UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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CHECK THE APPROPRIATE BOX: | ||
☐ | Preliminary Proxy Statement | |
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| Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
☑ | Definitive Proxy Statement | |
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| Soliciting Material |
AMN Healthcare Services, Inc.
AMN HEALTHCARE SERVICES, INC.
(Name of Registrant as Specified in itsIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY): | ||||
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☑ | No fee | |||
☐ | Fee paid previously with preliminary materials | |||
☐ | Fee computed on table |
Notice of Annual Meeting
& Proxy Statement
A Letter from Our CEO & Independent Board Chairman
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AMN Healthcare is well positioned to continue to meet the needs of healthcare organizations in an era of workforce shortages. | Dear AMN Healthcare Shareholders, On behalf of the Board and AMN Healthcare, thank you for the trust and confidence you have placed in us during this extraordinary time for the healthcare industry. In 2022, AMN Healthcare delivered record financial performance by supporting our clients, clinicians and communities as they navigated high service demand and workforce shortages. We believe our strong culture, our team’s ability to execute on our strategy combined with the platform we have created in healthcare, will continue to create value and make a positive impact on society. Evolution of AMN as the Total Talent Solutions Leader Our success over the years has been predicated on listening carefully to clients’ needs throughout dramatic changes in the healthcare industry – rising costs, healthcare reform, a major recession, an unprecedented pandemic, an aging population, and workforce shortages that today reach crisis proportions. To meet these challenges, AMN Healthcare has refined and continually strengthened our workforce solutions by investing in our existing services and platforms while also expanding into new solutions through strategic acquisitions and internal investments. The results over time have been the creation of an entirely new type of company in the healthcare industry – a diversified, integrated total healthcare talent services organization. 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. AMN Healthcare today places tens of thousands of nurses, physicians, allied health professionals, executives, and other professionals who are necessary to quality patient care and the business of healthcare. We invest in the improvement of the professional and personal lives of clinicians, particularly engaging many avenues of support for their mental health and wellbeing. The value that we bring to our strategic partnerships with our clients has grown throughout the company’s history and will continue to be our priority. As workforce shortages and other systemic challenges persist, and as an aging populace needs greater and more complex healthcare services, the healthcare industry’s total talent needs for integrated staffing, precision planning and technology innovations become increasingly essential. AMN Healthcare is well positioned to continue to meet these needs for years to come. In 2022, we delivered record revenue of $5.24 billion, net income of $444.1 million and adjusted EBITDA of $846.7 million.(1) As a result of these strong partnerships between our clients, healthcare professionals and our team members, our total shareholder return outperformed a number of our peers. AMN’s Culture is Foundational to Our Success The commitment to help create a more just and inclusive society for all is a foundation of AMN Healthcare’s culture. AMN Healthcare has created a truly inclusive and diverse company, where 69% of our corporate team members are women and 45% are from historically underrepresented communities. Our commitment to advancing diversity extends to our upper ranks, where 63% of all corporate leaders are women and 29% of our leaders are BIPOC. In the boardroom, 56% of our Board of Directors are women and 33% are BIPOC, and in total, 67% of our Board have identities that were historically excluded from corporate Boards, which places AMN Healthcare among the highest levels of Board diversity in the healthcare industry and publicly | |
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Dear Fellow Shareholders,
On behalf of AMN Healthcare Services and its Board of Directors, we are pleased to invite you to attend our Annual Meeting of Shareholders on April 22, 2020 at our offices in Dallas, Texas. Throughout the past year, we have further advanced our position as the leader and trusted partner for total talent solutions to healthcare organizations. We made significant progress in our mission to deliver the best talent and insights to help healthcare organizations optimize their workforce, give healthcare professionals opportunities to do their best work towards quality patient care and create a values-based culture of innovation where our team members can achieve their goals.
Purpose, Profit and Culture
We recognize the integral role that our corporate purpose and culture play in the Company’s ability to generate sustainable profits and make a positive impact in society. We have established a performance and values-based culture that aligns our business strategy with the development of our greatest assets, our people. To this end, we have an active strategy to enhance diversity, equality, and inclusion in our workplace, workforce, and marketplace.
Diversity, Equality & Inclusion
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,
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“Inclusion for me is an action verb. I am proud that we have initiated a strategic action plan to promote and achieve true diversity, equality, and inclusion – to make our company, our industry, and the world around us better.”
Susan Salka
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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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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, 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 2019 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 2019 Annual Report.
March 11, 2020
By Order of the Board of Directors,
Denise L. Jackson
Chief 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 Performance
(1) | More information on our adjusted EBITDA, which refers to our adjusted earnings before interest, taxes, depreciation and amortization, and a reconciliation of our |
2023 Proxy Statement | 1 |
A Letter from Our Total Return(²) vs. Russell 2000 and S&P 500
CEO & Independent Board Chairman
traded companies. The dedication of the AMN Healthcare culture has been widely recognized, including with the 2022 National Association of Corporate Directors (NACD) Diversity, Equity & Inclusion Award, along with many years of inclusion in the Bloomberg Gender-Equality Index and the Human Rights Campaign Corporate Equality Index. AMN Healthcare has significantly expanded its investment and accomplishments in establishing a diverse, equitable and inclusive corporate team, resulting in greater innovation and more expansive viewpoints and experiences to better serve our clients and enable our healthcare professionals to provide quality patient care. Our culture of diversity, equality, equity and inclusion reaches far beyond our virtual corporate walls. Our core business seeks to reduce inequality and drive health equity. Our Language Services division breaks down language and communication barriers for millions of patients through real-time interpretation. We are enhancing access to healthcare services through our provision of teletherapy services and our international nurse division brings much needed qualified nurses to communities who otherwise may be left behind. Vision – Present and Future The vision of AMN Healthcare’s executive and board leadership, continues to be that AMN empowers the future of care as a long-term, vital partner for the complex and challenging realities that the healthcare industry faces today. We thank Susan Salka, who retired as AMN’s CEO in 2022, for her visionary leadership. This post-pandemic era presents opportunities along with challenges, and AMN Healthcare is well positioned to capture those opportunities to deliver long-term value to its stakeholders. Enhanced healthcare workforce sustainability and engagement are goals we can achieve through growing partnerships between AMN Healthcare and our industry partners. Technology-enabled total talent solutions can mitigate pressures on healthcare organizations while driving better outcomes for care providers and their patients and improved performance for our company. We invest in the future by expanding our network of healthcare professionals overseas. We bolster our platforms through innovative solutions for the growing number of patients who are English learners or hearing impaired and telehealth for the rising demand for therapists and other clinicians in our schools. We will continue to focus on driving strong outcomes in our existing services while driving innovation that will result in improved patient outcomes, performance success for AMN Healthcare and our clients, and healthier communities where all can thrive. These topics and other issues of shareholder interest are discussed further within this proxy statement and may be addressed at our 2023 Annual Meeting of Shareholders on Wednesday, May 17, 2023, at 1:00 p.m. Central Time. We will conduct our 2023 meeting virtually. We cordially invite you to join us and have included instructions for participating in our virtual shareholder meeting under the General Information Section of this proxy statement. Gratefully Yours, | ||
This post-pandemic era presents opportunities along with challenges, and AMN Healthcare is well positioned to capture those opportunities to deliver long-term value to its stakeholders.
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DOUGLAS D. WHEAT
Chairman of the Board | CARY GRACE
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President and Chief Executive Officer |
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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 director, Ms. Teri G. Fontenot, who was appointed to the Board in September 2019. The addition of Ms. Fontenot, who is a former chief financial officer of three health systems and CEO of Women’s Hospital in Baton Rouge, Louisiana, supports our ongoing Board refreshment strategy and further strengthens and diversifies the aggregate skills, experiences and characteristics of our Board. Please find a list of all director nominees below. Additional information for each nominee can be found under “Election of Our Directors (Item 1)” beginning on page 6.
Name | Age | Director Since |
Professional Background
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Mark G. Foletta | 59 | 2012 |
Executive Vice President and Chief Financial Officer, Tocagen Inc.
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Teri G. Fontenot | 66 | 2019 |
Former CEO of Women’s Hospital
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R. Jeffrey Harris | 65 | 2005 | Former Of Counsel at Apogent Technologies, Inc. |
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Corporate Governance
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Michael M.E. Johns, M.D. | 78 | 2008 | Professor in the School of Medicine, Emory University |
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Compensation;
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Daphne E. Jones | 61 | 2018 |
Former Senior Vice President – Digital/Future of Work, GE Healthcare
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Martha H. Marsh | 71 | 2010 |
Former President and CEO, Stanford Hospital and Clinics
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Susan R. Salka | 55 | 2003 |
Chief Executive Officer, AMN Healthcare Services, Inc.
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Douglas D. Wheat | 69 | 1999 |
Managing Partner, Wheat Investments, LLC
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Our Key Executive Compensation Practices
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A Letter from Our CEO & Independent Board Chairman
AMN: LEADER & INNOVATOR IN TOTAL TALENT SOLUTIONS POSITIONED TO EMPOWER THE FUTURE OF CARE
Record Revenue of $5.24B in 2022 | Healthcare Professional Placements in 2022 | Recognized for Workplace Equality on Human Rights Campaign Corporate Equality Index 2018 – 2022 |
Ranked#91 on Fortune Magazine’s 2022 List of Fastest Growing Companies | Named by Newsweek as one of America’s Most Responsible Companies 2020 – 2023 | Diluted EPS of$9.90 and Adjusted Diluted EPS of $11.90 in 2022(1) |
Recognized for Workplace Equity on Bloomberg Gender-Equality Index 2018 – 2023 | Cary Grace joins AMN Healthcare as its President and Executive Officer | Winner– NACD Diversity, Equity & Inclusion Award – Public Company – Mid-Cap 2022 |
(1) | More information on our adjusted diluted EPS, and |
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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
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GIVE |
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the best talent and insights to help healthcare organizations optimize their workforce |
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Our Key Corporate Governance Policies
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Recent Recognition
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How to Vote your Shares
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Our Purpose
Helping to achieve personal and professional goals every day.
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We value everyone’s unique contribution, and as such, we treat everyone with the highest level of personal and professional courtesy, consideration, and care. TRUST Our relationships are honest, authentic, and open. We pride ourselves on the fact that we keep our commitments. Our word is our promise. CONTINUOUS IMPROVEMENT We know that even our best efforts and our most robust solutions can always be better. We never settle for ‘good enough’ and constantly seek opportunities and proactively embrace changes to improve. PASSION We love what we do – and it shows. Passion makes the difference between just doing something – and doing it well. It’s the fire that drives our purpose and our daily lives. INNOVATION Innovation is a mindset. We work to stay future-focused and committed to bringing new ideas to life that generate differentiated value for everyone. |
Table of Contents |
RECOMMENDATIONS
2023 Proxy Statement | 5 |
Notice of Annual Meeting of Shareholders |
DATE AND TIME | LOCATION | RECORD DATE |
May 17, 2023 | www.virtualshareholdermeeting.com/AMN2023 | March 21, 2023 |
1:00 p.m. (Central Time) |
VOTING MATTERS
RECOMMENDATION | PAGE | ||
1. | To elect nine directors to the Board of Directors | 16 | |
2. | To approve, by non-binding advisory vote, the compensation of our named executive officers | 58 | |
3. | To ratify the appointment of KPMG LLP to be our independent registered public accounting firm for the fiscal year ending December 31, 2023 | 101 | |
4. | To consider a shareholder proposal if properly presented at the 2023 Annual Meeting | 103 |
We will also take action upon any other business as may properly come before the 2023 Annual Meeting and any adjournments or postponements of that meeting.
HOW TO VOTE YOUR SHARES
ONLINE | CALL | DURING THE MEETING | |||||
Please follow the internet votinginstructions sent to you and visitwww.proxyvote.com, any timeup until 11:59 p.m. (Eastern Time) on May 16, 2023. | Please follow the telephonevoting instructions sent to you and
call 1 (800) 690-6903, any time up until 11:59 p.m. (Eastern Time) on |
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Our Board’s Voting Recommendations
Item | Description of Proposal | For | Against | Page | ||||||
1 | Election of eight director nominees |
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2 | Approval, on an advisory basis, compensation of our named executive officers |
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3 | Ratify the appointment of the independent auditor |
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4 | Reduce the threshold necessary to call a special shareholders meeting to 15% |
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5 | Shareholder proposal – Make Shareholder Right to Call Special Meeting More Accessible |
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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.
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 Environmental, Social, and Governance strategy by reducing our environmental footprint as well as reducing the costs associated with printing and distributing our proxy materials. On or about April 4, 2023, 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 2022 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 2022 Annual Report. |
April 4, 2023
By Order of the Board of Directors,
DENISE L. JACKSON
Chief Legal Officer and Corporate Secretary
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Our Strategy and Talent Solutions
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We are the leader and innovator in total talent solutions for the healthcare sector in the United States. We are passionate about all aspects of our mission:
PURPOSE-DRIVEN, VALUES-BASED ORGANIZATION Committed to Serving AllOur Stakeholders | LEADER AND INNOVATOR IN TOTALHEALTHCARE Well Positioned to Serve GrowingHealth Systems and Diverse Care Settings | EXPERIENCED, DIVERSE AND DEEPLEADERSHIP TEAM Driving Digital Enablement thatBenefits Healthcare Professionals and Clients | ||||||
Our talent solutions enable our clients to manage and optimize their workforce, simplify staffing complexity, increase efficiency, and elevate the patient experience. Our comprehensive suite of talent solutions provides management, staffing, recruitment, language services, technology, telehealth and virtual care management, analytics, and related services to build and manage all or part of our clients’ healthcare workforce needs. We offer temporary, project, and permanent career opportunities to our healthcare professionals, from nurses, doctors, and allied health professionals to healthcare leaders and executives in a variety of settings across the nation to help them achieve their personal and professional goals.
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PHYSICIAN & |
TECHNOLOGY & |
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ELECTION OF OUR DIRECTORS
The Board is elected by the shareholders to oversee their interest in the overall success of the Company’s strategy, business operations and financial strength. The Board serves as the Company’s ultimate decision-making body to the extent set forth in our Certificate of Incorporation and Amended and RestatedBy-laws (the “Bylaws”). It also selects and oversees our senior executives, who, in turn, oversee ourday-to-day business and related affairs.
Board Composition Evaluation and Director Nomination Processes
The Corporate Governance and Compliance Committee understands the vital role that a strong board composition with a diverse set of skills and continuous refreshment play in effective oversight. The Committee is committed to maintain a diverse board to more effectively manage complex corporate issues by leveraging different experiences to support the Company’s long-term objectives and business strategy. With this purpose in the 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. To ensure this alignment and in response to the Company’s shareholder discussions on Board refreshment, in 2018, the Committee established a more robust process by which it would regularly evaluate the Board’s collective composition relative to the Company’s strategic objectives and potential director candidates.
To kick off the process, the Corporate Governance and Compliance Committee mapped the collective composition of the then-current Board to the skills and experiences it considered necessary to support the Company’s long-term strategic objectives. It then established a pool of potential director candidates derived from various sources, including recommendations from shareholders and consultants, many of whom are industry experts that match certain key skills, experiences and characteristics the Committee identified as critical to the Company’s long-term strategic objective and from which the Committee could engage candidates quickly depending on the occurrence of certain events necessitating new or additional directors, such as retirements, changing market conditions or strategic objectives and newly considered enterprise risks. The Committee then regularly evaluates its potential candidate pool and adds and eliminates individuals based on the factors listed above as well as the candidates’ changing biographical information and availability.
WORKFORCE STAFFING
Allied Healthcare Local Staffing Rapid Response Revenue Cycle Solutions School Staffing Labor Disruption International Staffing and Permanent Placement | WORKFORCE STAFFING
Interim Leadership LEADERSHIP SEARCH Executive Search Academic Leadership Clinical Leadership PHYSICIAN SEARCH Retained Search for Physicians and Advanced Practices | TALENT MANAGEMENT
Recruitment Solutions Float Pool Management Scheduling & Staff Planning VIRTUAL CARE Language Services Teleservices Platforms |
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of revenue from these segments is derived from managed services programs (MSPs)
2023 Proxy Statement | 7 |
Our Strategy and Talent Solutions
We aim to deliver long-term sustainable value to our stakeholders. Every day, we help our clients and healthcare providers drive access to care, health and wellness. We continue to embed Diversity, Equality, Equity, and Inclusion (“DEI”) in our DNA, inspiring innovation, strengthening engagement, and driving health equity in the communities we serve. In partnership with our team members, healthcare professionals, clients, suppliers and others, we are committed to advancing a healthy, just, equitable, and sustainable world where all can thrive. We have aligned our environmental, social and governance (“ESG”) strategy with the United Nations’ Sustainable Development Goals and report in alignment with Sustainability Accounting Standards Board (“SASB”), Global Reporting Initiative (“GRI”), and Taskforce for Climate Related Financial Disclosure (“TCFD”) frameworks which we discuss in detail on page 35 of this Proxy Statement and within our 2022 ESG Report that can be found on the Corporate Social Responsibility page of our Company website https://www.amnhealthcare.com/about/corporate-social-responsibility/.
AMN HEALTHCARE EVOLUTION FROM STAFFING COMPANY TO LEADER IN TOTAL TALENT SOLUTIONS | |
Nurse & Allied Staffing 2010: Nursefinders | 2015: Onward | 2019: AdvancedMedical | 2022: Connetics Vendor Management Systems 2013: ShiftWise | 2015: Medefis | 2019: b4health Language Interpretation 2020: Stratus Video | Leadership Solutions 2015: The First String | 2016: B.E. Smith | 2018: PhillipsDiPisa/Leaders for Today Scheduling & Predictive Workforce Analytics 2014: Avantas Teletherapy and Virtual Care 2019: Advanced Medical | 2021: Synzi Revenue Cycle Solutions 2016: Peak | 2018: MedPartners |
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BelowOur Strategy and Talent Solutions
Our Business Strategy
Our strategy is a summarydesigned to support growth in (i) expansion of the process by whichmarkets we serve; (ii) the Governancenumber, scope and Compliance Committee activelysize of customer relationships and continuously evaluates its collective composition(iii) opportunities afforded to our healthcare professionals. Driving increased adoption of our existing talent solutions will deepen and potential director candidates priorbroaden our customer relationships. We will continue to nominating such director candidatesinnovate, develop, and invest in new, complementary service and technology solutions to add to our talent solutions portfolio and enhance the Boarddigital experience for review, approvalclinicians and appointment.clients. We believe this strategy will enable us to expand our strategic customer relationships, while driving more recurring revenue with an improved margin mix that will be less sensitive to economic cycles.
2022 Accomplishments
RECORD REVENUE of $5.24B | RECORD ADJUSTED DILUTED EPS(1)of $11.90 | RECORD NET INCOME of and RECORD ADJUSTED EBITDA(1) of |
MORE THAN $12B SPEND UNDER MANAGEMENT THROUGH VMS AND MSP SOLUTIONS | AMN PASSPORT DOWNLOADED BY 97% OF OUR NURSE AND ALLIED HEALTHCARE PROFESSIONALS ON ASSIGNMENT | 250,000 HEALTHCARE PROFESSIONAL |
(1) | More information on our adjusted diluted EPS and adjusted EBITDA, which refers to our adjusted earnings before interest, taxes, depreciation and amortization, and a reconciliation of our 2022 GAAP diluted net income per share to adjusted diluted EPS and 2022 net income to adjusted EBITDA, can be found at Exhibit A to this proxy statement (page 113). |
2023 Proxy Statement | 9 |
Our Strategy and Talent Solutions
Recent Recognition
NACD Winner – Diversity, Equity & Inclusion Award – Public | BLOOMBERG Gender-Equality Index |
HUMAN RIGHTS CAMPAIGN Corporate Equality Index | NEWSWEEK America’s Most Responsible Companies | FORBES America’s Best Large Employers; 2022America’s Best Employers for Women |
Advancing ESG Initiatives
GOVERNANCE | DIVERSITY, EQUALITY, EQUITY AND INCLUSION |
Materiality Assessment to prioritizeESG issues 56% women and 33% BIPOCrepresentation on our Board Enhanced TCFD & ESG Reporting | $961 million in diverse and/or smallbusiness spend 39% participation in EmployeeResource Groups 69% of our team members arewomen and 45% of ourteam members are fromunderrepresented communities |
HEALTH | SUSTAINABILITY |
Team member health insurancepremium waivers and enhanced401(k) contributions Over 250,000 healthcareprofessional placements in 2022 14 million patient encounters whereour 3,000+ interpreters(1) bridgedlanguage barriers, enabling accessand improving health outcomes | 34% reduction in Scope 1 & 2 GHGefrom 2019 baseline levels Measured full Scope 1, 2, and 3Greenhouse Gas Emissions for2020-2022 Measured full Scope 3 GreenhouseGas Emissions for 2020-2022 |
(1) | Includes both our team members as well as independent contractors. |
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Proxy Voting Roadmap 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 April 4, 2023. |
PROPOSAL 1 Election of Our Directors | |||
Our Board recommends that you vote FOR this proposal. | (page 16) | ||
Directors at a Glance
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 addition, Cary Grace, who was appointed as the Company’s President and Chief Executive Officer and a member of the Board on November 28, 2022. Ms. Grace is a proven executive that will continue AMN’s exceptional growth and impact, by building on our operational and organizational strengths. Ms. Grace brings to the Board more than three decades of experience developing and executing profitable growth strategies for leading financial service organizations across health care, banking, investment management, alternative capital, M&A and insurance. A list of all director nominees is reflected below. Additional information for each nominee can be found under “Election of Directors (Proposal 1)” beginning on page 16.
Name | Age | Director Since | Other Public Company Boards | Board Committees | |
Jorge A. Caballero IND | 66 | 2021 | 0 | A G | |
Mark G. Foletta IND | 62 | 2012 | 2 | A | |
Teri G. Fontenot IND | 69 | 2019 | 2 | A G | |
Cary Grace President and Chief Executive Officer, AMN Healthcare Services, Inc. | 54 | 2022 | 0 | E | |
R. Jeffrey Harris IND | 68 | 2005 | 0 | S C G E | |
Daphne E. Jones IND | 65 | 2018 | 2 | A C | |
Martha H. Marsh IND | 74 | 2010 | 1 | S C | |
Rear Admiral Dr. Sylvia Trent-Adams, PHD, RN, FAAN IND | 57 | 2020 | 0 | C G | |
Douglas D. Wheat (Chairman) IND | 72 | 1999 | 2 | S E |
A | Audit Committee | G | Corporate Governance and Compliance Committee | S | Search Committee | Chair | |
C | Compensation Committee | E | Executive Committee | IND | Independent |
2023 Proxy Statement | 11 |
Proxy Voting Roadmap
Current Board Composition
The illustration below summarizes the key experience, qualifications, and attributes of our director nominees and highlights the balanced mix of experience of our Board as a whole. This is a high-level summary that is not intended to be an exhaustive list of the director nominees’ skills or contributions to the Board.
Our Key Corporate Governance Practices
Practice | Description | |
Proxy Access | Our Bylaws contain meaningful proxy access features that are consistent with market practice and were developed through shareholder conversations. | |
Majority Voting in Uncontested Elections | Director nominees must receive the affirmative vote of a | |
Board Diversity / “Rooney Rule” | Our Board has committed that when considering candidates to fill an open seat on the Board, the pool of candidates from which Board nominees are chosen includes candidates from historically underrepresented communities. | |
Director Resignation Policy | Our Director Resignation Policy requires an incumbent director to tender their resignation if they receive more votes “Against” their election than votes “For” their election in an uncontested election. | |
Board Aggregate Tenure Policy | Our Board has committed that it will maintain an average tenure for independent board directors of less than ten years. As of December 31, 2022, our average board tenure was nine years. | |
No “Poison Pill” | We do not have a shareholder rights plan or “poison pill” and | |
Annual Election of Directors | All directors must be nominated and re-elected each year. | |
Shareholder EngagementProgram | We engage in a formal outreach program to | |
Stock Ownership Guidelines | We require senior executives and non-employee directors to maintain significant holdings of our common stock to promote alignment with the interests of our shareholders. | |
Code of Ethics | We have established a code of ethics that applies to our Senior Financial Officers to ensure adherence to best practices and advancement of the values-based culture we strive to maintain. |
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Proxy Voting Roadmap
PROPOSAL 2 Advisory Vote on Executive Compensation | |||
Our Board recommends that you vote FOR this proposal. | (page 58) | ||
Our Financial Performance
(1) | More information on adjusted EBITDA, which refers to our adjusted earnings before interest, taxes, depreciation and amortization, and a reconciliation of our 2022 net income to adjusted EBITDA can be found at Exhibit A to this proxy statement (page 113). |
Our Total Return vs. Russell 2000
2023 Proxy Statement | 13 |
Proxy Voting Roadmap
Pay Aligned with Financial Performance
(1) | CEO compensation represented Ms. Salka’s total compensation in 2022, since Ms. Grace did not join the Company until November 28, 2022. |
Say-on-Pay Results
In 2022, we received 90% of votes in favor of our Say-on-Pay proposal (based on shares voting). Since 2014, our Say-on-Pay results have averaged 95% (based on shares voting), which we believe reflects our pay-for-performance philosophy and level of engagement with our shareholders.
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Proxy Voting Roadmap
Key Executive Compensation Practices
Practice | Description | |
Executive Compensation Philosophy | Commitment to equal pay principles and a values-based culture to which leaders are held accountable through a portion of their annual cash incentive award. | |
Balanced Approach to Performance-based Pay | Performance-based awards are tied to the achievement of financial objectives, including revenue, adjusted EBITDA, total shareholder return, as well as strategic leadership and | |
Three-Year Performance Periods and | The performance periods and vest schedules for our equity awards span a three-year period to promote a long-term approach to the achievement of strategic and financial objectives. | |
Balanced Mix of Pay Components | Target compensation mix is not overly weighted toward annual incentive awards and balances cash and long-term equity awards in | |
Equity Ownership Guidelines | CEO 5x salary Named executive officers 2x salary Other members of the | |
“Double-Trigger” Change-in-ControlArrangements | Executive equity and severance agreements include “double-trigger” mechanisms. | |
No Tax Gross Ups | No tax gross ups included in executive compensation program. | |
PROPOSAL 3 Ratification of | |||
Our Board recommends that you vote FOR this proposal. | (page 101) | ||
PROPOSAL 4 Shareholder Proposal | |||
Our Board recommends that you vote AGAINST this proposal. | (page 103) | ||
2023 Proxy Statement | 15 |
Corporate Governance |
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PROPOSAL 1
The board of directors recommends that shareholders vote “FOR” each of the director nominees | ||||
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Since establishing the processes described above, the Board has appointed two new directors. In July 2018, the Board appointed Daphne E. Jones, an accomplished executive with extensive experience in strategic, entrepreneurial and global use technologies in the healthcare sector. Ms. Jones’ contributions to the Board have been evident through its strategic oversight of the execution of the Company’s digital and strategic initiatives. In September 2019, the Board appointed Ms. Teri G. Fontenot, an executive with extensive experience in healthcare leadership, women’s healthcare, corporate finance, economic policy and healthcare policy. Our Board is proud to be among a unique group of companies with 44% female representation.
Additional information regarding how shareholders can nominate a director candidate for election at our 2021 Annual Meeting of Shareholders can be found inExhibit A to this proxy statement. Our Board is committed to continue to seek out highly qualified candidates with diverse backgrounds, skills and experience to further strengthen our Board‘s collective composition and strategically support the Company’s strategic objectives. A collective summary of our Board’s current composition, skills and experiences is set forth below.
Our Nominees for the Board of Directors
EightNine directors are to be elected at our 20202023 Annual Meeting of Shareholders to hold office until our next annual meeting or until their successors are duly elected and qualified, or until the director retires, resigns, is removed or becomes disqualified.
