (i) commission of an act of fraud or embezzlement against us or any of our subsidiaries or conviction in a court of law, or guilty plea or no contest plea, of any charge involving an act of fraud or embezzlement; (ii) conviction in a court of law, or guilty plea or no contest plea, to a felony charge; (iii) willful misconduct as our employee or as an employee for any of our subsidiaries that is reasonably likely to result in injury or financial loss to us or our subsidiaries; (iv) willful failure to render services to us or any of our subsidiaries in accordance with her employment duties, which amounts to a material neglect of duties to us and does not result from physical illness, injury or incapacity, and which failure is not cured promptly after adequate notice; or (v) material breach of certain covenants of the employment agreement, if not cured within 30 days after written notice. |
“Good Reason” is defined in the employment agreement as (i) a material breach by us of the employment agreement with the exception of certain provisions thereto not cured within 30 days after the Board’s receipt of written notice of suchnon-compliance; (ii) the assignment to Ms. Salka without her consent of duties materially and adversely inconsistent with her position, duties or responsibilities, or a change in her title or office, or any removal of her from any of such positions, titles or offices, or any failure to elect or reelect her as a member of the Board or any removal of her as such a member, subject to certain exceptions; or (iii) the relocation of our corporate headquarters of more than 50 miles from San Diego, California without her approval. |
“Change in control” is defined in the employment agreement as occurring upon: (1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule13d-3 promulgated under the Exchange Act) of a majority of the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors; (2) our dissolution or liquidation; (3) the sale of all or substantially all of our business or assets; or (4) the consummation of a merger, consolidation or similar form of corporate transaction involving the Company that requires the approval of our shareholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), if immediately following such Business Combination: (x) a Person is or becomes the beneficial owner, directly or indirectly, of a majority of the combined voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), or (y) our shareholders cease to beneficially own, directly or indirectly, in substantially the same proportion as they owned the then outstanding voting securities immediately prior to the Business Combination, a majority of the combined voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation). “Surviving Corporation” means the corporation resulting from a Business Combination, and “Parent Corporation” means the ultimate parent corporation that directly or indirectly has beneficial ownership of a majority of the combined voting power of the then outstanding voting securities of the Surviving Corporation entitled to vote generally in the election of directors. |
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|
Additionally, under each of the above scenarios, Ms. Salka and her eligible dependents are entitled to continue to participate for two years in our medical, life, dental and disability insurance plans to the extent such plans permit continued participation (with Ms. Salka continuing to pay premiums in respect of such coverage that she was paying prior to termination).
74 |
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROLTable of Contents
ARRANGEMENTS FOR CHIEF EXECUTIVE OFFICERExecutive Compensation
Under some circumstances, amounts payable under Ms. Salka’s employment agreement are subject to a full “gross-up” payment to make her whole if she is deemed to have received “excess parachute payments” under Section 4999 of the Code. The employment agreement has not been amended in recent years; however, in 2009, we committed to cease entering into employment agreements with tax gross-ups. Payment of all or a portion of the amounts set forth above may be delayed six months following her termination, if necessary to comply with the requirements of Section 409A of the Code. The employment agreement requires Ms. Salka to release any claims against us. The employment agreement also contains a confidentiality provision and a provision requiring Ms. Salka not to solicit our employees during its term and for a period of two years thereafter.
The following table sets forth illustrative examples of the payments and benefits Ms. Salka would have received if any of the circumstances described above occurred as of December 31, 2019.2020.
