*
| Less than 1 %
| | | | |
| 8 | Modivcare 2023 Proxy Statement |
(1)
| The securities “beneficially owned” by each stockholder are determined in accordance with the definition of “beneficial ownership” set forth in the regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they may include securities to which the stockholder has or shares voting or investment power or has the right to acquire within 60 days of the Record Date. Beneficial ownership may be disclaimed as to certain of the securities. As of the Record Date there were 12,960,754shares of the Common Stock outstanding (including 65,618 restricted shares that do not have the right to vote), and 798,772shares of Preferred Stock outstanding, which, on an as-converted basis, represents 2,002,939 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.
|
(2)
| This information is based on the Schedule 13G/A filed with the SEC by BlackRock, Inc. (55 East 52nd Street, New York, NY 10055) on February 2, 2020.
|
| | | | | |
| TABLE OF CONTENTS | Voting Securities of Certain Beneficial Owners and Management |
2.This information is based on the Schedule 13G/A filed with the SEC by BlackRock, Inc. (55 East 52nd Street, New York, NY 10055) on January 26, 2023, and includes 21,895 shares with respect to which the reporting person reports having no voting power.
3.This information is based on ownership information reported in the Schedule 13D/A filed with the SEC on September 9, 2021 by Coliseum Capital Management, LLC (“CCM”), Coliseum Capital, LLC (“CC”), Coliseum Capital Partners, L.P. (“CCP”), Coliseum Capital Partners II, L.P. (“CCP2”), Adam Gray and Christopher Shackelton (105 Rowayton Avenue, Rowayton, CT 06853) and on the Form 4 filed with the SEC by the same entities and individuals on March 20, 2023. Based on information available in the Schedule 13D/A and the Form 4, the shares are held directly by (a) CCP, an investment limited partnership of which CC is general partner and for which CCM, a Delaware limited liability company, serves as investment adviser, (b) CCP2, an investment limited partnership of which CC is general partner and for which CCM serves as investment adviser, (c) a separate account investment advisory client of CCM (the “Separate Account,” and, collectively with CCP and CCP2, the “Coliseum Stockholders”). CCM, Christopher Shackelton, and Adam Gray each have shared voting and shared dispositive power over 1,399,195 shares, CC has shared voting and shared dispositive power over 1,070,500 shares, CCP has shared voting and shared dispositive power over 957,163 shares, CCP2 has shared voting and shared dispositive power over 113,337 shares, and the Separate Account has shared voting and shared dispositive power over 328,695 shares. Christopher Shackelton, the Chairman of our Board, and Adam Gray are managers of and have an ownership in each of CCM and CC and may be deemed to have an indirect pecuniary interest in the shares held by CCP, CCP2 and the Separate Account due to CCM’s right to receive performance-related fees from the Separate Account and CC’s right to receive performance-related fees from CCP and CCP2. Each of Christopher Shackelton, Adam Gray, CCP, CCP2, the Separate Account, CC and CCM disclaims beneficial ownership of these securities except to the extent of that person’s own pecuniary interest therein.
4.This information is based on the Schedule 13G filed with the SEC by T. Rowe Price Investment Management, Inc. (101 E. Pratt Street, Baltimore, MD 21202) on February 14, 2023, and includes 805,414 shares with respect to which the reporting person reports having no voting power.
5.This information is based on the Schedule 13G filed with the SEC by Fuller & Thaler Asset Management, Inc. (411 Borel Avenue, Suite 300, San Mateo, CA 94402) on February 14, 2023, and includes 17,630 shares with respect to which the reporting person reports having no voting power.
6.This information is based on the Schedule 13G/A filed with the SEC by The Vanguard Group (100 Vanguard Blvd., Malvern, PA 19355) on February 9, 2023, and includes (1) 12,551 shares with respect to which the reporting person reports having shared voting power and (2) 23,004 shares with respect to which the reporting person reports having shared dispositive power.
7.The shares reported do not include 1,314 unvested restricted stock awards.
8.The shares reported include 8,489 shares of Common Stock issuable upon the exercise of stock options that are exercisable within 60 days of the Record Date. The shares reported do not include 2,966 unvested restricted stock units or 6,570 unvested Performance Restricted Stock Units (“PRSUs”).
9.Includes shares of Common Stock held by the Coliseum Stockholders (for additional information see (3) above). Christopher Shackelton disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein.
10.The shares reported include 1,087 shares of Common Stock issuable upon the exercise of stock options that are exercisable within 60 days of the Record Date. The shares reported do not include 759 unvested restricted stock units or 5,617 unvested PRSUs.
11.The shares reported include 1,997 shares of Common Stock issuable upon the exercise of stock options that are currently exercisable.
(3)
| This information is based on ownership information reported in the Schedule 13D/A filed with the SEC on November 14, 2019 by Coliseum Capital Management, LLC (“CCM”), Coliseum Capital, LLC (“CC”), Coliseum Capital Partners, L.P. (“CCP”), Coliseum Capital Partners II, L.P. (“CCP2”), Coliseum Capital Co-Invest, L.P. (“CCC”), Adam Gray and Christopher Shackelton (105 Rowayton Avenue, Rowayton, CT 06853) and on the Form 4 filed with the SEC by the same entities and individuals on March 5, 2020. Based on information available in the Schedule 13D/A and Form 4, the shares are held directly by (a) CCP, an investment limited partnership of which CC is general partner and for which CCM, a Delaware limited liability company, serves as investment adviser, (b) CCP2, an investment limited partnership of which CC is general partner and for which CCM serves as investment adviser, (c) a separate account investment advisory client of CCM (the “Separate Account”) and (d) CCC, a Delaware limited partnership of which CC is general partner (together with CCP, CCP2 and the Separate Account, the “Coliseum Stockholders”). Christopher Shackelton, the Chairman of our Board, and Adam Gray are managers of and have an ownership in each of CCM and CC and may be deemed to have an indirect pecuniary interest in the shares held by CCP, CCP2 and the Separate Account due to CCM’s right to receive performance-related fees from the Separate Account and CC’s right to receive performance-related fees from CCP and CCP2. Each of Christopher Shackelton, Adam Gray, CCP, CCP2, the Separate Account, CC, CCM and CCC disclaims beneficial ownership of these securities except to the extent of that person’s own pecuniary interest therein.
| | | | |
| Modivcare 2023 Proxy Statement | 9 |
(4)
| This information is based on the Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP (6300 Bee Cave Road, Building One, Austin, TX 78746) on February 12, 2020.
|
(5)
| This information is based on the Schedule 13G/A filed with the SEC by Renaissance Technologies LLC and Renaissance Technologies Holdings Corporation (800 Third Avenue, New York, NY 10022) on February 13, 2020.
|
(6)
| This information is based on the Schedule 13G/A filed with the SEC by American Century Investment Management, Inc., American Century Companies, Inc. and Stowers Institute for Medical Research (4500 Main Street, Kansas City, MO 64111) on February 11, 2020.
|
(7)
| This information is based on the Schedule 13G/A filed with the SEC by The Vanguard Group (P.O. Box 2600, V26, Valley Forge, PA 19482-2600) on February 12, 2020.
|
(8)
| The shares reported include 3,862 restricted share awards.
|
(9)
| Includes shares of Common Stock and Preferred Stock held by the Coliseum Stockholders (for additional information see (3) above). Christopher Shackelton disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein.
|
(10)
| The shares reported do not include 32,391 restricted stock units.
|
(11)
| The shares reported include 258,563 shares of Common Stock issuable upon the exercise of stock options that are exercisable within 60 days of the Record Date.
|
(12)
| Includes 2,629 shares of restricted share awards.
|
(13)
| Includes 5,842 shares of restricted share awards.
|
(14)
| Includes 1,816 shares of restricted share awards.
|
(15)
| Includes 29,597 shares of restricted share awards.
|
| | | | | |
| Proposal One | TABLE OF CONTENTS |
PROPOSAL 1 – ELECTION OF DIRECTORS
The Company’s Second Amended and Restated
Proposal One: Approval of an Amendment to our Certificate of Incorporation to Declassify our Board
We are asking you to approve an amendment to our Certificate of Incorporation to declassify the Board and provide for annual elections of directors, with the classified Board to be phased out over three years such that, commencing with the 2025 Annual Meeting, all directors will be elected to one-year terms (the “Certificate Amendment”). This proposal is a result of the Board’s ongoing review and consideration of the Company’s corporate governance policies, structure, and functioning, taking into account broader corporate governance trends, peer practices, and views and perspectives of our stakeholders.
In connection with this review of our corporate governance, our Board considered the advantages and disadvantages of either maintaining the classified board structure or declassifying our Board. On one hand, the advantages of maintaining the classified board structure include that a classified board may promote board continuity, encourage a long-term perspective by management and the Board, and provide protection against certain abusive takeover tactics. On the other hand, our Board understands that many investors believe that annually elected boards increase accountability of directors to a company’s stockholders and that stockholders of public companies generally support shifting from classified boards to the annual election of directors. Our Board believes the Certificate Amendment better aligns our governance with governance practices supported by the majority of our investors. Our Board also considered that if our Board is declassified, it would be easier for one or more stockholders holding a large number of shares, whether a long-term stockholder or one that accumulates a large position over a short period of time, to replace our entire Board at once. In addition, while our Board remains classified, directors can be removed only for cause, whereas directors elected to a board that is not classified can be removed with or without cause under Delaware law.
Based on the considerations described above, upon the recommendation of the Nominating and Governance Committee, the Board has determined that it is in the best interests of the Company and its stockholders to amend the Company’s Certificate of Incorporation to eliminate its classified board structure and provide for the annual election of each member of the Company’s Board as amended,set forth in the Certificate Amendment, and to seek stockholder approval for such amendment, as required by Delaware law. Accordingly, the Board has unanimously adopted, approved, and declared advisable the proposed amendment to our Certificate of Incorporation attached to this Proxy Statement as Appendix B, subject to the approval of our stockholders.
Description of the Certificate Amendment
The Sixth Article of our Certificate of Incorporation currently provides that the numberour Board of directors be between four and eleven, as determined by the Board. The Board currently has seven directorsDirectors is divided into three classes serving staggered three-year terms. Each class must be as nearly equal in size as possible. Atpracticable, composed of directors each serving terms of office of three years. As a result, at each annual meeting of stockholders, the successors to theapproximately one-third of our directors whose terms will then expire will beare elected to serve for a three-year term. The current terms of our director classes expire as follows: Class 2—this 2023 Annual Meeting; Class 3—our 2024 Annual Meeting of Stockholders; and Class 1—our 2025 Annual Meeting of Stockholders. The Certificate Amendment, if approved by our stockholders, would amend the Sixth Article to provide for the annual election of directors to one-year terms when their current terms expire, beginning with this year’s Annual Meeting, and the declassification of our Board would, as a result, be phased in over a period of three years as the remaining terms of our current directors are served.
Specifically, if the proposed Certificate Amendment is adopted, directors will begin to be elected on an annual basis as follows:
1.directors who are elected at this 2023 Annual Meeting will serve a one-year term and they, or their successors, will stand for election to a one-year term also at the 2024 Annual Meeting;
2.directors whose current terms expire at the 2024 Annual Meeting will stand for election to a one-year term at the 2024 Annual Meeting and each annual meeting of stockholders thereafter; and
3.directors whose current terms expire at the 2025 Annual Meeting will stand for election to a one-year term at the 2025 Annual Meeting and each annual meeting of stockholders thereafter.
Beginning with our 2025 Annual Meeting of Stockholders, the declassification of our Board would be complete and all directors would be subject to annual election for one-year terms. If the proposed Certificate Amendment is adopted, any nominees appointed
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| 10 | Modivcare 2023 Proxy Statement |
| | | | | |
| TABLE OF CONTENTS | Proposal One |
to fill vacancies on the Board that occur following this 2023 Annual Meeting will be appointed for a term that coincides with the term to which such director is appointed or elected.