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 eightnine 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 eightnine 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.
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Our Directors’ Skills Matrix
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RETIRING DIRECTOR
We would like to recognize and thank Mr. Stern who will be retiring from the Board effective upon the conclusion of our Annual Meeting.
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Overview of Our Corporate Governance Program
Our Board and executive leaders believe that strong and effective corporate governance is essential to our success. A cornerstone of our corporate governance program is providing transparent disclosure to our stakeholders on an ongoing and consistent basis. Our approach integrates all components of effective governance, including a strong ethical culture, a comprehensive enterprise risk management program, a formal shareholder engagement program, sound financial, regulatory and legal compliance functions and corporate social responsibility. Our holistic strategy focuses on delivering long-term shareholder value and has been recognized for the highest standards of governance. AMN aligns with the Investor Stewardship Group’s (“ISG”) Corporate Governance Framework for U.S. Listed Companies. Below is an illustration how certain of our governance practices directly support each of the ISG principles.
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Our Annual Shareholder Outreach Summary
We understand that we must earn and maintain our shareholders’ continued support by adhering to the highest standards of corporate governance and social responsibility. To this end, five years ago, we initiated a formal shareholder corporate governance outreach program to supplement our financial-related outreach and gain further insight into the views of our shareholders. Our engagement efforts have evolved into a robust program where we take a customized approach to each shareholder. We believe this facilitates more meaningful and ongoing dialogue on relevant topicswe have a slate of director nominees that allow usare well-positioned to build stronger shareholder relationships and a more successful company.
With a formal outreach strategy and clear objectives in place, we sent letters to our top shareholders in 2019 representing approximately 64% of our outstanding Common Stock. We look forward to the opportunity to connect withrepresent our shareholders and find these engagements to be enlightening and productive. Each shareholder we met with expressed appreciation for our proactive interest in their views, and we certainly appreciated their time and insight. Collectively, our discussions focused on the following topics:
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Although each shareholder’s particular focus can differ, AMN’s mission, 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 post on our Company website atwww.amnhealthcare.investorroom.com/governance-guidelines.
The following chart summarizes some of the specific actions our Board has 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 supportoversee the Company’s long-term strategic objectives, our Governancestrategy, business operations and Compliance Committee reviewed itsfinancial strength.
AMN Healthcare 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.Directors
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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 Oversight
The Board as a whole is responsible for overseeing our risk exposure as part of determining a business strategy that generates long-term shareholder value. The Board shapes our enterprise-wide risk capacity, appetite and tolerance levels that provide the foundation for our overall business strategy and direction, and believes that overseeing processes for assessing and managing the various risks we face is one of its most important responsibilities to our stakeholders.
Purposeful and appropriate risk-taking in certain areas is important for us to be competitive and to achieve our long-term goals. Our enterprise risk governance framework reflects a collaborative process whereby the Board, executive management and other team members apply a consistent, 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.
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 influence how we operate our business, including how we marshal our 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, each of the Board’s standing committees’ responsibilities 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. Below is an illustration of which committees, or the full Board, are responsible for overseeing the Company’s key risks identified by the Board.
AUDIT COMMITTEE RISK OVERSIGHT
The Audit Committee assists the Board in fulfilling its 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, the Audit Committee didincumbent directors should not identify any significant deficiencies or material weaknesses in the Company’s internal controls. 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.
COMPENSATION COMMITTEE OVERSIGHT
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 difficult to achieve, is not viewedexpect to be at such an aggressive level that it would induce bonus-eligible employeesre-nominated annually. In determining whether to take inappropriate risks that could threaten our financial and operating stability.
The Compensation Committee believesrecommend a director for re-election, the use of a long-term incentive award program with targets that span a three-year performance period 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 the short- and long-term. 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) too much focus on equity, (B) compensation mix overly weighted toward short-term results, (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) 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.
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CORPORATE GOVERNANCE AND COMPLIANCE COMMITTEE OVERSIGHT
The Governance and Compliance Committee considers the risks associated withneeds of the Company and the diversity of the Board and believes that our corporate governance practices, leadership succession process, ethicsdirectors should satisfy several qualifications, including but not limited to, demonstrated integrity, the director’s overall engagement in board activities, the results of the annual Board evaluation and compliance programs,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.
Director Nominee Snapshot
INDEPENDENT DIRECTOR TENURE | AGE | GENDER DIVERSITY | RACIAL DIVERSITY | INDEPENDENCE |
Average 9 years | Average 65 years | 56% Female | 33% BIPOC | 89% Independent Directors |
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Corporate Governance
The Board represents 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 and to reflect a diversity of personal backgrounds. Diversity of race, ethnicity, gender and age are taken into account in director nominations. We believe a diverse organization, including our healthcare, clinicalBoard, leads to innovation and employment regulatory compliance practices,successful outcomes. Below, we include the demographic information for each director nominee and quality programs. Amongdescribe 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 things,qualifications in determining to recommend that they be nominated for election.
HEALTHCARE INDUSTRY We generally seek directors who have knowledge of and experience in the healthcare industry, which is useful in understanding the needs, regulatory requirements and complexities of our clients and healthcare professionals. | ||||
C-SUITE LEADERSHIP We believe that directors who have served in executive positions are important because they have the experience and perspective to analyze, shape and oversee our strategy and the growth and preservation of shareholder value. | ||||
FINANCE/AUDIT AMN is committed to strong financial discipline, effective allocation of capital and accurate disclosure practices. We believe that financial expertise on the Board is instrumental to our success. | ||||
LEGAL/RISK MANAGEMENT We operate in a constantly changing and increasingly complex regulatory environment. Directors with regulatory compliance oversight and enterprise risk management experience play an important role in the Board’s ability to oversee our enterprise risk management program and legal and compliance risks. | ||||
MERGERS & ACQUISITIONS We believe that our ability to achieve our long-term growth objectives will require a combination of organic growth and growth by acquisition. We believe that M&A expertise on the Board provides valuable insight and oversight of our growth strategies and achievement of financial goals. | ||||
HUMAN CAPITAL MANAGEMENT We have a large and diverse workforce which represents one of our key resources as well as one of our largest expenses. We believe experience in managing a large workforce is important to ensure that AMN has sufficient talent, robust development and retention practices and maintains our commitment to diversity, equity and inclusion. | ||||
GOVERNMENT/POLICY ADVOCACY We operate in a changing healthcare industry. State and federal government experience and an understanding of policy development enhance the Board’s ability to provide effective oversight of government policy and regulatory risk. | ||||
DIGITAL/TECHNOLOGY Our business has become increasingly complex as we have accelerated our digital transformation and expanded our service offerings to include more telehealth and technology related solutions. This digital transformation requires a sophisticated level of technology resources and infrastructure as well as technological expertise, and, accordingly, we believe digital transformation expertise on the Board contributes to our success. |
2023 Proxy Statement | 17 |
Corporate Governance
Skills and Experience
Skill, Competency or Attribute | Caballero | Foletta | Fontenot | Grace | Harris | Jones | Marsh | Trent- Adams | Wheat | |
HEALTHCARE INDUSTRY | ||||||||||
C-SUITE LEADERSHIP | ||||||||||
FINANCE/AUDIT | ||||||||||
LEGAL/RISK MANAGEMENT | ||||||||||
MERGERS & ACQUISITIONS | ||||||||||
HUMAN CAPITAL MANAGEMENT | ||||||||||
GOVERNMENT/POLICY ADVOCACY | ||||||||||
DIGITAL/TECHNOLOGY | ||||||||||
DEMOGRAPHIC BACKGROUND | ||||||||||
Tenure | 1 | 10 | 3 | 0 | 17 | 4 | 12 | 2 | 23 | |
Gender | M | M | F | F | M | F | F | F | M | |
RACE/ETHNICITY | ||||||||||
African American or Black | ||||||||||
Hispanic or Latinx | ||||||||||
White |
18 |
Corporate Governance
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 Governance and Compliance Committee is committed to maintaining 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 Governance and Compliance Committee seeks out candidates with skills, experiences, and characteristics, including individuals representing historically underrepresented groups, that when working collectively will fulfill its oversight responsibilities and continue to guide the Company into the future.
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 responsibilities include:
Overseeing matters of corporate governance, including preparingregular Board refreshment and recommendingdirector candidate identification process.
REVIEWS The Boards current composition and tenure relative to the Company’s strategic objectives | |||
IDENTIFIES The characteristics, skills, and experiences most critical to the Company’s long-term strategic objectives | |||
ALIGNS Desired characteristics, skills, and experiences for future director candidates to ensure a diverse Board |
When assessing and prioritizing desired characteristics, skills and backgrounds, the Governance Guidelines,
Overseeing director succession practices, including identifying potential director candidates forand Compliance Committee considers, among other things, the BoardBoard’s current skill set 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, includingtenure, the Company’s employment, healthcarelong-term strategic plan and clinical compliance practicesobjectives, shareholder discussions, current and risk oversight of the credentialing of candidatespast board service, commitment to ensure that the Company is placing qualified healthcare professionals,
Reviewing any significant events investigated under our compliance and ethics programscorporate social responsibility and the Company’s Code of Conduct (other than financial matters or misconduct that are reviewed bydirector feedback provided in connection with the Audit Committee), andBoard’s annual evaluation process.
Overseeing the Company’s shareholder outreach program relating to corporate governance matters.
The Governance and Compliance Committee reviewsthen establishes a diverse pool of potential director candidates who possess the Company’s practicesdesired characteristics, skills, and approach with respect to corporate governanceexperiences; the director candidate slates are identified from various databases and regulatory compliance to ensure that its corporate governancesources, including recommendations from shareholders, management and compliance structures provide a foundation for achieving 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 leadership gapsdirectors, consultants, and the consequences flowing from such gaps.
industry experts. The Governance and Compliance Committee may also reviews and discussesengage a third party to conduct or assist 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.search or evaluation. The Governance and Compliance Committee believesregularly 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. When considering candidates to fill an open seat on 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.
The Board, has adopted categorical standards for director independence, which we set forth in the Governance Guidelines and make available on our website. Under these standards, a director will not be considered independent if:
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The Board does not consider the following relationships to be material relationships that would impair a director’s independence:
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The Board has determined that director nominees Mark G. Foletta, Teri G. Fontenot, R. Jeffrey Harris, Dr. Michael M.E. Johns, Martha H. Marsh, Daphne E. Jones and Douglas D. Wheat all meet our categorical standards for director independence and the applicable rules and regulations of the NYSE and federal securities laws regarding director independence. Our CEO is the only member of our Board who 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, 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 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 reviewensures that the pool of candidates from which Board nominees are chosen includes candidates from historically underrepresented groups who would bring diversity to the Board. Any search firm or third-party consultant asked to provide an initial list of potential candidates is also required to include such candidates.
2023 Proxy Statement | 19 |
Corporate Governance
Board Refreshment
We prioritize effective and approval. The Committee may approve the transaction if it determines that consummationaligned Board composition, supplemented by a thoughtful approach to refreshment. It is essential to have a qualified group 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 interestappropriate mix 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 advanceskills, experience and attributes 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 employee 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
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.oversee AMN’s strategic objectives. The Governance and Compliance Committee evaluated this transactioncontinuously reviews the Board’s composition, taking into consideration the characteristics of the existing directors, both individually and 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 from the Company 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 does not constitute a conflict of interest involving Mr. Henderson. Subsequent to the review of this proposed transactiongroup. Ongoing strategic board succession planning, led 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, 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 2019 were negotiated on anarm’s-length basis and are within the categorical independence standardsensures that the Board continues to maintain an appropriate mix of objectivity, skills and experiences to provide fresh perspectives and effective oversight and guidance to management, while leveraging the institutional knowledge and historical perspective of our longer-tenured directors. Currently, 50% of our Board has adopted. The relationship does not prevent Ms. Fontenot from qualifying as an independent director under the categorical independence standards,served less than five (5) years, and the Board considers Ms. Fontenothas an aggregate tenure of nine (9) years. Each of the five directors that we have added to bethe Board over the past five years have brought additional skills and perspectives to the Board and strengthened the Board’s ability to support and oversee the Company’s long-term strategic objectives. These five directors all represent gender, race and ethnicities that have been historically underrepresented on boards.
Daphne E. Jones – Experience with strategic, entrepreneurial, and global use technologies in the healthcare sector. | Teri G. Fontenot – Experience in healthcare leadership, corporate finance, economic policy and healthcare. | Sylvia Trent-Adams – Experience in directing and coordinating major federal health programs, as well as strategic planning and leadership of a healthcare institution. | Jorge A. Caballero – Accomplished global executive with extensive experience in audit, financial, risk management and mergers and acquisitions. | Cary Grace – A proven executive with large organizations with significant experience developing and executing profitable growth strategies. |
Onboarding and Continuing Education
Our director onboarding process is designed to provide new directors with information, context, and perspectives that enables new directors to effectively contribute to the Board’s work. During the initial months after joining the Board, new directors have individual meetings with each of our current directors, including specific committee-focused meetings with the chair of each committee. New directors are also invited to attend all committee meetings to assist in their development. Each new director is also assigned an independent director.experienced AMN Healthcare board member to share feedback, provide perspective on boardroom activities and dynamics, help with meeting preparation, and act as a resource between meetings.
In addition to providing new directors with a library of resources that includes governance, finance and core background documents, key business executives and functional leaders from across the organization meet with new directors to increase their understanding of AMN’s businesses, operations, culture and values. Throughout their tenure directors participate in informal meetings with other directors and senior leaders to share ideas, build stronger working relationships, gain broader perspective and strengthen their working knowledge of our business, strategy, performance and culture.
We encourage and facilitate director participation in continuing education programs and each director is provided membership in the National Association of Corporate Directors as well as subscriptions to other governance publications and resources. In 2022, individual directors also participated in issue-focused educational programs in areas including ESG, cyber and climate, some receiving certifications. Periodic educational sessions are also provided to members of the Board through the Company by both internal and external resources on subjects that would assist them in discharging their duties. For example, in 2022 board members received educational briefings on topics including, but not limited to, ESG and Stakeholder Capitalism, Social Issues and Crisis Communication and Investor Perspectives.
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Corporate Governance
Board Tenure Policy
Our Board’s Aggregate Tenure Policy
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 followingThis policy, werewhich 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 believes 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 Company and the diversity of the Board as a whole, the director’s participation in and contributions to the activities of the Board, the results of the annual Board evaluation 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, theThe average aggregate tenure for our Board’s independent directors will be slightly less than 9is approximately nine (9) 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 2999 Olympus Blvd., Suite 500, Dallas, Texas 75019 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 Meetings andComposition & Director Nomination Process” above. To have a director nominee considered for election at our 2024 Annual Meeting Attendance by Board Members
We expect eachof Shareholders, a shareholder must submit the nomination in writing to the attention of our directorsCorporate Secretary and also satisfy the requirements set forth in our Bylaws regarding shareholder director nominees no later than February 17, 2024 and no sooner than January 18, 2024, assuming the date of the 2024 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 2024 proxy statement for election, a shareholder must submit the nomination in writing to attendthe attention of our Corporate Secretary and also satisfy the requirements set forth in the “proxy access” provisions of our Bylaws no earlier than November 6, 2023 and no later than December 6, 2023. In addition, a shareholder who intends to solicit proxies in support of director nominees submitted under the advance notice provisions of our Bylaws must provide the notice required under Rule 14a-19 promulgated by the SEC under the Exchange Act to our Corporate Secretary no later than March 18, 2024.
The Company received no recommendations for director nominees or director nominations from any shareholder for election to be held at the Annual Meeting.
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Corporate Governance
Board and Committee Self-Evaluation Process
In line with our value of continuous improvement, each meetingdirector conducts an evaluation of the performance of the Board and each committee for which they serve on an annual basis. Additionally, on a biennial basis, the Chair of our Governance and Compliance Committee conducts individual conversations with each director. Each step of the committees on which he or she serves. We also expect our directors to attend ourBoard’s annual meetings. Ourevaluation process is further illustrated below.
Director Independence
The Board has an excellent recorddetermined that director nominees Jorge A. Caballero, 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 attendance and engagement.During 2019,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 business relationships between LHC Group, Inc. and Orlando Health, Inc., both clients of the Company. Ms. Fontenot serves as an independent director of Orlando Health, Inc., and served as an independent director of LHC Group, Inc. from 2019 until its sale to United Healthcare in February 2023. We discuss these relationships in more detail in the “Certain Transactions” section below. The Board considered the nature of these related party relationships and the annual amount of payments we receive from each LHC Group, Inc. and Orlando Health, Inc. The Board determined that neither relationship precluded the Board from making an independence determination for Ms. Fontenot and that the related party relationships fell within our standards of independence.
Set forth below is a brief description of the backgrounds and qualifications of each director. These, along with the skills and experience described earlier in this section, led the Board to conclude that the director should be nominated for election at the 2023 Annual Meeting.
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Corporate Governance
Director Biographies
Director Since: 2021 Committee: Audit Committee Skills & Qualifications: Finance/ Legal/Risk Mergers & | Jorge A. Caballero | 66 Qualification Highlights ● Managing Partner of Deloitte’s Business Tax Services U.S.- India practice (2016–2019) ● New Jersey Tax Managing Partner of Deloitte (2003–2011) ● Assistant Vice President of Tax of Beneficial Corporation, a consumer finance company that was acquired by Household International, Inc. in 1998 (1983–1986) Board Experience ● Deloitte Tax LLP, a global professional services firm and one of the Big Four accounting firms, where he was the Chief Diversity Officer (2009–2016) ● United Way of Essex and West Hudson in New Jersey, a non-profit organization where he served as the chair of Board of Directors and Finance Committee (2003–2019) ● The College of New Jersey, where he served as the chair of the Board of Directors, Finance Committee, and Audit and Risk Management Committee (2007–2019) ● Jersey Battered Women’s Service, a private, non-profit agency, where he served as the chair of the Finance, Human Resources, and Infrastructure Committees (1993–2001) Mr. Caballero brings to the Board significant public company accounting and financial reporting expertise and a top-level perspective in organizational management. Mr. Caballero’s career has provided him with practical knowledge of executive management of complex, global businesses and extensive experience in a wide range of financial and accounting matters including management of global financial operations, financial oversight, risk management and the alignment of financial and strategic initiatives. Mr. Caballero also brings deep corporate governance experience through his work with public and private companies and in his board leadership positions at Deloitte and extensive experience in mergers and acquisitions, a critical component to AMN’s growth strategy. The Board has determined that Mr. Caballero qualifies as an audit committee financial expert and has appointed him to the Audit Committee. |
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Director Since: 2012 Committee: Audit Committee (Chair) Skills & Qualifications: Finance/ Legal/Risk Healthcare C-Suite | Mark G. Foletta | 62 Qualification Highlights ● Executive Vice President and Chief Financial Officer of Tocagen Inc., a brain cancer biotechnology company, from February 2017 until its acquisition by Forte Biosciences, Inc. in March 2020 ● Interim Chief Financial Officer of Biocept, Inc., a publicly traded diagnostics company (August 2015 to July 2016) ● Senior Vice President, Finance and Chief Financial Officer of Amylin Pharmaceuticals, Inc. (March 2006 – October 2012) ● Vice President, Finance and Chief Financial Officer of Amylin (March 2000 – March 2006) ● Certified Public Accountant (inactive) and a member of the Corporate Directors Forum ● Assisted with developing and launching the initial enterprise risk management assessment at Amylin Pharmaceuticals and guided the launch of the initial risk management assessment at both Regulus and DexCom Board Experience ● DexCom, Inc., a publicly traded diabetes care technology company, since November 2014, where he is the Lead Independent Director ● Enanta Pharmaceuticals, a publicly traded biotechnology company, where he is the Chair of the Audit Committee (June 2020 – present) ● Regulus Therapeutics Inc., where he served as Chair of the Audit Committee and a member of the Nominating and Governance Committee (February 2013 – June 2018) ● Viacyte, Inc., a privately held company ● Ambit Biosciences Corporation, where he served as Chair of the Audit Committee (sold in 2014) ● Anadys Pharmaceuticals, Inc. (sold in 2011) Mr. Foletta brings to the Board considerable audit, financial, healthcare and enterprise risk management experience as both an executive officer and director of healthcare companies. Mr. Foletta’s prior experience as a public company CFO provides the Board with extensive public company accounting and financial reporting expertise to guide AMN’s commitment to strong financial discipline, effective allocation of capital and accurate disclosure practices. The Board has designated Mr. Foletta as an audit committee financial expert, and he serves as the Chair of the Audit Committee. |
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Corporate Governance
Director Since: 2019 Committee: Audit Committee Skills & Qualifications: Finance/ Government/ Human Capital Healthcare C-Suite | Teri G. Fontenot | 69 Qualification Highlights ● President and CEO of Woman’s Hospital, the largest independently-owned women’s and infant’s hospital in the United States providing comprehensive subspecialty services to women (March 1996 – March 2019) ● Chief Financial Officer and Executive Vice President of Woman’s Hospital (1992 – 1996) ● Chief Financial Officer of three other hospitals located in Louisiana and Florida prior to joining Woman’s Hospital in 1992 ● Certified Public Accountant (inactive) ● Held a six-year term on the Advisory Committee on Research on Women’s Health for the National Institutes of Health Board Experience ● Amerisafe, Inc., a publicly traded specialty provider of workers’ compensation insurance, where she serves on the Audit and Governance Committees (June 2016 - present) ● Orlando Health, Inc., a not-for-profit organization (September 2021-present) ● Baton Rouge Water Company (2009-Present) and Dynamic Infusion Therapy (May 2021-present) both privately held companies ● LHC Group, Inc., a publicly traded in-home healthcare services company, where she served on the Clinical Quality and Corporate Development Committees and as Chair of the Audit Committee (2019 until its sale to United Healthcare in February 2023) ● Landauer (a formerly publicly traded company), where she served on its Audit and Governance Committee, until its sale in 2017 ● PELITAS, a privately held company (June 2021 until its sale in 2022) ● Sixth District Federal Reserve Bank of Atlanta, including as its Audit Committee chair for two years (2004 - 2009) ● Served on numerous healthcare boards at a local, state and national level, including the Board of Directors of the Louisiana Hospital Association, and the American Hospital Association where she served as Chairperson (2012) Ms. Fontenot brings substantial operational and strategic experience in the healthcare industry as a former chief executive officer and chief financial officer of four healthcare institutions and as the chair of an insurance provider. Ms. Fontenot’s more than 30 years in healthcare and finance leadership provides valuable insights into AMN Healthcare’s strategic discussions regarding the dynamic economic environment and healthcare industry and continued development of client-centric total talent solutions. The Board has determined that Ms. Fontenot qualifies as an audit committee financial expert and appointed her as a member of the Audit Committee. |
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Corporate Governance
Director Since: 2022 Committee: Executive Committee Skills & Qualifications: C-Suite Digital/ Human Capital Healthcare Mergers & Finance/ Legal/Risk | Cary Grace | 54 Qualification Highlights ● President and CEO of AMN Healthcare Services, Inc. ● Chief Executive Officer of the Global Retirement, Investment and Human Capital Solutions business at Aon PLC from 2016 to January 2020 ● Led Aon’s Global M&A integration, its Enterprise Client Management function as well as its digitally enabled private health exchanges; served on the Policy and Governance Team, the Operating Committee and was a named executive officer of the corporation ● More than 14 years at Bank of America, where she led several institutional and private banking businesses, including their $9 billion Mass Affluent Client Business Board Experience ● State Farm Insurance, a mutual company offering auto, home, life and health insurance as well as investment services, since 2022 ● League, Inc. a privately held digital platform and technology company empowering consumer health engagement, since 2020 ● FinTech Evolution Acquisition Group (2021-March 2023); served as Chair of its Audit Committee Ms. Grace brings to the Board more than three decades of experience developing and executing profitable growth strategies for leading professional and financial services organizations across human capital, banking, investments, health, and mergers and acquisitions. Ms. Grace’s extensive experience in leading initiatives and services with a focus on digital enablement provides valuable insight and leadership as AMN continues to evolve and develop technology related and enabled solutions for clients and clinicians. Ms. Grace is also a passionate advocate for diversity and inclusion and with deep knowledge of environmental, social and governance (ESG) in business, causes closely tied to AMN’s purpose and values and a key differentiator providing competitive advantage. |
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Corporate Governance
Director Since: 2005 Committee: Corporate Governance Skills & Qualifications: Legal/Risk Healthcare Mergers & C-Suite | R. Jeffrey Harris | 68 Qualification Highlights ● Of Counsel at Apogent Technologies, Inc., a laboratory, life science and diagnostic products company (December 2000 - 2003) ● Vice President, General Counsel and Secretary at Apogent Technologies, Inc. (1988 - 2000), when the company was named Sybron International Board Experience ● Sybron Dental Specialties (April 2005 - 2006) until it was acquired by Danaher Corporation ● Playtex Products, Inc. (2001 - October 2007) until it was acquired by Energizer Holdings ● Prodesse, Inc., an early-stage biotechnology company (2002 - 2009), until it was acquired by Gen-Probe Incorporated (2009) ● Apogent Technologies, Inc. (2000 - 2004) until it was acquired by Fisher Scientific International, Inc. ● Guy & O’Neill, Inc., a privately held private label and contract manufacturing company (2008 - 2018) ● Chairman (2013-2021), president, board member and a co-founder of BrightStar Wisconsin Foundation, Inc., a non-profit economic development corporation ● Okanjo Partners, Inc., an early-stage technology company Mr. Harris brings considerable mergers and acquisitions experience to the Board, which is a key component of AMN’s growth strategy. Mr. Harris’ legal, regulatory and corporate governance expertise provides valuable insights to the Board and Management as we operate in a constantly changing and increasingly complex regulatory environment and strive to deliver industry-leading results supported by strong governance and compliance practices. Mr. Harris serves as the Chair of the Corporate Governance & Compliance Committee. | |
Director Since: 2018 Committee: Audit Committee; Skills & Qualifications: Digital/ C-Suite Healthcare | Daphne E. Jones | 65 Qualification Highlights ● Senior Vice President, Digital/Future of Work for GE Healthcare, the healthcare business of GE (May 2017 - October 2017) ● Senior Vice President, Chief Information Officer for GE Healthcare Diagnostic Imaging and Services (August 2014 - May 2017) ● Senior Vice President, Chief Information Officer for Hospira, Inc., a provider of pharmaceuticals and infusion technologies (October 2009 - June 2014) ● Chief Information Officer at Johnson & Johnson (2006 to 2009); served in various information technology roles with Johnson & Johnson (1997 - 2006) ● Founder, The Board Curators, LLC (July 2021 -present) ● Founder, Destiny Transformations Group, LLC (April 2018 - present) Board Experience ● Masonite International Corp., a publicly traded global designer, manufacturer, and distributor of internal and external doors for the construction and renovation industry, where she serves as a member of the Corporate Governance and Nominating Committee (February 2018 - present) ● Barnes Group Inc., a publicly traded engineered products and industrial technologies company, where she serves on the Audit Committee (September 2019 - present) ● Thurgood Marshall College Fund, a not-for-profit organization and the nation’s largest organization exclusively representing the Black College Community Ms. Jones brings to the Board 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 provides valuable insights in leading innovative change, technological advancement and strategic growth and is critical to our successful execution of our technology and digital strategies. |
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Corporate Governance
Director Since: 2019 Committee: Compensation Skills & Qualifications: C-Suite Human Capital Healthcare | Martha H. Marsh | 74 Qualification Highlights ● President and CEO of Stanford Hospital and Clinics for eight years until her retirement (April 2002 -August 2010) ● CEO of UC Davis Medical Center and the Chief Operating Officer of the UC Davis Health System (1999 - 2002) ● Senior Vice President for Professional Services and Managed Care at the University of Pennsylvania Health System ● President and CEO of Matthew Thornton Health Plan in Nashua, New Hampshire ● Former Chair of the Board of Trustees for the California Hospital Association and the California Association of Hospitals and Health Systems Board Experience ● Edwards Lifesciences Corporation, a publicly traded structural heart disease and critical care monitoring company, where she serves as Lead Director and is a member of its Compensation and Governance Committee (2015 - present) ● Owens & Minor, Inc., a publicly traded healthcare services and logistics company, from 2012 through 2019; also served as a member of its Compensation and Benefits Committee and as Chairperson of its Governance and Nominating Committee ● Teichert, a privately held company, where she is a member of the Compensation Committee ● Thoratec Corporation until it was acquired by St. Jude Medical in 2015 ● Former Director of Ascension Healthcare Network, a privately held company With more than 40 years of experience in the healthcare industry, including as CEO or other C Suite Executive of multiple healthcare systems and facilities, Ms. Marsh provides the Board with experience and understanding of the challenges and opportunities of the large healthcare facilities, like the ones we serve, that are immensely useful in directing our strategy to innovate and provide enhanced and expanded talent solution service offerings to meet our clients’ evolving needs. Ms. Marsh’s experience in executive leadership and service on several public company boards also provides the Board with valuable experience in public company governance and top-level perspective in organizational management and execution of corporate strategy. Ms. Marsh serves as the Chair of our Compensation Committee. |
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Corporate Governance
Director Since: 2020 Committee: Compensation Skills & Qualifications: Healthcare C-Suite Government/ Human Capital | Sylvia Trent-Adams | 57 Qualification Highlights ● President, University of North Texas Health Science Center at Fort Worth (since September 2022) ● Executive Vice President and Chief Strategy Officer of the University of North Texas Health Science Center at Fort Worth (October 2020 –September 2022) ● Served in the U.S. Public Health Service Commissioned Corps from 1992 - 2020, which included service as Deputy Surgeon General and Acting Surgeon General of the United States ● Held leadership roles in the U.S. Department of Health and Human Services, including as Principal Deputy Assistant Secretary for Health Board Experience ● University of Minnesota School of Nursing, Board of Visitors ● Institute for Healthcare Improvement, an independent not-for-profit organization, focused on advancing and sustaining better outcomes in health and healthcare ● One Safe Place, a non-profit organization Dr. Trent-Adams is an active C-Suite healthcare leader which provides the Board with valuable insights as AMN continues to evolve to serve the more diverse needs of our clients and the complexities of large growing health systems and to proactively anticipate their needs driven by changes in care delivery, reimbursement, and other factors. Dr. Trent-Adams’ experience serving in high levels of the federal government health service and understanding of the drivers and development of public policy enhances the Board’s ability to provide effective oversight of clinical quality, government policy and regulatory risk, all of which are critical to the successful design and implementation of our growth strategy. | |
Director Since: 1999 Committee: Board Chair; Skills & Qualifications: Legal/Risk Finance/ Mergers & | Douglas D. Wheat | 72 Qualification Highlights ● Managing Partner of Wheat Investments, a private investment firm ● Founding and Managing Partner of Southlake Equity Group (2007 - 2015) ● President of Haas Wheat & Partners (1992 - 2006) ● A founding member of the merchant banking group Donaldson, Lufkin & Jenrette specializing in leveraged buyout financing ● Practiced corporate and securities law in Dallas, Texas (1974 - 1984) Board Experience ● Overseas Shipholding Group, a publicly traded ocean transportation services company, where he serves as Chairman (2014 - present) ● International Seaways, Inc., a publicly traded oil and gas tanker company, where he serves as Chairman (2016 - present) ● Former member of the Board of Directors of several other companies including Dex Media, Inc. (Vice Chairman), SuperMedia, prior to its merger with Dex One (Chairman), Playtex Products (Chairman), Dr. Pepper/Seven-Up Companies, Inc., Dr. Pepper Bottling of the Southwest, Inc., Walls Industries, Inc., Alliance Imaging, Inc., Thermadyne Industries, Inc., Sybron International Corporation, Nebraska Book Corporation, ALC Communications Corporation, Mother’s Cookies, Inc., and Stella Cheese Company Mr. Wheat brings to the Board 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. Additionally, Mr. Wheat has significant experience serving AMN Healthcare under different operating environments, management teams and financial market cycles strengthening the Board’s collective knowledge, perspective, and capabilities to guide the Company through both anticipated and unexpected environments. |
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Corporate Governance
Our Corporate Governance Program
Shareholder Corporate Governance Outreach
Accountability to AMN Healthcare shareholders is an essential component of our success, which is why we engage with our shareholders in a variety of ways throughout the year to discuss and obtain feedback on a range of important topics. Management will engage with shareholders to solicit their views on corporate governance, industry leadership, human capital management, corporate social responsibility and diversity, equality, equity, and inclusion. In addition, our Investor Relations team also meets regularly with shareholders, prospective investors, and investment analysts to discuss company performance, strategy, and sustainable growth.