Termination Reason | Cash Severance ($) | Bonus ($) | Benefits ($) (1) | Value of Accelerated Awards ($) (2) | TOTAL ($) | Cash Severance ($) | Bonus ($) | Benefits ($)(1) | Value of Accelerated Equity Awards ($)(2) | Total ($) | ||||||||||||||||||||||
Termination of Employment by Us without Cause or by Ms. Salka for Good Reason Absent a Change in Control | 2,000,000 | 1,849,551 | 41,211 | — |
| 3,890,762 | 2,060,000 | 2,308,165 | 63,570 | — | 4,431,735 | |||||||||||||||||||||
Death or Disability | 2,000,000 | 924,775 | 16,264 | — |
| 2,941,039 | 2,060,000 | 1,154,083 | 15,753 | — | 3,229,836 | |||||||||||||||||||||
Termination of Employment by Us without Cause or by Ms. Salka for Good Reason with a Change in Control | 3,000,000 | 2,774,326 | 41,211 | 9,223,812 |
| 15,039,349 | 3,090,000 | 3,462,248 | 63,570 | 10,812,779 | 17,428,597 |
(1) | Under the terms of Ms. Salka’s employment agreement, she and her eligible dependents may continue to participate for two years in our medical, life, dental and disability insurance plans to the extent such plans permit continued participation (with Ms. Salka continuing to pay premiums in respect of such coverage that she was paying prior to termination). For purposes of this column, we assume that all plans would permit continued participation and that Ms. Salka (or her eligible dependents in the event of her death) would continue to participate. We value the benefit at our estimated cost of two years of her and her dependents’ continued participation in the applicable plans. |
(2) | We computed the value of accelerated equity awards using a share price of |
EXECUTIVE OFFICER SEVERANCE AGREEMENTS
As of December 31, 2019,2020, we were party to executive severance agreements with each of Ms. Jackson, Mr. HendersonHagan and Mr. Scott, which are all virtually identical and provide that the applicable named executive officer will receive severance benefits if we terminate his or her employment without “cause,” or relocate his or her position to a locale, other than to the Company’s SEC-designated headquarters, that is beyond a50-mile radius of their current office location (in either case, an involuntary termination).
If an involuntary termination occurs, but not within one year of a “change in control” (defined as in Ms. Salka’s employment agreement, see footnote 83 on the page above), benefits include a cash payment equal to the applicable named executive officer’s then-current annual base salary, payment of a prorated portion of his or her Average Bonus and reimbursement for the COBRA health coverage for his or her health insurance for aone-year period (or until he or she becomes eligible for comparable coverage under another employer’s health plans, if earlier), less his or her share of premiums. If an involuntary termination occurs within one year of a change in control, the applicable named executive officer’s severance payment equals two times the sum of (A) his or her then-current annual base salary, plus (B) an amount equal to his or her Average Bonus. Each severance agreement contains a requirement that the named executive officer execute a general release in our favor as a condition to receiving the severance payments.
In addition, the named executive officers can resign their employment for “good reason(9)(1)” after a “change in control” and generally receive the same severance benefits described in the preceding paragraph.
On and after a “change in control,” “good reason” means the occurrence of any of the following events without the named executive officer’s express written consent: (i) a material reduction in his or her base salary or target annual bonus compensation as in effect on the date immediately prior to a change in control, (ii) the Company’s assignment to the named executive officer without his or her consent of duties materially and adversely inconsistent with the named executive officer’s position, duties or responsibilities as in effect immediately before the change in control, including, but not limited to, any material reduction in such position, duties or responsibilities, or a change in the named executive officer’s title or office, as then in effect, or any removal of the named executive officer from any of such positions, titles or offices, or (iii) our relocation of the named executive officer’s principal place of employment to a locale that is more than fifty (50) miles from his or her principal place of employment immediately prior to the change in control; provided, however that a relocation to the Company’s Dallas, Texas offices shall not trigger any severance obligation by the Company. |
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Executive Compensation
The following table sets forth illustrative examples of the payments and benefits Mr. Scott, Mr. HendersonHagan and Ms. Jackson would have received if any of the circumstances described above occurred as of December 31, 2019.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS OTHER EXECUTIVE OFFICERS2020.
BRIAN M. SCOTT | BRIAN M. SCOTT | |||||||||||||||||||||||||||||
Termination Reason | Cash Severance | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | TOTAL ($) | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($)(1) | TOTAL ($) | ||||||||||||||||||||
Involuntary Absent a Change in Control |
| 505,000 |
|
| 415,884 |
|
| 10,864 |
|
| — |
|
| 931,748 |
| 520,000 | 516,026 | 16,110 | — | 1,052,136 | ||||||||||
Involuntary Within One Year of a Change in Control |
| 1,010,000 |
|
| 831,769 |
|
| 10,864 |
|
| 3,029,014 |
|
| 4,881,646 |
| 1,040,000 | 1,032,053 | 16,110 | 3,547,908 | 5,636,071 | ||||||||||
RALPH S. HENDERSON | ||||||||||||||||||||||||||||||
MARK C. HAGAN | ||||||||||||||||||||||||||||||
Termination Reason | Cash Severance | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | TOTAL ($) | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($)(1) | TOTAL ($) | ||||||||||||||||||||
Involuntary Absent a Change in Control |
| 505,000 |