Our current Certificate of Incorporation also provides that our directors may only be removed for cause. Consistent with Delaware law, the Certificate Amendment also provides that from and after our 2025 Annual Meeting of Stockholders, directors may be removed either for or without cause. Prior to then, directors would continue to be removable only for cause.
Effect of Not Obtaining Stockholder Approval
If the timeCertificate Amendment does not receive stockholder approval, the Certificate Amendment will not be implemented, the Company’s current classified board structure will remain in place, and the four nominees to be elected as Class 2 directors pursuant to Proposal 2, if so elected, will serve for three-year terms that expire at the 2026 Annual Meeting.
Related Bylaw Amendments
In connection with the Certificate Amendment, the Board has also approved conforming amendments to our Bylaws (the “Bylaw Amendment”) to remove provisions relating to the classified board to be effective upon the filing of their electionthe Certificate Amendment with the Secretary of State of the State of Delaware. The Board’s approval of the Bylaw Amendment is conditioned upon the approval by stockholders of the Board’s proposal to amend the Certificate of Incorporation to declassify the Board as set forth in this proposal. If the Certificate Amendment is not approved by the Company’s stockholders, the Bylaw Amendment will not take effect.
Additional Information
If stockholders approve the Certificate Amendment, we intend to file a certificate of amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware immediately following the vote on this proposal at the Annual Meeting, and
qualificationprior to the vote to elect directors pursuant to Proposal 2, and the Certificate Amendment will be in effect immediately upon filing so that if the Certificate Amendment is approved, it will be effective when the vote is taken to elect directors. In that event, with respect to Proposal 2, stockholders will be asked to elect four directors to our Board to serve for one-year terms until the
third annual meeting following their election or2024 Annual Meeting of Stockholders and until their successors have been duly elected and qualified or
until thetheir earlier
of their death, resignation or removal.
Under the Company’s Bylaws, to be elected in an uncontested election, a director nominee must receive a majority of the votes cast for each director nominee. In an uncontested election, an incumbent director nominee must submit an irrevocable resignation that is subject to (i) that director receiving less than a majority of the votes cast in the uncontested election, and (ii) acceptance of the resignation by the Board in accordance with the policies and procedures adopted by the Board for such purpose. In the event an incumbent director doesthis proposal is not receive a majority ofapproved, the votes cast in an uncontested election, the NominatingCertificate Amendment will not be filed and Governance Committeestockholders will make a recommendationbe asked to the Board as to whether to accept or reject the resignation or whether other action should be taken. The Board is required to act on the Nominating and Governance Committee’s recommendation no later than 90 days following certification of the stockholder vote. If any incumbent director does not receive a majority of the votes cast, the Board will publicly disclose its decision regarding accepting or not accepting a resignation withinelect four business days of reaching its decision.
The Board proposes the election of David A. Coulter, Leslie V. Norwalk and Daniel E. Greenleafdirectors as Class 2 directors. The director nominees were nominated by the Nominating and Governance Committee of our Board, which nomination was confirmed by the Board. Each nominee has consenteddirectors to serve asfor three-year terms. The foregoing description of the Certificate Amendment is a nominee for electionsummary only and is qualified by reference to the Board,full text of the proposed Certificate Amendment, which is attached to be named in thethis Proxy Statement and to serve as a member of the Board if elected by the Company’s stockholders. Information regarding each nominee is set forth below.
Appendix B.
| | | | | | | | | | | |
| ü | | | |
| The Board unanimously recommends that you vote “FOR” the Certificate Amendment as disclosed in this Proxy Statement. | |
| | |
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| Modivcare 2023 Proxy Statement | 11 |
| | | | | |
| Proposal Two | TABLE OF CONTENTS |
| | | | | | | | | | | | | | |
Proposal Two:
Election of Directors | | | Board Recommendation ____ The Board unanimously recommends that the stockholders vote “FOR” the election of David A. Coulter, Leslie V. Norwalk, Rahul Samant, and L. Heath Sampson as directors of the Company for the ensuing term. | |
The Company’s Certificate of Incorporation provides that the number of directors be between four and eleven, as determined by the Board. The Board currently has established the total number of directors to be ten directors divided into three classes, serving staggered three-year terms. Each class is to be as nearly equal in size as possible. At each annual meeting of stockholders, the successors to the directors whose terms will then expire will be elected to serve from the time of their election and qualification until the third annual meeting following their election or until their successors have been duly elected and qualified, or until the earlier of their death, resignation or removal. If our stockholders approve Proposal 1 to declassify the Board, however, the Company intends to file the Certificate Amendment with the Delaware Secretary of State such that it is effective before taking a vote on this proposal, which will eliminate the classified Board over three years as discussed under Proposal 1, and directors will begin to be elected for one-year terms beginning with this Annual Meeting.
Under the Company’s Bylaws, to be elected in an uncontested election such as the election at this year’s Annual Meeting, a director nominee must receive more votes cast for such director nominee than cast against such director nominee. In an uncontested election, an incumbent director nominee must submit an irrevocable resignation that will be given effect only if (i) that director receives fewer votes cast for the director than against the director, and (ii) the resignation is accepted by the Board in accordance with the policies and procedures adopted by the Board for such purpose. In the event an incumbent director does not receive more votes cast for the director than against in an uncontested election, the Nominating and Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation or whether other action should be taken. The Board is required to act on the Nominating and Governance Committee’s recommendation no later than 90 days following certification of the stockholder vote. If any incumbent director does not receive more votes cast for the director’s election than against, the Board will publicly disclose its decision regarding accepting or not accepting a resignation within four business days of reaching its decision.
The Board proposes the election of David A. Coulter, Leslie V. Norwalk, Rahul Samant, and L. Heath Sampson for the ensuing term. If our stockholders approve Proposal 1, our Board will no longer be classified and the four nominees, if elected, will hold office for one-year terms expiring at the 2024 annual meeting of stockholders. If our stockholders do not approve Proposal 1, the Board will remain classified, the four nominees will remain as Class 2 directors and, if elected, the four nominees will hold office for three-year terms expiring at the 2026 annual meeting of stockholders. The director nominees were nominated by the Nominating and Governance Committee of our Board, which nomination was confirmed by the Board. Each nominee has consented to serve as a nominee for election to the Board, to be named in the Proxy Statement and to serve as a member of the Board if elected by the Company’s stockholders. Information regarding each nominee is set forth below.
| | | 1 Class 1 Directors •Richard A. Kerley •Stacy Staal •Christopher S. Shackleton | |
| | 2 Class 2 Directors •David A. Coulter •Leslie V. Norwalk •Rahul Samant •L. Heath Sampson | |
| | 3 Class 3 Directors •Todd J. Coulter •Garth Graham •Frank J. Wright | |
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| 12 | Modivcare 2023 Proxy Statement |
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| TABLE OF CONTENTS | Proposal Two |
The Board has no reason to believe that the Board’s nominees arewill be unable to serve or will not serve if elected. If, at the time of the Annual Meeting, any nominee becomes unavailable for any reason for election as a nominee becomes unabledirector, the persons entitled to serve orvote as proxy will vote for good cause will not servethe election of such substitute(s), if elected,any, as the Nominating and Governance Committee of our Board may designate a substitute nominee, in which event the shares represented by proxies returned to us will be voted for such substitute nominee. If the Nominatingrecommend.
Messrs. Coulter, Samant and
Governance Committee designates a substitute nominee, we will file an amended proxy statement that, as applicable, identifies the substitute nominee, discloses that such nominee has consented to being named in the revised proxy statementSampson and
to serve if elected, and includes certain biographical and other information about such nominee required by the applicable rules promulgated by the SEC.If elected, David A. Coulter, Leslie V. Norwalk and Daniel E. Greenleaf are each expected to serve until the 2023 annual meeting of stockholders or until his or her successor is duly elected and qualified. Mr. Coulter, Ms. Norwalk and Mr. Greenleaf are presentlyincumbent directors of the Company.
Mr. Coulter and Ms. Norwalk were previously elected by the stockholders, while Messrs. Samant and Sampson are standing for election by the stockholders for the first time. Mr. Samant was identified as a potential candidate as a director by a third-party recruiter. Messrs. Samant and Sampson were appointed to the Board by the remaining directors on the Board to fill then available vacancies on the Board, with Mr. Sampson being appointed in connection with his appointment by the Board to be the Company’s Chief Executive Officer.
Unless directed otherwise, the persons
named in the enclosed proxyacting as proxies intend to vote
such proxy for the election of the listed nominees or, in the event of death, disqualification, refusal or inability of a nominee to serve, for the election of such other person as the Board may recommend in the place of such nominee to fill the vacancy.
The Board unanimously recommends that the stockholders vote “FOR”
the election of David A. Coulter,
Leslie V. Norwalk, Rahul Samant and Daniel E. GreenleafL. Heath Sampson as directors of the Company for the ensuing term.The following table sets forth
certain information with respect to the current directors and the director nominees as of the Record Date.
Name | | Age | | Class | | Term Expires |
Todd J. Carter | | 56 | | 3 | | 2021 |
David A. Coulter† | | 72 | | 2 | | 2020 |
Richard A. Kerley | | 70 | | 1 | | 2022 |
Leslie V. Norwalk† | | 54 | | 2 | | 2020 |
Christopher S. Shackelton | | 40 | | 1 | | 2022 |
Frank J. Wright | | 72 | | 3 | | 2021 |
Daniel E. Greenleaf† | | 55 | | 2 | | 2020 |
| | | | | | | | | | | |
| Name | Age | Class | Term Expires |
| Todd J. Carter | 59 | 3 | 2024 |
| David A. Coulter† | 75 | 2 | 2023 |
| Garth Graham | 49 | 3 | 2024 |
| Richard A. Kerley | 73 | 1 | 2025 |
| Leslie V. Norwalk† | 57 | 2 | 2023 |
| Stacy Saal | 49 | 1 | 2025 |
| Rahul Samant† | 57 | 2 | 2023 |
| Christopher S. Shackelton | 43 | 1 | 2025 |
| Frank J. Wright | 75 | 3 | 2024 |
| L. Heath Sampson† | 52 | 2 | 2023 |
The process undertaken by the Nominating and Governance Committee in selecting qualified director candidates is described below under
the caption “Corporate Governance—Director Nomination Process—Director Nominee Selection Process.” Certain individual qualifications and skills of our directors that contribute to the Board’s effectiveness as a whole are described in each director’s biography.
