UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

Information Required in Proxy Statement

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

The Providence Service Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

700 Canal1275 Peachtree Street, ThirdSixth Floor

Stamford, CT 06902
Atlanta, GA 30309
_________________

April 28, 2017 29, 2020

Dear Stockholder:

We are pleased to invite you to attend the 20172020 Annual Meeting of Stockholders (the “Annual Meeting”) of The Providence Service Corporation (the(“Providence” or the “Company”), which will be held on Tuesday, June 15, 2017,16, 2020, at 11:10:00 a.m., Mountain Daylight Time, at 4700 South Syracuse Street, Fourth Floor, Denver, CO 80237.

We intend to hold the annual meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local time,governments may impose. In the event it is not possible or advisable to hold the annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our website at 700 Canal St., Third Floor, Stamford, CT 06902.    www.prscholdings.com for updated information. If you are planning to attend our meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting.

At the Annual Meeting you will be asked to consider and vote on the proposals described in the accompanying notice of annual meeting and Proxy Statement, as well as such other business as may properly come before the meeting.

Your vote is important, and we encourage you to vote promptly. For record holders, regardless of whether or not you are able to attend the Annual Meeting in person, please follow the instructions contained in the Noticenotice of annual meeting on how to vote via the Internet, by telephone, or request a paper proxy card to complete, sign and return by mail so that your shares may be voted. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares.

On behalf of the Board of Directors and management of the Company, I extend our appreciation for your continued support.

	James M. LindstromDaniel E. Greenleaf
	Director, President and Chief Executive Officer

Table of Contents

700 Canal

1275 Peachtree Street, ThirdSixth Floor
Atlanta, GA 30309

Stamford, CT 06902
_________________

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 15, 2017
_________________16, 2020

_________________

TO OUR STOCKHOLDERS:

Notice is hereby given that the 20172020 Annual Meeting of Stockholders (the “Annual Meeting”) of The Providence Service Corporation (the “Company”) will be held at 700 Canal St., Third4700 South Syracuse Street, Fourth Floor, Stamford, CT 06902,Denver, CO 80237, at 11:10:00 a.m. (local time)Mountain Daylight Time on Tuesday, June 15, 2017.16, 2020. The Annual Meeting is being held for the following purposes:

1.   To elect three Class 2 directors each to serve for a three-year term until the 2020

1.

To elect three Class 2 directors, each to serve for a three-year term until the 2023 annual meeting of stockholders or until his or her successor has been duly elected and qualified, as more fully described in the accompanying Proxy Statement;

Only stockholders of record of the Company’s common stock, $0.001 par value $0.001 per share, and Series A convertible preferred stock,Convertible Preferred Stock, $0.001 par value $0.001 per share, as shown by the transfer books of the Company, at the close of business on April 20, 2017,22, 2020, are entitled to notice of, and to vote at, the Annual Meeting or any adjournments, postponementsadjournment, postponement or reschedulingsrescheduling thereof.

All stockholders are cordially invited to attend the Annual Meeting in person. However, to ensure your representation at the Annual Meeting, you are urged to vote your shares in advance using one of the methods outlined in the accompanying Proxy Statement and proxy card.

We intend to hold the annual meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold the annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our website at www.prscholdings.com for updated information. If you are planning to attend our meeting, please check the website one week prior to the meeting date.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on Tuesday, June 15, 2017.16, 2020.We have elected to provide access to our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” rules. Consequently, the majority of stockholders will not receive paper copies of our proxy materials. We will instead mail stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) with instructions for accessing proxy materials and voting via the Internet. The Notice will also provide information on how stockholders may obtain paper copies of our proxy materials if they so choose.The Proxy Statement, form of proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 20162019 are available free of charge at www.envisionreports.com/PRSC.www.proxyvote.com. The Notice or our proxy materials, as applicable, are first being mailed to stockholders on or about April 28, 2017.

29, 2020.

April 28, 2017
Stamford, Connecticut

IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE
VOTE YOUR SHARES USING ONE OF THE METHODS OUTLINED IN THE PROXY STATEMENT
AS PROMPTLY AS POSSIBLE. SEE “VOTING PROCEDURES” IN THE ACCOMPANYING PROXY
STATEMENT FOR FURTHER DETAILS. IF YOU DO ATTEND THE MEETING, YOU MAY, IF
YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.

Table of Contents

THE PROVIDENCE SERVICE CORPORATION
700 Canal

1275 Peachtree Street, ThirdSixth Floor
Atlanta, GA 30309

Stamford, CT 06902

PROXY STATEMENT

2020 ANNUAL MEETING OF STOCKHOLDERS

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of The Providence Service Corporation (the “Company”), a Delaware corporation, for use at the 20172020 Annual Meeting of Stockholders (the “Annual Meeting”) of the Company, to be held at 700 Canal St., Third4700 South Syracuse Street, Fourth Floor, Stamford, CT 06902,Denver, CO 80237, at 11:10:00 a.m. (local time)Mountain Daylight Time on Tuesday, June 15, 2017,16, 2020, and at any adjournments, postponementsadjournment, postponement or reschedulingsrescheduling of the meeting, for the purposes set forth herein and in the attached notice of the Annual Meeting. Accompanying this Proxy Statement is the Board’s proxyProxy for the Annual Meeting, which you may use to indicate your vote on the proposals described in this Proxy Statement.

We intend to hold the annual meeting in person. However, we are actively monitoring the coronavirus (COVID-19); we are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state, and local governments may impose. In the event it is not possible or advisable to hold the annual meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor our website at www.prscholdings.com for updated information. If you are planning to attend our meeting, please check the website one week prior to the meeting date.

As is the practice of many other companies, the Company is now providingprovides proxy materials by a “notice and access” process through the Internet. Those stockholders who wish to receive paper proxy materials may request them. This Proxy Statement and accompanying proxy will be mailed to Company stockholders who request paper proxy materials on or about April 28, 2017.29, 2020.

Only stockholders of record, as shown on the transfer books of the Company, at the close of business on April 20, 201722, 2020 (the “Record Date”), will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments, postponementsadjournment, postponement or reschedulingsrescheduling thereof. On the Record Date, there were 13,465,38312,960,754 shares of the Company’s common stock, $0.001 par value $0.001 per share (“Common Stock”), outstanding, and 803,398including 65,618 restricted shares that do not have the right to vote. There are also 798,772 shares of the Company’s Series A convertible preferred stock,Convertible Preferred Stock, $0.001 par value $0.001 per share (“Preferred Stock”), outstanding, which, on an as-converted basis, represented 2,014,5382,002,939 shares of Common Stock. The Common Stock and Preferred Stock are the only outstanding classes of capital stock of the Company with voting rights, and the Common Stock and the Preferred Stock vote together as a single class. Each share of Common Stock is entitled to one vote, and each share of Preferred Stock is entitled to that number of votes equal to the whole number of shares of Common Stock into which such holder’s aggregate number of shares of Preferred Stock are convertible as of the close of business on the Record Date. As of the Record Date, each share of outstanding Preferred Stock was convertible into approximately 2.51 shares of Common Stock.

Sending in a signed proxy will not affect a stockholder’s right to attend the Annual Meeting and vote in person since the proxy is revocable. All proxies which are properly completed, signed and returned to the Company prior to the Annual Meeting or voted by internetInternet or telephone, and which have not been revoked, will, unless otherwise directed by the stockholder, and other than with respect to broker non-votes, as discussed below, be voted in accordance with the recommendations of the Board set forth in this Proxy Statement. A stockholder may revoke his or her proxy at any time before it is voted by following the instructions under “Voting Procedures—Changing or Revoking Your Vote.”

The principal executive offices of the Company are located at 700 Canal1275 Peachtree Street, ThirdSixth Floor, Stamford, CT 06902,Atlanta, GA 30309 and the telephone number of the Company is (203) 307-2800.(404) 888-5800. References to the “Company”, “Providence”, “we”,“Company,” “Providence,” “we,” “us” or “our” and similar terms mean The Providence Service Corporation and, except as otherwise specified herein, its subsidiaries. When such terms are used in reference to the Common Stock or Preferred Stock, they refer specifically to The Providence Service Corporation.

VOTING PROCEDURES

The presence, in person or represented by proxy, of the holders of a majority of the outstanding shares of Common Stock and Preferred Stock (on an as-converted basis) entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. All shares of Common Stock and Preferred Stock present in person or represented by proxy and entitled to vote at the Annual Meeting, will be counted in determining the presence of a quorum. Withheld votes, abstentions and broker non-votes (i.e.,(that is when a nominee holding shares of Common Stock or Preferred Stock cannot vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner) will be included in the number of shares present at the Annual Meeting for the purpose of determining the presence of a quorum.

A holder of Common Stock is entitled to cast one vote for each share of Common Stock held of record on the Record Date on all matters to be considered at the Annual Meeting. A holder of Preferred Stock is entitled to that number of votes equal to the whole number of shares of Common Stock into which such holder’s aggregate number of shares of Preferred Stock are convertible as of the close of business on the Record Date. As of the Record Date, each share of outstanding Preferred Stock was convertible into approximately2.51approximately 2.51 shares of Common Stock.

If you hold your shares in “street name” (that is, your shares are held in an account at and registered in the name of a brokerage firm, bank, broker-dealer or similar organization), your broker may vote your shares under certain limited circumstances if you do not provide voting instructions before the Annual Meeting, in accordance with the rules of the New York Stock Exchange that are applicable to the Nasdaq Stock Market (“NASDAQ”) that govern the banks and brokers. These circumstances include voting your shares on “routine matters,” such as the ratification of the appointment of our independent registered public accountants. With respect to routine matters, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted. The election of directors and the non-binding advisory vote approving executive compensation, however, are not considered routine matters. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares.

Approval of Proposal 1 requires a majority of the votes cast for theeach director nominees.nominee. Abstentions and broker non-votes are not considered votes cast with respect to the election of directors and thus will have no effect on the election of directors.

A plurality of In accordance with the votes castCompany’s Amended and Restated Bylaws (“Bylaws”), cumulative voting is requirednot permitted for the approvalelection of Proposal 3. This means that whichever of 1, 2 or 3 years receives the most votes will be approved. Abstentions and broker non-votes will not count toward the determination of whichever of 1, 2 or 3 years is approved.directors.

Approval of ProposalsProposal 2 and 4 will requirerequires the affirmative vote of the majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Abstentions are considered present and entitled to vote on ProposalsProposal 2 and 4 and will have the same legal effect as votes against any such proposal. Broker non-votes are not considered entitled to vote on Proposal 2 and will not count as votes against such proposalsproposal at the Annual Meeting. Cumulative voting is not permitted.

If you hold yourApproval of Proposal 3 requires the affirmative vote of the majority of shares present in “street name” (thatperson or represented by proxy and entitled to vote at the Annual Meeting. Abstentions are considered present and entitled to vote on Proposal 3 and will have the same legal effect as votes against such proposal. There will be no broker non-votes associated with this proposal, as the ratification of our independent registered public accounting firm is a routine matter. As a result, if your shares are held in an account at“street name” and registered in the name of a brokerage firm,you do not give your bank broker-dealer or similar organization) absentbroker instructions from you, your broker mayon how to vote, your shares onmay be voted by the ratification of the appointment of KPMG LLP (“KPMG”) as the independent registered public accounting firm of the Company for the 2017 fiscal year, but may not vote your shares on the election of directors, the non-binding advisory vote to approve named executive officer compensation or the non-binding advisory vote to approve the frequency of future non-binding advisory votes to approve named executive officer compensation. If you do not provide voting instructions on these items to your broker your shares will count as broker non-votes with respect to these matters. Accordingly, it is particularly important that beneficial owners instruct their brokers how they wish to vote their shares.in its discretion.

NoticeNoticeand Access.The Company uses the Internet as the primary means of furnishing proxy materials to stockholders. Stockholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice”) with instructions for accessing the proxy materials and voting via the Internet. The Notice will also provide information on how stockholders may obtain paper copies of our proxy materials.

The Company’s proxy materials are also available at www.envisionreports.com/PRSC.www.proxyvote.com. 

Stockholder of Record.If you are the stockholder of record with respect to your shares (that is, your shares are registered directly in your name with the Company’s transfer agent, Computershare Trust Company, N.A.), you may vote using the following methods:

The deadline for registered stockholders to vote by Internet, telephone or mail is 11:59 p.m., Eastern Daylight Time on June 14, 2017.15, 2020.

Beneficial Owner of Shares Held in Street Name. If you are the beneficial owner of shares held in street name (that is, your shares are held in an account at and registered in the name of a brokerage firm, bank, broker-dealer or similar organization), you may vote using the following methods:

You must bring a copy of the legal proxy to the Annual Meeting and ask for a ballot from a Company representative when you arrive. In order for your vote to be counted, you must hand boththeboth the copy of the legal proxy and your completed ballot to a Company representative to be provided to the inspector of election.

•     Mail. If you requested printed copies of the proxy materials by mail, you may vote by proxy by filling out the voting instruction form included with your proxy materials and returning it in the envelope provided.

Changing or Revoking Your Vote.After voting, you may change your vote one or more times by completing and returning a new proxy to the Company, by voting again either by Internet or telephone as described in this Proxy Statement, or by voting in person at the Annual Meeting. You may request a new proxy card from the Company’s Corporate Secretary at the address below. You may revoke a proxy before its exercise by filing written notice of revocation with the Company’s Corporate Secretary at 700 Canal1275 Peachtree Street, ThirdSixth Floor, Stamford, CT 06902,Atlanta, GA 30309, before the Annual Meeting. The last vote received chronologically will supersede any prior votes. The deadline for registered stockholders to change their vote by Internet or telephone is 11:59 p.m., Eastern Daylight Time on June 14, 2017.15, 2020.

If you hold your shares through a brokerage firm, bank, broker-dealer or similar organization, please refer to your proxy card or other information forwarded by such organization to learn how you can revoke your proxy and change your vote.

Failure to Provide Voting Instructions.Other than with respect to broker non-votes, if you submit a signed proxy card or vote by Internet or telephone, but do not indicate how you want your shares voted, the persons named in the enclosed proxy card will vote your shares of Common Stock or Preferred Stock, as the case may be:

•     “FOR” the non-binding advisory vote to approve named executive officer compensation;

•     “FOR” the ratification of the appointment of KPMG as the independent registered public accounting firm of the Company to serve for the 2020 fiscal year; and

•     with respect to any other matter that properly comes before the Annual Meeting, the proxy holders will vote the proxies in their discretion in accordance with their best judgment and in the manner they believe to be in the best interest of the Company.

Solicitation of Proxies.The entire cost of soliciting proxies, including the costs of preparing, assembling and mailing this Proxy Statement, the proxy card and any additional soliciting materials furnished to stockholders, will be borne by the Company. In addition to solicitation by mail, officers, directors or employees of the Company may solicit proxies in person or by telephone, facsimile or similar means without additional compensation. Upon request, the Company will pay the reasonable expenses incurred by record holders of the Common Stock or Preferred Stock who are brokers, dealers, banks or voting trustees, or their nominees, for sending proxy materials and the Annual Report on Form 10-K for the fiscal year ended December 31, 20162019 (the “2016“2019 Annual Report”) to the beneficial owners of the shares they hold of record.

The Company is not presently aware of any matters that will be brought before the Annual Meeting that are not reflected in the attached Notice of the Annual Meeting. If any such matters are brought before the Annual Meeting, the persons named in the enclosed proxy will act or vote in accordance with their best judgment.

VOTING SECURITIES OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of the Record Date, with respect to the beneficial ownership of Providence’s Common Stock and Preferred Stock by (a) each stockholder known by us to own beneficially more than 5% of our outstanding voting power of Common Stock and Preferred Stock, (b) each of Providence’s directors and nominees for director, (c) each of Providence’s executive officers named in the “Summary Compensation Table” which follows, who were named executive officers on the Record Date and (d) all of Providence’s directors and executive officers as a group. Except as otherwise specified, the named beneficial owner has sole voting and investment power with respect to the shares.

Compensation Committee.The Compensation Committee currently consists of Mr. Kerley (Chairperson), Ms. MeintsMr. Carter and Mr. Wright. Ms. Norwalk served on the Compensation Committee from November 4, 2015 to July 26, 2016. Mr. Wright joined the Compensation Committee on July 27, 2016.Coulter.

The primary function of our Compensation Committee is to assist our Board in discharging its responsibilities relating to compensation of our executives. These responsibilities include reviewing our general compensation philosophy for executive officers, overseeing the development and implementation of compensation programs for executive officers and reviewing compensation levels, including incentive and equity-based compensation, for executive officers, all other employees, directors and Board committee members. Our Compensation Committee determines and approves compensation for our executive officers and administers our incentive and equity-based compensation plans. In doing so, it considers recommendations made by our CEO meeting in executive session with the Compensation Committee. Neither our CEO nor anyOur Compensation Committee also reviews, and makes recommendations to the Board regarding, the compensation of our other executive officers participates in our Compensation Committee’s final deliberations on compensation matters.CEO. Under its charter, the Compensation Committee may, in its discretion, form and delegate all or a portion of its authority, duties and responsibilities to one or more subcommittees or to an officer of the Company (so long as such officer does not decide his or her own compensation).

Since 2015 the Compensation Committee has engaged an independent compensation consultant, ClearBridge Compensation Group LLC (“ClearBridge”), a nationally recognized consulting firm, to review the executive compensation programs (including executive pay levels) and assist in structuring short-term and long-term incentive programs for executive and operational management. ClearBridge reports directly and solely to the Compensation Committee. ClearBridge does not provide any other services to the Company, except at the direction of the Compensation Committee. The Compensation Committee assessed the independence of ClearBridge pursuant to the applicable rules and concluded that ClearBridge’s work did not raise any conflict of interest that would prevent it from independently representing the Compensation Committee.

The Board has determined that each member of the Compensation Committee is independent as defined in applicable NASDAQ listing standards.

Nominating and Governance Committee.The Nominating and Governance Committee currently consists of Ms. Norwalk (Chairperson), Mr. Coulter and Ms. Meints. Mr. Kerley served on the Nominating and Governance Committee until July 26, 2016. Mr. Coulter joined the Nominating and Governance Committee on July 27, 2016.Wright.

The primary functions of our Nominating and Governance Committee are to identify individuals qualified to become members of our Board, of Directors, recommend to our Board a slate of director nominees for election at our next annual meeting of stockholders, monitor legal and regulatory compliance, and develop and recommend to our Board a set of corporate governance principles. These corporate governance principles are set forth in our Corporate Governance Guidelines which can be found on our website at www.prscholdings.com/corporategovernance and are available in print to any stockholder who requests a copy by writing to our Corporate Secretary.

The Board has determined that each member of the Nominating and Governance Committee is independent as defined in applicable NASDAQ listing standards.