|
| 370,434 |
|
| 11,890 |
|
| — |
|
| 887,324 |
| 500,000 | 128,750 | 20,843 | — | 649,593 | ||||||||||
Involuntary Within One Year of a Change in Control |
| 1,010,000 |
|
| 740,869 |
|
| 11,890 |
|
| 3,029,014 |
|
| 4,791,772 |
| 1,000,000 | 257,500 | 20,843 | 2,045,589 | 3,323,932 | ||||||||||
DENISE L. JACKSON | DENISE L. JACKSON | |||||||||||||||||||||||||||||
Termination Reason | Cash Severance | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | TOTAL ($) | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($)(1) | TOTAL ($) | ||||||||||||||||||||
Involuntary Absent a Change in Control |
| 430,000 |
|
| 249,889 |
|
| 11,316 |
|
| — |
|
| 691,205 |
| 440,000 | 316,779 | 14,244 | — | 771,023 | ||||||||||
Involuntary Within One Year of a Change in Control |
| 860,000 |
|
| 499,779 |
|
| 11,316 |
|
| 1,639,937 |
|
| 3,011,032 |
| 880,000 | 633,559 | 14,244 | 1,998,360 | 3,526,163 |
(1) | Pursuant to the terms of the equity award agreements with our named executive officers, upon a change in control of the Company, all |
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Executive Compensation
At AMN,As required by Item 402(u) of Regulation S-K, we are committed to internal pay equity and equal pay based on role, qualifications, experience and merit, without regard to any legally-protected classifications. We design our compensation programs to be consistent and internally equitable to motivate employees to continue to perform in ways that enhance shareholder value. To this end, our Compensation Committee monitorsproviding the relationship between the pay of our executive officers and the pay of ournon-executive employees and takes into consideration the substantial amount of variable compensation that is tied to the Company’s performance. In 2019, 80% of our CEO’s compensation was at risk in the form of performance-based incentive cash and equity. For more details surrounding our executive compensation practices, please visit the subsection titled “Compensation Program Philosophy and Objectives” within the Compensation Discussion and Analysis above.
In August 2015, the SEC adopted rules implementing the “CEO pay ratio” disclosure requirements that were mandated by Congress pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The new rules require registrants to disclosefollowing information about the ratio of the median employee’s annual total compensation of our median employee to the CEO’s annual total compensation. Ourcompensation of our CEO pay ratio is calculatedfor fiscal year 2020.
To identify our median employee for fiscal year 2020, which we are required to do once every three years in accordance with SEC rules, we elected to use December 31, 2020 to identify our employee population. The last time we identified our median employee in 2017, we used October 27th as the SEC’s final rules regarding the CEO pay ratio disclosure requirements promulgated pursuant to Item 402(u) of RegulationS-K.
In 2017,date that we identified our employee population, but we opted to use December 31st for the purposes2020 because doing so allowed us to more efficiently identify full year compensation for our healthcare professionals and other temporary and contingent employees. As of calculating our CEO pay ratio as of October 27, 2017. On this date,December 31, 2020, we had approximately 2,87913,454 active employees, 2,786 of which were corporate employees. During the fourth quarteremployees and 10,668 of 2017, we had an average of (1)9,234which were nurses, allied and other clinical healthcare professionals (2) 384as well as executive and clinical leadership interim staff, and (3) 349 medical coding professionals and case managers contractedother temporary or contingent employees. We refer to work for us. This doesour non-corporate employees listed above as our “healthcare professionals.” Our healthcare professionals do not include our locum tenens clinicians, all of whom arewere independent contractors and not our employees.as of December 31, 2020.
To identify our 2020 median employee, we examined the 2017 total cash and equity2020 W-2 compensation, as of December 31, 2020, for all full-time, part-time, temporary and seasonal employees, excluding our CEO and 251 employees located in Costa Rica, and including the healthcare professionals mentioned above, as ofOctober 27, 2017.above. Wages were annualized for full-time corporate employees thatwho were not employed by us for the entire calendar year. Compensation for our healthcare professionals was not annualized. Other than the
foregoing, we did not make any assumptions, adjustments or estimates with respect to our employees’ total cash and equity compensation and used this consistently applied compensation measure to identify our median employee.
After identifying the median employee, we calculated his/her annual total compensation using the same SEC rules we use for calculating the annual total compensation of our named executive officers, as set forth in the Summary Compensation Table ofabove. In 2020, the Executive Compensation Disclosure section above.
Pursuant to SEC rules,we substituted a different employee whose compensation was substantially similar to the median employee we identified in 2017 for the purposes of calculating our 2018 CEO pay ratio because our previously identified median employee was no longer employed by the Company at the end of 2018. When calculating our 2019 CEO pay ratio, we analyzed the 2019 compensation for the same individual identified in 2018 and determined that this employee’s 2019 compensation was not a reasonable reflection of the Company’s median employee because of the impact that this employee’s commission compensation had on his 2019 compensation. As a result, we substituted a different employee whose compensation was substantially similar to the median employee that we identified in 2017 as our median employee for purposes of calculating our ratio in 2019, as permitted by SEC guidance.