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| Modivcare 2023 Proxy Statement | 13 |
| | | | | |
| Proposal Two | TABLE OF CONTENTS |
Director Nominees
| | | | | | | | |
| | David A. Coulter ____ Mr. Coulter is a Special Limited Partner of Warburg Pincus LLC, a global private equity firm focused on growth investing. During the past 12 years, he served in various roles at Warburg Pincus, including Vice Chairman as well as Managing Director and senior advisor focused on the firm’s financial services investment activities. Prior to that, Mr. Coulter held a series of positions at J.P. Morgan Chase and was a member of its Office of the Chairman. He also served as Chairman and Chief Executive Officer of Bank of America Corporation. Mr. Coulter is currently a director of Warburg Pincus Capital Corporation I-B (NYSE:WPCB), a publicly traded special purpose acquisition corporation, and Varo, Inc., a digital bank and financial services company. He is also a board member of Innovu, American Prairie Reserve, Carnegie Mellon University, Third Way, the Northern California Asia Society, and a board member Emeritus at Lincoln Center. He previously served as a director of Triton International Ltd. (NYSE:TRTN), a publicly traded global intermodal container leasing company, from 2015 until 2021. Mr. Coulter received a bachelor’s degree and master’s degree from Carnegie Mellon University, and currently serves as Chair of the Board of Trustees. Mr. Coulter’s experiences as both a senior executive of publicly traded financial services corporations, and as a director of public and private companies, provides the Board with extensive executive experience with regard to matters of interest to financial institutions, including risk, compensation, corporate governance and mergers and acquisitions. |
| |
Board Committees: Nominating and Governance Committee member | |
| |
| Director Since: 2016 | |
| |
| | | | | | | | |
| | Leslie V. Norwalk ____ Since September 2007, Ms. Norwalk has served as Strategic Counsel to Epstein Becker & Green, P.C. From 2001 to 2007, Ms. Norwalk served the Bush Administration in the Centers for Medicare & Medicaid Services (CMS). From 2006 to 2007, she was the Acting Administrator, where she managed the operations of federal health care programs, including Medicare and Medicaid. For the four years prior to that position, she was the agency’s Deputy Administrator. Prior to serving the Bush Administration, Ms. Norwalk practiced law with Epstein Becker & Green, P.C. where she advised clients on a variety of healthcare policy matters. She also served the first Bush administration in the White House Office of Presidential Personnel and the Office of the U.S. Trade Representative. Ms. Norwalk is currently a director on the public company boards of NuVasive Inc., a medical device company, Neurocrine Biosciences, Inc., a biopharmaceutical company, and Arvinas Inc., a clinical-stage biopharmaceutical company. She also serves as an Advisor to several private equity funds. She received a bachelor's degree from Wellesley College and a juris doctor degree from George Mason University School of Law. Ms. Norwalk’s significant healthcare regulatory and policy expertise, including her experiences with the Bush Administration on Medicare and Medicaid matters, provides healthcare industry expertise to the Board. Ms. Norwalk will be able to help guide the Company’s strategy, particularly as the healthcare regulatory environment continues to evolve. |
| |
Board Committees: Chairperson of the Nominating and Governance Committee, Audit Committee member | |
| |
| Director Since: 2015 | |
| |
Director Nominees
David A. Coulter
Director Since: 2016
Board Committees: Compensation Committee and Nominating and Governance Committee member
Mr. Coulter is a Special Limited Partner of Warburg Pincus. During the past 11 years, he served in roles at Warburg Pincus, including Vice Chairman as well as Managing Director and senior advisor focused on the firm’s financial services investment activities. Prior to that, Mr. Coulter held a series of positions at J.P. Morgan Chase and was a member of its Office of the Chairman. He also served as Chairman and Chief Executive Officer of Bank of America Corporation. Mr. Coulter is a director of Triton International Ltd. and Varo Money, Inc. He is also a board member of Lincoln Center, Carnegie Mellon University, Third Way and the Northern California Asia Society. Mr. Coulter received a bachelor’s degree and master’s degree from Carnegie Mellon University.
Mr. Coulter’s experiences as both a senior executive of publicly traded financial services corporations, and as a director of public and private companies, provides the Board with extensive executive experience with regard to matters of interest to financial institutions, including risk, compensation, corporate governance and mergers and acquisitions.
Leslie V. Norwalk
Director Since: 2015
Board Committees: Chairperson of the Nominating and Governance Committee, Audit Committee member
Since September 2007, Ms. Norwalk has served as Strategic Counsel to Epstein Becker & Green, P.C. From 2001 to 2007, Ms. Norwalk served the Bush Administration in the Centers for Medicare & Medicaid Services (CMS). From 2006 to 2007, she was the Acting Administrator, where she managed the operations of federal health care programs, including Medicare and Medicaid. For the four years prior to that position, she was the agency’s Deputy Administrator. Prior to serving the Bush Administration, Ms. Norwalk practiced law with Epstein Becker & Green, P.C. where she advised clients on a variety of healthcare policy matters. She also served the first Bush administration in the White House Office of Presidential Personnel and the Office of the U.S. Trade Representative. Ms. Norwalk is currently a director on the public company boards of Magellan Health Inc., NuVasive Inc., Neurocrine Biosciences, Inc., and Arvinas Inc. She also serves as an Advisor to several private equity funds. She received a bachelor's degree from Wellesley College and a juris doctor degree from George Mason University School of Law.
Ms. Norwalk’s significant healthcare regulatory and policy expertise, including her experiences with the Bush Administration on Medicare and Medicaid matters, provides healthcare industry expertise to the Board. Ms. Norwalk will be able to help guide the Company’s strategy, particularly as the healthcare regulatory environment continues to evolve.
Daniel E. Greenleaf
Director Since: 2019
Daniel E. Greenleaf has been a director since December 2019. Mr. Greenleaf currently serves as the President and Chief Executive Officer of the Company. Prior to joining the Company, from September 2016 through August 2019, Mr. Greenleaf served as President and Chief Executive Officer of BioScrip, Inc., the largest independent provider of infusion and home care management solutions, where he spearheaded the turnaround and successful merger of BioScrip with Option Care Health (Nasdaq: OPCH). Prior to BioScrip, from December 2013 through September 2016, he served as Chairman and Chief Executive Officer of Home Solutions Infusion Services, where he led the turnaround and eventual sale to BioScrip. Prior to joining Home Solutions Infusion Services, from April 2008 through November 2012, Mr. Greenleaf was the President and Chief Executive Officer of Coram Specialty Services, where he was instrumental in growing Coram to become the top-performing home infusion company in the country prior to its sale to CVS. Before joining Coram, Mr. Greenleaf served as President and Chief Operating Officer of VioQuest Pharmaceuticals, a publicly traded pharmaceutical company and as President of U.S. Operations for Celltech Biopharmaceuticals. Mr. Greenleaf holds a Bachelor of Arts in Economics from Dennison University and a Master of Business Administration from the University of Miami. Mr. Greenleaf is a military veteran, having served as a captain and navigator in the United States Air Force.
Mr. Greenleaf’s significant experience in the healthcare industry, and in particular his experience as Chief Executive Officer of BioScrip, Home Solutions and Coram, are particularly relevant to Mr. Greenleaf’s service on the Board. Further, as the only Board member who is also a member of the Company’s management team, Mr. Greenleaf provides management’s perspective in Board discussions about the operations and strategic direction of the Company.
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| 14 | Modivcare 2023 Proxy Statement |
| | | | | |
| TABLE OF CONTENTS | Proposal Two |
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| | Rahul Samant ____ Rahul Samant currently serves as Chief Information Officer of Delta Air Lines, Inc., a position he has held since 2016. Mr. Samant also serves as Executive Vice President of Delta Air Lines, Inc., a position he has held since 2018, and previously served as Senior Vice President from 2016 until 2018. Prior to that, he was Chief Digital Officer and Global Head of Application Development and Management at American International Group, Inc. and held various technology leadership roles at Bank of America Corporation, including: Chief Information Officer; Head of Technology and Operations for Global Wealth and Investment Management; and Manager and Director of Fixed Income Securities Technology. Mr. Samant commenced his career at Unisys Ltd. He graduated with a Bachelor of Science in Electronics Engineering from University of Mumbai and a Master of Business Administration from Wake Forest University. Mr. Samant’s extensive leadership experience, which spans over 30 years, provides the Board with important technological and operational expertise. |
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Board Committees: Audit Committee | |
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| Director Since: 2021 | |
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| | L. Heath Sampson ____ L. Heath Sampson has served as the Company’s President and Chief Executive Officer since July 27, 2022 and as the Company’s Chief Financial Officer since February 26, 2021. Mr. Sampson has nearly three decades of executive and financial leadership experience across a range of private and publicly traded companies. Most recently he served, beginning in April 2015, as Chief Executive Officer of Advanced Emissions Solutions, Inc., an environmental solutions provider to companies in coal-fired power generation, municipal water and other industries primarily through air and water purification control technologies, where he orchestrated a successful company turnaround and transformation, after having served there from August of 2014 as Chief Financial Officer and Treasurer. Prior to that, he held Chief Financial Officer roles at private equity-owned Square Two Financial and within key business units at First Data Corporation. He began his career in auditing and business consulting at Arthur Andersen. Mr. Sampson graduated from the University of Denver with a Bachelor of Business Administration degree in Accounting and a Master of Accountancy degree. Mr. Sampson’s significant leadership experience across a variety of industries coupled with his background in auditing and business consulting are particularly relevant to Mr. Sampson’s service on the Board. Further, as the only Board member who is also a member of the Company’s management team, Mr. Sampson provides management’s perspective in Board discussions about the operations and strategic direction of the Company. |
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| Director Since: 2022 | |
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Directors
Christopher S. Shackelton
Director Since: 2012
Chairman of the Board
Christopher S. Shackelton was appointed Chairman in 2012 and served as Interim CEO in 2015. Mr. Shackelton is managing partner and co-founder of Coliseum Capital Management, a private investment firm that invests with a long-term orientation in undervalued companies. Previously, Mr. Shackelton worked at Watershed Asset Management and Morgan Stanley & Co. Mr. Shackelton also serves on the boards of Lazydays Holdings, Inc., an operator of recreational vehicle dealerships, and Universal Technical Institute, a technical training school for the transportation industry, as well, from time to time, private companies. Mr. Shackelton was previously Chairman of Rural/Metro Corp, an emergency ambulance company, from December 2010 to June 2011 and served on the boards of BioScrip Inc., an infusion services company from March 2015 to August 2019, LHC Group Inc., a nursing care company from November 2012 through August 2017, Advanced Emissions Solutions Inc., a clean energy technology company, from August 2014 through May 2016, and Interstate Hotels Inc., a global hotel management company, from February 2009 through March 2010. Mr. Shackelton is actively involved in multiple charitable organizations. Mr. Shackelton received a bachelor's degree in Economics from Yale College in 2001.
Christopher Shackelton's experience creating stockholder value for a wide range of companies provides the Board with valuable business leadership and strategic focus. Mr. Shackelton brings financial, investing and accounting experience from other public company boards on which he led mergers and acquisitions, financings, restructurings and other initiatives. Furthermore, Christopher Shackelton's in-depth knowledge of the healthcare industry is particularly beneficial to the Board.
Richard A. Kerley
Director Since: 2010
Board Committees: Chairperson of the Compensation Committee and Chairperson of the Audit Committee
Mr. Kerley served as the Senior Vice President, Chief Financial Officer and member of the board of directors of Peter Piper, Inc., a privately held pizza and entertainment restaurant chain, from November 2008 to December 2014, when he retired. From July 2005 to October 2008, Mr. Kerley served as the Chief Financial Officer of Fender Musical Instruments Corporation. From June 1981 to July 2005, Mr. Kerley was an audit partner with Deloitte & Touche LLP. Prior to becoming a partner at Deloitte & Touche, Mr. Kerley served as an audit manager and staff accountant from August 1971 to June 1981. Mr. Kerley also serves on the board of Cavco Industries, Inc., one of the largest producers of manufactured homes in the United States, and served on the board of The Joint Corp., a publicly traded operator, manager and franchisor of chiropractic clinics from September 2015 until June 2019. He received a bachelor’s degree in accounting from Marshall University in 1971.
Mr. Kerley served as a senior financial executive with experience in a variety of operational issues, financial budgeting, planning and analysis, capital investment decisions, mergers and acquisitions, operational and financial controls, internal and external reporting, financings and public offerings and filings with the SEC. This strong financial background provides the Board with financial expertise, including an understanding of financial statements, finance, capital investing strategies and accounting.
Todd J. Carter
Director Since: 2016
Board Committees: Compensation Committee member
Todd J. Carter is Co-President and Chief Executive Officer of GCA Global, a global independent investment banking firm, and serves on the firm’s board of directors. He has served in these roles since 2008, and is a co-founder of the firm. Previously, Mr. Carter served as Chairman, President and Chief Executive Officer of Savvian Inc. and Perseus Group. Prior to 2003, he was President of Robertson Stephens & Company Inc., a global investment banking and asset management firm, and served on the firm’s board of directors. Earlier in his career, Mr. Carter was employed by McKinsey & Company and Smith Barney Inc. Additionally, Mr. Carter has served on a number of company, advisory and non-profit boards of directors. Mr. Carter received a bachelor’s degree from the University of Texas and a master of business administration degree from Harvard University.
Mr. Carter brings to the Board global investment banking experience, including his service as founder and chief executive officer of a large independent global investment bank, and his extensive financial expertise and experience in the transaction advisory industry, as well as a broad span of expertise in the financial advisory and mergers & acquisitions sectors.