The Audit, Compensation and Nominating and Governance Committees are each governed by a written charter approved by the Board. A copy of each committee’s charter is available on our website at www.prscholdings.com/corporategovernance.Providence intends to disclose any amendments to these charters required by the SEC or listing standards of NASDAQ at the same location on our website. The information contained on our website is not part of, and is not incorporated by reference in, this Proxy Statement or any other report we file with or furnish to the SEC.

Director Nomination Process

Director Qualifications

Nominees for director are selected on the basis of outstanding achievement in their careers and other factors, including: board experience; education; whether they are independent under applicable NASDAQ listing standards and theapplicable SEC rules; financial expertise; integrity; ability to make independent, analytical inquiries; understanding of the business environment; industry experience; and willingness to devote adequate time to Board and committee duties. The proposed nominee should also be free of conflicts of interest that could prevent such nominee from acting in the best interest of Providence and our stockholders. Additional special criteria apply to directors being considered to serve on a particular committee of the Board. For example, members of the Audit Committee must meet additional standards of independence and have the ability to read and understand Providence’s financial statements.

Director Nominee Selection Process

In evaluating potential director nominees, including those identified by stockholders, for recommendation to our Board, our Nominating and Governance Committee seeks individuals with talent, ability and experience from a wide variety of backgrounds to provide a diverse spectrum of experience and expertise relevant to a diversified business enterprise such as ours. Although we have no minimum qualifications, a candidate should represent the interests of all stockholders, and not those of a special interest group, have a reputation for integrity and be willing to make a significant commitment to fulfilling the duties of a director. Our Nominating and Governance Committee will screen and evaluate all recommended director nominees based on the criteria set forth above, as well as other relevant considerations. Our Nominating and Governance Committee will retain full discretion in considering its nomination recommendations to our Board. In identifying, evaluating and nominating individuals to serve as directors, our Board and its Nominating and Governance Committee do not rely on any preconceived guidelines or rules. Rather, our Board and its Nominating and Governance Committee believe that the Company is best served by directors with a wide range of perspectives, professional experiences, skills and other individual qualities and attributes and who come from diverse backgrounds.

To become a nominee, an incumbent director must also submit an irrevocable resignation to the Board that is contingent upon (a) thatsuch director receiving less than a majority of the votes cast in the uncontested election, and (b) acceptance of that resignation by the Board in accordance with the policies and procedures adopted by the Board for such purpose. The incumbent director must also complete and submit a questionnaire with respect to his or her background and execute a written representation and agreement (the “Director/Prospective Director Agreement”).

The Director/Prospective Director Agreement requires directors and nominees to disclose certain types of voting commitments and compensation arrangements and represent that the director or nominee, if elected, would be in compliance with all applicable corporate governance, conflicts of interest, confidentiality, securities ownership and stock trading policies and guidelines of the Company, and also provides for the immediate resignation of a director if such person is found by a court of competent jurisdiction to have breached the Director/Prospective Director Agreement in any material respect.

The Nominating and Governance Committee will consider properly submitted stockholder recommendations for director candidates. Director candidates recommended by stockholders are given the same consideration as candidates suggested by directors and executive officers. The Nominating and Governance Committee has the sole authority to select, or to recommend to the Board, the nominees to be considered for election as a director.

The officer presiding over the annual meeting of stockholders, in such officer’s sole and absolute discretion, may reject any nomination not made in accordance with the procedures outlined in this Proxy Statement and Providence’s amended and restated bylaws.Bylaws. Under Providence’s amended and restated bylaws,Bylaws, a stockholder who desires to nominate directors for election at an annual meeting of stockholders must comply with the procedures summarized below. Interested stockholders may review Providence’s amended and restated bylaws are available,Bylaws, at no cost, aton the SEC’s website, www.sec.gov, as Exhibit 3.2 to Providence’s Annual Report on Form 10-K filed with the SEC on March 12, 2010, or upon the stockholder’sby submitting a written request directed to the Company’s General CounselCorporate Secretary at the address given in the paragraph below. See “—Stockholder“Stockholder Nominations” below for a description of the procedures that must be followed to nominate a director.

Stockholder Nominations

According to Providence’s amended and restated bylaws,Bylaws, nominations by stockholders for directors to be elected at a meeting of stockholders which have not previously been approved by the Board must be submitted to our Corporate Secretary in writing, either by personal delivery, nationally-recognizednationally recognized express mail or United States mail, postage prepaid, at 700 Canal1275 Peachtree Street, ThirdSixth Floor, Stamford, CT 06902,Atlanta, GA 30309, not earlier than the close of business on the 120th calendar day, and not later than the close of business on the 60th calendar day, prior to the first anniversary of the immediately preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is more than 30 calendar days earlier or more than 60 calendar days later than such anniversary date, notice by the stockholder in order to be timely must be so delivered or received no earlier than the close of business on the 120th calendar day prior to the date of such annual meeting and not later than the close of business on the later of the 60th calendar day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 70 calendar days prior to the date of such annual meeting, the 10th calendar day following the day on which public disclosure of the date of such annual meeting is first made by the Company.

Each notice of nomination is required to set forth:

As to each person whom the stockholder proposes to nominate for election or reelection as a director:

As to the stockholder giving the notice:

In the event that a special meeting of stockholders is called for the election of directors, a stockholder’s nomination must be delivered to the Company not earlier than the close of business on the 120th calendar day prior to the date of the special meeting and not later than the close of business on the later of the 60th calendar day prior to the date of the special meeting, or, if the first public disclosure made by the Company of the date of the special meeting is less than 70 days prior to the date of the special meeting, not later than the 10th calendar day following the day on which public disclosure is first made of the date of the special meeting. The stockholder submitting a notice of nomination with respect to the election of directors at a special meeting must include, in its timely notice, the same information as set forth above.

A majority of the Board may reject any nomination by a stockholder not timely made or otherwise not made in accordance with the terms of the Company’s amended and restated bylaws. If a majority of the Board reasonably determines that the information provided in a stockholders’stockholder’s notice does not satisfy the informational requirements in any material respect, the Corporate Secretary will promptly notify such stockholder of the deficiency in writing. The stockholder will then have an opportunity to cure the deficiency by providing additional information to the Corporate Secretary within such period of time, not to exceed ten (10) days from the date such deficiency notice is given to the stockholder, as a majority of the Board reasonably determines. If the deficiency is not cured within such period, or if a majority of the Board reasonably determines that the additional information provided by the stockholder, together with the information previously provided, does not satisfy the requirements in any material respect, then a majority of the Board may reject such stockholder’s nomination.

Compensation of Non-Employee Directors

In assessing compensation elements and making compensation decisions with respect to our non-employee directors, the Compensation Committee engaged ClearBridge in 2017 to provide independent advice and recommendations. The non-employee director compensation program (as described below) was approved in 2017, and no changes have been made to the program since that time. The Compensation Committee also relies on information about the director compensation practices of a peer group of companies of similar size to the Company in related industries (see “Executive Compensation—Detailed Discussion and Analysis—Approach for Developing the Executive Compensation Program”), as well as its own judgment and prior experience, in determining director compensation.

As compensation for their service as directors of the Company in 2016,2019 (and consistent with the program approved in April 2017), each non-employee member of the Board received an $85,000 annual cash retainer. For service as committee Chairs,chairs, the ChairsChairperson of the Audit Committee received an additional retainer of $35,000 and the Chairpersons of the Compensation Committee and Nominating and Governance Committee each received an additional retainer of $35,000.$20,000. For service as Chairman of the Board, the Chairman of the Board received an additional retainer of $40,000.$35,000. Members of the Audit Committee, the Compensation Committee and the Nominating and Governance Committees (other than the Chairpersons) received an additional retainer of $15,000, $7,500 and $7,500, respectively. Payment of the retainers were made on a monthly basis in advance of each month of service. The Company’s target value of the equity retainer for non-employee members of the Board in 20162019 was $180,000,$130,000, based on the closing stock price of the Company’s stock on the grant date. On March 14, 2016, Mr. Kerley, Ms. Meints and Ms. Norwalk were each awarded 3,360 shares of restricted stock under the Company’s 2006 Long-Term Incentive Plan (“2006 Plan”), which vest in three equal installments on the first, second and third anniversaries of the grant date. On March 14, 2016, Coliseum Capital Partners, L.P. was granted 3,360 stock equivalent units, which vest in three equal installments on the first, second and third anniversaries of the grant date in lieu of an award to Christopher Shackelton as further discussed in note (4) to the table below. On July 5, 2016, Mr. Carter, Mr. Coulter and Mr. Wright were each awarded 1,934 shares of restricted stock under the 2006 Plan (the pro rata portion of the 2016 equity retainer based on the date of their appointment), which vest in three equal installments on the first, second and third anniversaries of the grant date.  As compensation for their service as members of the Special Litigation Committee, Ms. Norwalk and Mr. Wright each received a $40,000 retainer in 2016. Except for certain expense reimbursementreimbursements noted below, no additional payments were made to non-employee members for participating in Board and committee meetings. BeginninginDecemberBeginning in December 2016, non-employee members of the Board were offered the opportunity (as approved by the Board) to elect to receive unrestricted shares of common stockCommon Stock in lieu of cash compensation.

In consideration of the increased number of Board members in 2016 the Board approved several changes to its compensation practices for non-employee directors. In making these changes, the Board reviewed market data on board compensation. Effective April 1, 2017, the additional retainer payable to the Chairs of the Compensation Committee Mr. Coulter and the Nominating and Governance Committee was reduced from $35,000 to $20,000, and the additional retainer paid to the Chairman of the Board was reduced from $40,000 to $35,000. Additionally, the Company’s intended target for equity and equity-based compensation for non-employee members of the Board in 2017 was reduced from $180,000 to $130,000, based on the closing stock price of the Company’s stock on the grant date and excluding any shares that a director elects to receive in lieu of annual retainer cash compensation. The additional retainer payable to the Chair of the Audit Committee is unchanged at $35,000, and effective April 1, 2017 committee members other than the Chairs receive an additional annual cash retainer that was not previously paid. For members of the Audit Committee, this retainer is $15,000 and for members of the Compensation Committee and the Nominating and Governance Committee, this retainer is $7,500. Mr. CoulterWright elected to receive his 2017100% and 50%, respectively, of their 2019 director cash compensation in the form of unrestricted shares of Common Stock.

On February 14, 2019, Mr. Carter, Mr. Coulter, Mr. Kerley, Ms. Norwalk and Mr. Wright were each awarded 1,857 restricted share awards under the Company’s 2006 Long-Term Incentive Plan (the “2006 Plan”) for their annual equity award. On February 14, 2019, Coliseum Capital Partners, L.P. was granted 1,857 stock equivalent units in lieu of an award to Christopher Shackelton. All awards vest 1/3^rd on each of the first, second and third anniversary of the grant date.

On February 13, 2020, Mr. Carter, Mr. Coulter, Mr. Kerley, Ms. Norwalk and Mr. Wright were each awarded 1,952 restricted share awards under the Company’s 2006 Long-Term Incentive Plan (the “2006 Plan”) for their annual equity award. On February 13, 2020, Coliseum Capital Partners, L.P. was granted 1,952 stock equivalent units in lieu of an award to Christopher Shackelton. All awards vest on the first anniversary of the grant date. Because these grants were made in 2020, such grants are not included in the table below.

Non-employee directors are also reimbursed for reasonable expenses incurred in connection with attending meetings of the Board and meetings of Board committees.
The following table shows for the fiscal year ended December 31, 2019, certain information with respect to the compensation of our non-employee directors:

20162019 Director Compensation TableTable#

The aggregate number of unvested stock equivalent units outstanding for each non-employee director as of December 31, 20162019 is shown below:

						Number of stock options
Grant Date		Exercise Price				Richard A. Kerley				Kristi L. Meints
1/3/07		$	24.59				—				3,999
6/9/08		$	26.14				—				10,000
6/14/10		$	16.35				—				7,814
5/17/11		$	14.16				667				2,000
		Total					667				23,813

 

(3)

All of Christopher Shackelton’s compensation for service on the Board inures to the benefit of Coliseum Capital Partners, L.P. (of which Mr. Shackelton is a Managing Partner)CCP pursuant to this entity’s policy regarding Mr.Christopher Shackelton’s service on the board of companies in which it has an equity interest. ColiseumCCP also holds previously granted stock option equivalent units in respect of Mr.Christopher Shackelton’s services with respect to the acquisitions of Ingeus UK Holdings Limited and CCHN Group Holdings, Inc. (referred to as “Matrix Medical Network”), 200,000 of which were vested as of December 31, 2016,2019, with an exercise price of $43.81.

 

Stock Ownership Guidelines for Non-Employee Directors

 

Pursuant to our stock ownership guidelines, our non-employee directors are expected to own shares of our Common Stock with a value equal to three times their annual retainer (excluding compensation for committee membership andboard or committee chair, committee member or lead director positions held). Because Christopher Shackelton assigns all of his Board compensation to Coliseum Capital Partners, L.P.CCP as described above, he is excluded from these stock ownership guidelines.

 

The following will countcounts towards meeting the required holding level:

 

●

shares held directly or indirectly;

shares held directly or indirectly;

 

●

any vested restricted stock or stock units held under our annual equity-based compensation program;

any vested restricted shares or RSUs held under our annual equity-based compensation program;

 

●

any unvested time-based restricted stock or stock units held under our annual equity-based compensation program (calculated on an assumed net after-tax basis); and

any unvested time-based restricted shares or RSUs held under our annual equity-based compensation program (calculated on an assumed net after-tax basis); and

 

●

shares owned jointly with or in trust for, immediate family members residing in the same household.

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shares owned jointly with or in trust for, immediate family members residing in the same household.

 

Non-employee directors are not permitted to sell compensatory shares of our Common Stock until they have reached the required holding level, except if such sale is effected to satisfy tax obligations or to pay the exercise price of options. This holding requirement does not apply to shares purchased by a non-employee director in the market or from the Company for cash unless acquired by exercise of a compensatory option. In the event a non-employee director does not achieve his or her holding level set forth above and sells shares of our Common Stock in violation of the stock ownership guidelines, the Board will consider all relevant facts and take such actions as it deems appropriate under the circumstances. Each of our non-employee directors was in compliance with our stock ownership guidelines as of December 31, 2019.

 

Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports

 

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of the Common Stock to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of Providence. Executive officers, directors and greater than 10% stockholders are required by SEC regulation to furnish Providence with copies of all Section 16(a) forms they file.

 

To the Company’s knowledge, based solely on a review of the copies of such reports furnished tofiled with the CompanySEC and written representations that no other reports were required, the Company believes that all Section 16(a) executive officers, directors and individuals who are greater than 10% beneficial stockholders of Providence complied with applicable Section 16(a) requirements during the fiscal year ended December 31, 2016, other than Christopher Shackelton2019, except that Mr. Pate, Mr. Dotts, Ms. Stalmack and Sophia Tawil, whoMs. Smith each inadvertently hadfiled one late filing of a Form 4. Ms. Tawil inadvertently filed a Form 4 on June 2, 2016 that should have been filed no later than April 29, 2016. Mr. Christopher Shackelton, CCM and certain of their affiliated entities inadvertently filed a Form 4 on March 31, 2016 that should have been filed no later than March 22, 2016.two days late.

 

Certain Relationships and Related Party Transactions

 

Policy Regarding Certain Relationships and Related Party Transactions

 

Pursuant to its written charter, the Audit Committee has adopted a Related Person Transaction Policy that, subject to certain exceptions, requires the Audit Committee (or the chair of the Audit Committee in certain instances) to review and either ratify, approve or disapprove all “transactions” with “related persons,” which have the meanings given to such terms in Item 404(a) of Regulation S-K.S-K of the Securities Act of 1933, as amended.

 

In determining whether to approve or ratify a transaction with a related person under the policy, the Audit Committee is to consider all relevant information and facts available to it regarding the transaction and take into account factors such as the related person’s relationship to the Company and interest in the transaction (direct or indirect), the terms of the transaction and the benefits to the Company of the transaction. No director is to participate in the approval of a related person transaction for which he or she is a related person or otherwise has a direct or indirect interest.

 

The Audit Committee is also to reviewreviews and assessassesses ongoing related person transactions, if any, on at least an annual basis to determine whether any such transactions remain appropriate or should be modified or terminated.

 

Each year our directors and officers complete Directors’ and Officers’ Questionnaires, which, among other things, are designed to elicit certain information relating to transactions with the Company in which the officer or director or any immediate family member of such officer or director has a direct or indirect interest. We also make inquiries quarterly of officers and directors to identify any additional related person transactions that have arisen since the last inquiry as a means to ensure all potential transactions subject to the policy are captured. These questionnaires are reviewed by our General Counsel and any such transactions or other related person transactions are brought to the attention of the Audit Committee as appropriate.

 

Retention of Advisors

 

In 2017,2018 the Company retained two advisors that have relationships with members of our Board. We retained GCA Advisors, LLC (“GCA”) to provide financial advisory services to the Company, for customary fees, in connection with a transaction in their area of expertise. The transaction is no longer under consideration by the Company.  Todd Carter, a member of our Board, is Co-President, Chief Executive Officer and a member of the board of directors of GCA.  Upon the engagement of GCA, Mr. Carter immediately resigned from the Audit Committee and was replaced by Frank J. Wright.

In 2017 the Company also retained Epstein, Becker & Green, P.C. (“EBG”) to provide healthcare regulatory advice in respect of disclosures being made in our 2016 Annual Reportperiodic SEC filings and EBG Advisors, Inc. (“EBG Advisors”), an affiliated entity, to provide healthcare advisory services to the Company, both for customary fees. The Company made the decision to retain EBG and EBG Advisors after reviewing several potential healthcare regulatory advisors, and engaging in interviews with four potential firms and determined EBG and EBG Advisors were best positioned to meet the Company’s needs. In 2019 and 2018, respectively, the Company paid $108,339 and $15,740 to EBG and in 2018, the Company paid $50,000 to EBG Advisors for such services. The amounts represent less than 1% of total revenue for both EBG and EBG Advisors, respectively. Leslie Norwalk, a member of our Board, is Counsel at EBG.

 

Ms. Norwalk receives a fixed base salary for her employment at EBG and no additional variable compensation. The Company has received lettersa letter from GCA and EBG advising that the Company’s engagement of the applicable advisor, and the applicable director’sMs. Norwalk’s relationship with the Company and his or her membership on the Board was not and will not be taken into consideration when calculating the applicable director’s base salary or bonus (whether cash, stock or otherwise)her compensation or accounted for in any way as it relates to his or her compensation.  The Board has determined that Mr. Carter and Ms. Norwalk qualifyqualifies as independent under the applicable NASDAQ and SEC standards.