Our outreach efforts have evolved into a robust program with a customized approach to each shareholder and the topics and initiatives that are most important to them. We believe this results in more meaningful dialogue on relevant topics, builds stronger relationships with our shareholders and ultimately a more successful company. With this customized strategy in place, we conduct a formal outreach in the fall of each year. We look forward to the opportunity to connect with our shareholders and find these engagements to be enlightening and productive. Each shareholder we met six times,with expressed appreciation for our interest in their views, and took two actionswe certainly appreciated their time and insight.
Additionally, in 2022, we conducted a comprehensive ESG materiality assessment through engagement with key internal and external constituencies, including our shareholders, that identified and prioritized environmental, social and governance issues likely to have meaningful long-term impact on our Company. Among the top issues identified by unanimous written consent. In 2019, no memberinvestor respondents as internal and external priorities are healthcare professional pipeline, recruitment, retention and engagement, workplace health and safety, and diversity, equity and inclusion of our corporate team members.
2022 Engagement Summary
We sent letters to our largest shareholders representing approximately 55% of our shares outstanding Included Shareholders representing over 50% of our shares outstanding in our ESG Materiality Assessment | We met with shareholders representing approximately 17% of our outstanding stock on corporate governance matters in 2022 and the first quarter of 2023 Shareholders representing over 19% of our outstanding stock provided feedback to our ESG Materiality Assessment | ● Strategy and Culture ● Human Capital Management ● Healthcare Professional Shortage ● DEI and Pay Equity | ● Publication of second ESG Report aligned with the UN SDGs, SASB & TCFD frameworks in April 2023 ● Continued investments in human capital management infrastructure ● Increased financial support to organizations focused on diversity, equality, equity and inclusion efforts, mental health, and wellbeing ● Increased efforts for healthcare professional pipeline development in partnership with clients and universities |
Although the focus of each of our shareholders may differ, AMN’s purpose, long-term strategy, commitment to elimination of equity barriers, pay for performance approach to executive compensation and emphasis on corporate governance and social responsibility were well received.
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Corporate Governance
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, attended fewer than 75%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 2999 Olympus Blvd., Suite 500, Dallas, Texas 75019. The Corporate Secretary opens and reviews all written communications to the Board, one of its committees or specific director(s) and promptly forwards to the Chair of the aggregateBoard and/or the appropriate Committee Chairperson. The Corporate Secretary will also periodically provide the Chair of the Board, the Committee Chairperson, and the Company’s Chief Executive Officer (if appropriate) with a summary of all such communications and any actions taken if not previously forwarded.
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, compliance or legal issue, and whether the matter could have a material impact on the Company’s performance or stock price and the stakeholder(s) making the request.
Enterprise Risk Oversight
The Board is responsible for overseeing our enterprise-wide risk management program. In conjunction with this responsibility, the Board addresses our key risks, risk capacity and risk appetite levels that provide the foundation for our overall business strategy and annual goals. The Board believes that overseeing processes for assessing and managing the various risks we face is important 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 risks impact its long-term strategies and operational execution. This includes (i) at least an annual review by the Board of our Enterprise Risk Management Program and Crisis Management Plan, (ii) at least a quarterly review by the Audit Committee of reports on significant cybersecurity risks and material breaches, if any, (iii) an annual review by the Audit Committee of the Company’s Risk Management program, (iv) quarterly review by the Governance and Compliance Committee of its compliance, ESG and clinical quality programs, and, (v) quarterly reviews of human capital trends by the Compensation Committee.
Purposeful and calculated 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 where the Board, executive management and other team members apply a disciplined approach to our strategic planning and operational decisions that is designed to balance the opportunities and threats to our business.
As part of our annual strategic planning process, Executive Management and the Board identify the key risks that jeopardize achievement of our strategic plan. Executive Management and the Board discuss our risk tolerance in light of our (i) existing risk capacity, (ii) appetite, if any, to take on additional risk or lessen our risk, (iii) risk velocity and (iv) mitigation factors. The Board’s determination of our key risks and our tolerance for each ultimately influences how we operate our business, including how we allocate resources and make strategic and operational decisions. We also have designed and maintain internal processes and an internal control environment that further facilitates the identification and management of risks, including response readiness processes, such as planning, disaster recovery and business continuity. As an example, in response to a cybersecurity tabletop exercise with the Board, the Company implemented a technology tool to improve business continuity plans and enhance program efficiencies and oversight and created stand-alone crisis communication channels for clients, healthcare professionals and team members. Additionally, in 2022, we reviewed with the Board a crisis notification and board engagement framework, including escalation process levels based on the type and severity of the issue.
In addition to the foregoing, the responsibilities of each of the Board’s standing committees 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. For example, throughout 2021 and 2022, the Compensation Committee provided oversight of a human capital infrastructure project designed to mitigate an identified key risk related to talent. All committees play significant roles in carrying out the risk oversight function that typically focus in their areas of expertise. The general risk and oversight functions among the Board and its Committees is as follows. For more detail on the specific oversight and responsibilities of each Committee, see pages 48 - 52.
CORPORATE GOVERNANCE AND COMPLIANCE COMMITTEE: | AUDIT COMMITTEE: | COMPENSATION COMMITTEE: | ||
● Ethics and Compliance Program ● Clinical Quality Program ● ESG Program | ● Accounting, auditing and financial Controls and Disclosure ● Technology related risks, including cybersecurity ● Enterprise Risk Management process | ● Compensation Program ● Human Capital Management |
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Corporate Governance
Information Security, Cybersecurity and Data Privacy
Maintaining the privacy and security of the information we create and receive about the Company, our employees, clients, vendors and others is a component of the Company’s enterprise risk management program. We have systems in place to safely receive and store that information and to detect, contain and respond to data security incidents. While everyone at AMN Healthcare plays a part in information security and data privacy, oversight responsibility is shared by the Board, its committees and management.
Responsible Party | Oversight area | |
Board | Oversight of these topics within AMN Healthcare’s enterprise risks | |
Audit Committee | Primary oversight responsibility for information security and cybersecurity, including internal controls designed to mitigate risks related to these topics | |
Corporate Governance andCompliance Committee | Primary oversight responsibility for data privacy, including legal and regulatory compliance | |
Management | Our Chief Information and Digital Officer, Chief Legal Officer and senior members of our information security, risk management and privacy compliance teams are responsible for identifying and managing risks related to these topics and reporting to the respective committee and/or full Board. |
Our program and practices in these areas include the following:
● | Frequent Board and Committee Education. Management provides regular updates to the Board, Audit Committee and/ or Governance and Compliance Committee on these topics throughout the year and, at least annually, an information security program review is presented to the full board. In addition, the directors attend educational sessions offered through third party services. |
● | Systems and processes. We use a combination of industry-leading tools and technologies to protect AMN Healthcare and the personal information we maintain and operate a proactive threat intelligence program to identify and assess risk. |
● | Understanding evolving threats. Our information security team works to understand evolving threats and industry trends. |
● | Collaboration with organizations across all industries. We share information and collaborate with organizations across different industries to fight cybercrime and advance capabilities in these areas. |
● | Tabletop Exercises involving the Board and Management. We engage in regular tabletop exercises to simulate real-life cybersecurity and data privacy threats to provide our Board and/or management team with the opportunity to practice crisis response and implement policies and processes. |
● | Operations Based on Best Practices. We have adopted the National Institute of Standards and Technology (NIST) Cybersecurity Framework to better understand, manage, and reduce our cybersecurity risk and protect our networks and data. |
● | Data Privacy Program. We have invested in resources and technology to meet the evolving data privacy regulatory requirements. |
● | Regular training and compliance activities for our team members. Our team members receive annual training to understand the behaviors necessary to protect company and personal information and receive annual training on privacy laws and requirements. We also offer ongoing practice and education for team members to recognize and report suspicious activity, including phishing campaigns. |
● | Use of third parties. Beyond our in-house capabilities we engage with security and technology vendors to assess our program and test our technical capabilities. |
● | Risk Transfer. We maintain insurance coverage to limit our exposure to certain events, including network security matters. |
We continuously assess the risks and changes in the cyber environment and dynamically adjust our program and investments as appropriate. The Company has experienced cyber threats resulting in immaterial cyber incidents and expects cyber threats to continue with varying levels of sophistication. The Audit Committee receives quarterly reports on any notable incidents that may have occurred during the quarter.
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Our Strategic Approach to ESG
We envision a healthy, just, equitable, and sustainable world where all can thrive. We believe it is our responsibility to do our part in bringing this vision to life, which includes fostering a diverse and thriving workforce, leveraging the core of our business to advance health and health equity, and serving as a catalyst in partnership with our stakeholders to get further, faster, together. Recognizing that responsibility, AMN Healthcare is committed to using its unique reach and resources to advance social change and contribute to meet the demands of a more sustainable future. Our approach is premised on our core belief that achieving measurable results in ESG initiatives provides us with a competitive advantage by improving key stakeholder engagement, supporting talent acquisition, engagement, and retention, driving innovation and costs savings while reducing financial and non-financial risks, and improving the health of our workforce and communities. In working to achieve these results, we have embedded health, diversity, equity and inclusion and an ongoing commitment to sustainability into the core of our business strategy to drive shared value and position AMN Healthcare as the employer and strategic partner of choice. As a company steeped in our core values of customer focus, passion, trust, respect, continuous improvement, and innovation, we have always held our operations to high standards, and we are excited to share the progress we have made on our ESG initiatives and commitments.
Our ESG Pillars
Our ESG strategy is focused on four priority areas that matter most to our business and society and where we see the most meaningful opportunities to create a measurable impact in the coming years: (1) Corporate Governance; (2) Health & Wellness, (3) Diversity, Equality, Equity and Inclusion (“DEI”), and (4) Sustainability.
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CORPORATE GOVERNANCE |
CORPORATE GOVERNANCE | ||||
COMMITMENTS | PROGRESS IN 2022 | |||
1. Strong ethics, human rights, data privacy and cybersecurity 2. Comprehensive reporting of financial performance and social & environmental impact 3. Board diversity reflects value chain 4. Political advocacy aligns with our values and ESG goals | COMPLETED MATERIALITYASSESSMENT Conducted first materiality assessment integrating feedback from internal and external stakeholders to focus and prioritize ESG issues ENHANCED TCFD DISCLOSURES AND ESG REPORTING Enhanced TCFD disclosures and conducted scenario analysis Published first ESG report in 2022 aligned with GRI, SASB and TCFD frameworks ESG EDUCATION Provided ESG training for the full Board to promote understanding and alignment on the issues that matter most to our company and the communities in which we conduct business AWARD-WINNING BOARDDIVERSITY 56% of our Board members are women 33% of our Board members are BIPOC COMMITMENT TO ADVANCINGHEALTH EQUITY Inaugural signatory to Healthcare Leadership Council commitment to shared principles aimed at eliminating health disparities |
BOARD OVERSIGHT
The AMN Healthcare Board of Directors sets the tone for our Company’s commitment to our values, ethics, compliance, DEI and other ESG initiatives. The Board exercises active oversight of ESG matters, and the Board and its committees regularly and carefully review key governance documents, including our Corporate Governance Guidelines, Code of Conduct, and Code of Ethics for Senior Financial Officers, to ensure they contain practices that are relevant and support our ESG objectives and the values-based culture we strive to maintain. The foundation of our corporate governance strategy is to promote transparent disclosure to our stakeholders on an ongoing and consistent basis, so we publish these documents, among others, under the “Governance” section of the “Investors Relations” page on the Company’s website at https://ir.amnhealthcare.com/governance/governance-documents. We are happy to provide these materials in print for any stakeholder upon request.
Risk management is an integral component of AMN Healthcare’s business strategy, culture, and operations, so our Board’s oversight role and governance practices continue to evolve to support the resilience of our business and sustainability of our operations. Our strategy focuses on identifying the risks and opportunities, including ESG, that are most relevant to our business and then prioritizing those areas where we can achieve the greatest impact. To support the continuous evolution of these practices, we develop strategies to monitor or mitigate ESG risks, capitalize on opportunities, and disclose our progress to stakeholders on an ongoing and consistent
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basis. Our Governance and Compliance Committee regularly reviews ESG disclosure frameworks, initiatives, policies and disclosures from management. Our Governance and Compliance Committee oversees, and the Board is engaged and receives regular updates on our ESG initiatives. Our Board continues to invest in increasing their collective ESG acumen and expertise. For example, in 2022, the Conference Board ESG Center gave an Expert Briefing to our full Board on “Stakeholder Expectations & the Roles of the Board in ESG.”
Our executive management team sets the tone each day to foster a culture that represents the AMN Healthcare Difference and functions as the foundation for advancing our long-term ESG strategy. To help support our strategy, we have a dedicated team of cross-functional professionals who are focused on ensuring that our day-to-day operations are aligned with our ESG goals and principles.
ETHICS AND COMPLIANCE
Our core values are put into motion and reinforced by our ethics and compliance program’s many components, purposely designed to instill accountability at all levels of the organization. In this regard, our Ethics in Action program manages compliance training and monitors the development and completion of department operational compliance audit plans which are a key risk mitigation tool. For more than a decade, our leadership has appointed Ethics Champions and Records Champions throughout the company to serve as ambassadors of ethics and compliance requirements.
HEALTH AND WELLNESS |
As a healthcare total talent solutions company, AMN Healthcare is empowering the future of care. Critical to our success in helping our clients improve patient outcomes and equal access to healthcare is continually enhancing the well-being of our own team members and other healthcare professionals. Prioritizing the health, safety and wellbeing of our colleagues and healthcare professionals is essential to delivering on our business objectives and is a pillar of our ESG strategy.
HEALTH AND WELLNESS | ||||
COMMITMENTS | PROGRESS IN 2022 | |||
1. Drive health & wellness for our team members & healthcare professionals 2. Increase availability & quality of healthcare for communities 3. Meaningfully help our clients optimize talent management and improve patient experience & outcomes 4. Positively impact social & environmental determinants of health | HEALTHCARE ACCESS, QUALITY AND EQUITY Over 250,000 healthcare professional placements in 2022 Increased supply of healthcare professionals through Connetics acquisition, which along with our O’Grady Peyton business, enabled us to place 1,700 nurses from 32 countries globally Over 3,000 interpreters worked over 200 million minutes to provide language services for over 14 million patient encounters Partnered with Remote Area Medical to provide free care clinic to Dallas-Fort Worth area residents In partnership with the International Esperanza Project, our clinicians treated 1,300 patients and provided 127 life changing surgeries, and our team members installed 280 smoke free stoves and 280 water filters, advancing health for families in rural Guatemala CARING FOR OUR TEAM Launched and invested $3 million in AMN Caring for Caregivers Fund Invested additional $2 million in the AMN Team Member Hardship Fun Enhanced company match to 401(k) contributions Health insurance premium waivers |
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CULTURE OF TEAM MEMBER WELLBEING
Throughout the pandemic, we have worked hard to support our front-line healthcare professionals and other team members as our healthcare system was placed under an unprecedented strain. Our commitment to supporting our colleagues’ mental, physical, and economic well-being continued throughout 2022.
To reward our team members’ exceptional performance and provide for their future, during the first six months of 2022, AMN Healthcare enhanced its employer match to 100% of 401(k) and deferred compensation contribution on up to 10% of each team member’s salary for eligible team members and provided a one-time contribution of $3,300 to each of our team members with an active 401(k) or deferred compensation plan financial account as of December 31, 2022. We also demonstrated our support for our team members’ physical well-being by waiving 100% of health insurance premiums for all team members for four months.
We recognize that our team members and healthcare professionals may need extra support in times of crisis. During 2022, we also contributed an additional $2 million into our AMN Team Member Hardship Fund, which we launched in 2021 to provide financial support for team members experiencing extreme financial hardship. In 2022, the AMN Team Member Hardship Fund provided $363,232 to 87 grantees experiencing financial hardship. Also in 2022, we invested $3 million into and launched our AMN Caring for Caregivers Fund to provide similar support to our healthcare professionals. In 2022, its inaugural year, the AMN Caring for Caregivers Fund provided $221,221 to 97 grantees experiencing financial hardship. Through these funds, corporate team members and healthcare professionals can receive financial support for qualifying events such as life-threatening or serious illnesses, natural disasters, funeral costs, or other events causing financial strain. This support is in addition to the insurance and other benefits and employee assistance programs available to support our team members and healthcare professionals.
COMMUNITY HEALTH AND WELLNESS
AMN Healthcare is committed to driving health equity by removing barriers and enhancing patient access to quality healthcare. In 2022, our AMN Healthcare Language Services team continued to meet the demand for language and interpretation services for patients with Limited English Proficiency and hearing-impaired patients, promoting equitable access to healthcare. In 2022, over 3,000 interpreters provided services in over 14 million patient interactions, breaking down language and communication barriers to support access to healthcare and improved outcomes.
AMN Healthcare strives to have a positive impact on health in our global community, which is why we partner with the International Esperanza Project (IEP), a nonprofit dedicated to inspiring hope in developing countries through healthcare, community infrastructure, and education. In 2022, we were able to continue our support of IEP and once again send teams of corporate team members and healthcare professionals to provide essential healthcare services and install clean cookstoves and water purification systems in homes to help drive health and wellness for families in rural communities in Guatemala.
To support healthcare and wellness in our local communities, we continued our support for non-profits such as the Ronald McDonald House, Alzheimer’s Foundation, American Cancer Society and many more through volunteerism and financial contributions. In 2022, we piloted our partnership with Remote Area Medical (“RAM”) that works with healthcare organizations to create large pop-up healthcare clinics in areas with high levels of need. At the Dallas-Fort Worth RAM clinic in December 2022, we partnered with the University of North Texas Health Science Center at Fort Worth, where we provided funding and volunteers which helped serve 538 patients.
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DIVERSITY, EQUALITY, EQUITY AND INCLUSION |
AMN Healthcare is living proof of the power of Diversity, Equality, Equity and Inclusion. We are passionate about bringing diversity to our team, promoting social justice and achieving equity, and 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 all can thrive. Our Diversity, Equality, Equity and Inclusion philosophy is grounded in the belief that we should respect all voices, seek diverse perspectives, and succeed when we act together as a positive force for all humanity. We have the opportunity to influence each other, our industry, and our communities by fostering a diverse team.
DIVERSITY, EQUALITY, EQUITY AND INCLUSION | ||||
COMMITMENTS | PROGRESS IN 2022 | |||
1. DEI excellence in all recruiting & hiring for team members & healthcare professionals 2. Representative diversity at ALL levels 3. Equity in compensation and promotion 4. Deeply inclusive culture of belonging 5. Significant diverse supplier spend & economic impact in communities | DIVERSE REPRESENTATION THROUGHOUT AMN Increased representation of Leader-level team members from historically underrepresented groups (any combination of BIPOC, LGBTQ+, Disabled, or Veterans) by 52%, from 23% in 2019 to 35% in 2022 69% of our team members and 63% of our leaders are women Representation among team members is approaching parity with US Bureau of Labor statistics on race and ethnicity Initiated collection of EEO-1 data for the Healthcare professionals we employ and place INCLUSION THROUGHERG PARTICIPATION Added two new Employee Resource Groups and increased participation to 39% of team members in 2022 PAY TRANSPARENCY AND EQUITY Implemented enterprise-wide infrastructure to align job functions and compensation Salary transparency for all job postings nationwide INCREASED SPEND WITH DIVERSEAND SMALL SUPPLIERS Spent $961,271,590 with diverse and/or small suppliers in 2022, a 154% increase from 2021 and 472% increase from 2020, promoting economic growth in our communities |
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Our strategy to advance and enhance Diversity, Equality, Equity and Inclusion is built on the three defining pillars of Workforce, Workplace and Marketplace.
CREATING A DIVERSE AND INCLUSIVE WORKFORCE
We would not be able to empower the future of care without our team members, who work tirelessly to ensure that our clients and healthcare professionals have everything they need to deliver quality patient care. As a company we are enriched by the unique voices, backgrounds and perspectives that our team members bring to the organization, and we are proud of the positive impact our diverse team has on the healthcare industry. To ensure workforce diversity that reflects U.S. demographics, we track progress on recruitment, promotion, and retention to ensure compositional diversity and representation of gender, race/ethnicity, sexual orientation, disability, age, and veteran status, across all levels of the organization.
DIVERSITY GROWTH: UNDERREPRESENTED GROUPS AT AMN HEALTHCARE
We believe that our diverse workforce and inclusive environment drives better outcomes which has made us the leader in total talent solutions. We are proud to have made significant progress in hiring and promoting historically underrepresented team members, i.e., BIPOC, LGBTQ+, people with disabilities and veterans, across all levels of AMN Healthcare. Our corporate workforce increasingly reflects the diversity of the communities that we serve, which strengthens us, our clients and our communities.
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Growth of Historically Underrepresented Groups Among AMN Healthcare Team Members 2019 to 2022
2019 | 2022 | Change from 2019 to 2022 (%) | |||||
34% | TEAM MEMBERS | — | 45% | TEAM MEMBERS | 32% | ||
37% | INDIVIDUAL CONTRIBUTORS | — | 47% | INDIVIDUAL CONTRIBUTORS | 27% | ||
23% | LEADERS | — | 35% | LEADERS | 52% | ||
18% | DIRECTORS & ABOVE | — | 29% | DIRECTORS & ABOVE | 61% | ||
The diverse backgrounds and experiences we seek to represent are broad. As of January 2023, we are proud that: 69% of our team members are women; 63% of our leaders are women; 56% of our board of directors are women. Our team is 58% Millennials, 31% Generation X, 6% Baby Boomers, and 5% Generation Z. Additionally, team members that self-identified as veterans, disabled or LGBTQ+ represented approximately 3%, 2%, and 3% of our team, respectively.
For the last six years, AMN Healthcare has been named to the Bloomberg Gender-Equality Index and received a top ranking – 95 out of 100 – in the Human Rights Campaign’s Corporate Equality Index. AMN also received the 2022 National Association of Corporate Directors Diversity, Equity and Inclusion Award, which recognizes top companies and their boards for leveraging the power of DEI to enhance their organization and create long-term, measurable benefit for all stakeholders and communities. We believe that human capital management infrastructure, including our DEI commitment is fundamental to our continued recognition as one of America’s Most Responsible Companies in each of the last three years.
HIRING
AMN Healthcare strives to attract and retain the best talent that supports and aligns with our DEI goals based on the belief that a diverse, inclusive and healthy workforce enables us to best address the needs of our stakeholders. To maintain a diverse workforce reflective of the communities we serve, we are committed to sourcing candidates from historically underrepresented groups and focus our recruitment efforts on hiring team members with a wide range of diverse characteristics including gender, ethnicity, LGBTQ+, disability and military service. We also internally track our hiring, promotion and retention rates to inform our overall progress against achieving DEI targets and to guide our strategy in maintaining an inclusive workforce.