In 2019, theannual total compensation of our median employee was $55,343,$47,235, and our CEO’s annual total compensation was $5,714,525,$6,025,299, of which $3,993,751$4,868,452 was variable compensation based on the performance of the Company. The resulting ratio of the total annual compensation of our median employee compared to the total annual compensation of our CEO in 2019 is 103:2020 was 128:1.
The SEC rules do not allow for companies to annualize compensation paid to temporary employees. As mentioned above, our healthcare professionals, who comprised approximately 75% of our workforce, are temporary employees. Since we are unable to annualize compensation for our healthcare professionals, we do not believe that the above ratio accurately reflects our pay practices relative to the compensation of our CEO. We believe that measuring the compensation paid to our median corporate employee more accurately reflects our pay practices relative to the compensation of our CEO. In 2020, the ratio of the total annual compensation of our median corporate employee compared to the total compensation of our CEO was 80:1.
The pay ratio was calculated in accordance with SEC rules based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to the Company’s pay ratio as disclosed above.
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Management Proposal |
3: ADVISORY VOTE ON EXECUTIVE
COMPENSATIONTHE FREQUENCY OF FUTURE SAY-ON-PAY VOTES
Section 14A of the Exchange Act, as amended by theThe Dodd-Frank Act enables our shareholders to vote to approve, onindicate how frequently we should seek an advisory(non-binding) basis, vote on the compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules. By voting on this Proposal 3, shareholders may indicate whether they would prefer an advisory vote on named executive officer compensation to occur every year, every two years or every three years. Shareholders may also abstain from voting on this proposal.
The Company currently seeks an advisory vote on the compensation of its named executive officers every year and, after careful consideration of this Proposal, our Board continues to believe that an annual advisory vote on executive compensation remains the most appropriate alternative for the Company and its shareholders. Therefore, the Board recommends that you vote to maintain an every year interval for the advisory vote on executive compensation. Shareholders are not voting to approve or disapprove the Board’s recommendation.
In formulating its recommendation, our Board considered that an annual advisory vote on executive compensation has allowed our shareholders to provide us with valuable direct input on our compensation philosophy, policies and practices as disclosed in thisthe proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in accordancediscussions with, our shareholders on corporate governance matters and our executive compensation philosophy, policies and practices on a routine basis.
You may cast your vote on your preferred voting frequency by choosing the SEC’s rules. As previously disclosed,option of one year, two years, or three years, or abstain from voting.
The option of every year, every two years or every three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. However, because this vote is advisory and not binding on our Board has determinedor the Company in any way, our Board may decide that it willis in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation on an annual basis, andmore or less frequently than the next shareholder advisory vote will occur atoption approved by our 2020 Annual Meeting of Shareholders.shareholders.
As described in detail in the Compensation Discussion and Analysis section above, we design our executive compensation programs to, among other things, attract, motivate, and retain our named executive officers, who are critical to our success. Under these programs, we reward our named executive officers for the Company’s successful performance, the achievement of specific annual, long-term and strategic goals, and the realization of increased value for our shareholders. The executive compensation packages paid to our named executive officers are substantially tied to our key business objectives and total shareholder return, to align with the interests of our shareholders. The Board maintains oversight over our executive pay programs and adheres to the highest level of corporate governance with their design. To this end, they closely monitor evolving best practices, including the compensation programs and pay levels of executives at peer companies to ensure that our compensation programs do not fall outside of the normal range of relevant market practices.
We have two shareholder approved performance incentive plans; cash and equity. We use these performance incentive plans to motivate, retain and reward our executives. These performance incentive plans make up a majority of the pay we provide to our executives. As a result of thispay-for-performance focused structure, our named executive officers generally realized an amount above their target compensation from 2017 – 2019. During this three-year period, we delivered strong financial and
operational results and our Common Stock price appreciatedapproximately 62% on a cumulative basis during the three-year period ended December 31, 2019, compared to 28% and 53% during this same period for the Russell 2000 and S&P 500,(1) respectively. We believe our performance pay structure appropriately incents executives without excessive risk. In 2019, the Company, as it has done for the past several years, utilized TSR PRSUs and adjusted EBITDA growth PRSUs as its performance incentive vehicles.