 

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Indemnification ObligationsAgreement

 

In accordance with certain indemnification obligations set forth in financing agreements for theCompany’s 2014 acquisition of CCHN Group Holdings, Inc.,On May 9, 2018, the Company is obligated to pay for the legal expenses of certain entities affiliatedentered into a registration indemnification agreement with Coliseum Capital Management, LLC, in connection with Haverhill Retirement System v. Kerley et al., C.A. No. 11149-VCL (the “Haverhill Litigation”).  CCM acts as an investment adviser to certain stockholderseach of the Company, and Christopher Shackelton is a manager of and has an interest in CCM.  In addition, in accordance with the Company’s certificate of incorporation,Coliseum Stockholders, pursuant to which the Company is also obligatedagreed to pay forindemnify the legal expenses of certain of our current and former directors and officers in connection with the Haverhill Litigation; a portion of such expenses was paid by our insurance carriers.  The Company expensed $757,000 during the year ended December 31, 2016 for such legal expenses.  For more information on the Haverhill LitigationColiseum Stockholders, and the Company’s indemnification obligations, see Item 3. “Legal Proceedings” inColiseum Stockholders agreed to indemnify the 2016 Annual Report, and Note 19,Commitments and Contingencies,Company, against certain matters relating to our consolidated financial statements included therein.

Employment of David Shackelton

David Shackelton, the brother of Christopher Shackelton, the Chairmanregistration of the Board of Providence, is currently employed byColiseum Stockholders’ securities for resale under the Company as CFO, and reports to our CEO. In 2016, David Shackelton’s total compensation, including the grant date fair value of equity awards, was $1,130,046. David Shackelton’s compensation for 2016 is more fully described below in the “Summary Compensation Table” and the accompanying explanatory tables.Securities Act.

Compensation Committee Interlocks and Insider Participation

 

The Compensation Committee consists of Mr. Kerley (Chairperson), Ms. MeintsMr. Carter and Mr. Wright.Coulter. No person who served as a member of the Compensation Committee during the fiscal year ended December 31, 20162019 was a current or former officer or employee of Providence, or engaged in certain transactions with us, which was required to be disclosed by regulations of the SEC. None of Providence’s executive officers served as a director or member of the compensation committee of another entity, one of whose executive officers served as a member of our Board or as a member of our Board’s Compensation Committee.

 

Equity Compensation Plan Information

 

The following table provides certain information as of December 31, 20162019 with respect to our equity basedequity-based compensation plans.

 

Plan category		Number of securities tobe issued upon exercise of outstanding options, warrants and rights				Weighted- average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column (1))				Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)				Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights				Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column)
Equity compensation plans approved by security holders			355,598			$	33.48				2,324,927				729,601			$	64.72				1,306,243
Equity compensation plans not approved by security holders			—				—				—				—	��			—				—
Total			355,598			$	33.48				2,324,927				729,601			$	64.72				1,306,243

 

(1) The number of shares shown in this column represents the number of shares available for issuance pursuant to stock options and other stock-based awards that were previously granted and were outstanding as of December 31, 2019 under the 2006 Plan.

The number of shares shown in this column represents the number of shares available for issuance pursuant to stock options and other stock-based awards that were previously granted and were outstanding as of December 31, 2016 under the 2006 Plan.

 

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EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Introduction

 

This Compensation Discussion and Analysis explains the executive compensation program for the following individuals, who are referred to as the Named Executive Officers (“NEOs”):

 

Daniel E. Greenleaf – President and Chief Executive Officer

Kevin M. Dotts – Chief Financial Officer

Kathryn Stalmack – Senior Vice President, General Counsel & Corporate Secretary*

Suzanne G. Smith – Chief Accounting Officer*

•

●

James M. LindstromR. Carter Pate – CEO Former Interim Chief Executive Officer*

 

William Severance – Former Executive Vice President, Office of the Providence CEO*

•

●

David C. ShackeltonLaurence Orton – CFOFormerInterim Chief Accounting Officer and Senior Vice President Finance*

 

●

Sophia C. Tawil – Senior Vice President, General Counsel & Corporate Secretary

*Mr. Pate served as the Company’s Interim CEO from November 15, 2017 until December 11, 2019, when Daniel E. Greenleaf was appointed CEO of the Company. Mr. Pate served as a Special Advisor to the President and CEO until the end of his contract term, December 31, 2019. Ms. Stalmack has served as Senior Vice President, General Counsel & Corporate Secretary since August 19, 2019. Ms. Smith joined the Company in February 2019 and was named Chief Accounting Officer on March 1, 2019. Mr. Severance served as Executive Vice President, Office of the Providence CEO from August 22, 2018 until May 10, 2019. Mr. Orton served as Interim Chief Accounting Officer and Senior Vice President Finance from May 11, 2018 until March 1, 2019 and resigned from the Company on May 10, 2019.

●

Matthew Umscheid – Senior Vice President – Strategic Services

●

William Severance – Chief Accounting Officer (reporting to the CFO)

Executive Summary

 

Overview and 2019 Business Highlights

 

The Providence Service Corporation is a holding company, which owns interestsDelaware corporation formed in subsidiaries and other companies1996 that are primarily engaged inis the provision of healthcare and workforce development services for public and private sector entities seeking to control costs and promote positive outcomes.  The subsidiaries and other companies in which we hold interests comprise the following segments:

●     Non-Emergency Transportation Services – Nationwide providerlargest manager of non-emergency medical transportation (“NET”) programs for state governments and managed care organizations.organizations (“MCOs”) in the United States (“U.S.”) primarily through its brands LogistiCare and Circulation. In addition, our NET Services segment includes the Company’s activities related to executive, accounting, finance, internal audit, tax, legal, certain strategic and corporate development functions and the results of the Company’s captive insurance company. During 2018, the Company announced an Organizational Consolidation plan (“Organizational Consolidation”) to integrate substantially all activities and functions performed at the corporate holding company level into its wholly owned subsidiary, LogistiCare Solutions LLC ("LogistiCare"). Effective January 1, 2019, the consolidation was substantially complete. LogistiCare retained its name and continues to be headquartered in Atlanta, GA, and the Company continues to be named The Providence Service Corporation and is listed on NASDAQ Global Select Market ("NASDAQ") under the ticker symbol “PRSC”.

 

●     Workforce Development Services – Global provider of employment preparationProvidence also owns a minority investment in CCHN Group Holdings, Inc. and placement and legal offender rehabilitation services to eligible participants of government sponsored programs.

●its subsidiaries (“Matrix”). Matrix Investment – Minority interest inis a nationwide provider of a broad array of assessment and care management services that improve health outcomes for individuals and financial performance for health plans. Matrix’s national network of community-based clinicians deliver in-home services while its fleet of mobile health clinics provide community-based care optimizationwith advance diagnostic capabilities. These solutions combined with Matrix’s advanced engagement approach, helps health plans manage risks, close care gaps and management solutions, including comprehensive health assessments,connect members to members of managed care organizations, accounted for as an equity method investment.    care.

 

Our holding company strategy is designed to increase shareholder value throughFiscal year 2019 was a focusyear of challenging headwinds impacting our financial results as well as one of positive and important transitions for the Company. As described in our Annual Report on building intrinsic valueForm 10-K, the Company’s operating results in 2019 were impacted by increasing utilization under at risk contracts and increased transportation costs on a per share basis, whichtrip basis. These factors caused Adjusted EBITDA to be lower for fiscal 2019 than in turn is predicated uponfiscal 2018. These negative factors were partially offset by contracts renegotiated during 2019 and by top-line revenue growth. The result of this challenging environment was that the growth, continuous improvementCompensation Adjusted EBITDA (as defined below) target for the payment of amounts under the Company’s annual incentive plan (described below) was not achieved and efficient deliveryas a result, the portion of high quality, technology-enabled services within our segments. 

In orderthe annual bonus tied to successfully pursue our holding company strategy, our priorities at the holding company level include: 1) pursuing the highest standards of governance, values and compliance, 2) ensuring operating excellence by attracting, developing, and retaining empowered and accountable segment level leadership with significant industry experience, and 3) allocating capital opportunistically in markets that may be inefficient or where we have an ability to invest at a discount to intrinsic value, particularly where our experience, analysis, and long-term perspective can provide an advantage over competitors.  As demonstrated in 2016 with the sale of a controlling interest in our Health Assessment Services business, and in 2015 with the sale of our Human Services business, we also may enter into strategic partnerships or dispose of current or future segments, based on a variety of factors, including availability of alternative opportunities to deploy capital or otherwise maximize shareholder value as well as other strategic considerations. While infrequent, we may also pursue acquisitions and investments in industriesAdjusted EBITDA was not served by our existing segments. 

Our strategic priorities and service offerings are based upon a common purpose of delivering exceptional value in the healthcare and workforce development industries, primarily through technology-enabled service platforms. Our segments seek to deliver disciplined and industry-leading sales growth (excluding the impact of acquisitions) and generate industry-leading margins, cash flow and returns on capital. To accomplish these goals, we continuously improve our offerings in the areas of quality, cost and innovation through multiple operational levers. We pursue both organic and inorganic growth through entry into adjacent markets and complementary service lines, particularly with offerings that may leverage the advantages inherent in our large-scale networks. Our segments’ core competencies include developing and managing large provider networks, tailoring healthcare and workforce development service offerings to the unique needs of diverse communities and populations, and implementing technology-enabled delivery models to achieve superior outcomes in low cost settings.achieved for 2019.

 

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Fiscal year 2019 was also one of transition in our business having completed the Organizational Consolidation and with certain non-NET businesses having been divested, the Company focused on growing its NET services segment, integrating Circulation’s technology into the Company’s technology offering, and renegotiating pricing for certain contracts. In addition to the transition of the Company’s operations, there was also a transition in the executive leadership. In March 2019, Suzanne G. Smith was named Chief Accounting Officer. In August 2019, Kathryn Stalmack was hired as the Company’s General Counsel and Corporate Secretary, replacing M. Chinta Gaston, LogistiCare’s long serving General Counsel, who had become General Counsel of Providence on January 1, 2019. In December 2019, Daniel Greenleaf replaced Carter Pate as the Chief Executive Officer of the Company. Mr. Pate had been serving as the Interim Chief Executive Officer until a permanent CEO was retained. Mr. Greenleaf brings to the Company over 25 years of experience successfully transforming healthcare companies through periods of growth, most recently having served as President and CEO of BioScrip, Inc., where he spearheaded the turnaround and successful merger with Option Care Health (Nasdaq: OPCH).

Stockholder Say-on-Pay and Say-on-Pay Frequency and Company Response

 

In establishing and recommending 20162019 compensation for the NEOs, the Compensation Committee considered the results of the Say-on-Pay vote and the vote on the frequency of future Say-on-Pay votes at the 20162019 annual meeting of stockholders. In advance of that meeting, we reached out to certain stockholders to discuss certain key governance issues. At that meeting, our stockholders approved our executive compensation for the 20152019 fiscal year with approximately82%approximately 82% of the votes cast in favor. Our Board of Directors recognizes that executive compensation is important to stockholders and takes this into account when reviewing the compensation program throughout the year. The Company hasWe believe that we have established a compensation plan that directly aligns the compensation paid to NEOs with value delivered to stockholders.stockholders, including changes that we made in fiscal year 2019.

 

Detailed Discussion and Analysis

 

Compensation Committee Philosophy

 

WeProvidence has a strong philosophy that compensation should be earned based on performance. As a result, we believe that compensation programs offered to NEOs should support the achievement of our strategic and financial goals and creation of stockholder value over the long term primarily by rewarding both capital allocation and operational excellence strategies. Accordingly, our guiding compensation principles focusfor fiscal year 2019 focused on:

 

●

attracting and retaining high-performing leaders;

●

aligning the interests of our executives with those of our stockholders;

●

linking a meaningful portion of executive compensation to capital allocation and operational performance; and

●

maintaining a significant portion of compensation based on at-risk opportunities tied to total stockholder return over a multi-year period.

attracting, retaining, and motivating high-performing leaders;

 

aligning the interests of our executives with those of our stockholders, and incentivizing stockholder value creation;

linking a meaningful portion of executive compensation to achievement of key financial, operational, and capital allocation performance goals; and

maintaining a significant portion of compensation based on at-risk opportunities, including in equity awards tied to stock price and achievement of key transactions and projects. 

 

20162019 Compensation Components

 

The specific components of the 20162019 compensation program for NEOs arewere as follows:

 

Component	Description	Description		Purpose
Base Salary		Fixed cash component.		Establishedcomponent established upon hire and(and adjusted from time-to-time) based on overall skills and experience.	Provide competitive fixed compensation to attract and retain executive talent. Reviewed to reward for individual performance, and to consider market competitiveness.
2016 Cash Bonus AwardsAnnual Incentive Program		2016 cash bonus awards consisted of theThe Annual Incentive Program (“AIP”) approved in 2019 for our NEOs other thanthat served for all or most of fiscal 2019 (in this case Mr. Severance.Dotts and Ms. Smith) was based on performance metrics described below. Based on our fiscal 2019 results, no amounts were paid under the AIP. Mr. Severance wasGreenleaf and Ms. Stalmack were not eligible for a cash bonus pursuant to his offer letter. such awards in 2019 had they been paid.		Provide financial incentive to the executives to achievereward them for achieving specific strategic, organizational, financial and individual goals.

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Component	Description	Purpose
Interim CEO Bonus Plan	Mr. Pate, given that his position as Interim CEO was scheduled to come to close at the end of 2019, had a separate short-term incentive plan from the broader AIP above.	Provided a mix of financial and individual goals that were better aligned with the interim nature of his role with the Company.
Long-Term IncentivesIncentive (“LTI”)		LTI consistedMr. Dotts and Ms. Smith, along with other executives that were not NEOs, received stock option and restricted share awards from the Compensation Committee in September 2019. Mr. Greenleaf, received long-term equity awards of the HoldCo LTIP (as defined below), a 3-year plan tied to stockholder value creationstock options, Premium Priced Options, and restricted stock units (“RSUs”) in which NEOs other than Mr. Severance participate. Mr. Severance does not participate in the Holdco LTIP but is eligible for an annualconnection with his employment agreement described below. Ms. Stalmack and Ms. Smith received long-term equity grant pursuant to his offer letter.  Also, in certain cases, special grants were provided to certain executivesawards made up of stock options, and restricted share awards in connection with their appointment.employment agreements described below.		HoldCo LTIP alignsLong-term incentive grants to certain executives align them with holding company business strategyour stockholders’ interest in achieving increases of our stock value. Given the transition period the Company was experiencing in 2019, the Compensation Committee felt that a combination of options and driveseither restricted share awards or RSUs was the appropriate vehicle mix. The combination of stock options and either restricted share awards or RSUs furthered the Compensation Committees objectives of (1) directly aligning employee compensation with stockholder interests, with the stock option component incentivizing performance through stock price appreciation (i.e., stock options have no value creation overif stock price does not appreciate and Premium Priced Options to the long term.CEO have no value unless stock price appreciates above premium exercise price) and (2) the restricted share awards or RSUs providing incentives for retention of key executives.
Benefits and Perquisites		We provide certain benefits generally available to all employees and we provide additional benefits for NEOs. Perquisites for NEOs relate to certain enhanced insurance and other non-cash benefits. See “Benefits and Perquisites” for further detail.		Provide an appropriatea competitive level of employee benefits.benefits; aids in attraction and retention of key executives.
Post-Termination Compensation		Certain NEOs are eligible for certain payments post-termination, as specified in “Potential Payments Upon Termination or Change in Control”.	Control.”	Provide an appropriate level of payment in the event of a change in control or termination.
Other Policies		Stock Ownership Guidelines Clawback Anti-Hedging / Anti-Pledging		Enhance alignment withbetween executive and stockholder interests.

 

 

2016 Total Target Compensation Pay Mix forNEOs

Providence has a strong philosophy that compensation should be earned based on performance. This philosophy is demonstrated by our NEOs’ target compensation pay mix. The vast majority of the total target compensation that we provide to our NEOs is in performance-based compensation tied to key annual financial and strategic goals and long-term total stockholder return. Our long-term incentives for our leadership team, which includes direct reports to the CEO (i.e., all of our NEOs except for Mr. Severance), is 100% performance-based tied to total stockholder return. Our compensation includes a significantly greater portion in performance-based compensation than our peer companies. See below for the 2016 total target compensation pay mix of our NEOs:

*Total target compensation includes salary at the annual rate, target annual bonus, grant date fair value of HoldCo LTIP for Mr. Lindstrom, Mr. Shackelton, Ms. Tawil, and Mr. Umscheid annualized over 3 years, and annual target restricted stock award that is not performance based for Mr. Severance.

Approach for Developing the Executive Compensation Program

 

The compensation of our CEO (as was the compensation for our Interim CEO before his departure from the Company) is determined and approved by the Compensation Committee.Committee, subject to the approval of the Board. Our CEO annually reviews the performance of each NEO, other than himself, relative to the annual performance goals established for the year. Our CEO then makes recommendations to the Compensation Committee with respect to all aspects of the compensation of the other NEOs who report directly to him, but does not participate in the final deliberations of the Compensation Committee has the final decision with respect thereto.to executive compensation. The Compensation Committee exercises discretion in modifying compensation recommendations relating to the other NEOs that were made by our CEO and approves all compensation decisions for such NEOs. Mr. Severance’s compensation is determined by our CEO following a review of Mr. Severance’s performance relative to his annual performance goals established for the year.  Our CEO exercises discretion in modifying and approving such compensation recommendation under delegation from the Compensation Committee.

 

Since 2015, the Compensation Committee has engaged ClearBridge Compensation Group LLC, a nationally recognized consulting firm, to assess the competitiveness of pay for the executive officers and provide independent advice and recommendations to the Compensation Committee regarding executive compensation. In order to avoid conflicts of interest, ClearBridge only does work for or authorized by the Compensation Committee. The Compensation Committee annually reviews ClearBridge’s independence as contemplated by the Compensation Committee’s charter and applicable NASDAQ rules, and in March 2017February 2020 determined that there were no conflicts of interest.

 

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We believe it is appropriate for NEO pay to be competitive with the market for comparable executives. To achieve this objective, we will assess market data for a peer group of companies established by the Compensation Committee from time to time.

We periodically review our peer group for competitive compensation benchmarking analysis. For such determinations in 2016, the followingThe peer group was used:is comprised of health services related-companies that are comparable in terms of business mix and size (e.g., revenue, EBITDA, and market capitalization). As part of Providence’s transition in 2019, we reviewed the peer group to determine if any adjustments were necessary. Based on that review, we added Hanger, Inc. and removed Civitas Solutions (acquired and no longer public), RadNet Inc., and Amedisys, Inc. The following is a list of our current 12 company peer group:

  

Amedisys2019 Peer Group
Addus HomeCare Corporation	Ensign Group
Allscripts Healthcare Solutions, Inc.	HMS Holdings
American Renal Associates Holdings, Inc.	LHC Group
ChemedCapital Senior Living Corporation	MagellanOption Care Health, ServicesInc.(1)
Ensign GroupCorVel Corporation	MAXIMUSNational HealthCare Corporation
Envision Healthcare Holdings*Hanger, Inc.	Restaurant Brands International
Tivity Health	TransDigm Group

*Envision

(1) Option Care Health Holdings merged with AmSurg Corp. on December 1, 2016.Inc. was formerly BioScrip, Inc.