Frank J. Wright
Director Since: 2016
Board Committees: Audit Committee and Nominating and Governance Committee member
Mr. Wright is founder of the PharmaTrust, a firm that provides advisory services to companies and investors engaged in healthcare services and pharmaceutical development and manufacturing. Mr. Wright has almost 40 years of experience in the chemical and pharmaceutical industries. He served as a senior executive of Alexion Pharmaceuticals LLC from 2012 to 2014, as President of European operations, and is a co-founder of Aptuit, an integrated drug development services company. Prior to that, Mr. Wright held a variety of executive positions in multiple pharmaceutical companies, including Glaxo Wellcome (now GlaxoSmithKline). He is a director of Exela Pharma Sciences and ZenQMS LLC, and retired in 2017 as a Director of Laurus Labs Private, Limited and Laurus Synthesis Inc. where he served for 10 years. Mr. Wright received a mechanical engineering degree from the University of Strathclyde, Glasgow.
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| Modivcare 2023 Proxy Statement | 15 |
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| Proposal Two | TABLE OF CONTENTS |
Continuing Directors
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| | Todd J. Carter ____ Todd J. Carter is Chairman of Global Technology at Houlihan Lokey. Prior to assuming his role at Houlihan Lokey in October 2021, Mr. Carter served as Chief Executive Officer and Co-Founder of GCA Advisors, LLC (“GCA”), a global independent investment banking firm, since 2008 until GCA was acquired by Houlihan Lokey in October 2021. Mr. Carter also served on the board of directors of GCA. Prior to that, Mr. Carter served as Chairman, President and Chief Executive Officer of Savvian Inc., a global investment banking firm, and Perseus Group, a global asset management and investment banking firm. Prior to 2003, he was President of Robertson Stephens & Company Inc., a global investment banking and asset management firm, and served on the firm’s board of directors. Earlier in his career, Mr. Carter was employed by McKinsey & Company and Smith Barney Inc. Over the past two decades, Mr. Carter has advised on over 1,500 mergers and acquisitions, financings, takeover defenses, leveraged buyouts, divestures, leveraged recapitalizations, joint ventures, stock buybacks, and restructurings and has been actively involved as an early-stage and growth investor, primarily focused on the technology industry. He has invested in more than 100 companies, several of which he co-founded. Mr. Carter has also served on a number of public and private company boards as well as advisory and nonprofit boards. In the nonprofit area, he currently serves on UCSF’s Board of Overseers and the boards of Education SuperHighway and The Conservation Fund. Other selected involvement includes serving as Chairman of OneD Battery Science, a nanowire-material, high-performance battery company, and on advisory boards such as Foresite Capital and Victory Park Capital. Mr. Carter received a bachelor’s degree from the University of Texas and a master of business administration degree from Harvard Business School. Mr. Carter brings to the Board global investment banking experience, including his service as founder and chief executive officer of a large independent global investment bank, and his extensive financial expertise and experience in the transaction advisory industry, as well as a broad span of expertise in the financial advisory and mergers and acquisitions sectors. |
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Board Committees: Compensation Committee member | |
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| Director Since: 2016 | |
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| 16 | Modivcare 2023 Proxy Statement |
Mr. Wright has almost 40 years of operational experience in the chemical and pharmaceutical industries, including as the founder of an advisory services firm engaged in healthcare services, pharmaceutical development and manufacturing adding value to the Board. Mr. Wright’s executive leadership and experience provides the Board with operational expertise.
Non-director
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| TABLE OF CONTENTS | Proposal Two |
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| | Garth Graham, MD ____ Garth Graham, MD, currently serves as Director and Global Head of Healthcare and Public Health for Google and YouTube at Alphabet, Inc. Previously, he was Chief Community Health Officer at CVS Health Corporation from 2018 until 2020. Dr. Graham was also President of the Aetna Foundation from 2013 until 2019, as well as Vice President of Community Health at Aetna, Inc. from 2017 until its acquisition by CVS Health Corporation in 2018. Prior to that, he served as Assistant Dean of Health Policy and Chief of Health Services Research at University of Florida’s Department of Medicine, and as Attending Physician at The Massachusetts General Hospital. Dr. Graham started his career serving in two U.S. administrations as U.S. Deputy Assistant Secretary for Health, where he led the development of the federal government’s first national health disparities plan. He is an elected member of the National Academy of Medicine and serves on several boards, including: the National Heart, Lung, and Blood Institute Advisory Council; the Institute of Medicine Board on Population Health; and the Board of the National Quality Forum. Dr. Graham is currently a director on the board of Science Applications International Corp. (NYSE: SAIC), a technology-driven company focused on digital transformation across multiple markets. He graduated with a Bachelor of Science in Biology from Florida International University, a Master of Public Health from Yale School of Public Health, and a Doctor of Medicine from Yale University’s School of Medicine. Dr. Graham has approximately two decades of extensive healthcare experience, with an emphasis on community and public health, which provides the Board with deep insight into healthcare administration and policy. Dr. Graham helps guide the Company’s strategy, particularly in the area of social determinants of health. |
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Board Committees: Nominating and Governance Committee | |
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| Director Since: 2021 | |
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| Modivcare 2023 Proxy Statement | 17 |
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| Proposal Two | TABLE OF CONTENTS |
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| | Richard A. Kerley ____ Mr. Kerley served as the Senior Vice President, Chief Financial Officer and member of the board of directors of Peter Piper, Inc., a privately held pizza and entertainment restaurant chain, from November 2008 to December 2014, when he retired. From July 2005 to October 2008, Mr. Kerley served as the Chief Financial Officer of Fender Musical Instruments Corporation. From June 1981 to July 2005, Mr. Kerley was an audit partner with Deloitte & Touche LLP. Prior to becoming a partner at Deloitte & Touche, Mr. Kerley served as an audit manager and staff accountant from August 1971 to June 1981. Mr. Kerley also serves on the board of Cavco Industries, Inc., one of the largest producers of manufactured homes in the United States, and served on the board of The Joint Corp., a publicly traded operator, manager and franchisor of chiropractic clinics from September 2015 until June 2019. He received a bachelor’s degree in accounting from Marshall University in 1971. Mr. Kerley served as a senior financial executive with experience in a variety of operational issues, financial budgeting, planning and analysis, capital investment decisions, mergers and acquisitions, operational and financial controls, internal and external reporting, financings and public offerings and filings with the SEC. This strong financial background provides the Board with financial expertise, including an understanding of financial statements, finance, capital investing strategies and accounting. |
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Board Committees: Chairperson of the Compensation Committee and Chairperson of the Audit Committee | |
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| Director Since: 2010 | |
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| | Stacy Saal ____ Stacy Saal most recently served as the Chief Executive Officer of Glydways, a transportation technology and clean energy company until March 2023. Ms. Saal served as Chief Operating Officer of Fabric Inc., a commerce platform software company to the retail industry, from February 2022 until her move to Glydways in December 2022. Ms. Saal previously served as Chief Operating Officer of Babylon Inc, a technology-driven digital health company from February 2021 until February 2022. Previously, she was the General Manager and Chief Operating Officer of the Prime Air division of Amazon.com, Inc. from 2018 until 2021. Prior to that, she held various executive leadership roles in marketing, operations, and general management at Amazon from 2008 until 2018, including as Global Program Leader and Head of Global Marketing, Membership and Customer Experience of Amazon Fresh from 2016 until 2018 and General Manager of Prime Now from 2015 until 2016. Before joining Amazon, Ms. Saal was Vice President of Operations at GlobalWine, Chief Executive Officer of Tom’s Cookies, and Director of Demand Planning for the Dockers Brand at Levi Strauss & Co. At the start of her career, Ms. Saal held merchandising, operational and supply chain optimization roles at Williams-Sonoma, Inc. She graduated with a Bachelor of Art in Economics from Sonoma State University. Ms. Saal has nearly twenty-five years of broad leadership experience in strategy, team building, marketing, operations, and product management all unified by a strong focus on the customer experience, which provides the Board with valuable business and operating expertise. |
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Board Committees: Compensation Committee | |
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| Director Since: 2021 | |
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| 18 | Modivcare 2023 Proxy Statement |
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| TABLE OF CONTENTS | Proposal Two |
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| | Christopher S. Shackelton ____ Mr. Shackelton was appointed Chairman in 2012 and served as Interim CEO in 2015. Mr. Shackelton is managing partner and co-founder of Coliseum Capital Management, a private investment firm that invests with a long-term orientation in undervalued companies. Previously, Mr. Shackelton worked at Watershed Asset Management, an employee-owned, alternative investment firm, and Morgan Stanley & Co., an investment bank and financial services company. Mr. Shackelton also serves on the boards of Lazydays Holdings, Inc., an operator of recreational vehicle dealerships, and Universal Technical Institute, a technical training school for the transportation industry, and as Chairman of the Board of Medalogix, LLC, a heathcare data analytics company, as well as, from time to time, private companies. Mr. Shackelton was previously Chairman of Rural/Metro Corp, an emergency ambulance company, from December 2010 to June 2011 and served on the boards of BioScrip Inc., an infusion services company from March 2015 to August 2019, LHC Group Inc., a nursing care company from November 2012 through August 2017, Advanced Emissions Solutions Inc., a clean energy technology company, from August 2014 through May 2016, and Interstate Hotels Inc., a global hotel management company, from February 2009 through March 2010. Mr. Shackelton is actively involved in multiple charitable organizations. Mr. Shackelton received a bachelor's degree in Economics from Yale College in 2001. Mr. Shackelton's experience creating stockholder value for a wide range of companies provides the Board with valuable business leadership and strategic focus. Mr. Shackelton brings financial, investing and accounting experience from other public company boards on which he led mergers and acquisitions, financings, restructurings and other initiatives. Furthermore, Mr. Shackelton's in-depth knowledge of the healthcare industry is particularly beneficial to the Board. |
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| Chairman of the Board | |
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| Director Since: 2012 | |
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| | Frank J. Wright ____ Mr. Wright is founder of PharmaTrust, a firm that provides advisory services to companies and investors engaged in healthcare services and pharmaceutical development and manufacturing. Mr. Wright has almost 40 years of experience in the chemical and pharmaceutical industries. He served as a senior executive of Alexion Pharmaceuticals LLC from 2012 to 2014, as President of European operations, and is a co-founder of Aptuit, an integrated drug development services company. Prior to that, Mr. Wright held a variety of executive positions in multiple pharmaceutical companies, including Glaxo Wellcome (now GlaxoSmithKline). He is a director of Exela Pharma Sciences and ZenQMS LLC, and retired in 2017 as a Director of Laurus Labs Private, Limited and Laurus Synthesis Inc. where he served for 10 years. Mr. Wright received a mechanical engineering degree from the University of Strathclyde, Glasgow. Mr. Wright’s almost 40 years of operational experience in the chemical and pharmaceutical industries, including as the founder of an advisory services firm engaged in healthcare services, pharmaceutical development and manufacturing, adds significant value to the Board. Mr. Wright’s executive leadership and experience provides the Board with operational expertise. |
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Board Committees: Audit Committee and Nominating and Governance Committee member | |
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| Director Since: 2016 | |
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| Modivcare 2023 Proxy Statement | 19 |
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| Proposal Two | TABLE OF CONTENTS |
Non-Director Executive Officers
The following is a brief summary
as of the Record Date of the background of each
current executive officer who is not a director:
Kevin M. Dotts, 56, has served as Chief Financial Officer since August 2018. Mr. Dotts has over 30 years of experience as a finance and accounting executive at multiple technology companies, serving 14 of those years in the position of chief financial officer. Before joining Providence, Mr. Dotts served as Executive Vice President and Chief Financial Officer of Birch Communications, Inc. and its successor, Fusion Connect, Inc. since February 2017. Prior to that Mr. Dotts held the CFO role at Internap from August 2012 to December 2016, Culligan International from May 2011 to August 2012 and EarthLink from July 2009 to September 2009. In 2010, he served as Interim Chief Financial Officer and Director of Gas Turbine Efficiency Plc. Mr. Dotts began his career at General Electric Company (“GE”) and served in increasingly senior financial roles during his 15 years of tenure at GE. Mr. Dotts received a bachelor’s degree in finance and computer systems management from Drexel University.