We ask that you support the compensation of our named executive officers as disclosed in our Compensation Discussion and Analysis and the accompanying tables contained in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2020 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table and the other related tables and narrative disclosure.”
Because your vote is advisory, it will not bind us, the Compensation Committee, or our Board. However, our Board and our Compensation Committee value the opinions of our shareholders and will review the voting results and take them into consideration when making future decisions regarding our executive compensation programs and policies.
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THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
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Audit Committee Matters |
PROPOSAL 4: RATIFICATION OF THE SELECTION OF OUR INDEPENDENT PUBLIC ACCOUNTING FIRM
The Audit Committee appointed KPMG LLP (“KPMG”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2020. The Board proposes and recommends that the shareholders ratify this appointment.
SELECTION AND ENGAGEMENT OF KPMG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG served as our principal independent registered public accounting firm for 2020. We expect representatives from KPMG to be present at the Annual Meeting. They will be given the opportunity to make a statement if they so desire and are expected to be available to respond to any appropriate questions.
AUDIT FEES, AUDIT-RELATED FEES, TAX FEES AND ALL OTHER FEES
The following sets forth the fees paid or accrued for audit services and the fees paid for audit-related, tax and all other services rendered by KPMG for each of the last two years:
2020 ($) | 2019 ($) | |||||||
Audit Fees(1) | 2,313,125 | 2,307,320 | ||||||
Audit-Related Fees(2) | 34,268 | 45,474 | ||||||
Tax Fees(3) | 395,810 | 373,730 | ||||||
All Other Fees | 0 | 0 |
(1) Audit fees in 2020 consist of fees for professional services rendered in connection with the (i) annual audits of our consolidated financial statements, and the effectiveness of internal control over financial reporting, (ii) reviews of the interim consolidated financial statements included in quarterly reports, and (iii) provision of comfort letters issued in connection with the Company’s 2020 senior notes offerings. (2) Audit-related fees in 2020 consist principally of fees not reported under the “Audit Fees” heading, including fees in respect of accounting consultations and the licensing of KPMG’s accounting online research tool. (3) Tax fees in 2020 consist of professional services rendered primarily relating to consultations in connection with an audit of the Company by the California State Franchise Tax Board, research and development credits and state sales and use tax compliance as well as other tax-related consulting services.
Pursuant to the Audit Committee Charter, it is the policy of the Audit Committee to review in advance, and grant any appropriate pre-approvals of all auditing services to be provided by the independent registered public accounting firm and all non-audit services to be provided by the independent registered public accounting firm as permitted by Section 10A of the Exchange Act, and in connection therewith, to approve all fees and other terms of engagement. In 2019 and 2020, the Audit Committee approved all fees billed by KPMG prior to the engagement.
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021. |
2021 Proxy Statement | 79 |
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Audit Committee Matters
Management is responsible for the Company’s financial reporting process, including establishing and maintaining disclosure controls and procedures, establishing and maintaining internal control over financial reporting, evaluating the effectiveness of disclosure controls and procedures, evaluating and expressing an opinion on the effectiveness of internal control and the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.
KPMG LLP (“KPMG”) is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States of America, as well as expressing an opinion on the effectiveness of internal control over financial reporting. The Audit Committee’s responsibility is to monitor, evaluate and oversee these processes. The Audit Committee members are not employees of the Company and are not professional accountants or auditors. The Audit Committee’s primary purpose is to assist the Board to fulfill its oversight responsibilities by reviewing the financial information provided to shareholders and others, the systems of internal controls that management has established to preserve the Company’s assets and the audit process. It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews or procedures or to determine that the Company’s financial statements are complete and accurate and in accordance with accounting principles generally accepted in the United States of America. The Audit Committee has reviewed and discussed the audited financial statements with management. In giving the Audit Committee’s recommendation to the Board, it has relied on management’s representations that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the representations of the independent registered public accounting firm, KPMG, included in its report on the Company’s consolidated financial statements.
The Audit Committee is responsible for the appointment, subject to shareholder ratification, of the Company’s independent registered public accounting firm. The members of the Audit Committee are independent as defined by Section 303A of the NYSE Listed Company Manual.
In this context, the Audit Committee has reviewed and discussed with management, its report on the effectiveness of the Company’s internal control over financial reporting as well as KPMG’s report related to its audit of (i) the consolidated financial statements; and (ii) the effectiveness of internal control over financial reporting. The Audit Committee has discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees). In addition, the Audit Committee has received from KPMG the written disclosures and the letter from the independent registered accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence, and has discussed with KPMG its independence. The Audit Committee also considered whether KPMG’s provision ofnon-audit services to the Company is compatible with KPMG’s independence. KPMG advised the Audit Committee that KPMG was and continues to be independent accountants with respect to the Company.