 

In addition to market data, the Compensation Committee takes into consideration other factors, including an individual’s role, tenure, experience, skills and performance when making compensation decisions.

 

20162019 Executive Compensation Program Decisions

 

The following decisions were made in 2016fiscal year 2019 regarding each of these compensation components:

 

Base Salary

 

The Compensation Committee has periodically reviewed and set salaries for NEOs at levels intended to be competitive, as further discussed under “—Approach for Developing the Executive Compensation Program”,Program,” and to provide the appropriate level of fixed compensation for each individual’s role at the Company. In determining the NEOs’ base salaries, the Compensation Committee has considered the internal pay comparisons within the executive group at Providence,the Company, individual performance, overall financial performance of the Company, and market data, as appropriate. Salaries for our NEOs as of year-end were as follows:

 

	Name		2016 Base Salary
	Mr. Lindstrom		$	650,000
	Mr. D. Shackelton		$	450,000
	Ms. Tawil		$	350,000
	Mr. Umscheid		$	350,000
	Mr. Severance		$	300,000

Name		2019 Base Salary(1)
Daniel E. Greenleaf		$	850,000
Kevin M. Dotts		$	450,000
Kathryn Stalmack		$	375,000
Suzanne G. Smith		$	285,000
R. Carter Pate		$	750,000
William Severance		$	450,000
Laurence Orton		$	300,000

 

Actual(1) Reflects base salaries for Ms. Tawilour NEOs as of December 31, 2019, except for Mr. Pate who stepped down as Interim CEO on December 11, 2019, William Severance, who stepped down as EVP, Finance, Office of the Providence CEO, effective May 10, 2019 and Mr. Severance were pro-rated for time served in 2016Laurence Orton, who stepped down as shown in the“Summary Compensation Table.”Interim Chief Accounting Officer and Senior Vice President Finance, effective March 1, 2019 and resigned May 10, 2019.

 

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20162019 Cash Bonus Awards

Annual Incentive PlanProgram

 

For 2016, the Company’s leadership, which includes Messrs. Lindstrom, David Shackelton and Umscheidfiscal year 2019, Mr. Dotts and Ms. Tawil,Smith participated in the AIP, and each of them hadwhich provided for a bonus opportunity based two-thirds75% on consolidated financial performance, measured by earnings per share,EBITDA, as adjusted by the Compensation Committee for the AIP (“Compensation Adjusted EPS”EBITDA”), and one-third25% on individual goals established by the Compensation Committee.Committee, provided, however, that the AIP was self-funded and therefore if the Compensation Adjusted EBITDA threshold was not achieved, no amount would be payable, despite an executive’s achievement of their individual goals. As described below, for 2016,fiscal year 2019, the Compensation Committee determined that on the basis of the Company’s financial results, the Company did not achieve its Compensation Adjusted EPS achievement,EBITDA target and individual performance achievement, these NEOstherefore no AIP was paid for Mr. Dotts, Ms. Smith or the other participants in the AIP. Since Mr. Greenleaf and Ms. Stalmack were retained later in the year, they were not eligible for the AIP. Finally, Mr. Severance and Mr. Orton were entitled to the maximum AIP payoutsin 2019, as provided in the retention agreements described below. The Compensation Committee created a separate 2019 short-term incentive plan for 2016. HighlightsMr. Pate that consisted of 75% individual goals set by the Compensation Committee (including, without limitation, the successful fulfillment of Mr. Pate’s role as the chairman of the 2016 capital allocationAudit Committee of Matrix’s Board of Directors, and operational performancecompleting the consolidation of the Company’s Connecticut and Arizona offices into the Atlanta corporate headquarters by this leadership group included:June 30, 2019) and 25% based on Compensation Adjusted EBITDA if he remained at the Company for all of 2019 or until such date in 2019 as the Board believed his services were no longer necessary. As described above, the Compensation Committee determined that the Company did not achieve the Compensation Adjusted EBITDA target, but that given that Mr. Pate had achieved his individual goals, he would receive 75% of his short-term incentive plan payment for 2019. Ms. Smith was paid a $15,000 signing bonus when she joined the Company in February 2019.

 

● For Mr. Pate, the 2019 bonus opportunity under his short-term incentive plan was $750,000 or 100% of his 2019 base salary. As determined by the Compensation Committee, Mr. Pate received 75% of his bonus opportunity in 2019.

the October 2016 sale of Matrix Medical Network (acquired in October 2014) for a pre-tax gain of $167.9 million;

 

Named Executive Officer		Target Incentive Plan Opportunity as % of Salary				Maximum Incentive Plan Opportunity as % of Salary
Kevin M. Dotts – AIP			75%				150%
Suzanne G. Smith –AIP			50%				100%
R. Carter Pate - Short-term plan			100%				125%
William Severance – AIP			75%				75%
Laurence Orton – AIP			50%				50%

 

●  Our 2019 Compensation Adjusted EBITDA target was $100.3 million, as shown in the table below. In setting the target for fiscal year 2019, the Compensation Committee took into account, among other factors, the Company’s budget and projected performance for 2019. The Company achieved a 2019 Compensation Adjusted EBITDA of $64.4 million, resulting in no payouts under the AIP or Mr. Pate’s short-term incentive plan for this metric.

the initiation of multiple value enhancement projects in 2016 that are expected to increase the intrinsic value of our segments over the long term;

 

●

the evaluation of multiple capital allocation opportunities, including several acquisition candidates and the execution of share repurchase programs designed to improve intrinsic value per share over the long term;

●

achievement of values, compliance and accounting integrity performance goals; and

●

completion of strategic changes to the structure of the Board and the holding company senior leadership team.

Compensation Adjusted EBITDA	Threshold	Target	Maximum	Actual
Targets and FY2019 Actual	$95.3 million	$100.3 million	$110.3 million	$64.4 million
Payout %	50%	100%	200%	0%

 

Compensation Adjusted EPSEBITDA under the AIP is calculated by modifying Adjusted EPSEBITDA for LogistiCare and its subsidiaries to include discontinued operations, impairment chargesneutralize impact of changes in accounting rules, and exclude impact of acquisitions from actual results, earnings related to divested businesses after the resultsdate of divestment, one of the Company’s subsidiaries’ long-term incentive plans, unbudgeted severance of executive officers, losses and gains on unbudgeted sales of assets, the impact of “marking-to-market” of cash settled equity method investments.awards, and items of an “Unusual Nature” on a case by case basis. (For a complete discussion of the method of calculating Adjusted EPS,EBITDA, see the Form 8-K filed with the SEC on March 10, 2017.February 27, 2020.)

 

For 2016, each of these NEOs’ AIP opportunity was determined as a percentage of base salary, as follows:Retention Bonuses

 

Name		Target AIP Opportunity as % of Salary				Maximum AIP Opportunity as % of Salary
Mr. Lindstrom			90	%			180	%
Mr. D. Shackelton			75	%			150	%
Ms. Tawil			75	%			150	%
Mr. Umscheid			75	%			150	%

Upon the conclusion of his employment with the Company on May 10, 2019, following the completion of his tenure under the Retention Plan (as defined below), Mr. Severance became entitled to a cash payment of $875,000, an AIP bonus of $122,343 and other benefits under the Retention Plan. Upon the conclusion of his employment with the Company on May 10, 2019, Mr. Orton became entitled to a cash payment of $300,000, an AIP bonus of $54,375, and other benefits under the Retention Plan (see “2019 Executive Compensation Program Decisions—Long-Term Incentives—Employee Retention Plan”).

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Our 2016Long-Term Incentives

Equity Grants

In an effort to retain, motivate, and continue to align the Company’s NEOs with stockholders and stockholder value creation, the Compensation Adjusted EPS target was $3.23 as shownCommittee granted long-term incentive awards in September 2019 in the table below, which reflected growthform of $1.00 perstock options and restricted share over the 2015 Compensation Adjusted EPS (excluding the gain on the sale of our Human Services segment) of $2.23. Actual performance of Compensation Adjusted EPS exceeded the maximum level for each of the NEOs who participate in the AIP, as shown in the table below. Also, theawards to certain executives and other employees. The Compensation Committee determined that eachan award consisting of these NEOs achieved 100% of his or her individual performance goals.

	Compensation Adjusted EPS		Threshold		Target		Maximum		Actual
	Targets and FY2016 Actual		$2.91		$3.23		$3.88		$7.27
	Payout %		50%		100%		200%		200%

In addition,both (1) stock options which align executives’ interests with stockholders given their inherent performance-based value and (2) restricted share awards with their inherent retention value was the 2016 bonus opportunity of executive officers participating inbest vehicle mix to meet the AIP who were subject to Section 162(m) ofCompany’s objectives during 2019, given the Internal Revenue Code of 1986, as amended (the “IRC”) (i.e., the “162(m) covered employees”) was conditioned on 2016 actual results of operating cash flow less capex (per share) being equal to at least 50% of operating cash flow less capex (per share) in the 2016 budget (the “162(m) performance goal”). If this 162(m) performance goal was achieved it was intended to providetransition period the Company with the flexibility to pay the 162(m) covered employees a 2016 bonus up to the maximum amount payable under the 2006 Plan, but reduced by negative discretion based on other goals and to preserve full deductibility of these bonuses. However, for 2016, this 162(m) performance goal was not satisfied due to a one-time $30 million tax payment made in 2016 resulting from the sale of the Company’s Human Services business (“PHS”) in November 2015. Operating cash flow in the 2016 budget was developed solely on the basis of expected 2016 operations. Accordingly, it was not adjusted to account for the significant tax payment due in early 2016experiencing with respect to the PHS sale completed in 2015.

Because the 162(m) performance goal of operating cash flow less capex would have been achieved based on 2016 results if there was not a tax payment made in 2016 for the 2015 PHS sale,executive turnover. Given their level, the Compensation Committee determinedfelt it appropriate to grant Mr. Dotts and Ms. Stalmack awards that failure to satisfy this goal should not penalize the NEOs participating in the AIP who are 162(m) covered were weighted more towards performance and consisting of 75% stock options and 25% restricted share awards. For Ms. Smith and other executives/employees, and the Compensation Committee determinedfelt it was important to pay themmore evenly balance performance and retention objectives during this transition, as a result their full AIP bonuses basedawards consisted of 50% stock options and 50% restricted share awards. Mr. Greenleaf received awards in connection with the execution of his employment agreement as CEO of the Company consisting of RSUs, stock options with an exercise price equal to the Company’s common stock price on the other AIP criteria. As a resultdate of this determination, a portion of the bonus payment to Mr. Lindstrom for 2016 will not be deductible (i.e., the amount of his bonus, taken togethergrant (“Market Priced Options”) and stock options with his other 2016 compensation, that exceeds the $1 million limit under Section 162(m) of the IRC).

              Thus, as noted above, for 2016, the Compensation Committee determined to pay NEOs participating in the AIP their maximum AIP amounts.

Other Bonus Compensation

For 2016, Mr. Severance’s bonus opportunity was based on Compensation Adjusted EPS and on individual goals established by the CFO, to whom Mr. Severance reports. Commensurate with his position, Mr. Severance’s bonus compensation emphasizes his individual performance more than our consolidated financial performance, which is different than the other NEOs who participate in the AIP. Mr. Severance’s 2016 bonus was determined by the CEO, as delegated by the Compensation Committee. For 2016, Mr. Severance received 175% of target,an exercise price equal to 87.5%115% of his base salary.

Election to Receive Shares in Lieu of Cash Bonus

For 2016, each NEO was able to elect to receive up to 50% of their 2016 annual bonus in unrestricted shares of the Company’s Common Stock, with the number of shares determined at the closing price of the Company’s Common Stockcommon stock on the date of grant (the “Premium Priced Options”). Premium Priced Options further enhance the 2016 bonuses were paid. NEOs who elected this form of payment also received a Company match of one non-qualified stock option (each, a “Match Option”) for every pre-tax shareperformance orientation of the Company’sprogram as they require a minimum 15% increase in the stock price prior to the executive being able to share in the stock price appreciation. The Compensation Committee considered various multiple factors in determining the value of the individual equity grants, including: individuals’ roles, performance, historical LTI grants, and market data. Additional detail on the equity grants is provided below.

On March 31, 2019, options to purchase 73,875 shares of Common Stock granted to Mr. Pate in 2018 vested as a result of him meeting certain personal goals, including those relating to financial reporting, the Organizational Consolidation, and the mentorship of senior executives. Options to purchase 73,875 shares of Common Stock granted to Mr. Pate in 2018 were subject to vesting based on a budget goal as of March 31, 2019, of which the Compensation Committee determined that 36,938 of such options should vest based on performance in respect of this goal. Options to purchase an additional 147,750 shares of Common Stock granted to Mr. Pate in 2018 vested on June 30, 2019. All of these vested options have an exercise price of $71.67 and will remain exercisable until April 8, 2021.

In connection with his appointment as Interim Chief Financial Officer, on April 9, 2018, Mr. Severance received in this election. The Match Options havean option to purchase 13,710 shares of Company stock at a strike price equal toof $71.67 per share, the closing price of the Company’s Common Stock on the grant date, and will cliff vestdate. This option became fully exercisable on the third anniversary of the grant date, subjectMay 10, 2019. Mr. Orton, Interim Chief Accounting Officer, received an option to continued employment. Match Options will be forfeited if the associated share of Common Stock is sold (other than to cover taxes upon receipt of shares) prior to vesting.

Each of our NEOs elected to receive a portion of his or her 2016 annual bonus inpurchase 23,313 shares of the Company’s Common Stock as described above.

Long-Term Incentives

HoldCo LTI Program

The 2015 Holding Company LTI Program (“HoldCo LTIP”) isstock at a multi-year plan with a contingent share base payout based on stock price performance, thus providing direct alignment with stockholders. The Compensation Committee selected participants of the HoldCo LTIP based on individuals who could have a significant impact on Company results in support of the business strategy. Each of the NEOs who report to the CEO participates in the HoldCo LTIP. Performance will be measured from August 6, 2015 (the “award date”) to December 31, 2017 (the “determination date”).

Under the HoldCo LTIP, executives will earn Providence common shares based on the degree to which Providence’s compound annual stockholder returns exceed 8% (“Extraordinary Shareholder Value”) over the specified performance period. No award will be payable if compound annual stockholder returns are below 8%. If returns are above 8%, all participating executives will share in a total pool equal to 8% of the Extraordinary Shareholder Value (the “LTI Pool”). The LTI Pool will be capped based on 8% of 40% compound annual stockholder returns. The beginning and ending value will be measured based on the 90-day volume-weighted average stock price (“VWAP”) ending on the award date and determination date, respectively. The closing stock price of the Company’s Common Stock$56.42 per share on December 14, 2017 and an option to purchase 1,207 shares of Company stock at a price of $56.89 per share on December 16, 2017. These options became fully exercisable on December 31, 2016 was less than the threshold stock price of $56.79 under the HoldCo LTIP.2018.

 

The LTI opportunity was set such that, at a compound annual growth rate of 15%, participating executives’ compensation would be below the median of our peers. In order to earn compensation at or above median, performance above 15% compound annual stockholder returns would be required, such that at the plan maximum of 40%, participating executives’ compensation would be positioned towards the high end of the peer group, alignedOn February 18, 2019, in connection with the outstanding results to the stockholders.

Participants in the HoldCo LTIP receive a percentage allocation of the LTI Pool and will receive their awards in shares of Providence Common Stock, subject to the vesting schedule below. The number of shares will be determined based on each participant’s percentage allocation of the LTI Pool in dollars divided by the 90-day VWAP ending on the determination date.

Each NEO who is participating in the HoldCo LTIP was allocated the following percentage of the LTI Pool as of December 31, 2016:

Named Executive Officer		Percent Allocation of Pool
Mr. Lindstrom			40	%
Mr. D. Shackelton			20	%
Ms. Tawil			7.5	%
Mr. Umscheid			10	%
All Other Participants			11	%
Reserve for Future Awards			11.5	%

60% of each HoldCo LTIP participant’s shares will be issued on or shortly following the determination date(December 31, 2017), 25% will vest on the one-year anniversary of the determination date (December 31, 2018), and the remaining 15% will vest on the second anniversary of the determination date (December 31, 2019). Participants must be employed as of the vesting dates, in order for each tranche of shares to vest, except for certain involuntary termination events.

New Hire Grant to Ms. Tawil Under the HoldCo LTIP

Upon Ms. Tawil’s appointment as Senior Vice President, General Counsel & Corporate Secretary, she wasawarded a participation percentage of 7.5% of the LTI Pool on April 27, 2016.

New Hire Grant to Mr. Severance

Upon Mr. Severance’sher appointment as Chief Accounting Officer, heMs. Smith was awarded 4,750granted options to purchase 4,600 shares of Providence restrictedCommon Stock at $73.09 per share, the closing price of the Company’s stock on February 1, 2016.  the grant date. These options will vest if Ms. Smith remains continuously employed with the Company through October 31, 2020 and will expire on December 31, 2020.

 

The following table outlines the equity grants made to the NEOs during 2019.

Named Executive Officer		Grant Date		Exercise Price				Stock Options (# of underlying shares)				Restricted Share Award or RSUs
Daniel E. Greenleaf (1)		12/11/2019		$	59.25				67,090				20,104
Daniel E. Greenleaf (1)		12/11/2019		$	68.14				40,432				-
Kevin M. Dotts (2)		9/20/2019		$	58.84				25,175				2,629
Kathryn Stalmack (3)		9/20/2019		$	58.84				15,257				5,842
Suzanne G. Smith (4)		2/18/2019		$	73.09				4,600				-
Suzanne G. Smith (2)		9/20/2019		$	58.84				5,798				1,816
R. Carter Pate(5)		2/1/2019		$	-				-				23,317

(1)

In connection with his employment, Mr. Greenleaf was granted 67,090 options at the closing market price on the grant date, 40,432 Premium Priced Options and 20,104 RSUs. The stock options and RSUs vest in 25% increments on the first, second, third and fourth anniversaries of the grant date, subject to Mr. Greenleaf’s continued employment through such dates and the terms of Mr. Greenleaf’s employment agreement.

(2)

Granted in connection with the 2019 Long Term Incentive Plan. The stock options and restricted share award shares vest in 1/3rd increments on March 15, 2021, March 15, 2022 and March 15, 2023, subject to such NEO’s continued employment through such dates.