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Intentional Language in Job Postings | |
Routine review of job postings to ensure use of neutral language to eliminate unintended barriers to prospective applicants. | |
Diverse Candidate Slates | |
We increased our outreach to both passive and active candidate pools to ensure a diverse slate of candidates for all leadership positions. |
PROMOTION, RETENTION AND TEAM MEMBER ENGAGEMENT
Throughout 2022, approximately 1,200 team members were promoted or transferred internally into new positions, representing one-third of our corporate workforce. Our professional development education assistance program provides reimbursement to our corporate team members to advance their knowledge and skills through certificate and degree programs. We offer leadership development curricula led by our team of learning and talent development professionals for new leaders, called LEAD at AMN, as well as a leadership curriculum for our individual contributors who are seeking leadership positions, our emerging leaders program. In 2022, we also partnered with a university to offer a virtual certificate program for high-potential leaders and expanded access to executive coaching programs. Additionally, we provide a mentorship program to provide a larger group of our team members the opportunity to connect with others across our company to support their development, strengthen their skills, and deepen relationships. Nearly 10% of our team members participated in the mentoring program during 2022 as either a mentor or mentee. These programs are supplemented with professional development resources from third-party vendors and our corporate memberships in large industry associations, to which every team member has access.
In 2022, we continued to prioritize engaging with our team members through live virtual question and answer sessions on a monthly basis, through AMN Live as well as other town halls throughout the year with our Chief Executive Officer and other senior executives. To assess the engagement of our team members and take action to mitigate risks associated with workforce engagement, development and retention, in 2022 we restarted the annual survey that we have historically conducted to assess team member engagement. Based on the feedback we received, which was discussed with our Board, we incorporated several initiatives and areas of focus into our human capital management strategic plan. We then followed up later in the year with a shorter pulse survey. Team member engagement helps to strengthen our retention rate, which was above 85% in 2022, and our highest in the past five years.
2018 | 2022 | YoY Change (%) | |||||
78% | 2018 RETENTION | — | 87% | 2022 RETENTION | 12% |
FOSTERING A WORKPLACE CULTURE WHERE ALL CAN THRIVE
Because people are our greatest asset, we remain focused on embedding a culture of inclusion in every aspect of our work to drive engagement.
AMN HEALTHCARE INVESTS IN OUR ERGS
As a total talent solutions company, we understand how important it is to ensure all of our team members feel a deep sense of belonging in the workplace. In 2022, we continued to invest in and grow opportunities for team members to connect and build communities with colleagues. One of the key ways we continue to do this is through our growing Employee Resource Groups (“ERGs”) and our over 100+ Diversity Champions. Our goal in investing in our ERGs and our Diversity Champions is to increase our team members’ individual and collective visibility and leadership, empower inclusion, and strengthen a culture of belonging. Each of these groups is sponsored by members of our executive team who participate in meetings, provide guidance and professional development as well as amplify the voices of team members across levels of the organization.
Our ERGs hold a variety of events throughout the course of the year to raise awareness, enable team members to connect, and build greater understanding of the diverse mosaic that strengthens our company. Our directors and senior leadership understand the integral role ERGs play in driving our DEI priorities and are active participants in educational forums, our multicultural fair and community-based events sponsored by our ERGs and Diversity Champions. In 2022, to further drive our investment in DEI, we
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increased our investment in these groups to over $250,000. We also expanded the number of ERGs from 8 to 10, with the addition of Loving Our Bodies’ Existence (“LOBE”) and Black Women Leading in Inclusion, Excellence, Vision and Education (“BELIEVE”). We are proud that our ERGs enjoy robust participation, with approximately 39% of team members belonging to at least one ERG.
10 | EMPLOYEE RESOURCE GROUPS | 39% | TEAM MEMBER PARTICIPATION | |||||
OPEN Mental Health Advocacy & Awareness Advocating for mental health awareness and creating a work environment where everyone feels comfortable communicating authentically. | WISE Wisdom + Insight + Sincerity + Experience Creating positive intergenerational dialogue benefitting team members of the entire Company. | PRIDE LGBTQ + Allies Engaging with and supporting LGBTQ+ team members and their allies in an inclusive environment. | BRAVE Be Ready Always – Veterans Enterprise Serving and advocating for military veterans, deployed troops, their families and supporters. | LOBE (Loving Our Bodies Existence) Promoting body image positivity in the workplace by raising awareness, encouraging openness, and supporting all team members. | ||||
PAVE Power & Value in Equality Advancing gender diversity and equality enabling women to connect while developing professionally. | PACT Parents & Caregivers Together Championing working parents and caregiver team members by cultivating an inclusive, welcoming, agile and flexible workplace that ultimately builds trust, improves retention, and fosters innovation. | SLIDE Strength Lies in Diversity & Equity Enhancing the professional development, career path prospects and leadership opportunities of BIPOC in the workplace. | LALA Latin American Legacy Alliance Representing, advocating, and celebrating the unique experiences, challenges, and culture of the Latin community. | BELIEVE Black Women Leading in Inclusion, Excellence, Vision and Education Advancing equity and belonging with a focus on Black women by engaging a network of allies to attract, retain, empower and inspire Black women to achieve their fullest potential across the spectrum of professional development nurtured by AMN Healthcare leadership. |
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DEI EDUCATION
We offer a variety of courses through our LinkedIn Learning Library on several DEI topics. Currently, new team members are assigned an Inclusive Communications course which includes elements of unconscious bias. Additionally, newly promoted and newly hired leaders are required to complete an Inclusive Leadership course that centers learning around diversity, equity, and inclusion within leadership
Inclusive Communication Training for all Team Members Working with team members to build awareness, recognize blind spots based on mistaken, incomplete, or inaccurate assumptions, and embrace diversity. |
Inclusive Leadership Course for all Leaders Live, four-hour mandatory DEI training for all leaders at the Company on inclusive leadership. |
ADVANCING DIVERSITY, EQUALITY, EQUITY AND INCLUSION IN THE MARKETPLACE
Our commitment to DEI extends to our supplier partners and our community health partners. We actively engage diverse suppliers and identify new opportunities to support and grow small, minority, women, LGBTQ+, and veteran-owned businesses. By prioritizing supplier diversity, we positively impact the overall socio-economic health of the communities we serve.
SUPPLIER DIVERSITY
AMN Healthcare is focused on economic growth and creating work opportunities in line with our purpose of helping others achieve their personal and professional goals. We believe that equitable business opportunities contribute to a more equitable world, so we actively facilitate business partnerships with diverse vendors and suppliers by identifying business opportunities and partnerships that support small, minority, women, veteran, and LGBTQ+ owned businesses.
We understand that through supplier diversity, we have an opportunity to benefit the overall socioeconomic health of the communities we serve, so we increased our diverse and small supplier spend to $961,271,589 for 2022, continued funding our pledge of 100 minority-owned business certifications, and expanded our Vendor Development Program. In recognition of AMN Healthcare’s efforts to increase our spend with Minority-owned Business Enterprises, we were named Prime Supplier of the Year by the Western Regional Minority Supplier Development Council in 2022.
GIVING BACK
In addition to the work we do every day at AMN Healthcare, we reinforce our mission to empower the future of care and foster a stronger, more cohesive society through community service and charitable giving. We are proud to support and partner with nonprofits that are dedicated to encouraging diversity and driving equity, as we share those values. We have committed to supporting nonprofits that align with our holistic approach and goals toward health equity. We also recognize that AMN Healthcare is at its best when team members have the opportunity to support causes they care about. That is why we offer eight hours of paid time off for volunteering to our team members and encourage them to give back to their communities in personally meaningful ways. Being a healthcare industry leader demands purpose, a commitment to serve our communities, and the drive to use our resources for the greater good. To this end, we strive to create a meaningful impact and actively engage in philanthropy and community service to create a stronger, more cohesive society that supports our purpose and mission. Our core values act as a compass to our commitment to corporate social responsibility, and we align our charitable giving efforts with these values to help organizations and communities flourish. In 2022, we committed an additional $1.8 million to advance healthcare workforce pipeline, diversity, resilience, and wellness, and we contributed $1.1 million to nonprofits focused on health equity, wellness, DEI, and healthcare workforce (including $200,000 of the $1.8 million commitment noted just above). Our goal is to have a positive impact on the health and well-being of all our stakeholders.
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Below are some of the additional non-profit organizations we supported over the past year:
Sustainability |
SUSTAINABILITY | ||||
COMMITMENTS | PROGRESS IN 2022 | |||
1. Reduce our operational footprint to zero in market-based CO2 emissions (Scopes 1 and 2) by end of 2024 2. Set Scope 3 (value chain) GHG emissions Science-Based Target by end of 2024 3. Water & Waste footprints measured by 2023. Targets set by end of 2024 | 34% EMISSION REDUCTION Reduced Scope 1 & 2 GHGE by 34% from 2019 baseline year MEASURED Measured water and waste footprints for 2020, 2021, and 2022 Measured full Scope 1, 2, and 3 GHGE for 2020, 2021, and 2022 |
AMN Healthcare is committed to significantly reducing our environmental impact across our own operations, accelerating our value chain’s sustainability journey, and catalyzing a healthy, sustainable, and regenerative future where all can thrive. As part of our commitment to embed sustainability in our business, we monitor emerging ESG risks and opportunities. Building off our last two TCFD reports, we conducted a TCFD gap analysis, conducted a physical and transition risk analysis, identified business impact (risks and opportunities) to inform strategic planning and our enhanced 2022 TCFD report. For more detail, please see our 2022 TCFD report, which is located in our 2022 ESG Report.
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MEASURING SCOPE 1, 2 AND 3 GREENHOUSE GAS EMISSIONS
Addressing our shareholders’ and other stakeholders’ calls for greater transparency surrounding environmental and social impact, and building from our baseline (2019) operational greenhouse gas emissions (“GHGE”) inventory which we conducted in 2021, we have calculated our full operational (Scope 1 and Scope 2) and value chain (Scope 3) GHGE for 2020, 2021, and 2022 – as well as our operational waste and water footprints. Please see our 2022 ESG Report for more detail.
SELECT AWARDS AND RECOGNITION
NACD | WOMEN’S FORUM OF NEW YORK | BLOOMBERG | ||
Winner – Diversity, Equity & Inclusion Award – Public Company – Mid-Cap 2022 | Corporate Champion Honoree for Over 40% Female Board Representation, 2017-2023 (biennial) | Gender Equality Index | ||
HUMAN RIGHTS CAMPAIGN | NEWSWEEK | FORBES | ||
Corporate Equality Index | America’s Most Responsible | America’s Best Large Employers 2022 America’s Best Employers for Women 2022 | ||
ESG-Linked Performance Pay
At AMN Healthcare, we integrate ESG goals into executive compensation. Specifically, the Company holds leadership accountable for executing on our ESG-related commitments by integrating achievement of ESG-related objectives into leadership metrics that comprise a portion of the “Leadership” component that makes up 30% of our senior executives’ target annual cash incentive bonus. In determining the ESG component, the Compensation Committee considers the Company’s performance and progress on certain ESG initiatives.
For 2022, these initiatives included, among other things, increasing representation of historically underrepresented groups, including women, in leadership roles, overseeing an enterprise-wide review of pay equity, leadership of our Employee Resource Groups, philanthropic leadership through board service, and the completion of an ESG materiality assessment.
In 2022, AMN Healthcare made significant progress in each of these and other ESG initiatives which the Compensation Committee determined significantly exceeded our goals. Among other achievements for 2022, the Company under its executive leadership:
● | Received multiple national and regional awards and recognition for DEI leadership |
● | Increased team member representation of underrepresented groups, including women, in management-level roles |
● | Expanded the quantity and membership of our Employee Resource Groups |
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● | Expanded philanthropic leadership through board service, giving and volunteering programs |
● | Completed a materiality assessment to facilitate prioritization and implementation of ESG initiatives. |
Political Activity and Trade Associations
Our executive management reports annually to the Governance and Compliance Committee regarding compliance and overall strategic priorities for political and policy lobbying and political contributions that align with AMN’s long-term corporate strategy.
AMN makes limited direct political contributions to U.S. state and local candidates in accordance with our Corporate Political Activities Policy. AMN occasionally participates in the political process by providing financial support to state or local ballot initiatives relating to specific issues that have a direct impact on our businesses. AMN did not make any such contributions in 2022. As with every other aspect of our political involvement, AMN’s participation is guided by our purpose and values and is fully reported in accordance with governing laws. AMN does not make political contributions outside the United States.
From time to time, we engage in discussions with all levels of governments, industry associations, and coalitions on public policy and regulatory issues. When we determine it is in the best interest of our company, we work with lobbyists, trade associations, and government officials to provide information and perspective to support our point of view.
As part of our engagement in the public policy process, we participate in certain industry trade organizations representing the interests of the healthcare, healthcare workforce, staffing industry, and the broader business community with purposes that include, but are not limited to education about the industry, issues affecting the industry, and industry best practices and standards. We may not always support every position taken by our trade associations or the other members, however, we believe our participation in these organizations makes us more effective and broadens our perspective on policy issues critical to our industry, our company, our customers, and our communities.
Our complete Corporate Political Activities Policy can be found on our website at https://ir.amnhealthcare.com/governance/governance-documents.com.
Policies and Procedures Governing Conflicts of Interest and Related Party Transactions
Our Corporate Governance Guidelines, Code of Conduct and Related Party Transactions Policy collectively establish the Company’s procedures related to conflicts of interest and related party transactions.
Under these policies, directors and executive officers must notify the Company’s Chief Legal Officer in advance of any potential “related party transaction” that the Company would be required to disclose publicly under Item 404 of Regulation S-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. Any transaction involving a director, regardless of amount, must be referred to the Governance and Compliance Committee. The Governance and Compliance 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 Chairman of the Board and Chief Legal Officer. If the Chief Legal Officer determines that an actual conflict of interest may exist, then the matter must be referred to the Governance and Compliance Committee for review.
Certain Transactions
In determining whether directors are independent, the Board considered Ms. Fontenot’s role as an independent director at Orlando Health, Inc. The Board also considered Ms. Fontenot’s prior role as an independent director of LHC Group, Inc., where she served as an independent director from 2019 until the company was acquired by United Healthcare and the board was disbanded in February 2023. In 2022, we continued commercial relationships with LHC Group and Orlando Health that existed before Ms. Fontenot joined the Board under which the Company provides clinical staffing and language services to LHC Group and Orlando Health. The approximately $800 thousand and $6.5 million in fees that we received from LHC Group and Orlando Health, respectively, in 2022 were negotiated on an arm’s-length basis and are within the categorical independence standards that the Board has adopted. Neither relationship prevents Ms. Fontenot from qualifying as an independent director under the categorical independence standards, and the Board considers Ms. Fontenot to be an independent director.
46 | |
Corporate Governance
Board and Committee Structure
Board Leadership Structure
The Board has carefully considered its leadership structure, including whether the role of Chair should be a non-executive position or be combined with that of the CEO. 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 Board’s overall efficiency and effectiveness. As announced on October 31, 2022, Ms. Grace joined the Company on November 28, 2022, as our President and Chief Executive Officer and a member of our Board. As our CEO, Ms. Grace, 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, Mr. Wheat, leads the Board in overseeing our strategy, provides guidance to our CEO and presides over meetings of the Board (held during the period for which he or she has been a director) and (ii) the numberBoard.
Douglas D. Wheat | 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 a sounding board with 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; ● Acts as an independent spokesperson for the Company to our shareholders; and ● Has significant experience serving AMN Healthcare under different operating environments, management teams and financial market cycles, affording a unique and valuable ability to provide support to the Company’s new CEO. |
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 board refreshment and executive leadership succession. ● Models the culture and values expected of all directors. ● Conducts individual meetings with other directors, including the CEO, 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 observations 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. |
2023 Proxy Statement | 47 |
Corporate 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 and Executive Committees.capital allocation strategy. Additionally, shortly after Ms. Salka announced her intention to retire on March 10, 2022, the Board formed a CEO Search Committee to oversee the CEO succession process and engage a search firm to evaluate internal and external candidates. The Board committeesCommittees 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, Corporate 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.
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The table below provides current committee memberships and fiscal year 20192022 committee meeting information:
Director | Audit(1) | Compensation(2) | Corporate Governance and Compliance(3) | Executive(4) | CEO Search Committee | |||||
Mark G. Foletta | ● | |||||||||
R. Jeffrey Harris | ● | ● | ● | ● | ||||||
Jorge A. Caballero | ● | ● | ||||||||
Martha H. Marsh | ● | ● | ||||||||
Cary Grace | ● | |||||||||
Teri G. Fontenot | ● | ● | ||||||||
Sylvia Trent-Adams | ● | ● | ||||||||
Douglas D. Wheat | ● | ● | ||||||||
Daphne E. Jones | ● | ● | ||||||||
Committee Meetings and Actions by Written Consent | ||||||||||
Total Committee Meetings | 9 | 7 | 5 | 3 | 8 | |||||
Actions by Written Consent | 0 | 4 | 0 | 2 | 0 |
● Chair ● Member
Director |
Audit (1) |
Compensation (2) |
Governance & Compliance(3) |
Executive | ||||
Mark G. Foletta | Chair | |||||||
R. Jeffrey Harris | Chair | Member | ||||||
Michael M.E. Johns, M.D. | Member | Member | ||||||
Martha H. Marsh | Chair | |||||||
Susan R. Salka | Member | |||||||
Andrew M. Stern(4) | Member | Member | ||||||
Teri G. Fontenot | Member | |||||||
Douglas D. Wheat | Chair | |||||||
Daphne E. Jones | Member | Member | ||||||
Committee Meetings and Actions by Written Consent | ||||||||
Total Committee Meetings | 9 | 6 | 5 | 2 | ||||
Actions by Written Consent | 0 | 0 | 0 | 4 |
(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 Jorge A. Caballero, 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 Corporate Governance and Compliance Committee meet the standards for independence required by the NYSE. |
(4) | Ms. Salka served on the Executive Committee until she retired and resigned from the Board on November 27, 2022. |
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48 | |
AUDIT COMMITTEETable of Contents
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:
Corporate Governance
Mark G. Foletta (Chair) Members Teri G. Jorge A. Daphne E. | Audit Committee Total Committee Meetings: 9 | Attendance: 100% The Audit Committee is responsible for, among other things, overseeing our financial reporting process and cybersecurity risk management. In 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, ● receives and |
reviews quarterly reports from the Chief Information & Digital Officer on the Company’s technology and cyber risk profile, 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:
● Received quarterly updates and ● Annual review of the Company’s risk management program and oversight of the enterprise risk management process. ● Oversaw the relationship between the Company’s finance team and its independent auditor to ensure an effective audit process. |
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Members R. Jeffrey Sylvia Daphne E.
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| Compensation Committee
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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, 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 |
● prepares the Compensation Committee Report, approves the financial performance measures that were used by the Company to link compensation paid to the Company’s executives to performance for the most recently completed fiscal year, 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, equity, 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. Key 2022 Activities ● Oversaw human capital infrastructure project designed to mitigate key risks related to talent and support the Company’s growth strategies. ● Oversight of DEI initiatives to increase representation of team members from historically underrepresented communities. ● Approved the terms for a transition agreement with Ms. Salka upon her retirement from the Company. ● Designed retention bonus program for key executives in recognition of the competitive labor environment and to promote stability and continued growth during CEO transition. ● Approved compensation package for new CEO. |
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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Compensation Committee Interlocks and Insider Participation
The Compensation Committee, whose members are Ms. Marsh, Dr. Johns, andMr. Harris, Ms. Jones, and Dr. Trent-Adams 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
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.
R. Jeffrey Harris (Chair) Members Jorge A. Sylvia Teri G. | Corporate Governance and Compliance Committee Total Committee Meetings: 5 | Attendance: 95% 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 reporting frameworks ● 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, ● oversees our shareholder engagement program as it relates to corporate governance issues and considers feedback provided by our shareholders, ● reviews related party transactions, 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 2022 Activities ● Oversaw the advancement of the Company’s ESG strategy, commitments, and initiatives, including the Company’s measurement of its full value chain (Scopes 1, 2 and 3) GHGe footprint. ● Oversaw the continued development and effectiveness of the Company’s Enterprise Compliance Program utilizing an independent third-party assessment. ● Received quarterly updates and oversaw the continued investment in and maturity of the Company’s Privacy Compliance program. |
50 |
EXECUTIVE COMMITTEECorporate Governance
Douglas D. Wheat (Chair) Members R. Jeffrey Cary | Executive Committee Total Committee Meetings: 3 | Attendance: 100% The Executive Committee exercises the power of the Board between its meetings, including the approval of certain acquisitions within established parameters. Key 2022 Activities ● Oversaw the Company’s acquisition of Connetics Communications. ● Oversaw the Company’s business development strategies and evaluated acquisition targets. |
Douglas D. Wheat (Chair) Members R. Jeffrey Martha H. | Search Committee Total Committee Meetings: 8 | Attendance: 100% The CEO Search Committee was responsible for overseeing the CEO succession process and engaging a search firm to evaluate internal and external candidates. Key 2022 Activities ● Development of desired profile and characteristics for the Company’s next CEO. ● Selection of Executive Search firm to conduct robust internal and external search for the Company’s next CEO. ● Oversaw the search and recommended final candidates for the Board to interview. |
Meetings and Attendance
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 2022, the Board met 8 times and took 3 actions by unanimous written consent. In 2022, our directors attended (i) 100% of the aggregate of the total number of meetings of the Board including(held during the approvalperiod for which he or she has been a director) and the number of certain acquisitions within established parameters.meetings held by the Audit, Executive and CEO Search Committees of the Board (during the periods that he or she served on such committees) and (ii) 95% of the aggregate of the total number of meetings of the Corporate Governance and Compliance Committee and Compensation Committee of the Board (held during the period for which he or she served on such committee). All our then-serving directors also attended our 2022 Annual Meeting of Shareholders.
2023 Proxy Statement | 51 |
Corporate Governance
Executive Sessions ofNon-Management Directors
The Board has executive sessions at each regularly scheduled Board meeting during the year, for which our management director, Ms. Grace (or Ms. Salka before her retirement), is not present. In addition, all independent directors met to unanimously appoint Cary Grace as the Company’s President and Chief Executive Officer and a member of the Board, effective November 28, 2022.
Communications withMore Information
You can learn more about our corporate governance by visiting https://www.amnhealthcare.com/, where you will find our Corporate Governance Guidelines, each standing committee charter, and Director Independence Standards. AMN Healthcare has adopted a comprehensive Code of Conduct that applies to the CEO, CFO, Controller, and other senior financial and executive officers, as well as the Board of Directors
The Board has established the following procedure for shareholders and other interested parties to communicate with membersemployees. It is also available at https://www.amnhealthcare.com/. Each of the Board, the presiding director, or the independent directors as a group. All such communications should be addressedabove documents is available in print upon written request to the attentionOffice 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 attentionAMN Healthcare Services, Inc. 2999 Olympus Blvd, Suite 500, Dallas, TX 75019 (469) 524-1473, or by email request to the appropriate members of the Board, who then determine how such communication should be addressed.
officeofthecorporatesecretary@amnhealthcare.com Attn: Corporate Secretary.
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Director Compensation and Ownership Guidelines |
AND 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
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 two-thirds of our Independent Directors median total compensation in 2022. As part of its 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 conjunction with the election of directors at the Annual Shareholders Meeting. 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 Cash 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.
We pay our independent 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.instalments. The table on the rightbelow sets forth the
current annual retainer schedule for our Independent Directors.
Position | Annual Retainer ($) | |||
Independent Director | 75,000 | |||
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Chairperson of the Board |
| 150,000 | (1) | |
Chairperson of Audit Committee | 30,000 | |||
Chairperson of Compensation Committee |
| 20,000 | (2) | |
Chairperson of Corporate Governance and Compliance Committee | | 15,000 |
(1) | Effective April 1, 2022, we approved an increase in the annual cash retainer for the Chairperson of the Board from $100,000 to $150,000. |
| Effective April 1, 2022, we approved an increase in the annual cash retainer for the Chairperson of the Compensation Committee |
| 53 |
Director Compensation and Ownership Guidelines
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,$160,059, which we believe aligns with the market for independent director compensation.
On April 17, 2019,21, 2022, each independentnon-management directorIndependent Director serving on the Board at such time received an equity award of 2,9071,458 restricted stock units, which we refer to as RSUs. The RSU awards issued to independent directorsour Independent Directors vest on the earlier of theone-year anniversary of the grant date or the 2020 annual meeting2023 Annual Meeting of shareholders,Shareholders, provided such director remains in service, and eachservice. Each director was also given the option to defer receipt of the shares underlying the RSUs until their separation of service from the Board. Independent Directors that are elected to the Board at a time other than in connection with our annual meeting receive an equity award upon election in an amount equal to the pro rata annual grant value approved for Independent Directors for the anticipated service time from his or her separationdate of service.election through the Company’s next annual meeting of shareholders. The chart on the right illustrates a breakdown of the current annual compensation of our Independent Directors, excluding committee retainers.
INDEPENDENT DIRECTORS
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The following table reflects compensation that our directors earned during fiscal year 2019.2022. The table does not include Ms. Salka whoor Ms. Grace, neither of whom received no additional compensation for hertheir service as a director.
Name | Fees Paid in Cash ($) | Fees Paid in Stock ($)(1) |
Total ($) | |||||||||
Mark G. Foletta |
| 100,000 |
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| 140,001 |
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| 240,001 |
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R. Jeffrey Harris |
| 77,500 |
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| 140,001 |
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| 217,501 |
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Michael M.E. Johns, M.D. |
| 72,500 |
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| 140,001 |
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| 212,501 |
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Martha H. Marsh |
| 85,000 |
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| 140,001 |
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| 225,001 |
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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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| - |
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| 23,270 |
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Douglas D. Wheat |
| 170,000 |
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| 140,001 |
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| 310,001 |
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Daphne E. Jones |
| 70,000 |
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| 140,001 |
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| 210,001 |
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Teri G. Fontenot |
| 20,222 |
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| 75,489 |
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| 95,711 |
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Name | Fees Paid in Cash ($)(1) | Fees Paid in Stock ($)(2) | Total ($) | |||||||
Mark G. Foletta | 110,000 | 160,059 | 270,059 | |||||||
R. Jeffrey Harris | 100,000 | 160,059 | 260,059 | |||||||
Martha H. Marsh | 103,750 | 160,059 | 263,809 | |||||||
Jorge A. Caballero | 75,000 | 160,059 | 235,059 | |||||||
Sylvia Trent-Adams | 75,000 | 160,059 | 235,059 | |||||||
Douglas D. Wheat | 232,500 | 160,059 | 392,559 | |||||||
Daphne E. Jones | 75,000 | 160,059 | 235,059 | |||||||
Teri G. Fontenot | 75,000 | 160,059 | 235,059 |
(1) | In addition to their annual cash retainer, on December 13, 2022, we approved a payment of $20,000 to Mr. Wheat, $10,000 to Mr. Harris, $10,000 to Ms. Marsh and $5,000 to Mr. Foletta for their services as directors in connection with additional work performed in 2022 as part of the CEO Search and evaluation of strategic initiatives. |
(2) | The amount set forth in this column represents the AGD Fair Value of the |
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54 |
Director Compensation and Ownership Guidelines
Director 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)$375,000). 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, 2019,2022, all ofAMN non-management directors satisfy our director equity ownership guidelines, except for our two newest directors, with the exception of Ms. JonesDr. Trent-Adams and Ms. Fontenot,Mr. Caballero, who were appointed to the Board in July 2018October 2020 and September 2019, respectfully,December 2021, respectively.