Kathryn Stalmack, 43, joined the Company is August 2019. Ms. Stalmack has extensive experience as a corporate transactional and healthcare regulatory attorney. From August 2015 to July 2019, Ms. Stalmack served as Senior Vice President, General Counsel and Corporate Secretary at BioScrip, Inc. From January 2008 to August 2015, Ms. Stalmack served as a Shareholder at Polsinelli, PC working in the Healthcare Practice group. From April 2003 to December 2007, Ms. Stalmack worked at Donohue Brown Mathewson & Smith as a healthcare litigator primarily defending physicians and hospitals. Ms. Stalmack also worked as a litigator at Cassiday Schade & Gloor from 2001 to 2003. Ms. Stalmack holds a Bachelor of Science degree from Miami University in Oxford, Ohio, and Juris Doctor from Loyola University Chicago School of Law. Ms. Stalmack is admitted to practice law in Illinois, Colorado and Georgia.
Suzanne G. Smith, 52, has more than two decades of accounting and finance experience in a variety of industries. Prior to joining the Company in February 2019, she most recently served as Chief Accounting Officer of Cumulus Media from May 2017 until February 2019. Previous appointments include Vice President and Corporate Controller of staffing firm, EmployBridge from September 2015 through April 2017, interim Chief Financial Officer for Acuity from June 2015 through August 2015, and Senior Vice President and Corporate Controller of Serta Simmons Bedding from June 2014 through May 2015. Ms. Smith was also previously Treasurer at WestRock Company. Ms. Smith graduated from The Ohio State University with a Bachelor of Science in Human Ecology and received a Master in Business Administration with a concentration in Finance from Georgia State University. She is a CPA licensed in Georgia.
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| | Anne Bailey ____ Anne Bailey was appointed President of ModivCare’s Home division in March 2023. She brings over 25 years of executive leadership experience in the healthcare industry, including payor and revenue strategy, insurance, and communications. Ms. Bailey was most recently a senior executive and Group Vice President at DaVita, a fortune 250 healthcare company from 2014 through March 2023. Prior to that she was a Vice President at DaVita where she was also a founding member of DaVita’s Power of Women group and led DaVita’s community giving for many years. Ms. Bailey also has experience working with lawmakers to advance healthcare policies. Prior to DaVita, Ms. Bailey was at Bain & Company, where she led consulting teams focused on domestic and international growth strategies. Ms. Bailey has served as President of the Chronic Disease Coalition and sits on the boards of CU Denver Business School, City Year Denver (emeritus), Amp the Cause, and OI Infusion. Ms. Bailey holds a bachelor’s degree from the University of California, San Diego, a Master of Science degree in information systems from the University of Colorado, and a Master of Business Administration degree from the Wharton School of the University of Pennsylvania. |
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| Title: President, ModivCare Home | |
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| Age: 50 | |
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| | Jonathan B. Bush ____ Jonathan Bush has served as Senior Vice President, General Counsel and Secretary since July 2021. Prior to his promotion, Mr. Bush served as the Company’s Vice President, Deputy General Counsel and Assistant Secretary since November 2019. Previously, from August 2018 to October 2019, he was Vice President, Corporate Development and Deputy General Counsel at BioSrip, Inc., an independent provider of infusion and home care management solutions, and prior to then he held a variety of corporate transaction-oriented roles at the private law firms of PilieroMazza PLLC, Dechert LLP, Schulte Roth & Zabel LLP, and Cravath, Swaine & Moore LLP, and in-house at Goldman, Sachs & Co., a global financial institution that delivers a broad range of financial services across investment banking, securities, investment management and consumer banking to its clients. Mr. Bush graduated with an A.B. in Economics from Harvard University and a J.D. from the University of Texas School of Law. |
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Title: Senior Vice President, General Counsel and Secretary | |
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| Age: 54 | |
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| 20 | Modivcare 2023 Proxy Statement |
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| TABLE OF CONTENTS | Proposal Two |
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| | Rebecca Orcutt ____ Rebecca Orcutt has served as the Senior Vice President, Chief Accounting Officer since August 2022. Ms. Orcutt has more than 12 years of financial experience in healthcare, financial services, and public accounting, with expertise in Securities and Exchange Commission reporting and policy, technical accounting, Sarbanes-Oxley Act compliance, merger and acquisition (M&A) activities, and business combination integrations. Prior to her promotion to her current position, Ms. Orcutt had served as the Company’s Vice President, Financial Reporting and Accounting since January 2021. Previously, she worked for over a decade in audit and assurance at KPMG LLP. Ms. Orcutt, a certified public accountant, graduated with a B.S. and a Master of Accountancy from the University of Denver. |
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Title: Senior Vice President, Chief Accounting Officer | |
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| Age: 37 | |
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| | Kenneth Shepard ____ Kenneth Shepard has served as the Chief Financial Officer of ModivCare Mobility, which comprises the Company’s non-emergency medical transportation (“NEMT”) division, since August 2022. Prior to that, he served as the Company’s Vice President, Chief Accounting Officer since July 2021 until August 2022, as the Company’s Vice President, Finance and Controller, since May 2016 until July 2021, and as Director of Accounting from June 2015 through April 2016. Previously, he worked for ten years in assurance at BDO USA, LLP, a professional services firm which delivers assurance, tax, and financial advisory services to its clients around the globe. Mr. Shepard, a Certified Public Accountant, graduated with a B.S. in Accountancy from Southern Illinois University Edwardsville and a Master of Accountancy from University of Alabama, Tuscaloosa. |
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Title: Chief Financial Officer, ModivCare Mobility | |
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| Age: 42 | |
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| Modivcare 2023 Proxy Statement | 21 |
CORPORATE GOVERNANCE
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| Proposal Two | TABLE OF CONTENTS |
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| | Ilias Simpson ____ Ilias Simpson has served as President of ModivCare Mobility since April 2022. Mr. Simpson has more than fifteen years of executive leadership experience, with a focus on logistics and transportation, including most recently at Radial Inc., a subsidiary of Bpost Group – Parcels and Logistics, where he served as President and CEO, from 2017 until December 2021. Mr. Simpson has also served in leadership positions at Ryder System, Inc., Pentair, Cintas, and Halliburton. Additionally, he is a decorated veteran of the United States Air Force. He graduated with a Master of Business Administration from the University of Dayton and a Bachelor of Arts in Sociology from the University of North Texas |
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Title: President, ModivCare Mobility | |
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| Age: 40 | |
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| 22 | Modivcare 2023 Proxy Statement |
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| TABLE OF CONTENTS | Corporate Governance |
Corporate Governance
Board Leadership Structure
The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and recognizes that, depending on the circumstances, other leadership models might be appropriate. Accordingly, the Board periodically reviews its leadership structure.
The Board has determined to separate the roles of
Chief Executive Officer (“CEO”)CEO and Chairman of the Board between two individuals. The Board believes this leadership structure is appropriate because it strengthens the Board’s independence and enables the CEO to focus on the management of our business.
Independence of the Board
The Board believes that independence depends not only on our directors’ individual relationships, but also on the Board’s overall attitude. Providing objective, independent judgment is at the core of the Board’s oversight function. Under our corporate governance guidelines, the Board, with the assistance of legal counsel and the Nominating and Governance Committee, uses the current standards for “independence” established by NASDAQ to evaluate any material relationship a director may have with the Company to determine director independence. A director is not considered “independent” unless the Board affirmatively determines that the director has no material relationship with the Company or any subsidiary in the consolidated group (other than as a director of
ProvidenceModivCare or one of our consolidated subsidiaries). Any relationship that falls below a threshold set forth by the standards for “independence” established by NASDAQ and our corporate governance guidelines, or is not required to be disclosed under applicable SEC rules, is automatically deemed to be an immaterial relationship. Our Board has affirmatively determined that
all directors other than Mr.
Carter, Mr. Coulter, Mr. Kerley, Ms. Norwalk and Mr. WrightSampson are independent directors.
Daniel Greenleaf, who served as our Chief Executive Officer and as a Class 2 director until his departure from the Company in July 2022, was not considered independent due to his service as an executive officer of the Company.
The Board’s Role in Risk Oversight
The Board has an active role, as a whole and at the committee level, in overseeing management of the Company’s risks. The Board regularly reviews information regarding the Company’s credit, liquidity and operations, as well as the risks associated with each. The Company’s Compensation Committee is responsible for overseeing the management of risks relating to the Company’s executive compensation plans and arrangements. The Audit Committee oversees management of financial risks. The Nominating and Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest as well as legal and regulatory compliance. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through attendance at committee meetings or committee reports about such risks. In addition, members of senior management regularly provide reports to the Board about their respective areas of responsibility and any
risks thereof.related risks. These reports include actions taken by senior management to monitor and control such risks.
Prudent risk management is necessary to deliver long-term, sustainable stockholder value. The Compensation Committee believes that the Company’s executive compensation program supports the objectives described
abovebelow without encouraging inappropriate or excessive risk-taking. In reaching this conclusion, the Compensation Committee considered in particular the following attributes and risk mitigation features of our compensation program:
•our program’s emphasis on long-term, equity-based compensation discourages risk-taking that produces short-term results at the expense of building long-term stockholder value;
value•the maximum payout levels for bonuses and equity-based compensation are capped by the Compensation Committee;
we cap the payment amounts under our annual cash incentive compensation plan, and •the Compensation Committee can exercise negative discretion to reduce annual cash incentive compensation payments;
•the Compensation Committee uses an independent compensation consultant that performs no other services for the Company, except at the direction of the Compensation Committee;
Committee•the Compensation Committee has the authority to make retroactive adjustments to incentive compensation pursuant to the Company’s clawback policy; and
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| Modivcare 2023 Proxy Statement | 23 |
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| Corporate Governance | TABLE OF CONTENTS |
•the Compensation Committee reviews, in consultation with the Company’s outside compensation advisors, data contained in our peers’ proxy filings, to arrive at a compensation program that is consistent with our peers and aligns with the interests of the Company’s stockholders.
Communication with the Board
Stockholders may communicate with the Board as a whole, the non-management directors or any individual director, by sending a letter to
The Providence Service Corporation,ModivCare Inc., c/o Corporate Secretary,
1275 Peachtree Street, Sixth6900 Layton Avenue, 12th Floor,
Atlanta, GA 30309.Denver, CO 80237. In the letter, the stockholder must identify him or herself as a stockholder of
Providence.ModivCare. The Corporate Secretary may require reasonable evidence that the communication is being made by or on behalf of a stockholder before the communication is transmitted to the individual director or to the Board as a whole. Depending on the subject matter, the Corporate Secretary will either (i) promptly forward to the Chairperson of the Audit Committee and the General Counsel any communication alleging legal, ethical or compliance issues by management or any other matter deemed by the Corporate Secretary to be potentially material to the Company or (ii) not forward to the Board, any committee or any director, any communications of a personal nature or not related to the duties of the Board, including, without limitation, junk mail and mass mailings, business solicitations, routine customer service complaints, new product or service suggestions, opinion survey polls or any other communications deemed by the Corporate Secretary to be immaterial to the Company.
Meetings of the Board of Directors and Committees
During fiscal year
2019,2022, the Board held 13
meetings,meetings. In addition, during fiscal year 2022, the Audit Committee held
9five meetings, the Compensation Committee held
8four meetings, and the Nominating and Governance Committee held
4four meetings. During fiscal year
2019, all directors attended at least 75% of all of the meetings of the Board held during the period for which he or she was a director. Additionally,2022, all directors attended at least 75% of the
aggregate of the meetings of
each committeeour Board and of the
Committees on which each director served other than Messrs. Carter and Coulter, each of whom attended 71% of the aggregate of the meetings of our Board
held duringand of the
period inCommittees on which
he or she served on such committee.they respectively served.
Members of the Board and its committees also consulted informally with management from time to time and acted at various times by written consent without a meeting during fiscal year
2019.2022. Additionally, the independent members of the Board met in executive session regularly without the presence of management.