(3)

Granted in connection with Ms. Stalmack’s appointment as General Counsel and entry into her employment agreement. The stock options and restricted share award shares vest in 1/3rd increments on March 15, 2021, March 15, 2022 and March 15, 2023, subject to continued employment through such dates.

(4)

Granted in connection with Ms. Smith’s appointment as Chief Accounting Officer. These options will vest only if Ms. Smith remains continuously employed with the Company through October 31, 2020 and will expire on December 31, 2020.

(5)

Granted to reward Mr. Pate for his performance in various projects undertaken by the Company in 2018, which fully vested upon Mr. Pate’s separation of service from the Company in December 2019.

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Benefits and Perquisites

 

401(k) Plans

 

All NEOs are eligible to participate in our 401(k) Plan and to receive a company match, subject to plan requirements and contribution limits established by the Internal Revenue Service. NEOs receive matching contributions under our 401(k) Plan equal to 10% of participant elective contributions up to a maximum amount of $400. At the end of each plan year, we also may make a contribution on a discretionary basis on behalf of participants who have made elective contributions for the plan year.

 

Other Benefits and Perquisites

 

During 2016,fiscal year 2019, our NEOs received, to varying degrees, a limited amount of other benefits, including certain group life, health, medical and other non-cash benefits generally available to all salaried employees. In addition the Company paid for enhanced life insurance and an enhanced executive long-term disability plan and, for certain NEOs, life insurance premiums on their behalf, which are not available to all employees. More detail on these benefits and perquisites may be found in the “Summary Compensation Table.”

 

Other Compensation Policies

 

Stock Ownership Guidelines for NEOs

 

We believe that promoting stock ownership aligns the interests of our NEOs with those of our stockholders and provides strong motivation to build stockholder value. Under the guidelines, NEOs are expected to own shares of our Common Stock with a value equal to the following multiple of their respective salaries:

 

Executive	Stock Ownership Guideline as aMultiple of Salary
CEO	3x annual base salary
Other NEOs	2x annual base salary

 

The following will count towards meeting the required holding level:

 

●

shares held directly or indirectly;

shares held directly or indirectly;

 

●

any vested restricted stock or stock units held under our annual equity-based compensation program;

any vested restricted share or RSUs held under our annual equity-based compensation program;

 

●

any unvested time-based restricted stock or stock units held under our annual equity-based compensation program (calculated on an assumed net after-tax basis); and

any unvested time-based restricted share or RSUs held under our annual equity-based compensation program (calculated on an assumed net after-tax basis);

 

●

shares owned jointly with or in trust for, immediate family members residing in the same household.

any in-the-money value of vested stock options; and

shares owned jointly with or in trust for, immediate family members residing in the same household.

 

Our NEOs have elected to acquire shares of Common Stock from the Company and purchased shares on the open market, further aligning their interests with those of our stockholders.

NEOs are not permittedrequired to sellhold all compensatory shares of our Common Stock until they have reached the required holding level except if such sale is effected to satisfy tax obligations or to pay the exercise price of options.described above. This holding requirement does not apply to shares purchased by an NEO in the market or from the Company for cash unless acquired by exercise of a compensatory option. In the event an NEO does not achieve his or her holding level set forth above and sells shares of our Common Stock in violation of the Company’s stock ownership guidelines, the Board will consider all relevant facts and take such actions as it deems appropriate under the circumstances. Given that Mr. Greenleaf, Ms. Stalmack and Ms. Smith all joined the Company in 2019 and Mr. Dotts joined in 2018, none of them met these guidelines at December 31, 2019. The Company expects these executives to meet the guidelines over the next three to five years.

 

Clawback

 

It is the Board’s policy that the Compensation Committee will, to the extent permitted by governing law, have the sole and absolute authority to make retroactive adjustments to any excess cash or equity-based incentive compensation paid to executive officers and certain other officers where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Any such incentive compensation received within the three fiscal years prior to the restatement is subject to retroactive adjustment. The Company may seek cash repayment from the executive, offset compensation due to the executive by the amount subject to retroactive adjustment or cancel the executive’s outstanding awards. Where applicable, we will seek to recover any amount determined to have been inappropriately received by the individual executive.

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Anti-hedging / anti-pledging

 

We have a policy that prohibits employees, executive officers and the Board from engaging in any hedging or monetization transactions, or other financial arrangements that establish a short position in our Common Stock or otherwise are designed to hedge or offset a decrease in market value. In addition, we have a policy that prohibits our employees, executive officers and the Board from pledging our Common Stock as collateral for a loan or for a margin account.

 

Change in Control, Severance Arrangements and Severance Payments in 2016

 

During 2016,fiscal year 2019, we had employment agreements or offer letters with each of our NEOs. The employment agreements with Messrs. Lindstrom and David ShackeltonMr. Greenleaf, Mr. Dotts, Ms. Stalmack and Ms. TawilSmith provided for a severance payment upon the termination of employment under certain circumstances and for a payment upon a change in control as described below under “—Employment Agreements and Offer Letters with the Named Executive Officers” and “—Potential Payments Upon Termination or Change in Control”. The offer letters with Messrs. Umscheid and Severance did not entitle either of them to severance upon termination of employment or payment upon a change in control.Control.” 

 

Employee Retention Plan

On April 9, 2018, in connection with the Organizational Consolidation, we adopted an employee retention plan (the “Retention Plan”) covering the employees at the Company’s corporate holding company level, including Mr. Severance, Mr. Orton and certain other executive officers of the Company. The Retention Plan provided for certain payments and benefits to be provided to each such executive officer if they remain employed with the Company through a specified retention date, which was May 10, 2019, in the case of Mr. Severance and Mr. Orton (the “Retention Date”).

Under the terms of the Retention Plan, certain employees with termination dates in 2019 were eligible for ordinary course, merit-based salary increases in 2019 and would receive guaranteed 2019 short-term incentive bonuses on a pro-rata basis. Thus, if Mr. Severance remained employed with the Company through the Retention Date, or was terminated by the Company without “cause,” or by Mr. Severance as a result of a material reduction in base salary or target bonus, prior to the Retention Date, Mr. Severance would be entitled to (i) a retention bonus equal to 100% of his base salary, payable in two installments following the Retention Date, (ii) a pro rata  annual bonus, (iii) accelerated vesting of all of Mr. Severance’s restricted share awards and option awards, (iv) an extension of option exercisability through December 31, 2020, and (v) reimbursement for the Company portion of health insurance premiums following termination for a period up to December 31, 2019. In recognition of the increased demands on his time, attention and work, particularly in light of his increased responsibilities in respect of certain transitional items and special projects, the Compensation Committee increased Mr. Severance’s retention bonus to $875,000. Such retention bonus increase was effected by the Company and Mr. Severance entering into an amendment to the applicable award agreement.

Under the terms of the Retention Plan, if Mr. Orton remained employed with the Company through the Retention Date, or was terminated by the Company without “cause,” or by Mr. Orton as a result of a material reduction in base salary or target bonus, prior to the Retention Date, Mr. Orton would be entitled to (i) a retention bonus equal to 100% of his base salary, payable in two installments following the Retention Date, (ii) a pro rata  annual bonus, (iii) accelerated vesting of all of Mr. Orton’s restricted share awards and option awards, (iv) an extension of option exercisability through December 31, 2020, and (v) reimbursement for the Company portion of health insurance premiums following termination for a period up to December 31, 2019.

As a result of their participation in the Retention Plan, Mr. Severance and Mr. Orton were not entitled in 2019 to any other severance pay or benefits if their employment had been terminated during the retention period, including under the terms of any employment agreement. The terms of the Retention Plan required a release of claims against the Company as a condition to payment and provided for customary confidentiality, non-disparagement and non-solicitation restrictions.

Upon the conclusion of his employment with the Company on May 10, 2019, following the completion of his tenure under the Retention Plan, Mr. Severance received a $875,000 retention bonus and $122,344 as his pro rata AIP. Upon the conclusion of his employment on May 10, 2019, following the completion of his tenure under the Retention Plan, Mr. Orton received a $300,000 retention bonus and $54,375 as his pro rata AIP.

Impact of Tax Treatment on Compensation

 

Under Section 162(m) of the IRC, we may not take a tax deduction for compensation paid to any NEO (otherthan our CFO) that exceeds $1 million in any year unless the compensation qualified as “performance-based” under Section 162(m) of the IRC. While the Compensation Committee endeavors to structure compensation so that we may take a tax deduction, it does not have a policy requiring that all compensation must be deductible and it may, from time to time, authorize compensation that is not tax deductible, including where it deems appropriate or necessary in order to ensure competitive levels of total compensation for our NEOs and where doing so would be in the best interests of the Company.  The AIP andFor taxable years beginning after December 31, 2017 (including the HoldCo LTIP have been structured to take advantage of the performance-based exemption underCompany’s 2018 fiscal year), Internal Revenue Code (“IRC”) Section 162(m) generally disallows tax deductions for annual compensation in excess of the IRC. However, the Compensation Committee may$1 million paid to certain executive officers unless it qualifies for transition relief applicable to certain arrangements in its discretion determine (as it did for the 2016 AIP) to make payments under such plans that do not qualify for this exemption. place as of November 2, 2017.

 

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Other provisions of the IRC can also affect compensation decisions. Section 409A of the IRC, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a 20% additional tax and an interest penalty, on a recipient of deferred compensation that does not comply with Section 409A. The Compensation Committee takes into account the potential implications of Section 409A in determining the form and timing of compensation awarded to our executives and strives to structure its compensation plans to meet these requirements.

 

Section 280G of the IRC disallows a company’s tax deduction for payments received by certain individuals in connection with a change in control to the extent that the payments exceed an amount approximately three times their average annual compensation (an “excess parachute payment”) and Section 4999 of the IRC imposes a 20% excise tax on those payments. The Compensation Committee also takes the provisions of Sections 280G and 4999 into account in structuring compensation, endeavoring to enable the Company to take a tax deduction and executives to avoid the excise tax. For example, employment agreements with certain of our NEOs contain provisions reducing parachute payments to an amount that will not constitute an excess parachute payment.payment in certain circumstances.

 

Compensation Committee Report

 

The Compensation Committee operates under a written charter and is comprised entirely of directors meeting the independence requirements of NASDAQ listing requirements. The Board established this committee to discharge the Board’s responsibilities relating to compensation of our Interim CEO and each of our other executive officers. The Compensation Committee has overall responsibility for decisions relating to all compensation plans, policies, and benefit programs as they affect the CEO and other executive officers.

 

The Compensation Committee has reviewed and discussed with Providence’s management the preceding section entitled “Compensation Discussion and Analysis.” Based on this review and discussions with management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the 2019 Annual Report through filing of this Proxy Statement.

 

Compensation Committee
Richard A. Kerley (Chairperson)	Kristi L. MeintsTodd J. Carter	Frank J. WrightDavid A. Coulter

 

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Summary Compensation Table

 

The following table sets forth certain information with respect to compensation paid by us for services rendered in all capacities to us and our subsidiaries during the fiscal years ended December 31, 2016, 20152019, 2018 and 20142017 to our NEOs, which group is comprised of (1) each person who served as our CEO during 2016,fiscal year 2019, (2) each person who served as our CFO during 2016,fiscal year 2019, and (3) each of our threetwo other most highly compensated executive officers employed on December 31, 2016:2019:

 

Name and Principal Position		Year		Salary (1) ($)				Bonus (2) ($)				Stock Awards (3) ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation (2) ($)				All Other Compensation (4) ($)				Total ($)
James M. Lindstrom		2016			650,000				1,170,000				—				—				—				14,529				1,834,529
Chief Executive Officer		2015			559,744				400,000				5,536,022				198,190				—				25,661				6,719,617
David C. Shackelton		2016			450,000				—				—				—				675,000				5,046				1,130,046
Chief Financial Officer		2015			268,385				240,000				2,518,000				198,190				—				24,762				3,249,337
Sophia D. Tawil		2016			242,560				525,000				965,250				—				—				10,922				1,743,732
Senior Vice President, General Counsel & Secretary
Matthew Umscheid		2016			350,000				525,000				—				—				—				13,850				888,850
Senior Vice President, Strategic Services
William Severance		2016			277,568				262,500				209,998				—				—				17,795				767,861
Chief Accounting Officer

Name	Year	Salary (1) ($)		Bonus (2) ($)			Stock Awards (3) ($)		Option Awards (4) ($)			Non- Equity Incentive Plan Compensation (5) ($)		All Other Compensation (6) ($)		Total ($)
Daniel E. Greenleaf President and Chief Executive Officer	2019	32,692			—		1,191,162		1,955,559			—		—		3,179,413
Kevin M. Dotts Chief Financial Officer	2019 2018	456,346 118,462			— 50,000		154,690 —		364,204 372,445			— 50,000		24,281 5,566		999,521 596,473
Kathryn Stalmack Senior Vice President, General Counsel & Corporate Secretary	2019	132,692			—		343,743		220,721			—		8,399		705,556
Suzanne G. Smith Chief Accounting Officer	2019	243,346			15,000		106,853		140,602			—		12,420		518,221
R. Carter Pate Former Interim Chief Executive Officer	2019 2018 2017	764,423 553,077 88,846			— 450,000 —		1,499,983  — —		— 5,091,724 —	(7)		562,500 — —		4,126 3,645 137		2,831,031 6,098,446 88,983
William Severance Former Senior Vice President, Finance	2019 2018 2017	173,077 414,028 309,000			875,000 240,900 231,750		— 149,583		- 161,313 408,206			122,343 154,754 —		8,145 13,637 15,048		1,178,565 984,632 1,113,587
Laurence Orton  Former Interim Chief Accounting Officer and Senior Vice President Finance	2019 2018	115,385 297,269			300,000 31,800		——		——			54,375 112,500		7,979 13,360		477,739 454,929

 

(1)	Includes amounts contributed to our 401(k) Plan by each executive officer. 2019 included 27 pay periods, so amount in this column is slightly more than the amount described under “2019 Executive Compensation Program Decisions - Base Salary.”

(2)	Includes discretionary bonus, sign on bonus or retention bonus.

(3)

The compensation included in this column represents the aggregate grant date fair value of the equity awards granted during the year indicated. For 2016,additional information on the amounts in the Bonus and Non-Equity Incentive columns reflect 2016 cash incentive awards madevaluation assumptions with respect to the NEOs. For all NEOs otherexpense, refer to Note 14 of the Company’s consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC. The amounts do not necessarily reflect the actual value received by the executive, which may be more or less than David Shackelton, the 2016 bonus appears in the Bonus column because the 162(m) performance goal was not satisfied and, for Mr. Severance, because his bonus is discretionary. See above under “2016 Executive Compensation Program Decisions –2016 Cash Bonus Awards”. Because David Shackelton is not a 162(m) covered employee, his bonus is reported in the “Non-Equity Incentive Plan Compensation”.amount shown or zero

(3)(4)

This column shows the aggregate grant date fair value of the restricted stock HoldCo LTIPoption awards and Time-Based Restricted Stock (“TBRS”) awarded in 2016 and 2015 in accordance with FASB ASC 718. Additional information regarding such awards is set forth in the notes to the “Grants of Plan Based Awards Table” and “Outstanding Equity Awards” table.granted. The grant date fair values have been determined based on the assumptions set forth in our Annual ReportsReport on Form 10-K for the yearsyear ended December 31, 2016 and 20152019 (Note 13,14, Stock-Based Compensation and Similar Arrangements). Mr. Severance was granted an award of TBRS, calculated in 2016 and Ms. Tawil was granted a HoldCo LTIP award in 2016. The amounts included in this column for the TBRS granted in 2016 are consistentaccordance with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. The grant date fair value of HoldCo LTIP awards shown in this column was determined based on the likely payout under a Monte Carlo simulation model.

 

(4)(5)

Includes annual non-discretionary bonus amounts which were expensed during the year indicated, but paid in March of the following year.

(6)	We provide the NEOs with certain group life, health, medical and other non-cash benefits generally available to all salaried employees, which are included in this column. For 2016,fiscal year 2019, the amounts in this column include the following:

 

Name		Health, Dental, Life and Disability Insurance Premiums				Matching Contributions under Retirement Savings Plans
James M. Lindstrom		$	14,129			$	400
David C. Shackelton		$	5,046			$	—
Sophia D. Tawil		$	10,522			$	400
Matthew Umscheid		$	13,450			$	400
William Severance		$	17,395			$	400

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Name		Health, Dental, Life and Disability Insurance Premiums				Matching Contributions under Retirement Savings Plans
Daniel E. Greenleaf		$	—			$	—
Kevin M. Dotts		$	23,881			$	400
Kathryn Stalmack		$	8,226			$	173
Suzanne G. Smith		$	12,020			$	400
R. Carter Pate		$	4,126			$	—
William Severance		$	7,745			$	400
Laurence Orton		$	7,579			$	400

(7)

Represents options granted on April 9, 2018, with an exercise price of $71.67 (the closing price of the Company’s common stock as of the grant date). In 2018, Mr. Pate volunteered to forego 98,500 of the options in order to fund other incentive awards to key employees in amounts and values determined by the Compensation Committee.

Grants of Plan Based Awards Table

 

The following Grants of Plan Based Awards TableTable* provides additional information about stock and option awards and non-equity incentive plan awards granted to the Named Executive OfficersNEOs during the fiscal year ended December 31, 2016.2019. The compensation plans under which the grants in the following table were made are described under “Determinations Made Regarding“2019 Executive Compensation for 2016—2016Program Decisions—2019 Cash Bonus Awards” and “Determinations Made Regarding“2019 Executive Compensation for 2016—Equity-Based Compensation”Program Decisions—Long-Term Incentives” in the “Compensation Discussion and Analysis” section.