Level | Shares Held as Multiple of Annual Cash Retainer | Complies | ||
Mark G. Foletta | 53.5x | |||
R. Jeffrey Harris | 116.4x | |||
Martha H. Marsh | 72.5x | |||
Jorge A. Caballero | 2.6x | N/A(1) | ||
Sylvia Trent-Adams | 4.6x | N/A(2) | ||
Douglas D. Wheat | 47.7x | |||
Daphne E. Jones | 13x | |||
Teri G. Fontenot | 10.7x |
(1) | Mr. Caballero was appointed to the Board in December 2021 and does not yet satisfy the director equity ownership requirement. |
(2) | Dr. Trent-Adams was appointed to the Board in October 2020 and does not yet satisfy the director equity ownership requirement. |
2023 Proxy Statement | 55 |
Executive Officers |
Our named executive officers as of December 31, 2022 are listed below. We provide information regarding the business experience, qualifications, and affiliations of our director equity ownership guidelines.currently employed named executive officers who are not directors below.
For Ms. Grace’s experience, qualifications, and affiliations, please see page 26 above.
Jeffrey R. Knudson |48 Chief Financial Officer and Treasurer Mr. Knudson joined us as Chief Financial Officer and Treasurer in November 2021. In his role, Mr. Knudson oversees the Company’s accounting, finance, investor relations and internal audit functions. Prior to his appointment as Chief Financial Officer and Treasurer, Mr. Knudson served as Chief Financial Officer and Executive Vice President, Supply Chain of At Home Group, Inc., in which capacity he oversaw accounting, financial planning and analysis, treasury, investor relations, and internal audit and supply chain activities. Prior to Mr. Knudson’s tenure with At Home Group, Inc., he served in several leadership positions at CVS Health and CVS Caremark Corp., including as Senior Vice President of Finance and Retail Controller for their retail pharmacy segment. Prior to CVS, Mr. Knudson was a key member of the treasury and mergers and acquisition leadership teams at L Brands and Express Scripts. Mr. Knudson received his bachelor’s degree in accounting and finance from the University of San Diego. | ||
Mark C. Hagan | 54 Chief Information and Digital Officer Mr. 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, program management operations as well as certain customer support operations. Prior to joining AMN, from 2014-2018, Mr. Hagan was Chief Information Officer and Senior Vice President of IT at Envision Healthcare, a diverse healthcare services and technology company and a leading provider of physician-led services, post-acute care, ambulatory surgery services, and related management services. Prior to Envision, Mr. Hagan was IT Director at TeleTech. Mr. Hagan currently serves as a director of M&M Properties Colorado LLC and Wonolo, Inc. Mr. Hagan holds a Master of Business Administration from the University of Colorado and a Bachelor of Science and Computing from Queensland University of Technology. |
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Executive Officers
Denise L. Jackson | 58 Chief Legal Officer and Corporate Secretary Ms. Jackson joined us as General Counsel and Vice President of Administration in October 2000 and we appointed her as our Corporate Secretary in May 2003. Ms. Jackson is responsible for our legal, environmental, social and governance functions, compliance, risk management, real estate, government affairs and equity compensation. 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 the Chair of its Corporate Governance Committee. Prior to joining AMN, 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 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. |
2023 Proxy Statement | 57 |
Executive Compensation |
PROPOSAL 2
Advisory Vote on Executive Compensation | |||||||
| 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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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 2023 Annual Meeting of Shareholders.
The Compensation Discussion and Analysis that follows details our compensation philosophy and the implementation of that philosophy against goals, including how we set compensation targets and objectives and evaluate each named executive officer against those targets and objectives to ensure performance is appropriately rewarded.
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 2023 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.”
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. Because your vote is advisory, it will not bind us, the Compensation Committee, or our Board.
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Executive Compensation
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
20192022 PAY AND PERFORMANCE
In 2019,2022, the Company furthered its long-termdelivered strong financial and operational performance, including record high revenue of $5.24 billion and adjusted EBITDA of $847 million, a 32% and 33% increase over 2021, respectively. We are proud of how the entire AMN team supported our clients and clinicians amidst severe workforce shortages positively impacting our communities. The Compensation Committee believes the strength and diversity of experience across our leadership team, their continued focus on our strategic objectivepriorities, and our partnership with healthcare organizations to provide our full suite of total talent solutions to optimize their workforce were key to the Company’s outstanding performance in 2022 and demonstrates our ability 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 clients as a total talent management and workforce solutions partner. Additionally, our acquisition of Advanced Medical allowed the Company to expand its footprint into schools and other nonacute settings, which are strategically significant toexecute on our long-term growth objectivesstrategy.
As part of our long-term strategy to create sustainable value for shareholders, AMN Healthcare acquired Connetics Communications in May 2022, which specializes in the direct hire recruitment and permanent placement of international nurse and allied health professionals with healthcare facilities in the United States. The addition of Connetics expanded our international nurse business, adding permanent placement to our nurse and allied solutions and will help us bring more qualified and experienced healthcare professionals to the U.S. and further assist our clients in filling their staffing needs as patient care continuesthe critical labor shortage continues. In 2022, we continued to extend beyondmake significant progress on our investments in digital capabilities to enhance our client and clinician experience. Our clinician mobile application, AMN Passport, was downloaded by 97% of our nurse and allied clinicians on assignment and received industry-leading user satisfaction scores.
This year’s Compensation Discussion and Analysis highlights decisions made by the traditional hospital walls.Compensation Committee in the context of AMN’s exceptional 2022 financial and operational performance. The Compensation Committee has primary oversight over the design and execution of the Company’s executive compensation program that is structured on a pay-for-performance model that leverages short-and long-term incentives to drive multiple dimensions of performance and aligns the interests of our executives with those of our shareholders and other stakeholders. More specifically, we have designed a total rewards program consisting of base salary, annual cash bonuses, and long-term equity incentive awards.
By aligning pay with performance, we motivate and reward our executives for increases in long-term shareholder value. We grant performance restricted stock units based on total shareholder return and Adjusted EBITDA performance over a three-year period. For our 2020 awards, whose performance period ended on December 31, 2022, our absolute TSR of 95% placed us in the 89th percentile versus the Russell 2000 and our adjusted EBITDA performance exceeded target by more than 120%, resulting in the maximum payout of both awards. We also grant restricted stock units, the inherent value of which, is directly tied to the value of the Company’s stock performance.
We designed our 2022 Senior Management Incentive Bonus Plan, which we refer to as the Bonus Plan, to ensure that 70% of each executive’s annual cash bonus target is based on annual revenue and pre-bonus adjusted EBITDA goals, which serve as two key financial metrics for the Company. The Compensation Committee believes that the combination of these longer-term equity and annual cash incentive vehicles are effective to motivate and reward our executives, which is why they make up a substantial majority of their total compensation packages. As a result of this compensation structure that is focused on aligning our pay with performance and our leadership’s strong contributions and results in 2022, the Company’s named executive officers earned the maximum amount possible under each of our performance incentive programs for the 2022 performance period, which we cap at either 175% or 200% of target.
In May 2022, in recognition of the competitive labor environment and to promote stability and continued growth during our CEO transition, we established a cash bonus program (the “2022 Performance and Retention Plan”) for our named executive officers (other than Ms. Grace and Ms. Salka) and other key executives based on achieving 121% to 140% of our pre-bonus adjusted EBITDA target. These awards pay out at a range of 0% to 100% based on the performance, and the executive remaining employed by the Company on May 1, 2023. As a result of the Company’s exceptional performance, the 2022 Performance and Retention Plan is expected to result in the maximum payout, provided that the executive is employed by the Company on May 1, 2023.
The Compensation Committee believes that the Company’s compensation structure properly aligns pay with performance and appropriately incentivizes executives without excessive risk. The Compensation Committee is comfortable that the outcomes under the Company’s incentive compensation plans reasonably reflectalign with the balance of short- and long-termCompany’s record financial performance, and that management continuesthe Company’s named executive officers continue to take the necessary actions today to achieve the Company’sour long-term strategic plan and deliver shareholder value.
Our total shareholder return performance restricted stock units paid out at the maximum of 175% of target, as management continuedcontinue to deliver strong shareholder returns. Our cumulative total shareholder return, which we refersustainable value to as TSR,our shareholders.
(1) | For information on pre-bonus adjusted EBITDA and adjusted EBITDA, which means adjusted earnings before interest, taxes, depreciation and amortization, and a reconciliation of it from our 2022 net income, please see Exhibit A to this proxy statement (page 113). |
2023 Proxy Statement | 59 |
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 2020Performance Goals for 2023
Looking to 2020, in connection with the review of the long and short-term goals,2023, the Compensation Committee established financial goals for performance-based compensation with thresholds, targets and maximums for Bonus Plan compensation.over a three-year period (2023 through 2025). We set Bonus Plan targets based on our annual operating plan and intend that the achievement of our annual targets will contribute to achievementthe successful execution 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.
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Martha H. Marsh, Chair
R. Jeffrey Harris
Daphne E. Jones
Sylvia Trent-Adams
COMPENSATION DISCUSSION AND ANALYSISCompensation 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 our named executive officers.officers, and we listed those who served in this capacity during the 2022 fiscal year 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 incentingprovide incentives for talent to lead our organization to achievein a manner consistent with our core values and aligns with stakeholder 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.
Cary Grace(1) President | Susan R. Salka(2) | Jeffrey R. Knudson | Mark C. Hagan | Denise L. Jackson |
Former President and Chief Executive Officer | Chief Financial Officer and Treasurer | Chief Information and Digital Officer | Chief Legal Officer and Corporate Secretary |
(1) | Ms. Grace joined the Company as President and Chief Executive officer on November 28, 2022. |
(2) | Ms. Salka resigned from the Company effective November 27, 2022. |
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TheExecutive Compensation Committee believes
Executive Summary
Our Executive Compensation Program Philosophy and Objectives
Our executive compensation philosophy is that our namedcompensation realized by executives should (i) align with shareholders’ interests, (ii) reflect the individual skills and contributions of the executive officers are collectively a strong, valuable, experienced, talentedin achieving the strategic, financial, and innovative team, with a passion foroperational goals of the Company its core values and delivering sustainable returns for(iii) reflect the leadership they demonstrate in promoting our shareholders. Our named executive officers for the 2019 fiscal year are listed below.values-based culture and commitment to corporate social responsibility.
OUR EXECUTIVE COMPENSATION PROGRAM OBJECTIVES
OUR COMPENSATION PROGRAM OBJECTIVES | ||||
● Pay-for-performance, with variable pay constituting a significant portion of total compensation
● Provide equal pay based on performance ● Build a strong talent base to reinforce our succession planning objectives ● 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
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● Provide compensation that is competitive with compensation paid by other similarly sized companies, including those in our executive compensation peer group
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avoid excessive risk |
Ourpay-for-performance focusedWith these principles in mind, we have designed and continually evaluate and modify, as necessary, our executive compensation program is designed to motivatesupport our leaders to build long-term shareholder value. Among other things,strategic objectives of achieving above-market growth in revenue and profitability by (1) being the Compensation Committee premisesleader and innovator in healthcare total talent management solutions and services, (2) growing our executive compensation on the following guiding principles:overall revenue mix from strategic talent solutions and technology and (3) delivering a superior customer experience through operational excellence and agility.
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 includesincluding the following primary features whichthat constitute the majority of our named executive officersofficer’s total pay:compensation: (1) base salary; (2) annual bonuses; and (3) long-term incentive awards.
2023 Proxy Statement | 61 |
Executive Compensation
Executive Compensation Practices
WHAT WE DO | ||||||
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Below is a summary relating to our named executive officers’ total rewards compensation program.
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| Executive Compensation Philosophythat | |
| Align Pay with | |
executive’s compensation.
| Reward for Increases in Shareholder | |
| Focus on Our Long-term | |
value of the Company’s stock performance.
| Strong Ownership | |
| Cap Incentive | |
cash and equity incentive awards.
| Incentives to Achieve Objective Competitive Peer Benchmarking. We review our executive compensation peer group on an annual basis to ensure that our compensation program is | |
recruitment and staffing industries.
| Independent Compensation | |
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| “Double-trigger” Change in Control Recoupment Policy: Our Clawback policy authorizes the Board to recoup all or any portion of the bonus and equity or cash incentive compensation from all current or former executive officers in the event of a material restatement of the Company’s financial results due to misconduct. |
WHAT WE DON’T DO | ||
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No Pledging or Hedging of Company Securities Permitted
| No Single-Trigger Change in Control Agreements No | |
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Executive Compensation
2019 Financial, Operational and Stock2022 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 20192022(1)and continued to make significant progress on our short- and long-term objectives and overall business strategy.
Some We describe some of our 20192022 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.
below.
REVENUEof$5.24 Billion increased from $3.98 billion in 2021 | Increased | |
Increased Reported ADJUSTED EPS(2) by 48% from $8.03 in 2021 to $11.90 in 2022 | Deployed $577 million in SHARE REPURCHASES representing 13% of weighted average shares outstanding in 2022(3) |
(1) | For more detail regarding our financial results, please see our |
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(3) | For the year ended December 31, 2022. |
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CapitalizedAs we began a new phase of challenges and change within healthcare, the Company remained focused on a favorable capital markets environmentour commitment to make a private offeringour team members, healthcare professionals, clients, and their patients. We supported our clients amidst extreme staffing shortages and growing demand for patient care by collaborating, innovating, and evolving our existing solutions and creating new ones. We supported the full spectrum of $300 millionour client’s staffing needs and partnered to use an array of Senior Notes due in 2027our total talent services and technology to provide for additional liquidityenhance workforce sustainability and improve patient outcomes. In 2022, the number of clients that utilized 10 or more of our workforce solutions increased 10% and more than 60% of our consolidated revenue was generated from managed services programs. Additionally, as part of our growth strategy to pursue strategic acquisitions and other investments that we believe enhance long-term shareholder value.
Continued to returnadd value to our shareholdersclients and increase the supply of healthcare workforce, we acquired Connetics Communications in May 2022, an international nurse and allied recruitment company that specializes in nursing and allied professional direct hire recruitment and placements. Throughout 2022, the Company deployed more than 60,000 healthcare professionals each quarter and increased our corporate workforce by 10%. Guided by our core purpose of helping to achieve personal and professional goals, we increased our investment in our healthcare professionals’ and team members’ wellness, resiliency, mental health, and professional development. We believe that the deeper relationships with our clients, healthcare professionals and team members created through these efforts was central to delivering record performance in 2022 and sets us up for success in executing on our long-term strategy.
ADVANCING THE OVERALL HEALTH OF OUR WORKFORCE, WORKPLACE AND MARKETPLACE
AMN’s Purpose is helping people achieve their professional and personal goals. We believe our commitment to advancing the repurchase of approximately 395,212 sharesoverall health and wellbeing of our common stock.workforce, workplace and marketplace is vital to our ability to be the employer and strategic partner of choice in healthcare total talent solutions.
2023 Proxy Statement | 63 |
Continued executionExecutive Compensation
To advance our purpose and achieve our business strategy, we believe that we must foster a healthy and diverse workforce that will advance equity and inclusion in our workplaces and society. One way in which we measure this is the representation of our workforce and its reflections of the communities that we serve. As of January 2023, 69% of our team members are women, and 45% of our team members and 35% of our leaders are from other historically underrepresented communities. To ensure our ability to continue to attract and develop diverse talent, we also enhanced our human capital infrastructure to support pay equity, leadership development and professional connections. For the sixth consecutive year, we were named to the Bloomberg Gender Equality Index and received a top ranking in the Human Rights Campaign Foundation’s Corporate Equality Index. Our Board was recognized with the 2022 National Association of Corporate Directors Diversity, Equity & Inclusion Award. Our executive leaders continued to serve in important and influential roles within our industry and our communities. We believe our commitment to advancing the overall health and wellbeing of or workforce, workplace and marketplace is vital to our ability to be the employer and strategic partner of choice in healthcare total talent solutions.
EXECUTION ON TECHNOLOGY AND DIGITAL STRATEGIC INITIATIVES
Throughout 2022, we maintained a sharp focus on our investments in technology and digital capabilities to enhance our client, candidate, and analytical strategic initiativesteam member experience and to improveprepare for the recruitment, engagement and retentionfuture of healthcare delivery. We continued to execute on our digital business optimization strategy through our digital staffing platform, AMN Passport, enabling on-line and mobile touchpoints, self-service capabilities, and automated processes, resulting in high utilization and user satisfaction by healthcare professionals through developmenton assignment. We also improved ease of mobileuse, increased automation and enabled capabilities scheduling applicationsacross our suite of workforce technologies. We believe our investments in technology systems and artificial intelligence.digital capabilities will continue to drive innovation and position us to serve growing health systems and diverse care settings while reducing costs and complexities for our clients and more effectively engage our healthcare professionals on their entire career journey.
2022 COMPENSATION ELEMENTS
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 2019.for 2022.
CONSOLIDATED REVENUE (MM) | CONSOLIDATED ADJUSTED EBITDA (MM) | |
The Compensation Committee placed considerable emphasis on our total shareholder return as well as financial and operational performance over the past 12 months inas well as our 2022 total shareholder return when determining our CEO’s 2019named executive officers’ 2022 cash bonus and equity awards. When determining Ms. Salka’s 2022 cash bonus, we placed considerable emphasis on the months in 2022 prior to Ms. Salka’s Transition Agreement, as well as her 2019 equity awards.agreement to remain Chief Executive Officer until a new Chief Executive Officer was named. 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, 2019.2022.
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Executive Compensation
Period | Cumulative Total Shareholder Return (1) |
Compound Annual Growth Rate
| Common Stock Price at Beginning of Period | |||||||||
One-Year Period Ended December 31, 2019 |
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| $ | 55.65 |
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Two-Year Period Ended December 31, 2019 |
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Three-Year Period Ended December 31,2019 |
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(1)Period Cumulative Total
Shareholder
Return(3)
(%) Compound
Annual
Growth Rate
(%) Common
Stock Price
at Beginning
of Period
($)One-Year Period Ended December 31, 2022 4 N/A 120.80 Two-Year Period Ended December 31, 2022 76 23 68.92 Three-Year Period Ended December 31, 2022 94 18 62.11 (3) The price of our common stock on December 31, 2022 (the last trading day of the year) was $102.82. 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.
The illustrations below provide an overview of the principal components 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 firstexecutive compensation program aimed at driving long-term shareholder value 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
rewarding strong financial and operational performance. Numerous factors played a role in our 20192022 compensation decisions with the overarching goal of closely linking pay to performance. In 2019,2022, given the Company’s exceptional financial performance and long-term stock performance, performance-based cash incentives paid for 2022 performance and equity compensation (which is inherently linked to performance)granted in 2022 comprised 80%83% of our CEO’sMs. Salka’s total compensation, and 68%76% - 73%80% of the total compensation for each of our other named executive officers.
To illustrate this, the chart set forth below reflects the percentage breakdownofficers resulting in an average of 77% of total compensation for our CEO’s 2019 compensationother named executive officers at risk (other than with respect to Ms. Grace’s partial year of service), as set forth in the Summary Compensation Table.Table on page 85 below.
MS. GRACE’S COMPENSATION AT RISK
MS. SALKA’S COMPENSATION AT RISK
OTHER NEO COMPENSATION AT RISK(1)
2023 Proxy Statement | 65 |
Executive Compensation
Components(1) | Purpose | Key Features | ||||
Base Salary | ||||||
Ms. Salka’s:
| Other NEOs
| Attract and retain talent | ● Fixed base of cash compensation ● Reviewed and approved annually ● Benchmarked annually to the median and 75th percentile of our peer group and other companies of similar revenue and market capitalization | |||
Annual Cash Incentive Bonus | ||||||
Ms. Salka’s: |
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Drive achievement of annual strategic and financial objectives |
● Consolidated revenue (30%) ● Consolidated adjusted EBITDA (40%) ● 30% of target values are directly tied to non-financial factors (known as the “Leadership” component) ● One-year performance period, aligned with our strategic priorities ● Payout Range: 0-200% of target | |||||||
Long-Term Incentive | ||||||||
Ms. Salka’s: | Other NEOs | Align with shareholders interests and drive achievement of our long-term strategic objectives | ● Equity mix of: ● Time-vested restricted stock units (35%) ● Performance-based restricted stock units based on total shareholder return (30%) ● Payout Range: 0-175% of target ● Performance-based restricted stock units based on adjusted EBITDA performance (35%) ● Payout Range: 0-200% of target ● Three-year performance/vesting period ● Actual payout dependent upon long-term financial and stock performance and retention |
(1) | Ms. Grace joined the Company as President and CEO on November 28, 2022 and was not eligible to participate in the Bonus Plan for 2022 and did not receive the mix of long-term incentive awards reflected in this chart. The components of Ms. Grace’s 2022 compensation are included below in the section “Named Executive Officer Compensation in 2022.” Other NEOs reflected in this chart include Mr. Hagan, Mr. Knudson, and Ms. Jackson. |
As the Compensation Committee has consistently done, throughout the past several years, it based its 20192022 compensation decisions aroundon the Company’s 2022 financial goal setting for 2019goals and other actions influencing executive compensation based on the expectation that (1) we would achieve targeted revenue and adjusted EBITDA growthperformance 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 current named executive officer’sofficers’ actual compensation for 2019.2022, as set forth in the Summary Compensation Table on page 85 below.
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Executive Compensation
Named Executive Officer Compensation In 2022
Cary Grace TOTAL: $3,305,296 | Susan R. Salka TOTAL: $8,468,824 | ||
Jeffrey R. Knudson TOTAL: $3,255,853 | Mark C. Hagan TOTAL: $2,905,456 | ||
Denise L. Jackson TOTAL: $2,550,745 |
2023 Proxy Statement | 67 |
Executive Compensation
Response to 2019Say-on-PayTo 2022 Say-On-Pay Vote
At our 20192022 Annual Meeting of Shareholders held on April 17, 2019,May 6, 2022, we received more than 97%approximately 90% support (based on shares voting) on our“say-on-pay” 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 20192022 proxy statement, and we believe the following four themes remain most important amongto our investors:shareholders: (1) compensation should correlate to company performance, (2) performance awardscompensation should constitute an important componenta majority of compensation (3) long-term incentiveperformance awards (3) performance measures beyond total shareholder returnto ensure sustainable value for shareholders should be considered,an integral part of compensation 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 20192022 satisfied each of the four themes identified above. In 2019,2022, the Compensation Committee took the following actions:
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OurPrincipal Components of our Compensation Program Philosophy and Objectives
A guiding principleIn line with our core value of continuous improvement, we (1) listen to our Executive Compensation Philosophy is that compensation realized by executives should (i) align with shareholders’ interests; (ii) reflectshareholders, (2) review the individual skills and contributions of the executivelatest trends 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 and the annual shareholder advisory vote on executive compensation are also considered in the design ofpractices, (3) evaluate whether shareholders or proxy advisory services view certain pay practices with disfavor and (4) review our executives’ total rewards package. Our philosophy embraces the following principles:
Pay-for-performance, with variable pay constituting a significant portion of total compensation,
Create commonality of interest between our executives and shareholders by tying realized compensation directlypractices to changes in shareholder value,
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 executivesensure 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, we have designed and continually evaluateimplemented compensation programs that we believe will create value for our shareholders that attract, incentivize, 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.retain executives.
The primary components of our executive compensation program - (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 is provided with benchmarking information of each of these components at the 25th percentile, the median 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.
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PRINCIPAL COMPONENTS OF OUR EXECUTIVE COMPENSATION |
The illustration below provides a high level summary of the primary components of our executive compensation program.
● Base salary,
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● severance agreements, and
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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 | ||
| ● Individual performance, skills, knowledge, tenure, experience, and ● The recommendations of |
We manage salary changes to fall within our annual budget. We evaluate our operational and financial performance against our annual strategic objectives and our annual operating plan. We evaluate our stock performance against our executive compensation peer group and the Russell 2000 Index. Our CEO recommendations are particularly helpful for the Compensation Committee to evaluate the other executive officers’ performance, knowledge, skills, experience and responsibilities.
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Executive Compensation
Annual Cash Performance Bonus
Annual cash performance bonus opportunities serve as the second principal component of our executive compensation program and are designed to incentivize and reward performance. The Company’s Bonus Plan 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.
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 and ESG-related objectives and effective leadership in line with our core values.
In addition, in 2022 we established the 2022 Performance and Retention Plan to provide incentive compensation in the form of an additional cash bonus to our named executive officers (other than Ms. Grace and Ms. Salka) and other key employees that is directly related to 2022 consolidated adjusted EBITDA for performance beyond 121% of our annual operating plan. The 2022 Performance and Retention Plan has a payout range of 0% and 100%, upon the Company’s achievement of a minimum performance level of 121% of target consolidated adjusted EBITDA (with a cap at a maximum level of 140% of the target), provided that to receive the bonus the executive must remain employed by the Company on May 1, 2023.
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.
PRINCIPLES GOVERNING THE DESIGN OF CASH INCENTIVE BONUSES | ||||
● The metrics must be tied to key indicators of our success and our annual objectives,
| ● The portion of an individual’s target annual cash compensation attributable to target annual bonus should increase with successively higher levels of responsibility, and
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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 2022, we utilized PRSUs that pay out based on (i) the Company’s total shareholder return over three years and (ii) adjusted EBITDA Performance PRSUs that vest and pay out at the end of three years that accrue value on a one year and then two-year performance period based on the Company’s achievement of a target at the end of the first year and then a certain year-over-year compounding adjusted EBITDA performance target in the remaining two years. We refer to these awards as our TSR PRSUs and Adjusted EBITDA Performance PRSUs, respectively.
2023 Proxy Statement | 69 |
Executive Compensation
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● Performance periods should cover multiple years to create balance between short- and long-term objectives, ● Long-term |
● Awards should support retention. |
● The aggregate cost of long-term
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Our Compensation Determination Process
Roles and Responsibilities
Responsible Party | Primary Roles and Responsibilities Relating to Compensation Decisions | |||
| The primary responsibilities of the Compensation Committee include oversight of our executive compensation programs. Specifically, they include:
● Approve annual performance goals and objectives for our Chief Executive Officer; ● Determine the annual compensation of our Chief Executive Officer, including the performance metrics and goals for performance-based long-term and short-term incentive compensation; ● 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 performance metrics and goals for performance-based long-term and short-term incentive compensation; ● Hire the Company’s independent compensation consultant; and ● Approve 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
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Our Compensation Program Oversight
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.
(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 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. | |||
Chief ExecutiveOfficer | ● Recommend annual non-financial 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).
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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. 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 GROUPPeer Group
The duties ofOn 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 mostan important factors it mustfactor to consider in ensuring that our compensation program remains competitive, is the proper identification and selection of our peers,the executive compensation peer group, as we oftenmay 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 20192022 executive compensation peer group, as determined by our Compensation Committee, was as follows:
Our 2022 Executive Compensation Peer Group | ||
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● Veradigm Inc.(1) | ● Insperity, Inc. | ● ASGN Incorporated |
● Amedisys, Inc. | ● Kforce, Inc. | ● Premier, Inc. |
● Cross Country Healthcare, Inc. | ● Korn/Ferry International | ● Robert Half International Inc. |
● Healthcare Services Group, Inc. | ● LHC Group, Inc. | ● TrueBlue, Inc. |
● TriNet Group, Inc. | ● Pediatrix Medical Group, Inc.(2) | ● R1 RCM, Inc. |
(1) | Effective January 1, 2023, Allscripts Healthcare Solutions, 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 other companies from whom the Company recruits talents.of companies. When evaluating our 20202022 executive compensation peer group, the Compensation Committee reviewed (1) our 20192022 executive compensation peer group, (2) the peers utilized bythat Institutional Shareholder Services lists for us that were not in our 20192022 executive compensation peer group, (3) peers utilized bythat Glass Lewis lists for us that were not in our 20192022 executive compensation peer group, (4) companies that were not in our 20192022 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,
Our 2022 executive compensation peer group of 15 companies ranged from approximately $1.3 billion to $7.2 billion in revenues for the Compensation Committee decided notyear ended December 31, 2022, and from approximately $641 million to make changes to$8 billion market capitalization as of December 31, 2022. For purposes of comparison, our 2019consolidated revenue for the year ending December 31, 2022 was approximately $5.24 billion while our market capitalization was $4.5 billion as of December 31, 2022, placing us third in our 2022 executive compensation peer group for 2020.revenue and fourth for market capitalization. This does not include Veradigm Inc., who reported on February 28, 2023 that internal control failures resulting in a mis-statement to the reported revenue over the prior six quarters had occurred and filed a Form 12b-25, extending the due date of the Company’s Form 10-K. For the same reason, Veradigm Inc. is not included in the revenue chart directly below.