The Audit Committee discussed with KPMG the overall scope and plans for its audits. The Audit Committee has met with KPMG, with and without management present, to discuss the results of its audits, the evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
Based upon the Audit Committee’s discussions with management and KPMG, the Audit Committee’s review of the representations of management and the report of KPMG to the Audit Committee, the Audit Committee recommended that the Board include the audited consolidated financial statements in the Company’s Annual Report on Form10-K for the year ended December 31, 20192020 filed with the SEC.
Audit Committee Members
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Teri G. Fontenot Financial Expert
The Company has been advised that Mr. John Chevedden, 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278, who has indicated he is a beneficial owner of at least $2,000 in market value of AMN’s Common Stock, intends to submit the following proposal at the Annual Meeting.
PROPOSAL 5 – IMPROVE OUR CATCH-22 PROXY ACCESS Shareholders request that our board of directors take the steps necessary to enable as many shareholders as may be needed to aggregate their shares to equal 3% of our stock owned continuously for 3-years in order to enable shareholder proxy access. The current arbitrary ration of 20 shareholders to initiate shareholder proxy access can be called Catch-22 Proxy Access. In order to assemble a group of 20 shareholders, who have owned 3% of the stock for an unbroken 3-years, one would reasonably need to start with about 60 shareholders who own 9% of company stock for an unbroken 3-years because initiating proxy access is a complicated process that is easily susceptible to errors. It is a daunting process that is also highly susceptible to dropouts. The 60 shareholders could then be whittled down to 40 shareholders because some shareholders would be unable to timely meet all the paper chase requirements. After the 40 shareholders submit their paperwork to management – then management might arbitrarily claim that 10 shareholders do not meet the requirements figuring that shareholders do not want a battle in court and management might convince another 10 shareholders to drop out – leaving 20 shareholders. But the current rule does not allow 40 shareholders to submit their paperwork to management to end up with 20 qualified shareholders. And 60 shareholders who own 9% of company for an unbroken 3-years might determine that they own 51% of company stock when length of unbroken stock ownership is factored out. Plus it would be easier to simply call for a special shareholder meeting because 15% of shares can call for a special meeting and there is no 3-year unbroken stock ownership qualification. But how does one begin to assemble a group of 60 potential participants if potential participants cannot be guaranteed participant status after following the tedious rules that can easily be 1500-words of legalese – because a single shareholder always takes the risk that he will be the 21st shareholder that could be voted off the island after a substantial investment of time by the arbitrary ration of 20 shareholders. Who would be voted off the island? Would one favor shareholders who own the most stock or shareholders who have the best access to expert proxy access advice or shareholders who could attract the best proxy access candidates or the shareholders who can attract the most votes to the proxy access candidates? The current arbitrary ration of 20 shareholders to initiate shareholder proxy access means that shareholders of the same class of stock are treated unequally. This could violate state law. At least one court concluded that a company cannot provide different voting rights for the owners of the same class of stock. As an analogy such an arbitrary maximum limit of 20 shareholders does not apply to shareholders acting by written consent or to shareholders calling for a special shareholder meeting. Please vote yes: IMPROVE OUR CATCH-22 PROXY ACCESS – PROPOSAL 5
Shareholder Proposal
The Company’s current shareholder cap of 20 appropriately balances the benefits and risks of the proxy access provision. The current proxy mechanism is consistent with overwhelming market practice and affords a large number of the Company’s shareholders
The Company is committed to
For these and the THE COMPANY’S PROXY ACCESS BYLAW ALREADY PROVIDES A MEANINGFUL AND APPROPRIATE MECHANISM FOR SHAREHOLDERS TO NOMINATE INDIVIDUALS TO THE BOARD The Company’s proxy access bylaw was adopted on September 18, 2017 following considerable discussion and consideration by the Board, including engagement with many of our shareholders. It allows an eligible shareholder (or group of up to 20 eligible shareholders), owning at least 3% of the Company’s outstanding voting shares continuously for at least three years, to nominate and include in our annual meeting proxy materials, directors constituting the greater of two individuals or 20% of the Board. The current shareholder aggregation limit of 20 permits numerous combinations of small and/or large shareholders to satisfy the 3% limit and does not serve as a barrier for shareholders to participate in proxy access. In addition, our market benchmarking efforts and engagement with shareholders played a significant role in our Board’s decision to adopt the proxy access mechanics that it did. THE CURRENT PROXY ACCESS FRAMEWORK ALREADY PROVIDES