 

						Estimated Future Payouts Under Non-Equity Incentive Plan Awards												Estimated Future Payouts Under Equity Incentive Plan Awards (3)
Name		Grant Date				Threshold ($)				Target ($)				Maximum ($)				Threshold (#)				Target (#)				Maximum (#)				All Other Stock Awards: Number of Shares of Stock or Units (#) (4)				All Other Option Awards; Number of Securities Underlying Options (#)				Exercise or Base Price of Option Awards ($/Sh)				Grant  Date Fair Value of Stock and Option Awards ($)
Lindstrom			(1)				292,500				585,000				1,170,000				—				—				—				—				—				—				—
David Shackelton			(1)				168,750				337,500				675,000				—				—				—				—				—				—				—
Tawil			(1)				131,250				262,500				525,000				—				—				—				—				—				—				—
			4/27/16				—				—				—				—				16,286				53,950				—				—				—				965,250
Umscheid			(1)				131,250				262,500				525,000				—				—				—				—				—				—				—
Severance			(1) (2)				—				150,000				—				—				—				—				—				—				—				—
			2/1/2016				—				—				—				—				—				—				4,750				—				—				209,998

		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
Name	Grant Date	Threshold ($)		Target ($)		Maximum ($)		All Other Stock Awards: Number of Shares of Stock or Units (#)		All Other Option Awards; Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards ($)(2)
Daniel E. Greenleaf	12/11/2019	—		—		—		20,104		67,090 40,432		59.25 68.14		2,477,935 668,785
Kevin M. Dotts	N/A	—		337,500		675,000		—		—		—		—
Kevin M. Dotts	9/20/2019	—		—		—		2,629		25,175		58.84		518,894
Kathryn Stalmack	9/20/2019	—		—		—		5,842		15,257		58.84		564,465
Suzanne G. Smith	N/A	—		142,500		285,000		—		—		—		—
Suzanne G. Smith	2/18/2019	—		—		—		—		4,600		73.09		56,723
Suzanne G. Smith	9/20/2019	—		—		—		1,816		5,798		58.84		190,732
R. Carter Pate	N/A	—		750,000		937,500		—		—		—		—
R. Carter Pate	2/1/2019	—						23,317		—		—		1,499,983
William Severance	N/A	—		122,343		122,343		—		—		—		—
Laurence Orton	N/A	—		54,375		54,375		—		—		—		—

* Columns that do not apply have been deleted.

 

(1)

Amount representsAmounts represent the threshold, target and to the extent applicable, maximum, under the short-term incentive plan or the AIP for 2016fiscal year 2019 or similar provisions of theirthe NEOs’ employment agreements or offer letters. The actual amounts earned by the NEOs in 2016fiscal year 2019 under the annualAIP or short-term incentive plan are set forth under the Non-Equity Incentive Plan Compensation column of the “Summary Compensation Table”.Table.”

(2)	Mr. Severance was entitled to a bonus amount determined byThe amounts shown in this column, include the CEO under delegation from the Compensation Committee.
(3)	Amounts represent the estimated target and maximum number of shares eligible to be earned by Ms. Tawil under the HoldCo LTIP. The HoldCo LTIP does not have a predetermined target number of shares. Target number of shares displayed in the table is based on a 15% compound annual growth rate. The grant date fair value of theoption awards is consistent with estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC 718 andgranted in 2019 determined based on the likely payout under a Monte Carlo simulation model.
(4)	The number of shares shownassumptions set forth in this column represents a TBRS award made to Mr. Severanceour 2019 Annual Report on Form 10-K for 2016. The grant date fair value of this award was calculated in accordance with the provisions of FASB ASC 718.year ended December 31, 2019 (Note 14, Stock-Based Compensation and Similar Arrangements)

 

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Employment Agreements and Offer Letters with the Named Executive Officers

 

The following discussion and the discussion below under “—Potential Payments Upon Termination or a Change in Control” describe certain terms of the employment agreements and offer letters with the NEOs. As a result of their participation in the Retention Plan, neither Mr. Severance nor Mr. Orton were entitled in fiscal year 2019 to any other severance pay or benefits if their employment was terminated during the retention period, including under the terms of any employment agreement (see “Change in Control, Severance Arrangements and Severance Payments”).

 

James LindstromDaniel E. Greenleaf

 

Effective December 11, 2019, Daniel Greenleaf was appointed to serve as President and CEO of the Company. The Company, LogistiCare and Mr. LindstromGreenleaf entered into an employment agreement (the “Lindstrom“Greenleaf Employment Agreement”), dated August 6, 2015,November 29, 2019, in connection with the appointment of Mr. Lindstrom as President and CEO.Greenleaf’s appointment. The LindstromGreenleaf Employment Agreement provides for a term endingcommencing as of December 31, 2017. Mr. Lindstrom had served as Chief Financial Officer11, 2019 and continuing until his employment is terminated in accordance with the terms of the Company from January 14, 2015 to August 6, 2015.Greenleaf Employment Agreement (the “Term”).

 

Under the terms of the LindstromGreenleaf Employment Agreement, Mr. Lindstrom’sGreenleaf’s annual base salary is $650,000.$850,000. Mr. Greenleaf is eligible for an annual bonus beginning in fiscal year 2020 equal to 125% of his base salary, based upon achievement of 100% of the performance targets established by the Compensation Committee. Mr. Greenleaf’s annual bonus is subject to a maximum performance of up to 250% of his base salary. In addition, on December 11, 2019, Mr. Greenleaf was granted RSUs covering 20,104 shares of the Company’s common stock and an option to purchase 67,090 shares of Company common stock with an exercise price of $59.25 and 40,432 Premium Priced Options to purchase shares of Company common stock with an exercise price of $68.14. The RSUs and the options vest ratably in equal installments on each of the first, second, third and fourth anniversaries of the grant date, in each case subject to his annual base salary, duringcontinued employment through the term of the Lindstrom Employment Agreementapplicable anniversary date and expire on December 11, 2026.

      While employed, Mr. LindstromGreenleaf is eligibleentitled to participate in bonus plans or incentive compensation programs, if any, as may be in effect from timeall employee fringe benefits generally available to time. For the 2016 fiscal year,Company’s senior executives. Mr. Lindstrom wasGreenleaf is also eligible to participatereceive severance benefits in a bonus program under which he could be paid an amount equal to 90% ofthe event his aggregate base salary payable during 2016 under the Lindstrom Employment Agreement, upon the achievement of a financial performance target setemployment is terminated by the BoardCompany without cause or by him for 2016.good reason. Details with respect to the severance and change in control provisions under the LindstromGreenleaf Employment Agreement are set forth below under “—Potential Payments Upon Termination or Change in Control”.

The Company agreed to maintain term life insurance on the life of Mr. Lindstrom for a period of five years. Mr. Lindstrom will have the absolute right to designate the beneficiaries under his policy. The Company will pay the premium until the earlier of (i) the fifth anniversary of the date the insurance goes into effect and (ii) the date Mr. Lindstrom is no longer employed by the Company.

Mr. Lindstrom is also subject to restrictive covenants regarding non-competition, non-solicitation and confidentiality. His non-competition covenant remains in place for the duration of the period during which he receives severance as described under “Potential Payments Upon Termination or Change in Control” or, ifControl.”

The Greenleaf Employment Agreement includes restrictive covenants providing for Mr. Lindstrom is terminated for cause or terminates his employment voluntarily for any reason, two years following termination. HisGreenleaf’s non-competition, non-solicitation, non-piracy, non-disclosure and non-disparagement. The term of the non-competition, non-solicitation and non-piracy covenants remain in place foris the period that includes the term of Mr. Greenleaf’s employment and two years following termination.thereafter.

 

David ShackeltonKevin M. Dotts

 

Effective October 1, 2015, David Shackelton became Senior Vice President and CFO. On November 18, 2015,August 27, 2018, Kevin Dotts, was appointed to serve as Chief Financial Officer of the Company and David ShackeltonLogistiCare. The Company, LogistiCare and Mr. Dotts entered into an employment agreement (the “Shackelton“Dotts Employment Agreement”), effective as of September 28, 2015.dated August 18, 2018, in connection with Mr. Dotts’s appointment. The ShackeltonDotts Employment Agreement provides for a term commencing as of August 27, 2018 and ending on December 31, 2017.2020 (the “Term”).

 

Under the terms of the ShackeltonDotts Employment Agreement, David Shackelton’sMr. Dotts’s annual base salary was $400,000, which was increased to $450,000 effective March 1, 2019. Mr. Dotts is $450,000.eligible for an annual bonus equal to 75% of his base salary, based upon achievement of 100% of the performance targets established by the Compensation Committee. In addition, to his annual base salary, during the term of the Shackelton Employment Agreement, Mr. ShackeltonDotts is eligible to participate in bonus plansthe Company’s 2006 Plan, under the terms approved by the Compensation Committee.

In addition, Mr. Dotts was granted an option to purchase 24,685 shares of Company common stock, with the exercise price of each option equal to the closing price of a share of the Company’s common stock on August 27, 2018. These options will vest only if Mr. Dotts remains continuously employed with the Company through October 31, 2020, and will expire on December 31, 2021.

While employed, Mr. Dotts is entitled to participate in all employee fringe benefits generally available to the Company’s senior executives. Mr. Dotts is also eligible to receive severance benefits in the event his employment is terminated by the Company without cause or incentive compensation programs, if any, as may be in effect from time to time.by him for good reason. Details with respect to the severance and change in control provisions under the ShackeltonDotts Employment Agreement are set forth below under “—Potential Payments Upon Termination or Change in Control”.

The Company agreed to maintain term life insurance on the life of David Shackelton for a period of five years. Mr. Shackelton will have the absolute right to designate the beneficiaries under his policy. The Company will pay the premium until the earlier of (i) the fifth anniversary of the date the insurance goes into effect and (ii) the date David Shackelton is no longer employed by the Company.

David Shackelton is also subject to restrictive covenants regarding non-competition, non-solicitation and confidentiality. His non-competition covenant remains in place for the duration of the period during which he receives severance as described under “Potential Payments Upon Termination or Change in Control” or, ifControl.”

The Dotts Employment Agreement includes restrictive covenants providing for Mr. Shackelton is terminated for cause or terminates his employment voluntarily for any reason, two years following termination. HisDotts’s non-competition, non-solicitation, non-piracy, non-disclosure and non-disparagement. The term of the non-solicitation and non-piracy covenants remain in place foris the period that includes the term of Mr. Dotts’s employment and two years thereafter. The term of the non-competition covenant is the period that includes the term of Mr. Dotts’s employment and one year following termination.the termination of his employment.

 

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Sophia TawilKathryn Stalmack

 

Effective April 4, 2016, Ms. TawilAugust 19, 2019, Kathryn Stalmack, was appointed to serve as Senior Vice President,President. General Counsel Chief Compliance Officer and& Corporate Secretary of the Company. The Company, LogistiCare and the CompanyMs. Stalmack entered into an employment agreement (the “Tawil“Stalmack Employment Agreement”), dated August 8, 2019, in connection with Ms. Tawil withStalmack’s appointment. The Stalmack Employment Agreement provides for a term through April 4, 2018.  commencing as of August 19, 2019 and ending on December 31, 2021 (the “Term”).

 

Under the terms of the TawilStalmack Employment Agreement, Ms. Tawil’sStalmack’s annual base salary was $375,000. Beginning in 2020, Ms. Stalmack is $350,000. In additioneligible for an annual bonus equal to 75% of her annual base salary, during the termbased upon achievement of 100% of the Tawil Employment Agreement,performance targets established by the Compensation Committee. Ms. TawilStalmack’s annual bonus is subject to a maximum performance of up to 150% of her base salary. Ms. Stalmack is eligible to participate in bonus plansthe Company’s 2006 Plan, under the terms approved by the Compensation Committee.

In addition, the Company granted Ms. Stalmack restricted share awards valued at $250,000. The restricted share awards vest ratably in equal installments on each of March 15, 2021, March 15, 2022 and March 15, 2023, in each case subject to her continued employment through the applicable anniversary date.

While employed, Ms. Stalmack is entitled to participate in all employee fringe benefits generally available to the Company’s senior executives. Ms. Stalmack is also eligible to receive severance benefits in the event her employment is terminated by the Company without cause or incentive compensation programs, if any, as may be in effect from time to time.by her for good reason. Details with respect to the severance and change in control provisions under the TawilStalmack Employment Agreement are set forth below under “—Potential Payments Upon Termination or Change in Control”.  

The Company agreed to maintain term life insurance on the life of Ms. Tawil for a period of five years. Ms. Tawil will have the absolute right to designate the beneficiaries under her policy. The Company will pay the premium until the earlier of (i) the fifth anniversary of the date the insurance goes into effect and (ii) the date Ms. Tawil is no longer employed by the Company.

Ms. Tawil is also subject to restrictive covenants regarding non-competition, non-solicitation and confidentiality. Her non-competition covenant remains in place for the duration of the period during which she receives severance as described under “Potential Payments Upon Termination or Change in Control” or, ifControl.”

The Stalmack Employment Agreement includes restrictive covenants providing for Ms. Tawil is terminated for cause or terminates her employment voluntarily for any reason, two years following termination. HerStalmack’s non-competition, non-solicitation, non-piracy, non-disclosure and non-disparagement. The term of the non-solicitation and non-piracy covenants remain in place foris the period that includes the term of Ms. Stalmack’s employment and two years thereafter. The term of the non-competition covenant is the period that includes the term of Ms. Stalmack’s employment and one year following termination.the termination of her employment.

 

Matthew UmscheidSuzanne G. Smith

 

Effective February 18, 2019, Suzanne G. Smith was named Chief Accounting Officer of the Company. Under the terms of Ms. Smith’s employment letter dated January 14, 2019, (the “Smith Employment Letter”) her initial base salary was set at $285,000. Ms. Smith is eligible to participate in the Company’s short-term incentive bonus plan with her 2019 bonus equal to up to 50% of her base salary, based upon achievement of 100% of the performance targets established by the Compensation Committee. In addition, Ms. Smith is eligible to participate in the Company’s 2006 Plan, under the terms approved by the Compensation Committee. The Smith Employment Letter provides that Ms. Smith will be granted an option to purchase at least 4,600 shares of common stock on terms as determined by Compensation Committee. In addition, Ms. Smith was paid a one-time signing bonus of $15,000.

Ms. Smith is also eligible to receive severance benefits in the event her employment is terminated by the Company without cause or by her for good reason. Details with respect to the severance and change in control provisions under the Smith Employment Letter are set forth below under “Potential Payments Upon Termination or Change in Control.”

R. Carter Pate

Effective November 15, 2017, Mr. Pate became Interim CEO and the Company and Mr. Pate entered into an offer letter with Mr. Umscheid on September 21, 2015employment agreement (the “Umscheid OfferLetter”“Pate Employment Agreement”) pursuant to which Mr. Umscheid was appointed Senior Vice President of Strategic Services of the Company, effective November 2, 2015.. The Umscheid Offer Letter does not providePate Employment Agreement provides for a term ending upon the date a permanent successor CEO is hired and commences employment with the Company. The Company agreed to reimburse Mr. Pate for all reasonable and necessary expenses incurred by Mr. Pate in connection with his performance of employment.services as Interim CEO.

 

Under the terms of the Umscheid Offer Letter,Pate Employment Agreement, Mr. Umscheid’ sPate’s annual base salary is $350,000. In additionwas $700,000. On April 9, 2018, in connection with the Organizational Consolidation, the Company granted Mr. Pate an award of unvested options to purchase up to 394,000 shares of our Common Stock at a price of $71.67 per share, which was the closing price of the Company’s Common Stock on the grant date. The grant agreement (the “Pate Option Agreement”) also amended the terms of the Pate Employment Agreement by extending the term of his annualemployment as the Interim CEO through June 30, 2019, and providing for a reduced base salary of $500,000 per year plus a monthly amount of $1,177.04 for health coverage premiums. Subsequently in 2018, Mr. Umscheid is entitledPate volunteered to paymentforego 98,500 of a short-termthe options in order to fund other incentive bonusawards to key employees in an amount equal to 75% of his annual base salary. The Umscheid Offer Letter provides that this bonus is payable upon the achievement by the Company of 100% of its budgeted EBITDA performanceamounts and acceptable performance by Mr. Umscheid, in each case asvalues determined by the Board,Compensation Committee.

On March 31, 2019, 25% of the options granted under the Pate Option Agreement vested as a result of Mr. Pate meeting certain personal goals, including those relating to financial reporting, the Organizational Consolidation, and that the 2016 bonusmentorship of senior executives. 25% of the options were subject to vesting based on a budget goal as of March 31, 2019, of which 50% vested based on performance in respect of this goal. The remaining options vested on June 30, 2019. The options will nonetheless be consistentremain exercisable until April 8, 2021.

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The Pate Option Agreement also includes restrictive covenants in favor of the Company, including a one-year non-competition and non-solicitation restriction following Mr. Pate’s employment with the Company.

The 2018 option grant represented a substantial portion of Mr. Pate’s overall compensation for 2018. For 2019, the Compensation Committee approved target cash and equity compensation totaling $3,000,000 for Mr. Pate, comprised of a base salary of $750,000, a target bonus opportunity for other senior executivesof $750,000 and a grant of 23,317 restricted share awards representing a value of $1,500,000 based on the closing price per share of the Company. Mr. Umscheid is also eligible to participate inCompany’s stock on the HoldCo LTIP and is entitled to receive 10% ofgrant date. See our current report on Form 8-K filed with the LTI Pool.SEC on February 11, 2019.

 

William Severance

 

The Company entered into an offer letter with Mr. Severance on November 23, 2015 (the “Severance“Prior Severance Offer Letter”) pursuant to which Mr. Severance was appointed as Chief Accounting Officer of the Company reporting directly to the CFO of the Company, effective February 1, 2016. TheEffective January 10, 2018, the Company and Mr. Severance entered into a new offer letter (the “Amended Severance Offer Letter does not provide a term of employment.Letter”), which superseded and replaced the Prior Severance Offer Letter.

 

Under the terms of the Prior Severance Offer Letter, Mr. Severance’s annual base salary iswas $300,000. InThe Amended Severance Offer Letter provided for an increase of annual base salary to $318,270. Under the Amended Severance Offer Letter, in addition to his annual base salary, Mr. Severance iswas entitled to payment of a short-term incentive bonus in an amount targeted to equal 50% of his annual base salary upon the achievement of certain financial goals as well as certain personal performance targets, in each case consistent with other senior executives of the Company and to be determined by the Board. The Compensation Committee has delegated to the CEO authority to determine the ultimate payout of Mr. Severance’s short-term incentive bonus, which may be paid above the target amount. Mr. Severance received an award on his hire date of the number of restricted shares of the Company equal to 70% of his annual base salary divided by the closing price of the Company’s common stockCommon Stock on the date of the grant. As long as Mr. Severance remainsremained employed by the Company, he willwould also be entitled to an award on each anniversary of his hire date of the number of restricted shares of the Company equal to 35% of his annual base salary divided by the closing price of the Company’s Common Stock on the date of the grant.

 

 Effective April 11, 2018, in connection with the Organizational Consolidation, the Company appointed Mr. Severance Interim CFO. In connection with this appointment, Mr. Severance’s base salary was increased from $318,270 to $450,000 and his annual target bonus was increased from 50% to 75% of his base salary. Also in connection with this appointment, on April 9, 2018, Mr. Severance received options to purchase 13,710 shares of our Common Stock at a price of $71.67 per share, the closing price of the Company’s Common Stock on the grant date. The options will become fully exercisable on May 10, 2019, subject to Mr. Severance’s continued employment with the Company, and if not exercised will expire on December 31, 2020.