2023 Proxy Statement | 71 |
Executive Compensation
TRAILING TWELVE MONTHS REVENUE ($MM) AS OF DECEMBER 31, 2022
(1) | Revenue is reflected as of December 31, 2022 with the exception of Korn Ferry, which is based on the trailing twelve months ending January 31, 2023. |
MARKET CAPITALIZATION ($MM) AS OF DECEMBER 31, 2022
(1) | Effective July 1, 2022, Mednax, Inc. changed its corporate name to Pediatrix Medical Group, Inc. | |||
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| Effective January 1, 2023, Allscripts Healthcare Solutions, Inc. changed its name to Veradigm, Inc. |
Benchmarking
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 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 |
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BASE SALARY
Base salary, serves as(2) annual cash performance bonuses, and (3) long-term equity incentive awards - reflect the first componentimplementation of our executive compensation program. In setting base salaries,philosophy. The Compensation Committee receives benchmarking information for each of these components at the median and 75th percentile utilizing a blend of companies, including those within our executive compensation peer group, that are similar in terms of business type, revenue, and market capitalization. The Compensation Committee considers benchmarking data as a number of factors, including:
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We manage salary changes to fall within our annual budget. We evaluate our operational and financial performance in light of our annual internal objectives and our annual operating plan andreference point rather than determinative data. Compensation for specific individuals may vary upward or downward from the healthcare workforce solutions 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 factors the Compensation Committee considers, and her recommendations are particularly helpfulmedian for the Compensation Committee to evaluate 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 by which the Compensation Committee provides such opportunities. We intend our Bonus Plan to provide a strong incentive for ourindividual named executive officers to achieve annual financial objectives that support our strategic objectives. Although certain detailsbased on, among other things, individual performance, tenure, experience, scope of the annual bonus incentive may change from year to year, key components include specific financial goals set forth in our annual operating plan such as consolidated revenue and consolidated adjusted EBITDA. The Compensation Committee sets threshold, “target” (i.e., 100%) and maximum amounts for bonuses and a weight for 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 on a straight-line basis depending on the
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hurdle ultimately achieved. The leadership component of the bonuses, which we refer to as the Leadership Component, have been based onnon-financial factors, such as performance relative to direct competition, leadership, achievement of strategic objectives, effective leadership in line with our core values and executive leadership competencies and total shareholder return.
In setting each named executive officer’s target bonus, the Compensation Committee evaluates benchmarking data for comparable positions generally and within our peer group,responsibilities, internal parity considerations, the recommendations of our CEO (except with respect to(for compensation other than her target bonus), individual performance, knowledge, experienceown) and responsibilities, and the amount of the potential bonus under various performance scenarios. As with base salary, the Compensation Committee considers these factors in the context of each individual’s total cash compensation as well as the total compensation package (i.e., equity and cash) generally.
As set forth in our Executive Compensation Philosophy, the principles governing the annual design include the following:
succession planning considerations.
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The Compensation Committee may amend the Bonus Plan at any time and may also amend any outstanding award granted 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 and adjusted EBITDA margin PRSUs for performance-based equity for all of our named executive officers.
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:
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Executive Compensation
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 programs 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.
PERQUISITES
In addition to the benefits detailed 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 of 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 AGREEMENTS
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 20192022 Compensation Program and Results
Our named executive officers’ 20192022 direct compensation consisted of: (1) a base salary; (2) cash incentive bonus based on performance; (3) long-term equity incentives,incentives; (4) reimbursement for certain financial, and estate planning and personal health and wellness expensesexpenses; and (4)(5) certain other additional compensation, such as matching deferred compensation contributions. We discuss each component of our 20192022 compensation program for our named executive officers in more detail below.
BASE SALARYBase Salary
In late 2018,2021, the Compensation Committee reviewed annual base salary levels for the named executive officers and, after careful consideration, approved increases effective January 1, 20192022 ranging from three
zero to elevenpercentfromfive percent from the previous year, as set forthreflected in the table immediately to the right.below. In December 2019, the Compensation Committee considered base salaries of our named executive officers for 2020. 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 benchmarking,and other companies of similar revenue size and market capitalization, (2) Company operational and financial performance, and (3) individual and Company performance.
When benchmarking Ms. Salka’s 20192022 base salary, it was slightly above the median among other CEOs amongwithin our peers.2022 executive compensation peer group. The Compensation Committee believed this base salary was appropriate for Ms. Grace as well.
Named Executive Officer | 2021 Salary ($) | 2022 Salary ($) | Increase % | |||||||||
Cary Grace | — | 1,060,000 | — | |||||||||
Susan R. Salka(1) | 1,030,000 | 1,060,000 | 3 | |||||||||
Jeffrey R. Knudson | 600,000 | 600,000 | — | |||||||||
Mark C. Hagan | 510,000 | 525,000 | 3 | |||||||||
Denise L. Jackson | 440,000 | 460,000 | 5 |
(1) | Ms. Salka retired from the Company effective November 27, 2022. |
Senior Management Incentive Bonus Plan
Named Executive
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Brian M. Scott |
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Ralph S. Henderson |
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Denise L. Jackson |
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BONUS PLAN
Target Bonus. Levels
In January 2019,December 2021, the Compensation Committee reviewed the 2022 target bonus levellevels for eachour named executive officer,officers, which we express as a percentage of annual base salary. After careful considerationIn furtherance of peer group data and other benchmarking information,the Company’s pay-for-performance philosophy, the Compensation Committee decided to maintainadjusted the existing bonus percentage target for eachMr. Hagan and Ms. Jackson in 2022 due to an increase in their base salary, but did not change the bonus target as a percentage of Ms. Salka and Messrs. Henderson and Scott while increasing the target percentage for Ms. Jackson.salary.
The table below shows 20192022 target bonus information for each named executive officer both in dollar amount and as a percentage of salary together with, for comparative purposes, the same figures for 2018.2021.
Named Executive Officer | 2021 Bonus Target (% of Salary) | 2022 Bonus Target (% of Salary) | 2021 Bonus Target ($) | 2022 Bonus Target ($) | ||||||||||||
Cary Grace(2) | ||||||||||||||||
Susan R. Salka | 120 | 125 | 1,236,000 | 1,325,000 | ||||||||||||
Jeffrey R. Knudson(3) | 90 | — | 540,000 | |||||||||||||
Mark C. Hagan | 90 | 90 | 459,000 | 472,500 | ||||||||||||
Denise L. Jackson | 90 | 90 | 396,000 | 414,000 |
(2) | Ms. Grace joined the Company on November 28, 2022 but was not eligible to participate in the Bonus Plan in 2022. |
(3) | Mr. Knudson joined the Company on November 2, 2021 and assumed the role of Chief Financial Officer and Treasurer on November 8, 2021, but was not eligible to participate in the Bonus Plan in 2021. |
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We believe thatThe dollar amount of Ms. Salka’s 2019 dollar2022 cash bonus target fell aroundamount was generally aligned with the median50th percentile among CEOs within our 20192022 executive compensation peer group based on our peers’ filed 2019the most recent proxy statements filed by our executive compensation peer group, which the Compensation Committee believed was appropriate.
2023 Proxy Statement | 73 |
Executive Compensation
Structure of Ourour Senior Management Incentive Bonus Plan.
In 2019,2022, 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 2019,2022, consistent with prior years’ practice, the Compensation Committee tied the Financial Component of the bonusBonus Plan to the achievement of financial targetsour 2022 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 AEBITDA excludes from Adjusted EBITDA the payment of bonuses, the impact of acquisitions that were not included in our 2019the Company’s operating plan, and certain increases to the Company’s legal expense accruals not contemplated by its 2022 annual operating plan. AtFor information on the time we establishedcalculation of Pre-Bonus AEBITDA, and a reconciliation of our 2022 net income to adjusted EBITDA and Pre-bonus AEBITDA, please see Exhibit A to this plan, we believed that it reflected above market growth for our three business segments on a consolidated basis.proxy statement (page 113).
In 2019,2022, the weighting of the performance metrics wasreflected below were consistent for each of our named executive officers:
Consolidated
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Rationale for Annual2022 Senior Management Incentive Bonus Plan Performance Goals.Objectives The
In 2022, the Compensation Committee has continued to utilize financial,the Financial and Leadership Components as the annual performance and leadership goals in its annual incentive bonus program overmetrics under the last several years, including 2019,Bonus Plan 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 growthreasons, which are described 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.more detail below.
● | Financial Component | |
● | Consolidated Revenue (30%): The Compensation Committee believes revenue remains one of the most reliable measurements to evaluate the success of our growth strategy and operational performance. It also selected revenue because investors focus on revenue growth as a metric when evaluating our performance. | |
● | Pre-Bonus AEBITDA (40%): 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” pay outs under the 2022 Financial Component for each named executive officer represented performance that the Compensation Committee believed was at or above anticipated performance of those in our market sector. The threshold for a named executive officer to receive a bonus under the Financial Component required achievement of 90% of our 2022 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 2022 annual operating plan for that metric. | |
● | Leadership Component (30%): The Compensation Committee uses the Leadership Component to focus on the executive’s contribution to achieving our strategic goals that will fuel our financial success and create long-term value. While the specific measures may differ slightly for each named executive officer, we generally measure the Leadership Component based upon our named executive officers’ leadership, personal performance, execution on our strategic and operational initiatives and achievement of ESG-related objectives. |
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.
20192022 Payouts Under Senior Management Incentive 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.
FINANCIAL COMPONENT
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 2019.2022.
Metric | 2022 Target | 2022 Results | $ Variance From 2022 Target | % Variance From 2022 Target | ||||||||||||
Consolidated Revenue | 3,575,000 | 5,243,242 | 1,668,242 | 47 | ||||||||||||
Pre-Bonus AEBITDA | 545,100 | 846,687 | 301,587 | 55 |
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Executive Compensation
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 | ) |
LEADERSHIP COMPONENT
With respect to the Leadership Component, the Compensation Committee believes our named executive officers demonstrated strong leadership in 20192022 resulting in solidexceptional 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,Company. Specifically, we (i) successfullyeffectively responded, and worked with our clients to help address the continued challenges and opportunities that arose as labor market shortages increased and became severe, (ii) continued to executefocus on our long-term strategic planpriorities and our partnerships with healthcare organizations to expand and diversifyprovide our full suite of total talent solutions offeringsto optimize their workforce, (iii) expanded our international nurse business, adding permanent placement to our nurse and expand our footprint into nonacute care settings by acquiring Silversheet, Advanced Medical and b4health, (ii) capitalized on a favorable capital markets environmentallied solutions, (iv) continued to make significant progress on our investments in digital capabilities, and (v) made significant progress in advancing our other ESG-related initiatives.
PAYOUTS
The 2022 annual operating plan did not reflect the potential financial impact of any acquisitions. As such, the Compensation Committee did not include the financial impact of the Company acquisition of Connectics when determining the Company’s 2022 bonus plan revenue and adjusted EBITDA. Excluding the impact of such acquisitions, the Company’s 2022 revenue and Pre-Bonus AEBITDA results exceeded its 2022 annual operating plan and the revenue and Pre-Bonus AEBITDA Bonus Plan targets approved by the Compensation Committee in January 2022 by 47% and 55%, respectively. As a private offeringresult of $300 millionour leadership’s strong performance, the Company’s named executive officers earned maximum payouts of Senior Notes due 2027 to provide for additional liquidity to pursue strategic acquisitions and other investments that we believe enhance200% above their target long-term shareholder value, and (iii) continued our strategic development of mobile technology platforms and artificial intelligence aimed at improving the recruitment, engagement and retention of healthcare professionals.incentive compensation based on Pre-Bonus AEBITDA targets.
Based on outcomes, the Company and its Compensation Committee believe that the Bonus Plan is working as designed and intended, with the payout of the Financial Component of the 2019 annual incentive bonus having been in line with performance.intended. The illustrations below demonstrate the Company’s reported performance compared to annual operating plan target for each of the elements of the Financial Component together with an illustration of the Company’s 20192022 bonus payout compared to the Financial Component targets.
The tables below set forth metrics and summary calculations for each named executive officer’s bonus amounts under the Leadership Component together with the final amounts paid under the Financial Component, which makesmade up 70% of the total target bonus amount.
MS. SALKA’S BONUS METRICS | ||||||||||||||||||||||||||||||||
Pre-Bonus AEBITDA | Revenue | Leadership | ||||||||||||||||||||||||||||||
Levels | % of Target | | Pre-Bonus AEBITDA ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | | Revenue ($ in 1000’s) |
| | Bonus Amount ($) |
| % of Target | Target ($) | ||||||||||||||||
Maximum | 120 | 341,401 | 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: $532,155 |
| | % of Target Bonus Earned under Financial Component: 69.1% |
| | % of Target Bonus Earned under Leadership Component: 190% |
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Ms. Salka and Ms. Grace are not reflected in the tables below. For more information on compensation paid to Ms. Salka and Ms. Grace, see New CEO Compensation and Ms. Salka’s Retirement below.
2023 Proxy Statement | 75 |
Executive Compensation
MR. KNUDSON BONUS METRICS
Threshold | Target | Maximum | |||
Revenue ($ in 1000’s) % of Target Bonus Amount ($) | % of Target
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Pre-Bonus AEBITDA ($ in 1000’s) % of Target Bonus Amount ($) | |||||
Leadership Target ($) % of Target | % of Target 200% | ||||
Total Bonus Earned: $1,080,000 | |||||
MR. HAGAN’S BONUS METRICS | |||||
Threshold | Target | Maximum | |||
Revenue ($ in 1000’s) % of Target Bonus Amount ($) | % of Target 200% | ||||
Pre-Bonus AEBITDA ($ in 1000’s) % of Target Bonus Amount ($) | |||||
Leadership Target ($) % of Target | % of Target 200% | ||||
Total Bonus Earned: $945,000 |
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Executive Compensation
MS. JACKSON’S BONUS METRICS
Threshold | Target | Maximum | |||
Revenue ($ in 1000’s) % of Target Bonus Amount ($) | % of Target 200% | ||||
($ in 1000’s) % of Target Bonus Amount ($) | |||||
Leadership Target ($) % of Target | % of Target 200% | ||||
Total Bonus Earned: $828,000 |
2022 Performance and Retention Plan
In May 2022, we established the 2022 Performance and Retention Plan for our named executive officers (other than Ms. Grace and Ms. Salka) and other key executives based on heightened adjusted EBITDA goals, in recognition of the competitive labor environment and to promote stability and continued growth during our CEO transition. The awards were designed to pay out at a range of 0% to 100%, subject to the Company’s adjusted EBITDA performance exceeding target by 121% to 140% and the executive remaining employed by the Company on May 1, 2023. As a result of the Company’s exceptional performance, the 2022 Performance and Retention Plan is expected to result in the maximum pay out, provided that to receive the bonus the executive must remain employed by the Company on May 1, 2023. Neither Ms. Salka nor Ms. Grace received a 2022 Performance and Retention Bonus, as the bonus was established after Ms. Salka announced her retirement and before Ms. Grace joined the Company.
Pre-Bonus AEBITDA ($ in 1000’s) % of Target | |||
Mr. Knudson 2022 Performance and Retention Bonus | Payout Range | ||
Mr. Hagan’s 2022 Performance and Retention Bonus | Payout Range | ||
Ms. Jackson’s 2022 Performance and Retention Bonus | Payout Range |
2023 Proxy Statement | 77 |
New CEO Compensation
On March 10, 2022, the Company announced that Ms. Salka would retire as President and Chief Executive Officer but would stand for re-election to AMN Healthcare’s board and would remain as President and Chief Executive Officer until the hiring of her successor. On October 31, 2022, the Company announced the appointment of Cary Grace to succeed Ms. Salka as CEO of the Company, effective November 28, 2022.
The Board determined that Ms. Grace was the right candidate to build upon AMN Healthcare’s operational and organizational strengths and guide AMN Healthcare in the next phase of its evolution. Ms. Grace’s proven track record of leading dynamic, client-centric businesses positions her to lead AMN into the new environment of post-pandemic healthcare. She is the former CEO of Global Retirement, Investment and Human Capital at Aon where she also led their enterprise client management and oversaw the integration of all acquisitions for the company. Prior to joining Aon in 2011, she spent more than 14 years at Bank of America, where she led several institutional and private banking businesses, including their $9 billion Mass Affluent Client Business. Ms. Grace is a passionate advocate for Environmental, Social and Governance issues and connected to AMN Healthcare’s purpose and values.
In designing Ms. Grace’s compensation package, the Compensation Committee, advised by its independent compensation consultant, sought to deliver market-competitive compensation commensurate with Ms. Grace’s capabilities, experience, alignment with AMN’s values and culture and reflective of the challenging healthcare environment. Ms. Grace’s base salary of $1,060,000 and annual cash bonus target of 125% of base salary are both equal to those of her predecessor, which the Compensation Committee determined were market competitive and recognized Ms. Grace’s expertise and leadership experience. Upon her hire, Ms. Grace received (i) an equity grant in the form of restricted stock units valued at $2 million (the “Buy-Out Award”) and (ii) an equity grant in the form of RSUs valued at $1 million (the “Sign-On Award”) that, in each case, will vest ratably on each of the first three anniversaries of the grant date. Additionally, on December 16, 2022, the Company paid Ms. Grace a sign-on cash bonus of $200,000. Ms. Grace also received an annual long-term incentive award with a target value of $4.4 million comprised of a mix of RSUs and performance-based RSUs in accordance with the Company’s standard equity practices in January 2023.
In determining the size and structure of her one-time new hire equity awards and bonus payment, the Compensation Committee considered the following factors:
● | The importance of creating immediate alignment with AMN’s shareholders, | |||||||
| The competitive market for a talented, experienced, transformational leader capable of leading AMN, | |||||||
● | Ms. Grace’s unique skill-set and proven record as a successful executive at large organizations, and | |||||||
● | Outstanding equity awards that would be forfeited. |
MR. HENDERSON’S BONUS METRICS | ||||||||||||||||||||||||||||||||
Pre-Bonus AEBITDA | Revenue | Leadership | ||||||||||||||||||||||||||||||
Levels | % of Target | | Pre-Bonus AEBITDA ($ 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 COMPENSATIONMs. Salka’s Retirement
On November 27, 2022, Ms. Salka retired as President and Chief Executive Officer of the Company and resigned as a board member. Upon the announcement of her retirement, the Compensation Committee approved a Transition Agreement with Ms. Salka which included provisions related to her 2022 annual bonus, continued employment with the Company through her retirement date and future service to the Company in an advisory capacity. Specifically, the Transition Agreement provided that payment of the 2022 annual bonus would be made at the maximum payout amount of 250% (200% of the target bonus) of Ms. Salka’s base salary (i.e., $2,650,000) and would be paid in 2023 at the same time it would have been paid had she remained a Company employee. Additionally, to facilitate a smooth transition, Ms. Salka agreed to serve as an advisor to the Company from the date of retirement through the third anniversary of the separation date, pursuant to an Advisory Agreement, pursuant to which Ms. Salka will receive renumeration amounting to $300,000 on each of the three anniversaries following the effective date of the Advisory Agreement.
In 2019,designing the compensation-related provision of the Transition Agreement, the Compensation Committee considered the following factors:
● | Ms. Salka’s significant tenure and success while at AMN, |
● | Ms. Salka’s strong client, industry and other stakeholder relationships, |
● | The significant portion of 2022 for which Ms. Salka would be serving as President and CEO before retirement, and |
● | Ms. Salka’s commitment to enabling a smooth and efficient CEO transition. |
The Compensation Committee believes that this arrangement is beneficial to the Company and its shareholders given the duration Ms. Salka’s tenure as well as her commitment to enabling a smooth and efficient CEO transition. Ms. Salka also satisfies the requirement for retirement eligibility for equity awards granted, but not yet vested at the time of her retirement.
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Executive Compensation
Long-Term Incentive Compensation
2022 Long-Term Incentive Equity Awards
In 2022, the Compensation Committee granted equity awards to each named executive officer and the Committee believes it servesthese awards serve as a key component of our named executive officer’stheir total compensation package. The chart below reflects the aggregate grant date fair value,Consistent with prior years, we used a mix of time-based restricted stock units, which we refer to as AGD Fair Value, of each equity award type granted to each named executive officer. For allRSUs in this CD&A, and PRSUs. All equity awards that we 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 (55) and service time (15 years) requirements, which theour equity agreements refer to as “retirement.”
Commencing in October 2019 and December 2019, Ms. Salka and Ms. Jackson will, respectfully,each satisfy the requirements for retirement eligibility under their 2019respective 2022 equity awards. In light of Ms. Salka’s announced retirement, we amended Mr. Knudson’s restricted stock unit agreements on May 5, 2022, for his outstanding awards granted in 2021 and 2022 to also provide for accelerated vesting if he is terminated from the Company without Cause or termination of his service for Good Reason at a time when he could not have been terminated for Cause.
The RSUs that Ms. Grace received when she joined the Company on November 28, 2022 will vest ratably on each of the first three anniversaries of the grant date. In the event of a termination of Ms. Grace’s service by the Company without Cause or by Ms. Grace for Good Reason, (a) the Buy-Out Award will vest in full, (b) the Sign-On Award will vest on a pro-rata basis based on the number of full calendar months elapsed between the grant date and the termination date, (c) each Annual Award granted prior to 2026 in the form of RSUs will vest on a pro-rata basis based on the number of full calendar months elapsed between the grant date and the termination date and (d) each Annual Award granted prior to 2026 in the form of PRSUs will be eligible to vest on a pro-rata basis based on the number of full calendar months elapsed between the beginning of the applicable performance period and the termination date, subject to actual performance as measured at the end of the applicable performance period. “Cause” and “Good Reason” as used in the section are defined below in Termination of Employment and Change in Control Arrangements.
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 ($) | ||||||||||||
Susan R. Salka | 989,992 | 1,155,016 | 1,237,828 | 3,382,836 | ||||||||||||
Brian M. Scott | 302,982 | 353,489 | 353,489 | 1,009,959 | ||||||||||||
Ralph S. Henderson | 302,982 | 353,489 | 353,489 | 1,009,959 | ||||||||||||
Denise L. Jackson | 193,492 | 225,772 | 225,772 | 645,036 |
AGGREGATE GRANT DATE FAIR VALUE
The chart below reflects the aggregate grant date fair value of each equity award type that we granted to each named executive officer in 2022.
Named Executive Officer | AGD Fair Value of 2022 TSR PRSU Award(s) ($) | AGD Fair Value of 2022 Adjusted EBITDA Performance PRSU Award ($) | AGD Fair Value of 2022 RSU Award(s) ($) | Total AGD Fair Value of 2022 Awards ($) | ||||||||||||
Cary Grace | — | — | 2,999,903 | 2,999,903 | ||||||||||||
Susan R. Salka | 1,367,247 | 1,539,945 | 1,539,945 | 4,447,137 | ||||||||||||
Jeffrey R. Knudson | 465,990 | 524,907 | 524,907 | 1,515,805 | ||||||||||||
Mark C. Hagan | 388,374 | 437,477 | 437,477 | 1,263,328 | ||||||||||||
Denise L. Jackson | 341,775 | 384,932 | 384,932 | 1,111,639 |
Each of our named executive officers received PRSU grants in January 2022. The PRSUs represented 65% or more of the AGD Fair Value of the total equity grant value for Ms. Salka, Mr. Knudson, Mr. Hagan and Ms. Jackson.
Ms. Grace received equity grant of 8,164 and 16,329 RSUs in connection with her appointment as President and Chief Executive Officer on November 28, 2022, the Sign-On Award and Buy-Out Award, respectively. The Compensation Committee did not grant Ms. Grace PRSUs at that time, because it thought it would be more appropriate to wait until it approved equity awards for the other named executive officers in 2023.
2023 Proxy Statement | 79 |
Executive Compensation
To provide further clarity on our equity compensation practices, the chart below reflects the change in the AGD Fair Value of all 2022 equity awards granted to our named executive officers against the AGD Fair Value of all 2021 equity awards.
Named Executive Officer | AGD Fair Value of 2021 Equity Awards ($) | AGD Fair Value of 2022 Equity Awards ($) | Variance ($) | % Increase (Decrease) | ||||||||||||
Cary Grace | — | 2,999,903 | — | |||||||||||||
Susan R. Salka | 5,643,694 | 4,447,137 | (1,196,557) | (21) | ||||||||||||
Jeffrey R. Knudson | 2,999,940 | 1,515,805 | (1,484,135) | (49) | ||||||||||||
Mark C. Hagan | 2,841,104(1) | 1,263,328 | (1,577,776) | (56) | ||||||||||||
Denise L. Jackson | 2,495,210(1) | 1,111,639 | (1,383,571) | (55) | ||||||||||||
Total | 13,979,948 | 11,337,812 |
(1) | The AGD Fair Value of the 2021 equity awards for Mr. Hagan and Ms. Jackson were understated in the Company’s proxy statement filed on March 23, 2022 by $515,580, due to an administrative error. The AGD Fair Value of the 2021 equity awards for Mr. Hagan and Ms. Jackson were $2,841,104 and $2,495,210, respectively, not $2,325,524 and $1,979,630, as previously reported. |
TSR PRSUs
TSR PRSUs represented approximately 30% of the total 20192022 equity grant value that waswe awarded to each named executive officer,Ms. Salka, Mr. Knudson, Mr. Hagan and Ms. Jackson based on the AGD Fair Value, andValue. Each of our executive officers received a TSR PRSU grant in January each year that 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
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 | |||||
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| an absolute total shareholder return basis, which we refer to as Absolute TSR. |
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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. 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 2019January 2022 target PRSUs that may be earned depending on the actual results of the Company’s TSR Measurement as of December 31, 2021.2024.(4)(1)
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 |
Relative TSR Percentile Rank | % of 2022 TSR PRSUs Earned if Absolute TSR is Negative(2) | % of 2022 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 January 2022 for each named executive officer is as follows: (i) for Ms. Salka, 9,301; (ii) for Mr. Knudson, 3,170; (iii) for Mr. Hagan, 2,642 and (iv) for Ms. Jackson, 2,325. Due to the timing of Ms. Grace’s appointment, the Committee elected to wait until January 2023 to approve her TSR PRSUs awards. |
(2) | For each one percentile above the 25th percentile, an additional 3% of the TSR PRSUs will be earned if Absolute TSR is positive, and the maximum payout cannot exceed 175%. If Absolute TSR is negative, for each one percentile above the 25th percentile, an additional 1.5% of the TSR PRSUs will be earned up to the 50th percentile with the maximum payout of 100%. |
AdjustedADJUSTED EBITDA PERFORMANCE PRSUs
In 2019,2022, the Compensation Committee once again determined it best to dedicate a significant portion of the restricted stock unitsPRSUs to focus our named executive officers on achieving a 13.3%an adjusted EBITDA marginperformance target of $537 million in 2022 with compound year-over-year adjusted EBITDA performance rate target of 4% for 2021.the two-year period of 2023 and 2024(5)(1) Theby issuing Adjusted EBITDA Performance PRSUs. For these awards, 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.in 2022 and compound year-over-year adjusted EBITDA performance in the two-year period of 2022 and 2023.