The Board has an internal policy that all of the directors should attend (either telephonically or in person) the annual meeting of stockholders, absent exceptional cause. All
but two of the directors who were directors at the time of the meeting attended the
20192022 annual meeting of stockholders.
Committees of the Board of Directors
The Board has three separately designated standing committees: the Audit Committee, the Compensation Committee and the Nominating and Governance Committee, each as described below.
Audit Committee. The Audit, CommitteeCompensation, and Nominating and Governance Committees are each governed by a written charter approved by the Board. A copy of each committee’s charter is currently composedavailable on our website at www.ModivCare.com/governance. ModivCare intends to disclose any amendments to these charters required by the SEC or listing standards of Mr. Kerley (Chairperson), Ms. NorwalkNASDAQ at the same location on our website. The information contained on our website is not part of, and Mr. Wright. is not incorporated by reference in, this Proxy Statement or any other report we file with or furnish to the SEC.
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| Audit Committee | The Audit Committee currently consists of Mr. Kerley (Chairperson), Ms. Norwalk, Mr. Samant and Mr. Wright. |
The primary function of our Audit Committee is to assist our Board in fulfilling its responsibility to oversee management’s conduct of our financial reporting process, including review of our financial reports and other financial information, our system of internal accounting controls,
our compliance with legal and regulatory requirements, the qualifications and independence of our independent auditors
and the performance of our internal audit staff and independent
auditors.auditors, and, together with our Nominating and Governance Committee, our compliance with legal and regulatory requirements,. Our Audit Committee has sole authority to appoint, retain, compensate, evaluate and terminate our independent auditors and to approve all engagement fees and terms for our independent auditors.
In addition, our Audit Committee provides oversight to the Company’s information security programs.
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The Board has determined that each member of the Audit Committee is independent as defined by the applicable NASDAQ listing standards and applicable SEC rules. The Board has determined that Mr. Kerley is an “audit committee financial expert” as defined in applicable SEC rules.
Compensation Committee. The Compensation Committee currently consists of Mr. Kerley (Chairperson), Mr. Carter and Mr. Coulter.
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| Compensation Committee | The Compensation Committee currently consists of Mr. Kerley (Chairperson), Mr. Carter and Ms. Saal. |
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. Our Compensation Committee also reviews, and makes recommendations to the Board regarding, the compensation of our 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 2015In 2022, the Compensation Committee has engagedcontinued the engagement of an independent compensation consultant, ClearBridgeMeridian Compensation GroupPartners, LLC (“ClearBridge”Meridian”), 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. ClearBridgeMeridian reports directly and solely to the Compensation Committee. ClearBridgeMeridian does not provide any other services to the Company, except at the direction of the Compensation Committee. The Compensation Committee assessed the independence of ClearBridgeMeridian pursuant to the applicable rules and concluded that ClearBridge’sMeridian’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 Mr. Wright.
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| Nominating and Governance Committee | The Nominating and Governance Committee currently consists of Ms. Norwalk (Chairperson), Mr. Coulter, Dr. Graham and Mr. Wright. |
The primary functions of our Nominating and Governance Committee are to
identify individuals qualified to become members of our Board,establish criteria for selecting new directors, identifying, screening and recruiting new directors, recommend to our Board a slate of director nominees for election at our next annual meeting of stockholders, monitor legal and regulatory compliance
in coordination with our Audit Committee, and develop and recommend to our Board a set of corporate governance principles.
TheseThe Committee is directed to assist the Board and management in furthering and promoting the Company’s commitment to diversity and inclusion. In addition, the Committee oversees (i) the Company’s corporate responsibility programs relating to, and (ii) management of the Company’s strategies, initiatives, risks, opportunities, and related reporting obligations with respect to, the governance of sustainability and other material ESG matters. The Company’s corporate governance principles are set forth in our Corporate Governance Guidelines which can be found on our website at
www.prscholdings.com/corporategovernancewww.ModivCare.com/governance 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.
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Board Diversity
The Audit, Compensationmatrix below sets forth the self-identified gender identity and Nominating and Governance Committees are each governed by a written charter approved by the Board. A copydemographic diversity attributes of each committee’s charter is availableof our directors as of May 1, 2023. Please see “Information About Director Nominees,” above, for biographical information on each of our website at www.prscholdings.com/corporategovernance. Providence intendsdirectors. For information regarding the self-identified gender identity and demographic diversity attributes of our directors as of May 2, 2022, please refer to disclose any amendments to these charters required byour proxy statement filed with the SEC or listing standardson May 2, 2022.
Board Diversity Matrix (as 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.May 1, 2023)
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| Board Size: |
| Total Number of Directors: 10 | |
| Gender Identity: | Female | Male | Non-Binary | Gender Undisclosed |
| Number of directors based on gender identity | 2 | 7 | — | 1 |
| Number of Directors who identify in any of the categories below: |
| African American or Black | — | 1 | — | — |
| Alaskan Native or American Indian | — | — | — | — |
| Asian | — | 1 | — | — |
| Hispanic or Latinx | — | — | — | — |
| Native Hawaiian or Pacific Islander | — | — | — | — |
| White | 2 | 5 | — | — |
| Two or More Races or Ethnicities | — | — | — | — |
| LGBTQ+ | — | — | — | — |
| Undisclosed | — | — | — | 1 |
Director Nomination Process
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 applicable 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
ProvidenceModivCare 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’sModivCare’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, and considers attributes such as race, ethnicity, gender, and cultural background when reviewing candidates for our Board and in assessing our Board’s overall composition, in an effort 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
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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) such director receiving
lessmore votes cast against the director’s election than
a majority offor the
votes castdirector’s election 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’sModivCare’s Bylaws. Under
Providence’sModivCare’s 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’sModivCare’s Bylaws, at no cost, on the SEC’s website, www.sec.gov, as Exhibit
3.23.4 to
Providence’sModivCare’s Annual Report on Form 10-K filed with the SEC on March
12, 2010,7, 2023, or by submitting a written request directed to the Company’s Corporate Secretary at the address given in the paragraph below.
See “Stockholder Nominations” below for a description of the procedures that must be followed to nominate a director.
Stockholder Nominations
According to Providence’s
ModivCare’s Bylaws
require 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 recognized express mail or United States mail, postage prepaid, at
1275 Peachtree Street, Sixth6900 Layton Avenue, 12th Floor,
Atlanta, GA 30309,Denver, CO 80237, 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:Asforth, as to each person whom the stockholder proposes to nominate for election or reelection as a director:
•the name, age, business address and residence address of such person;
•the principal occupation and employment of such person;
•the class and series and number of shares of each class and series of capital stock of the Company which are owned beneficially or of record by such person (which information shall be supplemented not later than ten (10) calendar days after the record date for the meeting to disclose such ownership as of the record date);
•such person’s executed written consent to being named in the proxy statement as a nominee and to serving as a director if
•elected;
•all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made with the SEC in connection with the solicitation of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act (or pursuant to any law or statute replacing such section), and the rules and regulations promulgated thereunder;
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•a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such person being nominated, on the one hand, and the stockholder and any Stockholder Associated Person (as defined below), on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the stockholder making the nomination and any Stockholder Associated Person were the “registrant” for purposes of such rule and the person being nominated were a director or executive officer of such registrant. A “Stockholder Associated Person” is, with respect to any stockholder, (a) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (b) any beneficial owner of shares of Common Stock of the Company owned of record or beneficially by such stockholder, and (c) any person controlling, controlled by or under common control with such Stockholder Associated Person; and
•a questionnaire regarding his or her background and an executed Director/Prospective Director Agreement.
As to the stockholder giving the notice:
•the name and record address, as they appear on the Company’s stock ledger, of such stockholder and the name and address of any Stockholder Associated Person;
•(a) the class, series and number of shares of each class and series of capital stock of the Company which are, directly or indirectly, owned beneficially and/or of record by such stockholder or any Stockholder Associated Person, documentary evidence of such record or beneficial ownership, and the date or dates such shares were acquired and the investment intent at the time such shares were acquired, (b) any derivative instrument (as defined in the amended and restated bylaws)Bylaws) directly or indirectly owned beneficially by such stockholder or any Stockholder Associated Person and any other direct or indirect right held by such stockholder or any Stockholder Associated Person to profit from, or share in any profit derived from, any increase or decrease in the value of shares of the Company, (c) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or any Stockholder Associated Person has a right to vote any shares of any security of the Company, (d) any short interest (as defined in the amended and restated bylaws)Bylaws) indirectly or directly held by such stockholder or any Stockholder Associated Person in any security issued by the Company, (e) any rights to dividends on the shares of the Company owned beneficially by such stockholder or any Stockholder Associated Person that are separated or separable from the underlying shares of the Company, (f) any proportionate interest in shares of the Company or derivative instruments held, directly or indirectly, by a general or limited partnership in which such stockholder or any Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner, and (g) any performance-related fees (other than an asset-based fee) to which such stockholder or any Stockholder Associated Person is entitled based on any increase or decrease in the value of shares of the Company or derivative instruments, if any, as of the date of such notice, including without limitation, any such interests held by members of such stockholder’s or any Stockholder Associated Person’s immediate family sharing the same household (which information, in each case, must be supplemented by such stockholder and any Stockholder Associated Person not later than ten (10) calendar days after the record date for the meeting to disclose such ownership as of the record date);
•a description of all arrangements or understandings between such stockholder and/or any Stockholder Associated Person and each proposed nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by such stockholder;
•any material interest of such stockholder or any Stockholder Associated Person in the election of such nominee, individually or in the aggregate, including any anticipated benefit to such stockholder or any Stockholder Associated Person therefrom;
•a representation from such stockholder as to whether the stockholder or any Stockholder Associated Person intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the person and/or (2) otherwise to solicit proxies in support of the election of such person;
•a representation that such stockholder is a holder of record of stock of the Company entitled to vote at such meeting, that such stockholder intends to appear in person, or by proxy, at the meeting to nominate the person or persons named in the notice;
•whether and the extent to which any agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power of such stockholder or any Stockholder Associated Person with respect to any shares of the capital stock of the Company, without regard to whether such transaction is required to be reported on a Schedule 13D or other form in accordance with Section 13(d) of the Exchange Act or any successor provisions thereto and the rules and regulations promulgated thereunder; and
•any other information relating to such stockholder or any Stockholder Associated Person that would be required to be disclosed in a proxy statement or other filings required to be made with the SEC in connection with the solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act (or pursuant to any law or statute replacing such section) and the rules and regulations promulgated thereunder.
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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.Bylaws. If a majority of the Board reasonably determines that the information provided in a 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
ClearBridgeMeridian in
20172022 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
the information under the caption “Executive Compensation—
Detailed Discussion and Analysis—Approach for Developing the Executive Compensation Program”
) below), as well as its own judgment and prior experience, in determining director compensation.
As compensation for their service as directors of the Company in
20192022 (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, the Chairperson 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 $20,000. For service as Chairman of the Board, the Chairman of the Board received an additional retainer of $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
20192022 was $130,000, based on the closing stock price of the Company’s stock on the grant date. Except for certain expense reimbursements noted below, no additional payments were made to non-employee members for participating in Board and committee meetings.
Beginning in December 2016, non-employeeNon-employee members of the Board
were offered the opportunity (as approved by the Board) tomay elect to receive unrestricted shares of Common Stock in lieu of cash compensation.
Mr.Each of Messrs. Coulter,
Samant and
Mr. Wright
and Ms. Saal elected to receive
100% and 50%, respectively,all or a portion of their
20192022 director cash compensation in the form of unrestricted shares of Common
Stock.Stock, which was granted on a quarterly basis.
On February
14, 2019,7, 2022, Mr. Carter, Mr. Coulter,
Dr. Graham, Mr. Kerley, Ms. Norwalk,
Ms. Saal, Mr. Samant and Mr. Wright were each awarded
1,8571,223 restricted
sharestock awards under the
Company’s 2006
Long-Term Incentive Plan
(the “2006 Plan”) for their annual equity award. On February
14, 2019,7, 2022, Coliseum Capital Partners, L.P. was granted
1,8571,223 stock equivalent units in lieu of an award to
ChristopherMr. Shackelton. All
of these awards
vest 1/3rdvested 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 on7, 2023, 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.