Neither the Prior Severance Offer Letter nor the Amended Severance Offer Letter provided for a term of employment. Details with respect to the severance provisions under the Amended Severance Offer Letter are set forth below under “Potential Payments Upon Termination or Change in Control.”

 In addition, Mr. Severance was covered by the Retention Plan, which became effective on April 9, 2018 (see “Change in Control, Severance Arrangements and Severance Payments - Employee Retention Plan”), pursuant to which he was paid.

Laurence Orton

The Company entered into an offer letter with Mr. Orton on December 28, 2017 (the “Orton Offer Letter”) pursuant to which Mr. Orton continued to be employed as Vice President and Corporate Controller of the Company reporting to the Chief Accounting Officer of the Company. The Orton Offer Letter does not provide a term of employment.

Under the terms of the Orton Offer Letter, Mr. Orton’s annual base salary was $290,000. In addition to his annual base salary, Mr. Orton was entitled to payment of a short-term incentive bonus in an amount targeted to equal 50% of his annual base salary upon the achievement of certain goals determined by the Board or Compensation Committee. Mr. Orton was also eligible to participate in the Company’s 2006 Plan, under the terms approved by the Compensation Committee, and the Company’s fringe benefit programs as may be in effect from time to time.

In addition, Mr. Orton is covered by the Retention Plan, which became effective on April 9, 2018 (see “Change in Control, Severance Arrangements and Severance Payments - Employee Retention Plan”), pursuant to which he was paid.

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Outstanding Equity Awards at December 31, 20162019

 

The following table reflects the equity awards granted by us to the NEOs outstanding at December 31, 2016:2019:

 

			Option Awards																Stock Awards
Name and Grant Date			Number of Securities Underlying Unexercised Options (#) Exercisable (1)				Number of Securities Underlying Unexercised Options (#) Unexercisa- ble (1)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested (#) (2)(3)				Market Value of Shares or Units of Stock That Have Not Vested ($) (2)(3)				Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(4)				Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(5)
James M. Lindstrom (6)
8/6/2015				—				11,319				44.17			8/6/2020					—				—				—				—
8/6/2015				—				—				—				—				—				—				287,734				10,948,279
David C. Shackelton
9/11/2014				50,000				—				43.81			9/11/2024					—				—				—				—
8/6/2015				—				11,319				44.17			8/6/2020					—				—				—				—
8/6/2015				—				—				—				—				—				—				143,867				5,474,139
Sophia D. Tawil
4/27/2016				—				—				—				—				—				—				53,950				2,052,798
Matthew Umscheid
11/4/2015				—				—				—				—				—				—				71,934				2,737,089
William Severance
2/1/2016				—				—				—				—				4,750				180,738				—				—

		Option Awards												Stock Awards
Name and Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable (1)			Number of Securities Underlying Unexercised Options (#) Unexercisable (2)			Option Exercise Price ($)			Option Expiration Date			Number of Shares or Units of Stock That Have Not Vested (#) (3)			Market Value of Shares or Units of Stock That Have Not Vested ($) (4)			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested ($)
Daniel E. Greenleaf
12/11/2019		—			—			—			—			20,104			1,189,755			—			—
12/11/2019		—			67,090			59.25			12/11/2026			—			—			—			—
12/11/2019		—			40,432			68.14			12/11/2026			—			—			—			—
Kevin M. Dotts
8/27/2018		—			24,865			67.00			12/31/2021			—			—			—			—
9/20/2019		—			—			—			—			2,629			155,584
9/20/2019		—			25,175			58.84			9/20/2024			—			—			—			—
Kathryn Stalmack
9/20/2019		—			—			—			—			5,842			345,730			—			—
9/20/2019		—			15,257			58.84			9/20/2024			—			—			—			—
Suzanne G. Smith
2/18/2019		—			4,600			73.09			12/31/2020			—			—			—			—
9/20/2019		—			—			—			—			1,816			107,471			—			—
9/20/2019		—			5,798			58.84			9/20/2024			—			—			—			—
R. Carter Pate
4/9/2018		258,563			—			71.67			4/8/2021			—			—			—			—
William Severance
12/14/2017		34,004			—			56.42			12/31/2020			—			—			—			—
12/16/2017		1,786			—			56.89			12/31/2020			—			—			—			—
4/9/2018		13,710			—			71.67			12/31/2020			—			—			—			—
Laurence Orton		—			—			—			—			—			—			—			—

 

(1)

Certain options expire five years and ten years from the date of the respective grant. The options have an exercise price equal to the closing market price of our Common Stock on the grant date. The unvested options granted to Messrs. Lindstrom and David Shackelton on August 6, 2015 cliff vest on August 6, 2018.

 

(2)

The options granted to Mr. Greenleaf on December 11, 2019 consist of 67,090 options and 40,432 Premium Priced Options which have an exercise price 15% above the market price on date of grant. Mr. Greenleaf’s options will vest ratably in four equal installments on the first, second, third and fourth anniversaries of the grant date. The options granted to Mr. Dotts on August 27, 2018 will vest if Mr. Dotts remains continuously employed with the Company through October 31, 2020. The options granted to Mr. Dotts on September 20, 2019 will vest ratably in three equal annual installments on March 15, 2021, 2022, and 2023, in each case, subject to Mr. Dotts’ continued employment. The options granted to Ms. Stalmack on September 20, 2019 will vest in three equal annual installments on March 15, 2021, 2022, and 2023, in each case, subject to Ms. Stalmack’s continued employment. The options granted to Ms. Smith on February 18, 2019 will vest if Ms. Smith remains continuously employed with the Company through October 31, 2020. The options granted to Ms. Smith on September 20, 2019 will vest in three equal annual installments on March 15, 2021, 2022, and 2023, in each case, subject to Ms. Smith’s continued employment. All options, other than the Premium Priced Options, have an exercise price equal to the market price on the date of grant.

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(3)

Represents unvested restricted stockshare awards thator RSUs. The RSUs granted to Mr. Greenleaf on December 11, 2019 vest as follows:in four equal annual installments on the first, second, third, and fourth anniversary of the grant date. The restricted share awards granted to Mr. Dotts, Ms. Stalmack, and Ms. Smith on September 20, 2019 vest in three equal installments on March 15, 2021, 2022 and 2023.

 

Award		Grant Date		Vesting
Restricted Stock		2/1/2016		1/3 per year beginning on the anniversary of the grant

(3)(4)

The market value of the unvested restricted stockshare awards was calculated using a value of $59.18 per share of Common Stock, which was the closing market price of our Common Stock on December 31, 2016.2019.

(4)	Represents potential estimated maximum payout under the HoldCo LTIP, which would be payable following the performance period ending December 31, 2017.

(5)	The market value of the unvested, unearned HoldCo LTIP shares that would be issuable was calculated, assuming performance at maximum, in each case using the closing market price of our Common Stock on December 31, 2016.

(6)	As of December 31, 2016, Mr. Lindstrom also held 10,134 restricted stock units (“RSUs”) that have vested, but will not be issued to him until the earlier of (a) the third anniversary of the grant date and (b) six months following the termination of his employment.

Option Exercises and Stock VestingVested Table

 

The following table provides additional information about the value realized by the Named Executive OfficersNEOs on option award exercises and stock and RSU award vesting during the year ended December 31, 2016.2019.

 

		Option Awards								Stock Awards								Option Awards						Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)				Number of Shares Acquired on Exercise (#)			Value Realized on Exercise ($)			Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)
James M. Lindstrom (1)			—				—				146				6,655
Daniel E. Greenleaf																		—			—			—			—
Kevin M. Dotts																		—			—			—			—
Kathryn Stalmack																		—			—			—			—
Suzanne G. Smith																		—			—			—			—
R. Carter Pate																		—			—			23,317			1,375,237
William Severance																		2,115			37,139			3,730			238,069
Laurence Orton																		24,520			324,677			1,422			90,432

 

(1)

In addition, Mr. Lindstrom held 3,307 shares of RSUs that vested during 2016 that had a value of $150,733 on the date of vesting. These shares will not be issued to him until the earlier of (a) the third anniversary of the grant date and (b) six months following termination. Therefore, no value was realized upon vesting.

Non-qualified Deferred Compensation

 

Name		Executive Contributions in Last FY ($)				Registrant Contributions in last FY($)				Aggregate Earnings in Last FY ($)(2)				Aggregate Withdrawals/ Distributions ($)				Aggregate Balance at Last FY ($)(3)
James M. Lindstrom (1)			—				—				(85,457	)			—				385,599

None of our NEOs participated in or had account balances in non-qualified defined contribution plans or other non-qualified deferred compensation plans maintained by us during fiscal year 2019.

(1)

Deferred amounts represent the value of shares of restricted stock units RSUs that vested in 2015 and 2016 but, pursuant to the terms of the Lindstrom Employment Agreement, will not be issued to him until the earlier of (a) the third anniversary of the grant date and (b) six months following the termination of his employment.

(2)

Reflects the change in the Company’s stock price applicable to 6,827 RSUs vested in 2015 from $46.92 on December 31, 2015 to $38.05 on December 30, 2016, as well as the change in the Company’s stock price applicable to 3,307 RSUs vested on January 26, 2016 from $45.58 on January 26, 2016 to $38.05 on December 30, 2016.

(3)	Based on the aggregate value of the vested RSUs not yet delivered at December 31, 2016.

 

Potential Payments Upon Termination or Change in Control

 

General

 

The employment agreements of Messrs. Lindstrom and David ShackeltonMr. Greenleaf, Mr. Dotts, and Ms. TawilStalmack provide for severance payments in the event of termination of employment under certain circumstances, and each such employment agreement provides for a payment in the event of a change in control (none of which include excise tax gross-ups). Ms. Smith’s Employment letter also provides for severance payments in the event of termination of employment under certain circumstances

 

The receipt of the payments and benefits to these NEOs under the employment agreements are generally conditioned upon their complying with non-competition, non-solicitation/non-piracy and non-disclosure provisions. By the terms of such agreements, the executives acknowledge that a breach of some or all of the restrictive covenants described therein will entitle us to injunctive relief restraining the commission or continuance of any such breach, in addition to any other available remedies.

 

In entering into these agreements, the Compensation Committee considered certain legal and tax provisions, fairness to stockholders, tenure of each executive officer and general corporate practice to select the events that will trigger payments under the employment agreements noted below.

 

Severance Payments

 

UnderFor fiscal year 2019, under their respective employment agreements Messrs. Lindstrom and David Shackeltonor offer letters, as applicable, Mr. Greenleaf, Mr. Dotts, Ms. Stalmack and Ms. TawilSmith would behave been eligible to receive a severance benefit, upon executing a general release in favor of us in the event of a termination of the executive officer by us without Cause (as defined below) or with respect to Mr. Greenleaf, Mr. Dotts and Ms. Stalmack, the termination by the executive for Good Reason (as defined below). NeitherIf termination had occurred as of December 31, 2019, the severance payment to which Mr. Umscheid or Mr. Severance isGreenleaf would have been entitled to equaled (i) twenty-four months’ base salary and two times’ the target bonus for the full fiscal year (which was $0 for 2019), (ii) continued healthcare coverage for eighteen months following the date of termination and (iii) accelerated vesting of any severance payment under his offer letter.equity awards that would have otherwise vested based on continued employment for two years following the date of termination. The severance payment to which Mr. Lindstrom will be entitled is equal to (i) the lesser of (a) his base salary thatDotts would have been paid from the date of termination through December 31, 2017 and (b) hisentitled to equaled (i) twelve months’ base salary in effect at termination, or,plus (ii) if greater, a payment of six months of base salary, and any bonus earned for the prior completed fiscal year, but not yet paid (which was $0 for 2019), and (iii) a pro-rata portion of any bonus earned for the then fiscal year through the date of termination. The severance payment to which David Shackelton and Ms. Tawil will beStalmack would have been entitled is equal to equaled twelve months’ base salary and any bonus earned for the prior completed fiscal year, but not yet paid, and a pro-rata portion of any bonus earned for the then fiscal year through the date of termination.severance payment to which Ms. Smith would have been entitled to equaled six months’ base salary.

 

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Under the employment agreements and offer letters, as applicable, with Messrs. Lindstrom and David ShackeltonMr. Greenleaf, Mr. Dotts, Ms. Stalmack, and Ms. Tawil,Smith, “Cause” is defined as:

 

●

fraud or theft committed by the employee against us or any of our subsidiaries, affiliates, joint ventures and related organizations, including any entity managed by us (collectively referred to as “Affiliates”), or commission of a felony or any crime involving fraud or moral turpitude;

fraud or theft committed by the employee against us or any of our subsidiaries, affiliates, joint ventures and related organizations, including any entity managed by us (collectively referred to as “Affiliates”), or commission of a felony or any crime involving fraud or moral turpitude;

 

●

gross negligence of the employee or willful misconduct by the employee that results, in either case, in material economic or reputational harm to us or our Affiliates;

gross negligence of the employee or willful misconduct by the employee that results, in either case, in material economic or reputational harm to us or our Affiliates;

 

●

breach of any provision by the employee of the employment agreement or breach of any fiduciary duty or duty of loyalty owed to us or our Affiliates;

breach of any provision by the employee of the employment agreement or breach of any fiduciary duty or duty of loyalty owed to us or our Affiliates;

 

●

conduct of the employee tending to bring us or our Affiliates into public disgrace or embarrassment, or which is reasonable likely to cause one or more of its customers or clients to cease doing business with, or reduce the amount of business with, the Company or its Affiliates;

conduct of the employee tending to bring us or our Affiliates into public disgrace or embarrassment, or which is reasonably likely to cause one or more of its customers or clients to cease doing business with, or reduce the amount of business with, the Company or its Affiliates;

 

●

neglect or refusal by the employee to perform duties or responsibilities as directed by us, the Board or any executive committee established by the Board, or violation by the employee of any express direction of any lawful rule or regulation established by us or the Board or any committee established by the Board which is consistent with the scope of the employee’s duties under the employment agreement, if such failure, refusal, or violation continues uncured for a period 10 days after written notice from us to the employee specifying the failure, refusal, or violation and our intention to terminate the employment agreement for Cause;

neglect or refusal by the employee to perform duties or responsibilities as directed by us, the Board or any executive committee established by the Board, or violation by the employee of any express direction of any lawful rule or regulation established by us or the Board or any committee established by the Board which is consistent with the scope of the employee’s duties under the employment agreement, if such failure, refusal, or violation continues uncured for a period 10 days after written notice from us to the employee specifying the failure, refusal, or violation and our intention to terminate the employment agreement for Cause;

 

●

commission of any acts or omissions by the employee resulting in or intended to result in direct material personal gain to the employee at our or our Affiliates’ expense; or

commission of any acts or omissions by the employee resulting in or intended to result in direct material personal gain to the employee at our or our Affiliates’ expense; or

 

●

employee materially compromises our or our Affiliates’ trade secrets or other confidential and proprietary information.

employee materially compromises our or our Affiliates’ trade secrets or other confidential and proprietary information.

 

Action or inaction by the employee is not considered “willful” unless done or omitted by him or her intentionally and without his or her reasonable belief that his or her action or inaction was in our or our Affiliates’ best interests, and does not include failure to act by reason of total or partial incapacity due to physical or mental illness.

 

Under the employment agreements with Mr. Greenleaf and Ms. Stalmack, “Good Reason” is defined as: the occurrence of any of the following that is not cured within thirty days of executive’s written notice that the occurrence constitutes Good Reason: (i) a material reduction of executive’s position, duties, or responsibilities with the Company or LogistiCare, including a requirement that the executive report directly to any person other than as provided in the agreement. (ii) a reduction of executive’s base salary other than a reduction which is generally applicable to all executives of the Company and LogistiCare, (iii) a material breach by the Company or LogistiCare of the employment agreement; provided that any resignation for Good Reason must be made within 60 days of the occurrence set forth in (i) –(iii) above. Mr. Dotts’ employment agreement defines Good Reason the same way, with an additional occurrence of requiring Mr. Dotts to move or relocate his primary place of employment more than 75 miles from LogistiCare’s current office at 1275 Peachtree Street, Atlanta, GA 30309.

The amount of estimated payments and benefits that would be provided by us (or our successor) to each of the NEOs employed by us as of December 31, 2016,2019, under the employment agreements, and the HoldCo LTIP (for those NEOs who participate in the HoldCo LTIP), assuming that such agreement had been in effect and the termination circumstance occurred on December 31, 20162019 and did not involve a Change in Control (as defined below) is as follows:

 

InUnder their employment agreements, in the event of a termination of employment by the Company without cause Messrs. Lindstrom and David Shackelton(or termination by the executive for good reason with respect to Mr. Greenleaf, Mr. Dotts and Ms. TawilStalmack), Mr. Greenleaf would receivehave received cash severance payments under theirtotaling $1,736,000 and an acceleration of stock-based compensation valued at $594,877, Mr. Dotts would have received $450,000, Ms. Stalmack would have received $375,000, and Ms. Smith would have received $142,500. With the exception of the terms of Mr. Greenleaf’s employment, agreements totaling $650,000, $450,000 and $350,000, respectively. Thethe Company does not provide NEOs with continuation of benefits or accelerated vesting of equity awards upon a termination of employment, and no NEO is entitled to payments or benefits in connection with a termination other than by the Company without cause.

In addition, the HoldCo LTIP provides for pro rata participation by a participant whose employment is terminated more than one year after the date of being granted an award either without cause or by the Company or by reason of the participant’s death or disability, which is payable when HoldCo LTIP awards are otherwise paid to other participants in the plan. Assuming a qualifying termination of employment on December 31, 2016, Messrs. Lindstrom and David Shackelton would not have received any payments under the HoldCo LTIP because the closing price of the Company’s Common Stock on December 31, 2016 was less than the threshold stock price under the HoldCo LTIP awards, and Ms. Tawil would have forfeited her award pursuant to the terms of the HoldCo LTIP since she was not employed more than a year with the Company as of December 31, 2016.executive for good reason.

 

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Change in Control Payments

 

Employment Agreements

 

Certain payment provisions of the employment agreements are also triggered by a “Change in Control.” Under the employment agreements with Messrs. Lindstrom and David ShackeltonMr. Greenleaf, Mr. Dotts, and Ms. TawilStalmack, a “Change in Control” is defined as an event or events, in which:

 

●

any “person” as defined in Sections 13(d) and 14(d) of the Exchange Act (other than (i) us or our subsidiaries, (ii) any fiduciary holding securities under our employee benefit plan or our subsidiaries, or (iii) any company owned by our stockholders), is or becomes the “beneficial owner” of 50% or more of our voting outstanding securities; or

any “person” as defined in Sections 13(d) and 14(d) of the Exchange Act (other than (i) us or our subsidiaries, (ii) any fiduciary holding securities under our employee benefit plan or our subsidiaries, or (iii) any company owned by our stockholders), is or becomes the “beneficial owner” of 50% or more of our voting outstanding securities; or

 

●

we consummate (i) mergers or consolidations as more specifically described in the employment agreements, (ii) a liquidation or (iii) the sale or disposition of all or substantially all of our assets.

we consummate (i) mergers or consolidations as more specifically described in the employment agreements, (ii) a liquidation or (iii) the sale or disposition of all or substantially all of our assets.