A LARGE NUMBER OF OUR SHAREHOLDERS WITH THE RIGHT TO UTILIZE PROXY ACCESS Based on the current shareholder base, any of our five largest shareholders acting alone could satisfy the 3% threshold. Further, any of our top 100 shareholders could form a group of 20 that would satisfy the 3% threshold. Beyond that, any of our smaller shareholders could nominate directors through proxy access by partnering with our larger shareholders. Therefore, the current shareholder limit of 20 already allows for numerous combinations of small and large shareholders that could satisfy the 3% limit. Since the current aggregation limit does not serve as a barrier for shareholders to participate in proxy access, eliminating the aggregation limit would not provide our shareholders with a meaningful new right. THE COMPANY’S CURRENT SHAREHOLDER CAP APPROPRIATELY BALANCES THE BENEFITS AND RISKS OF THE PROXY ACCESS PROVISION; ELIMINATING THE CAP COULD BE HARMFUL TO THE COMPANY AND ITS SHAREHOLDERS The Board believes its current proxy access framework strikes an appropriate balance between making proxy access available to shareholders and creating an undue burden and expense on the Company to the detriment of its shareholders. As a necessary part of the proxy access process, the Company is required to collect and verify information submitted by each nominating group member, which diverts Company time and resources away from primary business functions. The Board elected to set a reasonable limit on the size of the shareholder nominating group to alleviate any potentially unreasonable resource allocation required by this process, while retaining an equally reasonable and viable proxy access right. The current proposal
Shareholder Proposal ALLOWING AN UNLIMITED NUMBER OF SHAREHOLDERS TO AGGREGATE THEIR SHARES FOR PROXY ACCESS PURPOSES WOULD ALLOW SMALL SHAREHOLDERS WITH NARROW, SPECIAL INTERESTS TO EXERCISE DISPROPORTIONATE INFLUENCE OVER THE DIRECTOR NOMINATION PROCESS The existing shareholder aggregation limit protects shareholders because it ensures that proxy access is available to shareholders who have a significant economic stake in the Company, but cannot be coopted by shareholders with minimum economic stakes who would then be able to drive their special interests under a proxy access right without a cap on shareholder group size. Even small ALLOWING UP TO 20 SHAREHOLDERS TO ACT AS A GROUP CONTINUES TO BE CONSISTENT WITH OVERWHELMING MARKET PRACTICE Allowing groups of up to 20 shareholders to aggregate their stock ownership in order to satisfy the minimum ownership threshold is consistent with the approach taken by more than 85 percent of companies that have proxy access. This overwhelming consensus reflects the belief that capping nominating groups at 20 shareholders strikes the appropriate balance between empowering shareholders to effectively utilize proxy access, while limiting the administrative burden
THE COMPANY IS COMMITTED TO UPHOLDING CORPORATE GOVERNANCE BEST PRACTICES AND PROVIDES MULTIPLE OTHER AVENUES IN ADDITION TO PROXY ACCESS FOR SHAREHOLDERS TO ENGAGE WITH THE BOARD We are a
The Board believes that the Company’s commitment to ongoing and consistent dialogue with shareholders, combined with the
For all the above reasons, among others, the proponent’s
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information as of February Beneficial ownership includes shares for which a person, directly or indirectly, has or shares voting or investment power, or both, and also includes shares that each such person or group had the right to acquire within 60 days following the Record Date, including upon the exercise of options or warrants. Where applicable, we calculate the percentage of Common Stock beneficially owned by including the number of shares of Common Stock deemed to be beneficially owned by reason of the right to acquire such shares within 60 days following the Record Date in both the numerator and the denominator.
Security Ownership And Other Matters
Section 16(a) of the Exchange Act generally requires our directors, executive officers and persons who own more than 10% of our Common Stock to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Directors, executive officers and shareholders who own greater than 10% of our Common Stock are required by SEC rules to furnish us with copies of Section 16(a) forms they file. We believe that all of our directors, named executive officers and greater than 10% beneficial owners complied with all filing requirements applicable to them in
SHAREHOLDER PROPOSALS FOR THE 2022 ANNUAL MEETING From time to time, shareholders present proposals, which may be proper subject for inclusion in the proxy statement and for consideration at the next annual meeting of shareholders. Any shareholder who desires to bring a proposal at our The shareholder proposals must comply with the requirements of Rule14a-8 promulgated by the SEC under the Exchange Act. If a shareholder proposal is not properly submitted for inclusion in the
Shareholders will receive with this proxy statement a copy of our Annual Report including the financial statements set forth in our annual report onForm 10-K, as filed with the SEC for the fiscal year ended December 31, Shareholders may request additional copies by sending a written request to AMN Healthcare Services, Inc., 12400 High Bluff Drive, Suite 100, San Diego, California 92130, Attn: Denise L. Jackson, Chief Legal Officer and Corporate Secretary.