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The following table shows for the fiscal year ended December 31,
2019, certain2022, information with respect to the compensation of our non-employee directors:
20192022 Director Compensation Table#
Name | | Fees Earned Or Paid in Cash ($) (1) | | Stock Awards ($) (2) | | | Total ($) |
Todd J. Carter | | $ 92,500 | | $ 133,611 | | | $ 226,111 |
David A. Coulter | | $ 100,000 | | $ 133,611 | | | $ 233,611 |
Richard A. Kerley* | | $ 140,000 | | $ 133,611 | | | $ 273,611 |
Leslie V. Norwalk* | | $ 120,000 | | $ 133,611 | | | $ 253,611 |
Christopher S. Shackelton† (3) | | $ 120,000 | | $ 133,611 | | | $ 253,611 |
Frank J. Wright | | $ 107,500 | | $ 133,611 | | | $ 241,111 |
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| Name | Fees Earned Or
Paid in Cash
($) | Stock Awards ($)(1) | Total
($) |
| Todd J. Carter | 92,500 | | 129,980 | | 222,480 | |
| David A. Coulter | 92,500 | | 129,980 | | 222,480 | |
| Garth Graham | 92,500 | | 129,980 | | 222,480 | |
| Richard A. Kerley* | 140,000 | | 129,980 | | 269,980 | |
| Leslie V. Norwalk* | 120,000 | | 129,980 | | 249,980 | |
| Stacy Saal | 92,500 | | 129,980 | | 222,480 | |
| Rahul Samant | 100,000 | | 129,980 | | 229,980 | |
Christopher S. Shackelton†(2) | 120,000 | | 129,980 | | 249,980 | |
| Frank J. Wright | 107,500 | | 129,980 | | 237,480 | |
†Denotes Board Chair as of December 31, 2022
*Denotes Committee Chair as of December 31, 2022
1.Represents the aggregate grant date fair value of the stock and stock equivalent units granted in fiscal year 2022. The aggregate grant date fair value of the restricted shares was computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718-Compensation-Stock Compensation (“ASC 718”).
The aggregate number of unvested stock awards outstanding for each non-employee director as of December 31, 2022 is shown below, all of which vested on February 7, 2023:
Columns that do not apply have been deleted.
† Board Chairman at December 31, 2019
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*Committee Chair at December 31, 2019
|
(1)
Name | Mr. Coulter elected to receive 100% of his 2019 cash compensation in the form of unrestricted shares of Common Stock. Mr. Wright elected to receive 50% of his 2019 cash compensation in the form of unrestricted shares of Common Stock.
|
(2)
| Represents the aggregate grant date fair value of the stock and stock equivalent units granted in fiscal year 2019. The aggregate grant date fair value of the restricted shares was computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718-Compensation-Stock Compensation (“ASC 718”). For a discussion of valuation assumptions, see Note 14, Stock-Based Compensation and Similar Arrangements, of our 2019 Annual Report. The aggregate number of unvested stock awards outstanding for each non-employee director as of December 31, 2019 is shown below:
|
Name
| Unvested Restricted Share
Stock Awards |
Todd J. Carter | 4,234
1,223 | |
David A. Coulter | 4,234
1,223 | |
Garth Graham | 1,223 | |
| Richard A. Kerley | 4,234
1,223 | |
Leslie V. Norwalk | 4,234
1,223 | |
Stacy Saal | 1,223 | |
| Rahul Samant | 1,223 | |
| Frank J. Wright | 4,234
1,223 | |
The aggregate number of unvested stock equivalent units outstanding for each non-employee director as of December 31,
20192022 is shown
below:below, all of which vested on February 7, 2023:Name
| Unvested Stock Equivalent Units
| | | | |
Name | Unvested Stock
Equivalent Units |
Christopher S. Shackelton (3)(2) | 4,234
1,223 | |
2.All of Mr. Shackelton’s compensation for service on the Board inures to the benefit of CCP pursuant to this entity’s policy regarding Mr. Shackelton’s service on the board of companies in which it has an equity interest.
(3)
| All of Christopher Shackelton’s compensation for service on the Board inures to the benefit of CCP pursuant to this entity’s policy regarding Christopher Shackelton’s service on the board of companies in which it has an equity interest. CCP also holds previously granted stock option equivalent units in respect of 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, 2019, with an exercise price of $43.81.
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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
threefive times their annual retainer (excluding compensation for board or committee chair, committee member or lead director positions held). Because
ChristopherMr. Shackelton assigns all of his Board compensation to CCP as described above, he is excluded from these stock ownership guidelines.
The following counts towards meeting the required holding level:
•shares held directly or indirectly;
•shares underlying any vested restricted shares or RSUs held under our annual equity-based director compensation program;
•any unvested time-based restricted shares or RSUs held under our annual equity-based director 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.
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.
EachAll of our non-employee directors
waswere in compliance with our stock ownership guidelines as of December 31,
2019.2022, with the exception of Dr. Graham, Ms. Saal, and Mr. Samant, who joined the Company in 2021 and are still subject to a grace period for compliance. The Company expects, however, that these directors will meet the guidelines over the next two to four years.
Delinquent Section 16(a) Reports
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.ModivCare.
To the Company’s knowledge, based solely on a review of the copies of such reports filed with the SEC 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
ProvidenceModivCare complied with applicable Section 16(a) requirements during the fiscal year ended December 31,
2019,2022, except
that Mr. Pate, Mr. Dotts, Ms. Stalmack and Ms. Smith each filed onefor (i) a Form 4
for Kenneth Shepard filed late on May 20, 2022 to report two
days late.tax withholding events upon the vesting of previously reported restricted stock and restricted stock unit awards; (ii) a Form 4 for Jonathan Bush filed late on May 20, 2022 to report two tax withholding events upon the vesting of previously reported restricted stock and restricted stock unit awards; (iii) a Form 4 for L. Heath Sampson filed late on May 20, 2022 to report one tax withholding event upon the vesting of a previously reported restricted stock unit award and (iv) a Form 4 for Rebecca Orcutt filed late on October 27, 2022 to report a single grant of restricted stock units and employee stock options.
Family Relationships
There are no family relationships among any of our directors and executive officers.
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 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.
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The Audit Committee reviews and assesses 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 2018 the Company retained Epstein, Becker & Green, P.C. (“EBG”) to provide healthcare regulatory advice in respect of disclosures being made in our periodic 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.
Indemnification Agreement
The Company has received a letter from EBG advising that the Company’s engagement of the applicable advisor, and Ms. Norwalk’s relationship with the Company and her membership on the Board was not and will not be taken into consideration when calculating her compensation or accounted for in any way as it relates to her compensation. The Board has determined that Ms. Norwalk qualifies as independent under the applicable NASDAQ and SEC standards.Indemnification Agreement
On May 9, 2018, the Company entered into a registration indemnification agreement with each of the Coliseum Stockholders, pursuant to which the Company agreed to indemnify the Coliseum Stockholders, and the Coliseum Stockholders agreed to indemnify the Company, against certain matters relating to the registration of the Coliseum Stockholders’ securities for resale under the Securities Act.
Additional information with respect to related party transactions with the Coliseum Stockholders is provided in our Annual Report on Form 10-K for the year ended December 31, 2022 (Note 20,
Transactions with Related Parties). Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Mr. Kerley (Chairperson), Mr. Carter, and
Mr. Coulter.Ms. Saal. No person who served as a member of the Compensation Committee during the fiscal year ended December 31,
20192022 was a current or former officer or employee of
Providence,ModivCare, or engaged in
certainany transactions with us which was required to be disclosed by regulations of the SEC. None of
Providence’sModivCare’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, 2019 with respect to our equity-based compensation plans.
Plan category | | 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 | | | 729,601 | | | $ | 64.72 | | | | 1,306,243 | |
Equity compensation plans not approved by security holders | | | — | �� | | | — | | | | — | |
Total | | | 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.
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Executive Compensation
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis explains the executive compensation program for the following individuals, who are referred to as the
Named Executive Officersnamed executive officers (“NEOs”):
L. Heath Sampson – President, Chief Executive Officer, and Chief Financial Officer*
Ilias Simpson – President of ModivCare Mobility*
Jason Anderson – Former President of ModivCare Home*
Daniel E. Greenleaf – Former President and Former Chief Executive Officer*
Brett Hickman – Former Chief Commercial Officer*
Grover N. Wray – Former Chief Human Resources Officer*
*Mr. Sampson has served as Chief Executive Officer since July 2022 and as Chief Financial Officer since February 2021. Mr. Simpson has served as President of ModivCare Mobility since April 2022. Mr. Anderson’s service as President of ModivCare Home ceased in July 2022. Mr. Greenleaf’s service as President and Chief Executive Officer
Kevin M. Dotts – ceased in July 2022. Mr. Hickman’s service as Chief FinancialCommercial Officer
Kathryn Stalmack – Senior Vice President, General Counsel & Corporate Secretary*
Suzanne G. Smith – began in April 2022 and ceased in March 2023. Mr. Wray’s service as Chief Accounting Officer*
Human Resources Officer ceased in February 2023, although his employment with the Company continued in a transitional role until May 1, 2023. | •
| R. Carter Pate – Former Interim Chief Executive Officer*
|
William Severance – Former Executive Vice President, OfficeSummary
Despite the continued impact of the Providence CEO*COVID pandemic and the challenging macroeconomic environment on our business and society at large, the Company continued the evolution of its business and technology that had positive impacts on our clients, transportation providers and members. We also enhanced our senior leadership, resulting in an experienced team with a track record of operational excellence, including veteran leaders for our Mobility and Home businesses. The Board promoted L. Heath Sampson to CEO, Rebecca Orcutt to CAO, and Kenneth Shepard to CFO of our Mobility business. We made progress building for scale through our integration efforts in 2022 which continue into 2023. We grew our membership from 30 to 35 million monthly members in our Mobility segment and we grew our Personal Care provider base - we reintroduced benefits to caregivers in 2022 which contributed to an increase in our caregiver satisfaction score, resulting in an increase in the number of caregivers.
| •
| Laurence Orton – FormerInterim Chief Accounting Officer
| | | |
| We strengthened our senior leadership, and Senior Vice President Finance*redefined our vision and goals under a talented new executive team. |
| We advanced key technology and center of excellence optimization initiatives |
| 2022 | We realigned our service offerings under two units: Mobility, consisting of our NEMT business, and Home, which includes our Personal Care, Monitoring, and Meals businesses |
*Mr. Pate served
The efforts of this talented leadership team during 2022 resulted in the Company continuing to produce strong financial results despite continuing COVID headwinds and a challenging macroeconomic environment. This strong financial performance is evidenced by the Company reporting substantial revenue growth in the last two years 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 Advisorcompared to the
President and CEO untiltwo years prior, as well as sustained growth in Adjusted EBITDA* with a CAGR of 58% over the
end of his contract term, December 31, 2019. Ms. Stalmack has servedlast four years, 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.
Executive Summary
Overview and 2019 Business Highlights
The Providence Service Corporationdemonstrated below.
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*Adjusted EBITDA is a Delaware corporation formed in 1996financial measure that is the largest manager of non-emergency medical transportation (“NET”) programs for state governments and managed care organizations (“MCOs”)not presented in accordance with accounting principles generally accepted in the United States (“U.S.”) primarilyof America, or GAAP. A reconciliation of Adjusted EBITDA to net income (loss), its most directly comparable GAAP financial measure, is provided in Appendix A to this Proxy Statement.
Against this challenging macroeconomic environment, the Compensation Committee has utilized four key objectives to continue to engage, retain and motivate the Executive Leadership Team at ModivCare. For 2022, this included enhancing the performance-based aspect of our compensation strategy 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 resultsintroduction of the Company’s captive insurance company. During 2018, the Company announced an Organizational Consolidation planperformance restricted stock units (“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"PRSUs”). Effective January 1, 2019,These performance-based awards align executive performance with Company performance by tying the consolidation was substantially complete. LogistiCare retainedoutcome of these awards to common stock price appreciation target values, in addition to time-based vesting restrictions.