 

The Lindstrom Employment Agreement entitlesFor fiscal year 2019, had a Change in Control occurred during the term of Mr. Greenleaf’s employment agreement and he was terminated following such Change in Control, Mr. Greenleaf’s employment agreement would have entitled him to receive from the Company (i) thirty months’ base salary and 2.5 times the producttarget bonus for the full fiscal year 2019, (ii) continued healthcare coverage for eighteen months following the date of two multiplied by his twelve-monthtermination and (iii) accelerated vesting of all unvested equity awards. Had a Change in Control occurred during the term of Mr. Dotts’ employment agreement and he was terminated without cause or he resigns for good reason following such Change in Control Mr. Dotts’ employment agreement would have entitled him to receive from the Company continued payment of base salary;salary for twelve months and (ii) a pro-ratapro rata portion of any bonus earned for the then fiscal year through the date of termination ifof. Had a Change in Control occursoccurred during the term of Ms. Stalmack’s employment agreement term and aftershe was terminated following such Change in Control but prior to the end of the term, he is terminated without Cause.

David Shackelton’s and Ms. Tawil’sStalmack’s employment agreements entitle each of themagreement would have entitled her to receive twelve months’ base salary, and a pro-rata portionaccelerated vesting of any bonus earned for the then fiscal year through the date of termination if a Change in Control occurs during the agreement termall outstanding unvested restricted share units and after such Change in Control but prior to the end of the term, such person is terminated without Cause.performance stock units.

 

Equity Awards

 

Upon a Change in Control, each of Messrs. Lindstrom, David Shackelton, Severance and Umscheid and Ms. Tawil isthe NEOs are entitled to anaccelerated vesting of stock options and accelerated vesting and payment of stock options and restricted stockshare awards granted to that executive officer, as applicable. However, for Messrs. Lindstrom and David Shackelton and Ms. Tawil, if the sum of any lump payments, the value of any accelerated vesting of stock options and restricted stock awards, and the value of any other benefits payable to the executive officer, would constitute an “excess parachute payment” (as defined in Section 280G of the IRC), then such lump sum payment or other benefit will be reduced to the largest amount that will not result in receipt by the executive officer of a parachute payment.

 

The following table quantifies the estimated maximum amount of payments and benefits under the employment agreements, offer letters, and agreements relating to awards granted under our 2006 Plan to which the NEOs employed by us as of December 31, 20162019 would have been entitled upon a Change in Control of our Company that occurred on December 31, 20162019 and termination of employment, but without giving effect to any reduction for excess parachute payments.

 

Name		Change in Control Payment ($)				Value of Accelerated Vesting of Equity Awards ($)(1)				Total Termination Benefits ($)(2)
James M. Lindstrom			1,300,000				—				1,300,000
David C. Shackelton			450,000				—				450,000
Sophia D. Tawil			350,000				—				350,000
William Severance			—				180,738				180,738

Name		Change in Control Payment ($) (1)			Value of Accelerated Vesting of Equity Awards ($)(2)			Total Termination Benefits ($)(3)
Daniel E. Greenleaf		2,161,000			1,189,755			3,350,755
Kevin M. Dotts		500,000			164,144			664,144
Kathryn Stalmack		375,000			350,917			725,917
Suzanne G. Smith		—			109,442			109,442

 

(1)	(1)For Mr. Greenleaf and Ms. Stalmack, no bonus was included as they were not eligible for a bonus in 2019 pursuant to their employment agreements.

(2)	No value is included for the HoldCo LTIP awards becauseCalculated based on the closing stockmarket price of the Company’sour Common Stock on December 31, 2016 was less than the threshold stock price under the HoldCo LTIP awards.2019.

(3)	(2)	No value has been assigned to any provisions of the employment agreements that remain in force following a Change in Control.

 

CEO Pay Ratio Disclosure

Pay Ratio Methodology

To determine the estimated ratio of CEO pay to median employee pay (the “Pay Ratio”) in accordance with Item 402(u) of Regulation S-K of the Securities Act, we considered our entire employee population of approximately 3,800 employees who were on the payroll as of December 31, 2019. We then used base salary paid during fiscal year 2019 as the form of compensation to determine our median employee, and annualized pay for those employees who commenced work during fiscal year 2019. We then identified our median employee, whose Summary Compensation Table (“SCT”) total compensation, as calculated in accordance with Item 402(u)(2) of Regulation S-K of the Securities Act, was $24,940 in fiscal year 2019.

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The CEO pay used for purposes of calculating the Pay Ratio is $2,831,031, the SCT total compensation paid to our Interim CEO, R. Carter Pate, from January 1, 2019 through December 31, 2019.

As a result, the reasonable estimated ratio of CEO pay to median employee pay, calculated in a manner consistent with Item 402(u) of Regulation S-K of the Securities Act is 114:1. The SEC’s pay ratio disclosure rules permit the use of estimates, assumptions, and adjustments. We believe that the foregoing pay ratio is a reasonable estimate calculated in a manner consistent with the SEC’s pay ratio disclosure rules.

PROPOSAL 2 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), enables our stockholders to vote, on a non-binding advisory basis, on the compensation of our NEOs as disclosed in this Proxy Statement in accordance with the SEC’s compensation disclosure rules.

 

The Compensation Committee has considered that the holders of over 86%approximately 82% and 82%80% of the votes cast at our 20152019 and 20162018 annual meeting of stockholders, respectively, approved, on an advisory basis the compensation of our NEOs as disclosed in the Proxy Statement for those annual meetings.

 

As described in detail under the heading “Executive Compensation—Compensation Discussion and Analysis,” above, our executive compensation programs are designed to attract, motivate, and retain our NEOs, who are critical to our success. Under these programs, our NEOs are rewarded for the achievement of specific annual, long-term and strategic goals, corporate goals, and the realization of increased stockholder value. Please read the “Compensation Discussion and Analysis” beginning on page 21for19 for additional details about our executive compensation programs, including information about the fiscal year 20162019 compensation of our NEOs.

 

We believe that the compensation programs offered to our NEOs should support the creation of stockholder value and

achievement of our financial goals. Accordingly, our guiding compensation principles focus on:

 

	●	attracting and retaining high-performance leaders;

	●	aligning the interests of our executives with those of our stockholders;

	●	linking a meaningful portion of executive compensation to performance; and

●

maintaining a significant portion of compensation based on at-risk opportunities tied to total stockholder return over a multi-year period.

attracting, retaining, and motivating high-performing leaders;

aligning the interests of our executives with those of our stockholders, and incentivizing stockholder value creation;

linking a meaningful portion of executive compensation to achievement of key financial, operational, and capital allocation performance goals; and

maintaining a significant portion of compensation based on at-risk opportunities including equity awards tied to stock price.

 

Our Compensation Committee has a long history of performance basedperformance-based pay practices and considers numerous factors when setting compensation for our NEOs including:

 

	●	actual and adjusted EBITDA, earnings per share, return on equity performance, and stockholder value created;

	●	goals and objectives set for each executive officer at the beginning of the year; and

●

recommendations of an independent third party executive compensation consultant.

actual and adjusted EBITDA, earnings per share, return on equity performance, and stockholder value created;

goals and objectives set for each executive officer at the beginning of the year; and

recommendations of an independent third-party executive compensation consultant.

 

Other considerations include individual performance, internal pay comparisons within the executive group at the Company, overall financial performance of the Company, and market data.

 

Performance based portions of our executive compensation for any given year are awarded primarily based on the respective prior year financial performance. Our annual incentive cash compensation and equity-based compensation programs are designed to be performance-based incentives requiringand to incentivize achievement of performance goals set by the Board in order to earn payouts.Company’s short- and long-term financial, operation and strategic goals. Our long-term incentive program is designedhas historically used equity grants to drive extraordinary stockholder value andincentivize performance, reward our executives for substantial stockholder value creation. This multi-year program rewards our executives only for sustained returns exceeding 8% compounded annual growth over a specified period.creation and drive extraordinary stockholder value. We believe this structure encourages an ownership mentality that incentivizes our management to create stockholder value over a multi-year period.

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Our Compensation Committee continually reviews the compensation programs for our NEOs to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices.

 

We are asking our stockholders to indicate their support for our NEO compensation as described in this Proxy Statement. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our NEOs’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:

 

“RESOLVED, that the Company stockholders approve, on a non-binding advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Proxy Statement for the 20172020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the 20162019 Summary Compensation Table and the other related tables and disclosure.”

 

The Say-on-Pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. The Company values the opinions of our stockholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns. We conduct this vote on an annual basis, and the next such vote will take place with our 2021 annual meeting of stockholders.

 

The Board unanimously recommends that you vote “FOR” the compensation of our Named Executive Officers, as disclosed in this Proxy Statement.

PROPOSAL 3–ADVISORY VOTE TO APPROVE THE FREQUENCY OF FUTUREADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

 

In addition to the advisory “Say on Pay” vote set forth in Proposal 2, pursuant to Section 14A of the Exchange Act, our stockholders are also entitled, at least once every six years, to indicate on an advisory basis their preference regarding how frequently we should solicit the “Say on Pay” advisory vote. This non-binding advisory vote is commonly referred to as a “Say on Frequency” vote. By voting on this ProposalPROPOSAL 3 stockholders may indicate whether the advisory “Say on Pay” vote should occur every one year, every two years or every three years, or they may abstain from voting. Although the vote is advisory and is not binding on the Board, the Board will take into account the outcome of the vote when considering the frequency of future “Say on Pay” proposals advisory votes.

After careful consideration, our Board has determined that an annual advisory vote on NEO compensation is the most appropriate alternative choice for the Company because it will provide our stockholders the opportunity to react promptly to emerging trends in compensation and will provide the Board and the Compensation Committee the opportunity to evaluate compensation decisions in light of annual feedback from stockholders.

Please note that this proposal does not provide stockholders with the opportunity to vote for or against any particular resolution; rather, it permits stockholders to choose how often they would like us to include a stockholder advisory vote on the compensation of our NEOs on the agenda for the annual meeting of stockholders.

Notwithstanding the recommendation of the Board and the outcome of the stockholder vote, the Board may in the future decide that it is in the best interest of our stockholders and the Company to conduct “Say on Frequency” votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

When voting on this Proposal, you should mark your proxy for “Every 1 Year,” “Every 2 Years” or “Every 3 Years” based on your preference as to the frequency with which an advisory vote to approve NEO compensation should be held. If you have no preference, you may abstain.

The Board unanimously recommends that you vote “Every 1 Year” for the frequency of future “Say on Pay” advisory votes to approve NEO compensation.

PROPOSAL 4 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Company’s independent registered public accounting firm for the fiscal year ended December 31, 20162019 was KPMG. The Audit Committee of the Board has selected KPMG as its independent registered public accounting firm to audit the Company’s consolidated financial statements for the fiscal year ending December 31, 2017.2020.

 

Although we are not required to do so, we believe that it is appropriate for us to request stockholder ratification of the appointment of KPMG as our independent registered public accounting firm. If stockholders do not ratify the appointment, though it may nevertheless retain KPMG, the Audit Committee will investigate the reasons for the stockholders’ rejection and reconsider the appointment. In addition, even if the stockholders ratify the selection of KPMG, the Audit Committee may in its discretion appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that a change is in the best interest of the Company.

 

The Company has been advised that representatives of KPMG will be present at the Annual Meeting with the opportunity to make a statement if the representatives desire to do so. It is expected that the representatives will be available to respond to appropriate questions.

 

The Board unanimously recommends that you vote “FOR” the ratification of the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2017.2020.

 

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AUDIT COMMITTEE REPORT

 

The Audit Committee of the Board consists of Mr. Kerley, Ms. MeintsNorwalk and Mr. Wright. Ms. MeintsMr. Kerley is the Chairperson of the Audit Committee.

 

The Audit Committee operates under a written charter adopted by the Board, a copy of which is available on the Company’s website at www.prscholdings.com/corporategovernance.

 

The Audit Committee has reviewed and discussed with management its assessment and report on the effectiveness of Providence’s internal control over financial reporting as of December 31, 2016,2019, which it made using the criteria established inInternal Control-Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Audit Committee has also reviewed and discussed with KPMG, the Company’s independent registered public accounting firm, its review and report on Providence’s internal control over financial reporting. Providence published these reports in its 20162019 Annual Report.

 

The Audit Committee has reviewed and discussed with management and KPMG the audited consolidated financial statements of Providence for the fiscal year ended December 31, 2016.2019. Management represented to the Audit Committee that Providence’s consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States. The Audit Committee also discussed with representatives of KPMG the matters required to be discussed by Statement on Auditing Standards No. 16 as adopted bythe applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T..

 

The Audit Committee received the written disclosures and the confirming letter from KPMG required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and discussed with KPMG its independence from Providence.

 

Based on these reviews and discussions and in reliance thereon, the Audit Committee recommended to the Board that the audited financial statements be included in the 20162019 Annual Report.

 

The Audit Committee
Kristi L. MeintsRichard A. Kerley (Chairperson)	Richard A. KerleyLeslie V. Norwalk	Frank J. Wright

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

 

Fees of Independent Registered Public Accounting Firm

 

Fees for professional services provided by KPMG, the Company’s independent registered public accounting firm, for the fiscal years ended December 31, 20162019 and 2015,2018, in each of the following categories were:

 

		Fiscal Year Ended December 31,								Fiscal Year Ended December 31,
		2016				2015				2019				2018
Audit fees and fees for services provided in connection with statutory and regulatory filings		$	2,809,950			$	3,107,040
Audit fees										$	1,532,083			$	2,289,800
Audit related fees			37,136				—				-				15,000
Tax fees			1,059,825				1,593,983				453,805				1,971,768
All other fees			75,000				100,185				-				472,862
Total		$	3,981,911			$	4,801,208			$	1,985,888			$	4,749,430

 

Audit Fees. Audit fees consisted of amounts incurred for services performed in association with the annual financial statement audit (including required quarterly reviews), the audit of the Company’s internal control over financial reporting, and other procedures normally required by the independent auditorfor services provided in order to be able to form an opinion on the Company’s consolidated financial statements.connection with statutory and regulatory filings or engagements.

 

Audit Related Fees. Audit related fees consisted of amounts incurred for the audit of specific internal controls of one of the Company’s subsidiariescontrol assurance services in 2016.fiscal year ended December 31, 2018.

 

Tax Fees. Tax fees consisted of amounts incurred for professional services rendered by KPMG for tax compliance, transfer pricing and tax consulting.

 

All Other Fees. Other fees primarilyfor fiscal year 2018 consisted of fees incurred for services rendered by KPMG forin connection with the auditdisposal of information technology security and internal control over protected client health information related to our non-emergency transportationworkforce development services operating segment.business.

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The Audit Committee has considered and determined that the services provided by KPMG were compatible with KPMG maintaining their independence.

 

The Audit Committee has adopted a policy that requires advance approval of all audit, audit related, tax services and other services performed by the independent auditor. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. The Audit Committee pre-approved all of the foregoing services provided to the Company by KPMG in fiscal years 2016ended December 31, 2019 and 2015.2018.

 

STOCKHOLDER PROPOSALS FOR 20182021 ANNUAL MEETING

 

Pursuant to the proxyapplicable rules promulgated under the Exchange Act, Company stockholders are notified that the deadline for providing the Company with timely notice of any stockholder proposal to be submitted within the Rule 14a-8 process for consideration at the Company’s annual meeting to be held in 20182021 (the “2018“2021 Annual Meeting”) will be December 29, 2017.30, 2020.

 

Pursuant to the amended and restated bylaws,Company’s Bylaws, in order for a stockholder to bring a proposal (other than proposals sought to be included in the Company’s Proxy Statement pursuant to Rule 14a-8 of the Exchange Act) before, or make a nomination at, the 20182021 Annual Meeting, such stockholder must deliver a written notice of such proposal and/or nomination to, or it must be mailed and received by, the Company’s Corporate Secretary at the principal executive offices of the Company, located at 700 Canal1275 Peachtree Street, ThirdSixth Floor, Stamford, CT 06902,Atlanta, GA 30309, no earlier than the close of business on February 15, 2018,16, 2021, and not later than the close of business on April 16, 2018.17, 2021. Stockholders are also advised to review the Company’s amended and restated bylaws,Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.

 

As to all such matters which the Company does not have notice on or prior to April 16, 2018,17, 2021, discretionary authority shall be granted to the persons designated in the Company’s proxy related to the 20182021 Annual Meeting to vote on such proposal.

 

OTHER MATTERS

 

On the date we filed this Proxy Statement with the SEC, the Board did not know of any other matter to be raised at the Annual Meeting. If any other matters properly come before our stockholders at this Annual Meeting, the persons named on the enclosed proxy card intend to vote the shares they represent in accordance with their best judgment.

 

ADDITIONAL INFORMATION

 

The Company files reports and other information with the SEC. Copies of these documents may be obtained at the SEC’s public reference room in Washington, D.C. The Company’s SEC filings are also available on the SEC’s web site at www.sec.gov. Stockholders may also request additional copies of the Company’s 20162019 Annual Report, except for exhibits to the 20162019 Annual Report, without charge, by submitting a written request to the Company’s Corporate Secretary at 700 Canal1275 Peachtree Street, ThirdSixth Floor, Stamford, CT 06902.Atlanta, GA 30309.

 

HOUSEHOLDING

 

In order to reduce printing costs and postage fees, the Company has adopted the process called “householding”. Under this procedure, the Company may deliver a single copy of the Notice, and if applicable, this Proxy Statement and 20162019 Annual Report to multiple stockholders who share the same last name and address, unless the Company receives contrary instructions from stockholders at that address. Stockholders who participate in householding will continue to receive separate proxy cards, if applicable.

 

If you prefer to receive multiple copies of the Company’s Notice or Proxy Statement and the 20162019 Annual Report, at the same address, you may obtain additional copies by writing to the Company’s Corporate Secretary at 700 Canal1275 Peachtree Street, ThirdSixth Floor, Stamford, CT 06902Atlanta, GA 30309 or by calling (203) 307-2800.(404) 888-5800. Eligible stockholders of record receiving multiple copies of this Proxy Statement and 20162019 Annual Report can request householding by contacting the Company in the same manner.

 

	On behalf of the Board of Directors
	Daniel E. Greenleaf
	James M. Lindstrom
	Director, President and Chief Executive Officer

April 29, 2020

April 28, 2017
Stamford, ConnecticutAtlanta, Georgia

 

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