(1) | As set forth in the Grants of Plan-Based Awards Table, the target number of adjusted EBITDA PRSUs that we granted in 2022 for each named executive officer is as follows: (i) for Ms. Salka, 14,214; (ii) for Mr. Knudson, 4,845 (iii) for Mr. Hagan, 4,038, and (iii) for Ms. Jackson, 3,553. |
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Time-Vested RSUsExecutive Compensation
Restricted stock unit grants, whichTIME-VESTED RSUs
RSUs that we refer to as RSUs, granted in 20192022 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 $1,237,828on December 16, 2019.
Aggregate Grant Date Fair Value
PRSUs represented 65% of the AGD Fair Value of all 2019 equity awards for our named executive officers, other than our CEO. Due to the timing of Ms. Salka’s RSU award in December 2019 (rather than January 2019), she received PRSUs that represented 37% of her total 2019 equity award value. To provide further clarity on our equity compensation practices, the chart below details the change of the AGD Fair Value of all 2019 equity awards granted to our named executive officers against the AGD Fair Value of all 2018 equity awards.
The 17% increase in our CEO’s AGD Fair Value in 2019 from 2018 is driven in part by the Company’s strong financial, operational and stock performance in 2019, as well as peer group and other compensation benchmarking.We believe that the AGD Fair Value of her equity awards placed her below the median among CEOs within our 2019 peer group for long-term incentive compensation. On an aggregate basis, the combined AGD Fair ValueResults of our named executive officers’ equity awards increased 69% in 2019 from 2018.2020 Performance Restricted Stock Unit Awards
(4) As set forth in the Grant of Plan-Based Awards Table, the target number of TSR PRSUs granted in 2019 for each named executive officer is as follows: (1) for Ms. Salka, 13,400; (2) for Mr. Scott, 4,101; (3) for Mr. Henderson, 4,101; and (4) for Ms. Jackson, 2,619.
(5) As set forth in the Grant of Plan-Based Awards Table, the target number of adjusted EBITDA PRSUs granted in 2019 for each named executive officer is as follows: (i) for Ms. Salka, 20,755; (ii) for Mr. Scott, 6,352; (iii) for Mr. Henderson, 6,352; and (iv) for Ms. Jackson, 4,057.
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Named Executive Officer | AGD Fair Value of 2018 Equity Awards($) | 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,In early 2023, the Compensation Committee performed the TSR Measurement for the 20172020 TSR PRSU awards. Our Relative TSR was atawards for the 81st percentile of the Russell 2000 Index and our Absolute TSR was 73.45% during the measurement period from January 1, 20172020 through December 31, 2019. Accordingly,2022.
2020 TSR PRSUS:
RELATIVE TSR PERCENTILE RANK VS. RUSSELL 2000 | ABSOLUTE TSR % | % OF 2020 TSR PRSUs EARNED |
89th | 94% | 175% |
Named Executive Officer | Number of 2020 TSR PRSUs Earned | |||
Cary Grace(1) | — | |||
Susan R. Salka | 23,336 | |||
Jeffrey R. Knudson(1) | — | |||
Mark C. Hagan | 4,204 | |||
Denise L. Jackson | 4,401 |
(1) | Ms. Grace and Mr. Knudson were not employed by the Company when it issued the 2020 TSR PRSUs and therefore did not receive any of these awards. |
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 based on our review of peer market data indicating that a deferred compensation plan was a significant component of executive compensation. Our named executive officers are not eligible to participate in our 401(k) if they exceed the compensation threshold set by the Internal Revenue Service, which is primarily designed to assist us in satisfying discrimination testing performed on our 401(k) plan.(1) 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.
In addition, all equity awards allow for continued vesting of outstanding equity awards if a grantee terminates his or her employment (other than for cause or due to a change in control) after satisfying certain age and service time requirements, which our equity agreements refer to as “retirement eligible.”
We also offer healthcare insurance and other employee benefits 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.
(1) | Ms. Grace was eligible to participate in our 401(k) plan when she joined the Company in November 2022 but is not eligible to participate in 2023. |
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Executive Compensation
Perquisites
In addition to the benefits described 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 Compensation Committee approved this limited perquisite to attract and retain talent and provide market competitive compensation. Our named executive officers also received the maximum (175%) of his oran inflation stipend consistent with our other corporate employees. In connection with Ms. Grace’s appointment as President and Chief Executive Officer and her target amount of 2017 TSR PRSUs. Specifically,agreement to relocate to our headquarters in Dallas, Texas, we agreed to reimburse her for certain expenses consistent with our Company policy for executives. We additionally paid certain attorney’s fees for Ms. Salka Mr. Scott, Mr. Henderson and Ms. Jackson earned 20,701, 7,245, 7,245Grace in connection with Ms. Salka’s Transition Agreement and 4,242 PRSUs, respectively.related agreements and Ms. Grace’s compensation-related agreements. The Compensation Committee believes that its approval of these perquisites remains consistent with the Company’s philosophy and commitment to align pay with performance.
2017 Adjusted EBITDA PRSU Award MeasurementSeverance Arrangements
On February 13, 2020,Severance arrangements serve as the fifth component of our executive compensation program. We are party to a severance agreement with each of our current 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 determined that our 2019 adjusted EBITDA margin equaled 12.5%. Accordingly, each named executive officer received 25%Committee’s experience. We describe the terms of his or her target amountthese agreements more fully in the section entitled “Termination of 2017 adjusted EBITDA margin PRSUs. Specifically, Ms. Salka, Mr. Scott, Mr. HendersonEmployment and Ms. Jackson earned 4,496, 1,574, 1,574 and 922 PRSUs, respectively.Change in Control Arrangements” below.
Equity Ownership, Requirements, Clawback and No Pledging or Hedging Policies
We maintain meaningful equity ownership requirements as well as clawback and 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 named executive officers are subject to meaningful equity ownership requirements require the followingas set forth below. Additionally, our named executive officers and other executives to maintain the following:
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The value of unvested RSUs and vested or unvested SARs and options are not taken into account in determining whether a named executive officer satisfies our equity ownership requirements. Individuals subject to a securities trading policy that prohibits trading in the equity ownershipCompany’s securities based on material information and engaging in inappropriate transactions such as pledging and hedging. We set forth a summary of these requirements above who have not metand policies below. Additional details related to these requirements and policies are contained in the applicable ownership requirements are required to retain 50% of net vested shares from equity awards issued subsequent toGovernance Guidelines posted on the initial assessment of ownership until they have reached the applicable ownership requirement. Company’s website.
As of the close of business on February 24, 2020,March 21, 2023, all of our named executive officers satisfysatisfied our equity ownership requirements with the exception of Ms. Grace, whose employment with the Company began on November 28, 2022, and Mr. Knudson, whose employment with the Company began on November 2, 2021.
Level | Required Ownership as a Multiple of Base Salary | Shares Held as Multiple of Base Salary(1) | Complies(2) | |||||||
Cary Grace | 5x Base Salary | — | — | |||||||
Jeffry R. Knudson | 2x Base Salary | 1.7 | — | |||||||
Mark C. Hagan | 2x Base Salary | 4.5 | ||||||||
Denise L. Jackson | 2x Base Salary | 3.0 |
Additionally, other CEO Committee Members are subject to equity ownership requirements amounting to 1.5 times their annual base salary.
(1) | The value of unvested RSUs and vested or unvested stock appreciation rights and options are not considered when determining whether a named executive officer satisfies our equity ownership requirements. Our Chief Executive Officer, Named Executive Officers and other CEO Committee Members are subject to equity ownership requirements, which requires them to retain 50% of net vested shares from equity awards issued by the Company until they have reached the applicable ownership requirements reflected above. |
(2) | Ms. Grace and Mr. Knudson joined the Company on November 28, 2022 and November 2, 2021, respectively, and do not yet meet the required equity ownership as a multiple of each of their base salary. |
Clawback Policy
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 POLICYThe Company intends to adopt a clawback policy consistent with the requirements of the Exchange Act Rule 10d-1 and in accordance with the final listing standards adopted by the New York Stock Exchange.
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Executive Compensation
No Pledging or Hedging 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.
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 theThe TCJA repealed the performance-based exception, has been repealed and the $1 million deduction limit now applies to anyone serving as the chief executive officer or the chief financial officer at any time during the taxable year and the top three other highest compensated executive officers serving at fiscalyear-end. The new rules generally apply to taxable years beginning after December 31, 2017, but do2017. Because many different factors influence a well-rounded, comprehensive executive compensation program, some of the compensation we provide to our named executive officers is likely not apply to remuneration provided pursuantbe fully deductible for tax purposes due to a written binding contract in effect on November 2, 2017 that is not modified in any material respect after that date.Section 162(m).
Overview of Our 20202023 Executive Compensation Program
Overall, the Compensation Committee believes the Company performed well during 20192022 and continued to execute on the Company’s long-term strategic plan. WeIn 2022, we achieved year-over-year consolidated revenue and consolidated adjusted EBITDA growthperformance of approximately 4%32% and 3%33%, respectively. Performance of our common stock continued its strong performance in 2019, delivering a 10% price appreciation. The Compensation Committee believes it has designed the 20202023 compensation structure to provide for important short- and long-term performance components that are aligned with shareholders,shareholders’ interests, consistent with the market environment and tailored specifically to us. Additional discussion of the Company’s 2023 executive compensation decisions will be provided in next year’s proxy statement.
BASE SALARYBase Salary
The Compensation Committee approved the annual base salaries for the named executive officers for 20202023 as follows:
Named Executive Officer | 2022 Salary ($) | 2023 Salary ($) | % Increase | |||||||||
Cary Grace | 1,060,000 | 1,060,000 | — | |||||||||
Jeffrey R. Knudson | 600,000 | 630,000 | 5 | |||||||||
Mark C. Hagan | 525,000 | 550,000 | 4.8 | |||||||||
Denise L. Jackson | 460,000 | 500,000 | 8.7 |
Named Executive Officer | 2019 Salary ($) | 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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The base salaries of our named executive officers reflect a 0% to 3%8.7% increase. The 20202023 base salary for our named executive officers is based on executive compensation market and peer group benchmarkingcompetitive analyses, and the Compensation Committee’s recognition that the Company’s 2019 organic2022 growth and core business performance did not meetwell exceeded targeted expectations, the individual performance and its commitment to maintain a pay for performance environment.
BONUS PLANBonus Plan
Target Bonus.
In January 2020,2023, 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 20202022 bonus target as a percentage of salary should not be increased for our namedMr. Hagan and Ms. Jackson but determined to slightly increase the bonus target for Mr. Knudson based on executive officers.compensation peer group and market competitive data. We set forth below the 20202023 target bonuses for each named executive officer as a percentage of salary which remained unchanged from 2019.below.
Named Executive Officer | 2022 Bonus Target (% of Salary) | 2023 Bonus Target (% of Salary) | ||||||
Cary Grace | — | 125 | ||||||
Jeffrey R. Knudson | 90 | 100 | ||||||
Mark C. Hagan | 90 | 90 | ||||||
Denise L. Jackson | 90 | 90 |
2023 Proxy Statement | 83 |
Executive Compensation
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 |
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 useretain the same bonus structure used in 2022 for each named executive officer as it did in 2019.officers, with 40% of the bonus earned for achieving 2023 pre-bonus adjusted EBITDA target and 30% earned for achieving 2023 revenue target. The target goals for each of the financial metrics are consistent with the targets under our 20192023 annual operating plan and generally require growth that exceeds our estimate of anticipated industry performance. For our CEO, we believeMs. Grace, her 20192023 bonus target in dollar amountpercentage falls near the median50th percentile among CEOs within our 20192022 peer group.
LONG-TERM EQUITY INCENTIVESLong-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 2020,2023, the Compensation Committee utilized a combination of (1) TSR PRSUs, (2) adjusted EBITDA performance PRSUs and (3) time-vested RSUs, and (3) adjusted EBITDA growth PRSUs,keeping the allocation attributable to performance awards at 65% which replaced adjusted EBITDA margin PRSUs. Thewas the same as 2022. In 2023, the Compensation Committee continued to targettargeted an allocation of 30% TSR PRSUs, 35% adjusted EBITDA growthperformance PRSUs and 35% time-vested RSUs (as a percentage of the estimated AGD Fair Value of all 20202023 equity awards) in 2020. For each named executive officer, other than Ms. Salka, approximately 65% of the AGD Fair Value of the January 2020 equity awards consisted of PRSUs, and the remaining 35% consisted of time-vested RSUs. All of Ms. Salka’s January 2020 equity awards were PRSUs, as2023.
Peer Group
Based on its evaluation, the Compensation Committee will make their decision on her equity grant of time-vested RSUsdecided to add Change Healthcare, Inc., Encompass Health Corporation, Kelly Services, Inc, Option Care Health, Inc. and Teladoc Health, Inc. to our peer group for 2023, and to remove Veradigm Inc., (formerly, Allscripts Healthcare Solutions, Inc.), Healthcare Services Group, Inc., KForce, Inc., LHC Group, Inc. and TrueBlue, Inc. from our peer group in the fourth quarter of 2020 when it has better visibility of the Company’s 2020 performance.
2023.
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Executive Compensation
EXECUTIVE COMPENSATION DISCLOSUREExecutive Compensation Disclosure
Our named executive officers for the 2019 fiscal year are listed below. We provide information regarding the business experience, qualifications and affiliations of our named executive officers who are not directors below. For Ms. Salka’s experience, qualifications and affiliations, please see page 15 above.
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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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 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 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.
The following table shows the compensation earned or accrued by our named executive officers for the three fiscal years ended December 31, 2019, 20182022, 2021 and 2017.2020.
Named Executive Officer and Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($)(4) | Total ($) | |||||||||||||||||||||
Susan R. Salka | 2019 | 996,154 | — | 3,382,836 | (5) | 1,120,527 | 127,289 | 5,626,806 | ||||||||||||||||||||
PEO,(6) President & CEO | 2018 | 897,592 | — | 2,888,030 | (7) | 1,105,721 | 197,689 | 5,089,032 | ||||||||||||||||||||
| 2017 | 835,577 | — | 2,299,955 | (8) | 548,078 | 197,357 | 3,880,967 | ||||||||||||||||||||
Brian M. Scott | 2019 | 504,423 | — | 1,009,959 | (10) | 532,155 | 60,416 | 2,106,953 | ||||||||||||||||||||
PFO,(9) CFO, CAO & Treasurer | 2018 | 489,038 | — | 1,000,046 | (11) | 480,324 | 50,941 | 2,020,349 | ||||||||||||||||||||
| 2017 | 464,423 | — | 699,969 | (12) | 235,174 | 84,643 | 1,484,209 | ||||||||||||||||||||
Ralph S. Henderson | 2019 | 504,423 | — | 1,009,959 | (10) | 395,805 | 93,647 | 2,003,834 | ||||||||||||||||||||
President, Professional Services & Staffing | 2018 | 489,038 | — | 1,000,046 | (11) | 480,324 | 113,605 | 2,083,013 | ||||||||||||||||||||
| 2017 | 464,423 | — | 699,969 | (12) | 235,174 | 75,587 | 1,475,153 | ||||||||||||||||||||
Denise L. Jackson | 2019 | 429,212 | — | 645,036 | (13) | 339,842 | 44,013 | 1,458,103 | ||||||||||||||||||||
Chief Legal Officer & Corporate Secretary | 2018 | 408,750 | — | 430,001 | (14) | 270,596 | 38,570 | 1,147,917 | ||||||||||||||||||||
| 2017 | 389,423 | — | 409,978 | (15) | 139,230 | 49,449 | 988,080 |
Named Executive Officer and Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||
Cary Grace PEO,(7) President & CEO | 2022 | 81,538 | 200,000 | (5) | 2,999,903 | (6) | — | 23,855 | 3,305,296 | ||||||||
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2020 | |||||||||||||||||
Susan R. Salka President & CEO | 2022 | 977,308 | — | 4,447,137 | (8) | 2,650,000 | 394,379 | 8,468,824 | |||||||||
2021 | 1,030,000 | — | 5,643,694 | (9) | 2,472,000 | 326,857 | 9,472,551 | ||||||||||
2020 | 1,027,692 | — | 3,632,452 | (10) | 1,236,000 | 129,155 | 6,025,299 | ||||||||||
Jeffrey R. Knudson PFO,(12) CFO & Treasurer | 2022 | 600,000 | 1,515,805 | (11) | 1,080,000 | 60,048 | 3,255,853 | ||||||||||
2021 | 90,000 | 900,000 | (13) | 2,999,940 | (14) | — | 32,745 | 4,022,685 | |||||||||
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Mark C. Hagan Chief Information & Digital Officer | 2022 | 524,423 | — | 1,263,328 | (15) | 946,000 | 171,705 | 2,905,456 | |||||||||
2021 | 510,000 | — | 2,841,104 | (16) | 918,000 | 137,868 | 4,406,972 | ||||||||||
2020 | 498,731 | — | 830,405 | (17) | 386,250 | 114,692 | 1,830,078 | ||||||||||
Denise L. Jackson Chief Legal Officer & Corporate Secretary | 2022 | 459,231 | — | 1,111,639 | (18) | 828,000 | 151,875 | 2,550,745 | |||||||||
2021 | 440,000 | — | 2,495,210 | (19) | 792,000 | 119,811 | 3,847,021 | ||||||||||
2020 | 442,615 | — | 660,064 | (20) | 339,900 | 55,529 | 1,498,108 |
(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 |
(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 |
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(6) | 8,164 RSUs with an AGD Fair Value of |
(7) | “PEO” refers to our principal executive officer. |
(8) | 14,214 RSUs with an AGD Fair Value of $1,539,945, 9,301 TSR PRSU with an AGD Fair Value of |
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2023 Proxy Statement 85
Executive Compensation
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(13) | Mr. Knudson joined the Company on November 2, 2021, so he was not eligible to receive an annual cash incentive bonus under the Bonus Plan. The Compensation Committee took this and other considerations into account at that time and determined it would be more appropriate to offer Mr. Knudson a $900,000 sign-on bonus, which was paid on March 11, 2022. |
(14) | 29,262 RSUs with an AGD Fair Value of |
(15) | 4,038 RSUs with an AGD Fair Value of $437,477, 2,642 TSR PRSUs with an AGD Fair Value of |
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(17) | 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 Performance PRSUs with an AGD Fair Value of $220,655 comprise the amount of Mr. |
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(20) | 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 Performance PRSUs with an AGD Fair Value of $231,016 comprise the amount of Ms. Jackson’s 2020 stock awards. Assuming the highest level of performance conditions will be achieved for the |
|
|
|
|
|
Executive Compensation
The following table contains information concerning grants of plan-based awards to our named executive officers under our cash and equity plans during the year ended December 31, 2019.2022.
Name and Type of
Equity Award
| Estimated Future Payouts UnderNon-Equity Incentive Plan Awards
| Estimated Future Payouts Under Equity Incentive Plan Awards(1)
| All Other Awards: # of Stock or Units
| Grant Date Fair Value of Stock Awards ($)(8)
| ||||||||||||||||||||||||
Grant Date
| Threshold ($)(2)
| Target ($)(3)
| Maximum ($)(4)
| Threshold (#)(5)
| Target (#)(6)
| Maximum (#)(7)
| ||||||||||||||||||||||
Susan R. Salka |
| 249,000 | 1,200,000 | 2,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
TSR PRSU | 1/3/2019 |
|
|
| 3,350 | 13,400 | 23,450 |
|
|
| 989,992 | |||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
|
|
| 5,189 | 20,755 | 41,510 |
|
|
| 1,155,016 | |||||||||||||||||
RSU | 12/16/2019 |
|
|
|
|
|
|
|
|
|
|
|
| 20,755 (9) | 1,237,828 | |||||||||||||
Brian M. Scott |
| 104,788 | 505,000 | 1,010,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
TSR PRSU | 1/3/2019 |
|
|
| 1,025 | 4,101 | 7,177 |
|
|
| 302,982 | |||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
|
|
| 1,588 | 6,352 | 12,704 |
|
|
| 353,489 | |||||||||||||||||
RSU | 1/3/2019 |
|
|
|
|
|
|
|
|
|
|
|
| 6,352 (9) | 353,489 | |||||||||||||
Ralph S. Henderson |
| 104,788 | 505,000 | 1,010,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
TSR PRSU | 1/3/2019 |
|
|
| 1,025 | 4,101 | 7,177 |
|
|
| 302,982 | |||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
|
|
| 1,588 | 6,352 | 12,704 |
|
|
| 353,489 | |||||||||||||||||
RSU | 1/3/2019 |
|
|
|
|
|
|
|
|
|
|
|
| 6,352 (9) | 353,489 | |||||||||||||
Denise L. Jackson |
| 66,919 | 322,500 | 645,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
TSR PRSU | 1/3/2019 |
|
|
| 655 | 2,619 | 4,583 |
|
|
| 193,492 | |||||||||||||||||
AEBITDA PRSU | 1/3/2019 |
|
|
| 1,014 | 4,057 | 8,114 |
|
|
| 225,772 | |||||||||||||||||
RSU | 1/3/2019 |
|
|
|
|
|
|
|
|
|
|
|
| 4,057 (9) | 225,772 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards(1) | All Other Stock Awards: | Grant Date Fair Value of | |||||||||||||||||
Name and Type of Equity | Grant Date | Threshold ($)(2) | Target ($)(3) | Maximum ($)(4) | Threshold (#)(5) | Target (#)(6) | Maximum (#)(7) | # of Shares of Stock or Units | Stock Awards ($)(8) | |||||||||||
Cary Grace | — | — | — | |||||||||||||||||
RSU | 11/28/2022 | 24,493 | 2,999,903 | |||||||||||||||||
Susan R. Salka | 265,000 | 1,325,000 | 2,650,000 | |||||||||||||||||
TSR PRSU | 1/15/2022 | 2,325 | 9,301 | 16,277 | 1,367,247 | |||||||||||||||
Adjusted EBITDA PRSU | 1/15/2022 | 3,554 | 14,214 | 28,428 | 1,539,945 | |||||||||||||||
RSU | 1/15/2022 | 14,214 | (10) | 1,539,945 | ||||||||||||||||
Jeffrey R. Knudson | 108,000 | 540,000 | 1,080,000 | |||||||||||||||||
TSR PRSU | 1/15/2022 | 793 | 3,170 | 5,548 | 465,990 | |||||||||||||||
Adjusted EBITDA PRSU | 1/15/2022 | 1,211 | 4,845 | 9,690 | 524,907 | |||||||||||||||
RSU | 1/15/2022 | 4,845 | (9) | 524,907 | ||||||||||||||||
Mark C. Hagan | 94,500 | 472,500 | 945,000 | |||||||||||||||||
TSR PRSU | 1/15/2022 | 661 | 2,642 | 4,624 | 388,374 | |||||||||||||||
Adjusted EBITDA PRSU | 1/15/2022 | 1,010 | 4,038 | 8,076 | 437,477 | |||||||||||||||
RSU | 1/15/2022 | 4,038 | (9) | 437,477 | ||||||||||||||||
Denise L. Jackson | 82,800 | 414,000 | 828,000 | |||||||||||||||||
TSR PRSU | 1/15/2022 | 581 | 2,325 | 4,069 | 341,775 | |||||||||||||||
Adjusted EBITDA PRSU | 1/15/2022 | 888 | 3,553 | 7,106 | 384,932 | |||||||||||||||
RSU | 1/15/2022 | 3,553 | (10) | 384,932 |
(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 |
(6) | For TSR PRSUs, the number of PRSUs set forth in this column assumes that under the TSR Measurement, our relative TSR percentile rank |
(7) | The number of TSR PRSUs set forth in this column assumes that under the TSR Measurement each of the following conditions |
(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 |
2023 Proxy Statement 87
Executive Compensation
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 |
(9) | 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. | ||||||
| The RSUs underlying this award are retirement eligible as of July 15, 2022 and vest in three tranches on each of the first, second and third anniversaries of the Grant Date. |
|
|
88 |
|
Executive Compensation
Outstanding Equity Awards at Fiscal Year End
The following table represents equity interests held by the named executive officers as of December 31, 2019,2022, 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 |
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(3) |
|
|
|
|
|
| 20,701 (4) | 1,289,879 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(5) |
|
|
|
|
|
| 4,496 (6) | 280,146 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 12/19/2017(7) | 13,687 | 852,837 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(8) |
|
|
|
|
|
| 20,174 (9) | 1,257,042 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(10) |
|
|
|
|
|
| 4,482 (11) | 279,273 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 12/17/2018(17) | 14,865 | 926,238 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(13) |
|
|
|
|
|
| 13,400 (14) | 834,954 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(15) |
|
|
|
|
|
| 5,189 (16) | 323,327 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 12/16/2019(17) | 20,755 | 1,293,244 |
|
|
|
|
|
| |||||||||||||||
Brian M. Scott |
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(3) |
|
|
|
|
|
| 7,245 (4) | 451,436 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(5) |
|
|
|
|
|
| 1,574 (6) | 98,076 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(13) | 2,077 | 129,418 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(8) |
|
|
|
|
|
| 8,006 (9) | 498,854 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(10) |
|
|
|
|
|
| 1,779 (11) | 110,849 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(17) | 4,766 | 296,969 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(13) |
|
|
|
|
|
| 4,101 (14) | 255,533 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(15) |
|
|
|
|
|
| 1,588 (16) | 98,948 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(17) | 6,352 | 395,793 |
|
|
|
|
|
| |||||||||||||||
Ralph S. Henderson |
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(3) |
|
|
|
|
|
| 7,245 (4) | 451,436 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(5) |
|
|
|
|
|
| 1,574 (6) | 98,076 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(13) | 2,077 | 129,418 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(8) |
|
|
|
|
|
| 8,006 (9) | 498,854 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(10) |
|
|
|
|
|
| 1,779 (11) | 110,849 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(17) | 4,766 | 296,969 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(13) |
|
|
|
|
|
| 4,101 (14) | 255,533 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(15) |
|
|
|
|
|
| 1,588 (16) | 98,948 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(17) | 6,352 | 395,793 |
|
|
|
|
|
| |||||||||||||||
Denise L. Jackson |
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(3) |
|
|
|
|
|
| 4,242 (4) | 264,319 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(5) |
|
|
|
|
|
| 922 (6) | 57,450 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/4/2017(13) | 1,216 | 75,769 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(8) |
|
|
|
|
|
| 3,442 (9) | 214,471 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(10) |
|
|
|
|
|
| 765 (11) | 47,667 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/5/2018(17) | 2,050 | 127,736 |
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(13) |
|
|
|
|
|
| 2,619 (14) | 163,190 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(15) |
|
|
|
|
|
| 1,014 (16) | 63,182 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| 1/3/2019(17) | 4,057 | 252,792 |
|
|
|
|
|
|
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) | ||||||||||||
Cary Grace | 11/28/2022 | (3) | 8,164 | 839,422 | |||||||||||||||||
11/28/2022 | (3) | 16,329 | 1,678,948 | ||||||||||||||||||
Susan R. Salka | 1/6/2020 | (4) | 33,559 | (5) | 3,450,536 | ||||||||||||||||
1/6/2020 | (6) | 23,336 | (7) | 2,399,408 | |||||||||||||||||
12/16/2020 | (8) | 6,673 | 686,118 | ||||||||||||||||||
1/4/2021 | (9) | 29,304 | (10) | 3,013,037 | |||||||||||||||||
1/4/2021 | (11) | 23,522 | (12) | 2,418,532 | |||||||||||||||||
9/20/2021 | (8) | 20,581 | 2,116,138 | ||||||||||||||||||
1/15/2022 | (13) | 28,428 | (14) | 2,922,967 | |||||||||||||||||
1/15/2022 | (15) | 16,277 | (16) | 1,673,601 | |||||||||||||||||
1/15/2022 | (8) | 14,214 | 1,461,483 | ||||||||||||||||||
Jeffrey R. Knudson | 11/2/2021 | (3) | 19,606 | 2,015,889 | |||||||||||||||||
1/15/2022 | (13) | 9,690 | (14) | 996,326 | |||||||||||||||||
1/15/2022 | (15) | 5,548 | (16) | 570,445 | |||||||||||||||||
1/15/2022 | (3) | 4,845 | 498,163 | ||||||||||||||||||
Mark C. Hagan | 1/6/2020 | (4) | 6,045 | (5) | 621,547 | ||||||||||||||||
1/6/2020 | (6) | 4,204 | (7) | 432,255 | |||||||||||||||||
1/6/2020 | (17) | 1,203 | 123,692 | ||||||||||||||||||
3/9/2020 | (18) | 2,603 | 267,640 | ||||||||||||||||||
1/4/2021 | (9) | 7,692 | (10) | 790,891 | |||||||||||||||||
1/4/2021 | (11) | 6,174 | (12) | 634,811 | |||||||||||||||||
1/4/2021 | (3) | 4,639 | 476,982 | ||||||||||||||||||
8/15/2021 | (19) | 11,375 | (20) | 1,169,578 | |||||||||||||||||
1/15/2022 | (13) | 8,076 | (14) | 830,374 | |||||||||||||||||
1/15/2022 | (15) | 4,624 | (16) | 475,440 | |||||||||||||||||
1/15/2022 | (3) | 4,038 | 415,187 | ||||||||||||||||||
Denise L. Jackson | 1/6/2020 | (4) | 6,329 | (5) | 650,748 | ||||||||||||||||
1/6/2020 | (6) | 4,401 | (7) | 452,511 | |||||||||||||||||
1/6/2020 | (17) | 1,259 | 129,450 | ||||||||||||||||||
1/4/2021 | (9) | 5,158 | (10) | 540,346 | |||||||||||||||||
1/4/2021 | (11) | 4,141 | (12) | 425,778 | |||||||||||||||||
1/4/2021 | (8) | 3,111 | 319,873 | ||||||||||||||||||
8/15/2021 | (19) | 11,375 | (20) | 1,169,578 | |||||||||||||||||
1/15/2022 | (13) | 7,106 | (14) | 730,639 | |||||||||||||||||
1/15/2022 | (15) | 4,069 | (16) | 418,375 | |||||||||||||||||
1/15/2022 | (8) | 3,553 | 365,319 |
(1) | ||||
|
|
|
|
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, |
2023 Proxy Statement 89
Executive Compensation
trading day of the year). For PRSUs, the number of shares set forth in the applicable column may be more than the target amount granted under the award as detailed in the footnotes below, and the amount ultimately received for each award may be different than the number of shares identified. |
(3) | 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. |
(4) | The adjusted EBITDA PRSUs underlying this award vested on January 6, 2023 and settled on February 15, 2023 after the Compensation Committee determined the Company’s 2022 adjusted EBITDA. |
(5) | Because the number of shares earned under this award was based on the Company’s 2022 adjusted EBITDA, we set forth the number of shares earned. Based on the Company’s adjusted EBITDA in each of the three performance periods consisting of 2020, 2021 and 2022, 171% of the target amount for this award was earned. |
(6) | These PRSUs vested on January |
The Compensation Committee performed the TSR Measurement for this award for the measurement period ended December 31, |
The RSUs underlying this award vest in three tranches on each of the first, second and third anniversaries of the Grant Date and are irrevocable by the Company in the event of the executive’s retirement. | |
(9) | The adjusted EBITDA |
| |
(10) | Pursuant to the instructions set forth to Item 402(f)(2) of Regulation S-K, which provides that the number of shares |
|
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, |
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. |
|
|
|
|
|
The adjusted EBITDA |
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 | |
(15) | The TSR PRSUs underlying this award vest on the |
(16) | The ultimate number of |
(17) | 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, but are still reflected on this table as unvested because they remained unvested as of December 31, 2022. | ||||||
| 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. | |||||
(19) |
| |||||
(20) | 50% of the target TSR PRSUs underlying this award vested on August 16, 2022. The Compensation Committee performed the TSR Measurement for this award for the measurement period ended August 16, 2022 on August 16, 2022. Relative TSR measured at the 87th percentile and Absolute TSR was positive. Based on those results, the number of PRSUs for this award for the first performance period was the maximum amount that could have been received under the award, vested as of August 16, 2022. The Compensation Committee will perform the TSR Measurement following the end of the two-year performance period for the remainder of this award, which shall occur within 30 days after August 15, 2023. We describe the TSR Measurement in detail in the CD&A section above. If we were to have conducted the TSR Measurement on December 31, 2022, Relative TSR would have measured at the 86th percentile. Based on those results, TSR PRSUs equal to 175% of target would have been earned. |
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Executive Compensation
Option 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 2019,2022, as of December 31, 2019.2022.