Security Ownership And Other Matters
DELIVERY OF PROXY STATEMENT, ANNUAL REPORT OR NOTICE OF INTERNET AVAILABILITY We may satisfy SEC rules regarding delivery of our proxy materials, including our proxy statement, or delivery of the Notice of Internet Availability of Proxy Materials (the “Notice”) by delivering a single copy of these documents to an address shared by two or more shareholders. This process is known as “householding.” To the extent we have done so, we have delivered only one set of proxy materials or one Notice, as applicable, to shareholders who share an address with another shareholder, unless contrary instructions were received prior to the mailing date. We undertake to deliver promptly upon written or oral request a separate copy of our proxy statement, our annual report and/or our Notice, as requested, to a shareholder at a shared address to which a single copy of these documents was delivered. To make such a request, please contact our Secretary at the address set forth in the section immediately above entitled “Annual Report” or by calling our offices at866-871-8519. If your Common Stock is held by a brokerage firm or bank and you prefer to receive separate copies of our proxy statement, our annual report or the Notice, either now or in the future, please contact your brokerage or bank. If your brokerage or bank is unable or unwilling to assist you, please contact us as indicated above. Shareholders sharing an address who are receiving multiple copies of proxy materials and who want to receive a single copy of our annual reports, proxy statements and/or our Notices may do so by contacting our Secretary at the address set forth in the section immediately above entitled “Annual Report” or by calling our offices at866-871-8519.
The Board does not know of any other matter that will come before the Annual Meeting other than those described in this proxy statement. If any other matters properly come up before the Annual Meeting, the persons named in the form of proxy intend to vote all proxies in accordance with their judgment on such matters.
WHEN AND WHERE IS THE ANNUAL MEETING?
Our 21, 2021, at
We are making the proxy solicitation materials available to our shareholders electronically via the Internet under the Notice and Access rules and regulations of the SEC. On or about March Instructions on how to access the proxy materials on the Internet or to request a printed copy may be found in the Notice. In addition, shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. Electronic delivery decreases costs, expedites distribution, and reduces our environmental impact. Environmental stewardship is a component of our Corporate Social Responsibility Program, and we encourage shareholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of the Annual Meeting. Shareholders who received the Notice but would like to receive a printed copy of the proxy materials in the mail should follow the instructions in the Notice for requesting such materials.
We are providing these proxy materials in connection with the solicitation of proxies on behalf of our Board for use at the Annual Meeting. This proxy statement includes information that we are required to provide under SEC rules and is designed to assist you in voting your shares. Proxies in proper form received by us at or before the time of the Annual Meeting will be voted as specified. You may specify your choices by marking the appropriate boxes on your proxy card. If a proxy card is dated, signed and returned without specifying choices, the proxies will be voted in accordance with the recommendations of the Board set forth in this proxy statement, and, in their discretion, upon such other business as may properly come before the Annual Meeting. Business transacted at the Annual Meeting will be confined to the purposes stated in the Notice of Annual Meeting. Shares of our Common Stock, cannot be voted at the Annual Meeting unless the holder is present in person or represented by proxy.
The Notice will provide you with instructions on how to (1) view our proxy materials for the Annual Meeting on the Internet, and (2) instruct us to send proxy materials to you by email. The proxy materials are also available under the “Investor Relations” tab on our website at
WHAT IS INCLUDED IN THE PROXY MATERIALS?
Our proxy materials include:
If you receive a paper copy of these materials by mail, the proxy materials will also include a proxy card.
General Information
WHO PAYS THE COST OF SOLICITING PROXIES FOR THE ANNUAL MEETING?
Proxies will be solicited on behalf of the Board by mail, telephone, email or other electronic means or in person, and we will pay the solicitation costs. We have retained Morrow Sodali LLC, a proxy solicitation firm, to assist us in soliciting proxies and have agreed to pay them a fee of
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
In accordance with our Bylaws, the Board has fixed the close of business on February of our voting securities was
At the Annual Meeting, shareholders will be asked:
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