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) | ||||||||||||
Susan R. Salka |
| 193,949 |
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| $8,571,772 |
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| 74,587 |
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| 4,226,424 |
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Brian M. Scott |
| — |
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| — |
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| 59,148 |
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| 3,304,694 |
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Ralph S. Henderson |
| — |
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| — |
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| 59,148 |
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| 3,304,694 |
| ||||
Denise L. Jackson |
| — |
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| — |
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| 13,046 |
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| 727,690 |
|
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||
Cary Grace | — | — | — | — | ||||
Susan R. Salka | — | — | 88,629 | 9,339,720 | ||||
Jeffrey R. Knudson | — | — | 9,656 | 1,226,698 | ||||
Mark C. Hagan | — | — | 28,356 | 3,133,889 | ||||
Denise. L. Jackson | — | — | 28,203 | 3,107,581 |
(1) |
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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 day prior to the applicable vest dates. |
Nonqualified Deferred Compensation
We adopted and maintain oura Deferred Compensation Plan which providesto provide 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.plan, with exception to Ms. Grace and Mr. Knudson, who were eligible to participate in 2022, because they did not exceed the compensation threshold for at least a portion of 2022. In 2019,2022, we matched 100% up to 50% of the first 6% and 100% of the next 4%10% of the executive’s eligible compensation for a maximum match of 7%10% of the executive’s cash compensation.compensation through June 25, 2022 and then 50% of their contribution up to 6% and 100% of the next 4% contribution for the remainder of 2022. 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 Market Index, Fidelity VIP Investment Grade Bond, PIMCO VIT Real Return Portfolio, MFS VIT Value, Dreyfus Stock Index, American Funds ISwhich were available throughout all of 2022 are as follows: Hartford Small Cap 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, Principal LargeCap Growth I R5, MFS Mid Cap Value R4,Y, MassMutual Select Mid Cap Growth R5, Dodge & Cox International Stock, Invesco Diversified Dividend R5, and the Mid Cap Growth Fund Fee Class I1. In addition to these, there is a series of target date funds, which include several underlying funds. For the first half of 2022, these funds included 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 Z, 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. Effective August 8, 2022, the target date funds were replaced with the Blackrock Lifepath target date series which as the following underlying funds: iShares Core MSCI Total Intl Stk ETF (IXUS), iShares Developed Real Estate Idx K (BKRDX), iShares Russell 1000 Large-Cap Idx K (BRGKX), iShares Russell 2000 Small-Cap Idx K (BDBKX), iShares TIPS Bond ETF (TIP), iShares US Intermediate Credit Bond Idx (BICBX), iShares US Intermediate Gov Bd Idx (BIGBX), iShares US Long Credit Bond Index (BLCBX), iShares US Long Government Bond Idx (BLGBX) and the iShares US Securitized Bond Index (BISBX). Effective August 8, 2022, the following funds were replaced: MFS Mid Cap Value Fund Class R4 was replaced with MFS Mid Cap Value Fund Class R6; PGIM Total Return Bond Fund – Class Z was replaced with PGIM Total Return Bond Fund – Class R6; Principal LargeCap Growth Fund I R-5 Class was replaced with Principal LargeCap Growth Fund I Class R-6; Principal LargeCap S&P 500 Index Fund Institutional Class was replaced with Fidelity 500 Index Fund; Victory Sycamore Small Company OppOpportunity Fund Class I Hartfordwas replaced with Victory Sycamore Small Company Opportunity Fund R6; BNY Mellon Bond Market Index Fund – Class I was replaced with Fidelity U.S. Bond Index Fund; Large Cap Value Fund CL I2 was replaced with Large Cap Value Fund CL I1; Principal International Equity Index Fund Institutional Class was replaced with Fidelity International Index Fund; Principal MidCap S&P 400 Index Fund Institutional Class was replaced with Fidelity Mid Cap Index Fund; Principal SmallCap S&P 600 Index Fund Institutional Class was replaced with Fidelity Small Cap Index Fund; and the Small Cap Growth Y and Principal International Equity Index.II I2 was replaced with Small Cap Growth Fund II Fee Class I1.
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 2019,2022, the Company set the rate of return at 3.1%2.2% per annum. In 2019, the Company changed the rate
2023 Proxy Statement | 91 |
Table of return to 3.9% per annum.Contents
Executive Compensation
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 20192022 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 ($)(2) | Aggregate Earnings (Loss) in Last FY ($)(3) | Aggregate Withdrawals or Distributions ($) | Aggregate Balance at FYE ($)(4) | ||||||
Cary Grace | |||||||||||
Susan R. Salka | 345,074 | 332,581 | (1,269,601) | — | 17,248,607 | (5) | |||||
Jeffrey R. Knudson | 30,084 | 36,829 | ($1,968) | — | 64,945 | ||||||
Mark C. Hagan | 1,089,252 | 137,488 | (540,239) | — | 2,965,323 | ||||||
Denise L. Jackson | 125,291 | 119,344 | (424,912) | — | 2,313,610 |
(1) | ||||
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NONQUALIFIED DEFERRED COMPENSATION TABLE
Name | Executive Contribution in Last FY ($) (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 executive 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 |
Termination of Employment and Change in Control Arrangements
Ms. Grace’s Severance Agreement
MS. SALKA’S EMPLOYMENT AGREEMENT
We are party to an employmenta severance agreement with Ms. Salka(the “Severance Agreement”), dated May 4, 2005, as amended February 6, 2008. The employment agreement providesNovember 28, 2022 providing 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, 2020 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. SalkaGrace will receive severance benefits undershould (1) the following three circumstances:Company terminate her employment without Cause(1), or (2) Ms. Grace resigns for Good Reason(2) (both deemed an “Involuntary Termination”).
(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 as (A) Executive’s failure to perform in any material respect his or her duties as an employee of the |
“Good Reason” is defined | |
92 |
Executive Compensation
In the event of an Involuntary Termination, except due to a Change-in-Control(3), Ms. Grace’s severance benefits will include: (1) a one-time cash payment equal to the sum of (A) 2 times Ms. Grace’s then-current annual base salary and (B) a prorated portion of her Average Bonus (an amount equal to the average of the annual performance bonus payments received by Ms. Grace for the three most recent fiscal years (or such fewer number of fiscal years during which Ms. Grace was employed)) and (2) reimbursement for COBRA health coverage for her health insurance for an 18-month period following the Involuntary Termination (or until such time as Ms. Grace becomes eligible for comparable coverage under another employer’s health plans, whichever is earlier), less her share of premiums.
Involuntary Termination due to Change-in-Control. If an Involuntary Termination occurs within one year of a Change in Control, Ms. Grace’s severance benefits will include (1) a one-time cash payment equal to 2.5 times her then-current annual base salary, (2) a one-time cash payment equal to 2.5 times her Average Bonus, (3) a one-time cash payment equal to a prorated portion of her Average Bonus, and (4) reimbursement for COBRA health coverage for her health insurance for an 18-month period following the Involuntary Termination (or until such time as Ms. Grace becomes eligible for comparable coverage under another employer’s health plans, whichever is earlier), less her share of premiums. The following table sets forth illustrative examples of the payments and benefits Ms. Grace would have received if any of the circumstances described above occurred as of December 31, 2022.
Termination Reason | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | Tax Gross-Up ($) | Total ($) | ||||||
Termination of Employment by Us without Cause or by Ms. Grace for Good Reason Absent a Change in Control | 2,120,000 | — | 15,201 | 1,702,265(1) | — | 3,837,466 | ||||||
Termination of Employment by Us without Cause or by Ms. Grace for Good Reason with Change in Control | 2,650,000 | — | 15,201 | 2,518,370(2) | 5,183,571 |
(1) | Represents the value of full acceleration of unvested RSUs pursuant to the RSU grant agreement for the buy-out award in addition to the vesting of a pro-rated portion of RSUs pursuant to the RSU grant agreement for the sign-on award based on the number of full calendar months elapsed between the grant date and the termination date. For the purpose of calculating the value of the vesting of the accelerated RSUs, we used $102.82, the closing price of our Common Stock on December 31, 2022, as the fair market value. |
(2) | Represents the value of full acceleration of unvested RSUs pursuant to the respective RSU grant agreements for the buy-out and sign-on awards. For the purpose of calculating the value of the vesting of the accelerated RSUs, we used $102.82, the closing price of our Common Stock on December 31, 2022, as the fair market value. |
On or after a Change in Control and ending on the |
“Change in |
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Executive Compensation
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROLExecutive Officer Severance Agreements
ARRANGEMENTS FOR CHIEF EXECUTIVE OFFICER
The following table sets forth illustrative examples of the payments and benefits Ms. Salka would have received if any of the circumstances described above occurred as of December 31, 2019.
Termination Reason | Cash Severance ($) | Bonus ($) | Benefits ($) (1) | Value of Accelerated 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 | ||||||||||||||||
Death or Disability | 2,000,000 | 924,775 | 16,264 | — |
| 2,941,039 | ||||||||||||||||
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 |
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EXECUTIVE OFFICER SEVERANCE AGREEMENTS
As of December 31, 2019,2022, we were party to executive severance agreements with each of Mr. Knudson, Mr. Hagan and Ms. Jackson Mr. Henderson 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,”(1) 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 (inexecutive officer resigns for “good reason”(2) (in either case, an involuntary termination).
If an involuntary termination occurs, but not within one year of a “change in control” (defined as(as defined in Ms. Salka’s employment agreement, see footnote 8 on the pageGrace’s Severance Agreement 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)”reason” after a “change in control” and generally receive the same severance benefits described in the preceding paragraph.
“Cause” is defined as (A) Executive’s failure to perform in any material respect his or her duties as an employee of the Company, (B) violation of the Company’s Code of Business Conduct, Code of Ethics for Senior Financial Officers and Principal Executive Officer, and/or Securities Trading Policy, (C) the engaging by Executive in willful misconduct or gross negligence which is injurious to the Company or any of its affiliates, monetarily or otherwise, (D) the commission by Executive of an act of fraud or embezzlement against the Company or any of its affiliates, or (E) the conviction of Executive of a crime which constitutes a felony or any lesser crime that involves Company property or a pleading of guilty or nolo contendere with respect to a crime which constitutes a felony or any lesser crime that involves Company property. | |
(2) | “Good Reason” for purposes of an involuntary termination not within one year after a “change in control” means the occurrence of any of the following events without the named executive officer’s express written consent: (i) a material reduction in the executive’s base salary or target annual bonus compensation unless such reduction is commensurate with reductions simultaneously made to similarly situated executives, (ii) the Company’s assignment to the executive of duties that are materially inconsistent and adverse to his or her position, 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. 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 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. | ||||||
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94 | ||||||||
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Executive Compensation
The following table sets forth illustrative examples of the payments and benefits Mr. Scott,Knudson, Mr. HendersonHagan, and Ms. Jackson would have received if any of the circumstances described above occurred as of December 31, 2019.2022. Ms. Salka is not reflected below as she retired as President and Chief Executive Officer of the Company on November 27, 2022 and as a result, would not be entitled to any payments as of the measurement date as the result of severance or a change in control.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROLJEFFREY R. KNUDSON
ARRANGEMENTS OTHER EXECUTIVE OFFICERS
BRIAN M. SCOTT | ||||||||||||||||||||
Termination Reason | Cash Severance | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | TOTAL ($) | |||||||||||||||
Involuntary Absent a Change in Control |
| 505,000 |
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| 415,884 |
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| 10,864 |
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| — |
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| 931,748 |
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Involuntary Within One Year of a Change in Control |
| 1,010,000 |
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| 831,769 |
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| 10,864 |
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| 3,029,014 |
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| 4,881,646 |
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RALPH S. HENDERSON | ||||||||||||||||||||
Termination Reason | Cash Severance | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | TOTAL ($) | |||||||||||||||
Involuntary Absent a Change in Control |
| 505,000 |
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| 370,434 |
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| 11,890 |
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| 887,324 |
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Involuntary Within One Year of a Change in Control |
| 1,010,000 |
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| 740,869 |
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| 11,890 |
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| 3,029,014 |
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| 4,791,772 |
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DENISE L. JACKSON | ||||||||||||||||||||
Termination Reason | Cash Severance | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($) | TOTAL ($) | |||||||||||||||
Involuntary Absent a Change in Control |
| 430,000 |
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| 249,889 |
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| 11,316 |
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| 691,205 |
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Involuntary Within One Year of a Change in Control |
| 860,000 |
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| 499,779 |
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| 11,316 |
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| 1,639,937 |
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| 3,011,032 |
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Termination Reason | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($)(1) | Total ($) | |||||
Involuntary Absent a Change in Control | 630,000 | 1,080,000 | 18,977 | 4,080,720 | 5,809,697 | |||||
Involuntary Within One Year of a Change in Control | 1,260,000 | 2,160,000 | 18,977 | 4,080,720 | 7,519,697 | |||||
MARK C. HAGAN | ||||||||||
Termination Reason | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($)(1) | Total ($) | |||||
Involuntary Absent a Change in Control | 525,000 | 666,125 | 18,977 | — | 1,210,102 | |||||
Involuntary Within One Year of a Change in Control | 1,050,000 | 1,332,250 | 18,977 | 6,238,089 | 8,639,317 | |||||
DENISE L. JACKSON | ||||||||||
Termination Reason | Cash Severance ($) | Bonus ($) | Benefits ($) | Value of Accelerated Equity Awards ($)(1) | Total ($) | |||||
Involuntary Absent a Change in Control | 500,000 | 653,300 | 13,347 | — | 1,116,647 | |||||
Involuntary Within One Year of a Change in Control | 1,000,000 | 1,306,600 | 13,347 | 5,013,092 | 7,333,039 |
(1) |
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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 annualannualized total compensation. Ourcompensation of our CEO, Ms. Grace, for fiscal year 2022.
Pursuant to SEC rules, we are permitted to calculate our 2022 CEO pay ratio is calculatedusing the same median employee that we identified in accordance with the SEC’s final rules regarding the CEO pay ratio disclosure requirements promulgated pursuant2020 because we do not believe there have been any changes to Item 402(u) of RegulationS-K.
In 2017, we identified our employee population for the purposes of calculatingor employee compensation arrangements during 2022 that would have a significant impact on our CEO pay ratio as of October 27, 2017. On this date,disclosure. Accordingly, we had approximately 2,879 corporate employees. Duringhave elected to use the fourth quarter of 2017, we had an average of (1)9,234 nurses, allied and other clinical healthcare professionals, (2) 384 executive and clinical leadership interim staff, and (3) 349 medical coding professionals and case managers contracted to work for us. This does not include our locum tenens, all of whom are independent contractors and not our employees.same median employee.
To identifyWe calculated our median employee, we examined the 2017 total cash and equity compensation for all full-time, part-time, temporary and seasonal employees, excluding our CEO and including the healthcare professionals mentioned above, as ofOctober 27, 2017. Wages were annualized for full-time corporate employees that 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/heremployee’s 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 2022, 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,$75,764, and our CEO’s annualannualized total compensation was $5,714,525,$4,262,478, of which $3,993,751$2,999,903 was variable compensation based on the performance of the Company. Since Ms. Grace joined the Company on November 28, 2022, we used her total annual base salary of $1,060,000, rather than the $81,538.46 in base salary that she received for 2022. She was also not eligible to receive an annual cash incentive bonus under the Bonus Plan. The resulting ratio of the total annual compensation of our median employee compared to the total annualannualized compensation of our CEO in 2019 is 103:2022 was 56:1.
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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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 inPay Versus Performance
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 2020 Annual Meeting of 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 ofadopted by the Securities and Exchange Commission includingpursuant to the Compensation DiscussionDodd-Frank Wall Street Reform and Analysis, Summary Compensation TableConsumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officers (“PEOs”) and Non-PEO NEOs and Company performance for the other related tables and narrative disclosure.”
Because your vote is advisory, it will not bind us, thefiscal years listed below. The Compensation Committee or our Board. However, our Board and our Compensation Committee valuedid not consider the opinionspay versus performance disclosure below in making its pay decisions for any 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.years shown.
Summary | Compensation | Summary | Compensation | Average Summary Compensation | Average Compensation | Value of Initial Fixed $100 Investment based on:4 | Pre-Bonus | |||||||||||||
Year | Compensation Table Total for Susan Salka1 ($) | Actually Paid to Susan Salka1,2,3 ($) | Compensation Table Total for Cary Grace1 ($) | Actually Paid to Cary Grace1,2,3 ($) | Table Total for Non-PEO NEOs1 ($) | Actually Paid to Non-PEO NEOs1,2,3 ($) | TSR ($) | Peer Group TSR ($) | Net Income ($ Millions) | Adjusted EBITDA5 ($ Millions) | ||||||||||
(a) | (b) | (c) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||
2022 | 8,468,824 | 7,987,377 | 3,305,296 | 2,823,763 | 2,904,018 | 3,534,932 | 165.01 | 118.22 | 444 | 868 | ||||||||||
2021 | 9,472,551 | 22,502,459 | — | — | 2,972,826 | 3,451,653 | 196.32 | 147.19 | 327 | 660 | ||||||||||
2020 | 6,025,299 | 8,091,337 | — | — | 1,874,937 | 1,760,065 | 109.53 | 133.81 | 71 | 335 |
(1) | Susan Salka was our PEO in 2020, 2021, and 2022. Cary Grace was our PEO in 2022. The individuals comprising the Non-PEO NEOs for each year presented are listed below. |
2020 | 2021 | 2022 | |||
Brian M. Scott | Brian M. Scott | Jeffrey R. Knudson | |||
Ralph S. Henderson | Christopher S. Schwartz | Mark Hagan | |||
Mark Hagan | Jeffrey R. Knudson | Denise Jackson | |||
Denise Jackson | Mark Hagan | ||||
Denise Jackson |
(2) | The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. |
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Executive Compensation
(3) | Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEOs and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards column set forth in the Summary Compensation Table. |
Year | Summary Compensation Table Total for Susan Salka ($) | Exclusion of Stock Awards for Susan Salka ($) | Inclusion of Equity Values for Susan Salka ($) | Compensation Actually Paid to Susan Salka ($) | |||||
2022 | 8,468,824 | (4,447,137) | 3,965,690 | 7,987,377 | |||||
2021 | 9,472,551 | (5,643,694) | 18,673,602 | 22,502,459 | |||||
2020 | 6,025,299 | (3,632,452) | 5,698,490 | 8,091,337 |
Year | Summary Compensation Table Total for Cary Grace ($) | Exclusion of Stock Awards for Cary Grace ($) | Inclusion of Equity Values for Cary Grace ($) | Compensation Actually Paid to Cary Grace ($) | |||||
2022 | 3,305,296 | (2,999,903) | 2,518,370 | 2,823,763 | |||||
2021 | — | — | — | — | |||||
2020 | — | — | — | — |
Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | |||||
2022 | 2,904,018 | (1,296,924) | 1,927,838 | 3,534,932 | |||||
2021 | 2,972,826 | (2,012,241) | 2,491,068 | 3,451,653 | |||||
2020 | 1,874,937 | (900,110) | 785,238 | 1,760,065 |
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Susan Salka ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Susan Salka ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Susan Salka ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Susan Salka ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Susan Salka ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Susan Salka ($) | Total - Inclusion of Equity Values for Susan Salka ($) | |||||||
2022 | 5,424,177 | (961,985) | — | (496,502) | — | — | 3,965,690 | |||||||
2021 | 8,521,434 | 9,159,676 | — | 992,492 | — | — | 18,673,602 | |||||||
2020 | 4,013,649 | 1,508,995 | — | 175,846 | — | — | 5,698,490 |
Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Cary Grace ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Cary Grace ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Cary Grace ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Cary Grace ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Cary Grace ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Cary Grace ($) | Total - Inclusion of Equity Values for Cary Grace ($) | |||||||
2022 | 2,518,370 | — | — | — | — | — | 2,518,370 | |||||||
2021 | — | — | — | — | — | — | — | |||||||
2020 | — | — | — | — | — | — | — |
2023 Proxy Statement | 97 |
Executive Compensation
Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs ($) | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | |||||||
2022 | 1,581,852 | (69,081) | — | 415,067 | 0 | — | 1,927,838 | |||||||
2021 | 1,966,827 | 832,469 | — | 37,890 | (346,117) | — | 2,491,068 | |||||||
2020 | 729,754 | 327,207 | — | (24,011) | (247,712) | — | 785,238 |
The | |
(5) | We determined Pre-Bonus Adjusted EBITDA to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEOs and |
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Description of Relationship Between PEO and Other NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our other NEOs, and our Net Income during the three most recently completed fiscal years.
Description of Relationship Between PEO and Other NEO Compensation Actually Paid and Pre-Bonus Adjusted EBITDA
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our other NEOs, and our Pre-Bonus Adjusted EBITDA during the three most recently completed fiscal years.
2023 Proxy Statement | 99 |
Executive Compensation
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEOs and other NEOs for 2022 to Company performance. The measures in this table are not ranked.
Pre-Bonus Adjusted EBITDA
Revenue
Adjusted EBITDA Performance
Relative TSR
Absolute TSR
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Audit Committee Matters |
PROPOSAL 3
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| 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, 2023. |
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The Audit Committee appointed KPMG LLP (“KPMG”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2023. The Board proposes and recommends that the shareholders ratify this appointment.
KPMG served as our principal independent registered public accounting firm for 2022. 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:
2022 ($) | 2021 ($) | |||
Audit Fees(1) | 2,430,890 | 2,000,000 | ||
Audit-Related Fees(2) | 21,683 | 10,960 | ||
Tax Fees(3) | 362,218 | 248,750 | ||
All Other Fees | — | — |
(1) | Audit fees in 2022 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 and (ii) reviews of the interim consolidated financial statements included in quarterly reports. | |||||||
(2) | Audit-related fees in 2022 consist principally of fees not reported under the “Audit Fees” heading, including fees in respect of accounting consultations. | |||||||
(3) |
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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 2021 and 2022, the Audit Committee approved all fees billed by KPMG prior to the engagement.
2023 Proxy Statement | 101 |
REPORT OF THE AUDIT COMMITTEEAudit Committee Matters
Report of the Audit Committee
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 controlcontrols 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.process, including the review of critical audit matters with the Company’s independent registered accounting firm, and technology-related risks, including cybersecurity risks. 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).the applicable requirements of the Public Company Accounting Oversight Board and the SEC. 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, 20192022 filed with the SEC.
Audit Committee Members
MARK G. FOLETTA
Financial Expert
TERI G. FONTENOT
Financial Expert
DAPHNE E. JONES
Financially Literate
JORGE A. CABALLERO
Financial Expert
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Shareholder Proposal |