The guiding principles of our compensation philosophy are intended to meet the following objectives:
| | | | | |
| 1 | Market competitiveness |
| 2 | Pay-for-Performance |
| 3 | Align with Stockholder Interests |
| 4 | Risk Mitigation |
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We use market and stockholder driven compensation practices to ensure that there is alignment in pay for performance for our executives.
| | | | | | | | |
What we do: | | “Double-trigger” change of control provisions |
| Emphasize pay for performance |
| Maintain a clawback policy that covers both cash and equity compensation and addresses reputational and financial risk as well as risk management failures |
| Use an independent compensation consultant |
| Limit executive perquisites |
| Maintain robust stock ownership guidelines applicable to all of our executive officers and directors |
| Provide a significant portion of officer compensation in variable at-risk pay elements |
| Conduct competitive benchmarking to understand market-typical officer pay levels and practices |
| | | | | | | | |
What we do not do: | | “Single-trigger” accelerated vesting of equity-based compensation |
| Provide tax gross-ups on executive perquisites |
| Short-sell, hedge or pledge Company securities |
| Excessive perquisites |
| Trade in Company securities during black-out periods, except under limited circumstances, including Rule 10b5-1 trading plans |
| Reprice stock options without stockholder approval |
| Excise tax “gross ups” upon change in control |
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The elements of our performance-based compensation program are as follows:
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Component of
Performance-Based
Compensation | Description of Program |
Short-Term Incentive Plan
(the “STI”) | The STI is designed to provide financial incentive to the executives for achieving in-year goals that are aligned to stockholder value creation. As further described below under “2022 Executive Compensation Program Decisions—Short-Term Incentive Plan,” cash and discretionary equity awards were granted under the STI to certain of our NEOs based on 2022 performance. |
Long-Term Incentive Program
(the “LTI”) | The LTI is designed to align the eligible executives’ incentives with our stockholders’ interests to achieve increases in our stock value. As further described below under “2022 Executive Compensation Program Decisions—Long-Term Incentive Program,” equity awards were granted under the LTI to each of our NEOs in 2022. |
STI Determinations
As further described below under “2022 Executive Compensation Program Decisions—Short-Term Incentive Plan,” the Compensation Committee utilized Compensation Adjusted EBITDA, a non-GAAP financial measure that is reconciled to its
name and continuesmost directly comparable GAAP financial measure, net income, in Appendix A to
this Proxy Statement, as the financial measure against which to determine whether payouts would be
headquartered in Atlanta, GA, and the Company continuesmade to
be named The Providence Service Corporation and is listed on NASDAQ Global Select Market ("NASDAQ")executives under the
ticker symbol “PRSC”.Providence also owns a minority investment in CCHN Group Holdings, Inc. and its subsidiaries (“Matrix”). Matrix is 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 with advance diagnostic capabilities. These solutions combined with Matrix’s advanced engagement approach, helps health plans2022 STI. The Compensation Committee chose to use Compensation Adjusted EBITDA, among other reasons, to motivate the executives to manage, risks, close care gaps and connect members to care.
Fiscal year 2019 was a year 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 Form 10-K,extent reasonably practicable, the Company’s operating resultsexpenses to the amounts that were included in 2019 were impacted by increasing utilization under at risk contracts and increased transportation costs on a per trip basis. These factors caused Adjusted EBITDA to be lower for fiscal 2019 thanthe Company’s Board approved 2022 operating budget. The Compensation Committee then, in fiscal 2018. These negative factors were partially offset by contracts renegotiated during 2019 and by top-line revenue growth. The resultconnection with its determination of this challenging environment was that the Compensation Adjusted EBITDA (as defined below) target for the payment of amountspayouts under the Company’s annual incentive plan (described below) was not achieved and as2022 STI based on 2022 executive performance, exercised discretion to award a result, the portion of the annual bonus tiedearned payouts in newly structured PRSUs.
LTI Determinations
As further described below under “2022 Executive Compensation Program Decisions—Long-Term Incentive Program,” equity awards were granted under the LTI in 2022 to
Adjusted EBITDA was not achieved for 2019.Fiscal year 2019 was also oneeach of transition in our business having completed the Organizational ConsolidationMessrs. Sampson, Hickman, Simpson, Anderson, Greenleaf 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).
Wray.
Stockholder Say-on-Pay and
Say-on-Pay Frequency and Company Response
In establishing and recommending
20192022 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
20192022 annual meeting of stockholders.
In advance of that meeting, we reached out to certain stockholders to discuss certain key governance issues. At
thatthe 2022 annual meeting, our stockholders approved our executive compensation for the
20192021 fiscal year with
approximately 82%the affirmative vote of
more than 99% of shares present in person or represented by proxy and entitled to vote on the
votes cast in favor.proposal. Our Board recognizes that executive compensation is important to stockholders and takes this into account when reviewing the compensation program throughout the year. We believe that we have established a
performance-based compensation plan that aligns the compensation paid to NEOs with value delivered to
stockholders, including changes that we made in fiscal year 2019.Detailed stockholders.
Executive Compensation
Committee Philosophy
Providence has
ModivCare’s compensation philosophy is designed to attract, incentivize and retain highly talented individuals with diverse backgrounds and experience who are committed to our core values and our purpose of balancing mission and margin.
The guiding principles for our compensation philosophy are:
•Market competitiveness - Aggregate total direct compensation (base salary, variable pay and long-term incentive) should be near the market median (if affordable) and allows company and/or individual performance to drive actual compensation up or down, including above target pay at the market median when performance warrants it;
•Pay-for-Performance - There should be a strong philosophylink between our business strategy, the performance metrics in our short-term and long-term incentive programs, and the business results that compensationdrive stockholder value;
•Align with Stockholder Interests - A significant portion of pay should be earned based on performance. Asperformance-based, with the percentage of total pay tied to performance increasing proportionally with a result, we believe thatleader’s level of responsibility, and the compensation programs offeredpolicies should include an opportunity for, and a requirement of, significant equity ownership intended 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 for fiscal year 2019 focused on:attracting, retaining, and motivating high-performing leaders;
aligningalign the interests of NEOs and stockholders; and
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•Risk Mitigation - Financial risk should be managed through sound plan design and decision-making, with the Compensation Committee and its independent compensation consultant reviewing our executives with thoseexecutive compensation plans and programs for inappropriate risk on an ongoing basis.
Looking forward to 2023, we are further enhancing the performance-based aspect of our stockholders,compensation strategy by launching a new structure of PRSUs that ties the performance of executives to the Revenue and incentivizing stockholder value creation;
linking a meaningful portionEBITDA goals of the Company, in addition to time-based vesting restrictions. This structure is built toward the Company’s goal of achieving $3 billion in Revenue and $300 million in EBITDA in 3 years’ time and aligns executive compensation to achievementwith the attainment of key financial, operational, and capital allocation performance goals; and
this goal.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.
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2022 Compensation Components
The specific components of the
20192022 compensation program for NEOs were as follows:
Component
| Description
| Purpose
| | | | | | |
Component | Description | Purpose |
| Base Salary | Fixed cash component established upon hire (and adjusted from time-to-time)time to time) based on overall skills and experience. | Provide competitive fixed compensation to attract and retain executive talent. Reviewed totalent, reward for individual performance, and to consideraddress market competitiveness.
|
AnnualShort-Term Incentive Program
Plan (the “STI”) | The Annual Incentive Program (“AIP”) approved in 2019STI for our NEOs that served for all or most of fiscal 2019 (in this case Mr. Dotts and Ms. Smith) wasis based on Company financial and NEO individual performance metrics, as described further below. Based on our fiscal 2019 results, no amounts were paid under the AIP. Mr. Greenleaf and Ms. Stalmack were not eligible for such awards in 2019 had they been paid. | Provide financial incentive to the executives to reward them for achieving specific strategic, organizational, financial and individual goals. |
Component
| Description
| Purpose
goals that are intended to improve stockholder value. |
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 Incentive (“LTI”Program (the “LTI”) | Mr. Dotts and Ms. Smith, along with other executives that were not
The LTI provides for the grant to the eligible NEOs received stock option and restricted share awards fromof a combination, depending on the Compensation Committee in September 2019. Mr. Greenleaf, received long-term equity awardsexecutive, of stock options, Premium Priced Options, and restricted stock units (“RSUs”)(RSUs) and, beginning in connection with his employment agreement described below. Ms. Stalmack and Ms. Smith received long-term equity awards made up of2022, performance restricted stock units (PRSUs). Our stock options andprovide NEOs with the right to purchase Company stock after a specified date, at an exercise price equal to the closing market price on the grant date. Our restricted share awardsstock units provide NEOs with the right to receive shares of Company common stock on a specified date in connectionthe future after vesting occurs. RSUs retain the right to receive dividends on the underlying shares, however such dividends are not paid until the RSUs vest. RSUs do not provide voting rights. Our performance restricted stock units provide NEOs with their employment agreements described below.the right to receive shares of Company common stock based on the achievement of certain performance targets, in addition to time-based vesting restrictions. For 2022, the performance aspect of our PRSUs was tied to common stock price appreciation target values.
| Long-term incentive grantsProvide motivation to certain executives align themthe executives’ incentives with our stockholders’ interestinterests in achieving increases ofin our stock value. Given the transition period the Company was experiencing in 2019, the Compensation Committee felt that a combination of options and either restricted share awards or RSUs was the appropriate vehicle mix. The combination of stock options, RSUs and either restricted share awards or RSUsPRSUs furthered the Compensation CommitteesCommittee’s objectives of (1) directly aligning employeeexecutive compensation with stockholder interests, with (1) the stock option component incentivizingmotivating performance through stock price appreciation (i.e., stock options have no value if stock price does not appreciate and Premium Priced Options to the CEO have no value unless stock price appreciates above premium exercise price) andappreciate), (2) the restricted share awards or RSUs providing incentives for long-term retention of key executives.
executives and (3) PRSUs motivating performance through achievement of stock price appreciation targets and providing incentives for long-term retention. |
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 “Benefitsthe discussion below under the caption “—Benefits and Perquisites” for further detail. | Provide a competitive level of employee benefits; aids in attraction and retention of key executives. |
Post-Termination Compensation | Certain NEOs are eligible for certain payments post-termination, as specified in “Potentialbelow under the caption “—Potential Payments Upon Termination or Change in Control.”
| Provide an appropriate level of payment in the event of a change in control or termination. termination event in order to motivate executives to put the Company’s long-term objectives ahead of their own. |
Other Policies | •Stock Ownership Guidelines •Anti-Hedging / Anti-Pledging Policy | Enhance alignment between executive and stockholder interests. |
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 by the Compensation Committee, subject to the approval of the
Board.full Board excluding our CEO. 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 the Compensation Committee
exercises discretion and has the final decision with respect 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.Since 2015,
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In 2022, the Compensation Committee
has engaged
ClearBridgeMeridian 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,
ClearBridgeMeridian only does work
for or authorized by the Compensation Committee. The Compensation Committee annually reviews
ClearBridge’sMeridian’s independence as contemplated by the Compensation Committee’s charter and applicable NASDAQ rules, and
determined in
February 2020 determined2022 that there were no conflicts of interest.
We believe it is appropriate for NEO pay to be competitive with the market for comparable executives. To achieve this objective, we assess market data for a peer group of companies established by the Compensation Committee, with the assistance of its compensation consultant, from time to time.
We periodically review our peer group for competitive compensation benchmarking analysis. The peer group chosen for purposes of the 2022 compensation decisions is comprisedprovided below. The group is composed of 12 health services related-companiesrelated companies that arewere comparable to us 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:
when it was chosen for 2022. 2019 Peer Group
| | | | | | | | |
2022 Peer Group |
| Addus HomeCare Corporation | EnsignCorVel Corporation
| LHC Group |
| |
Allscripts Healthcare Solutions, Inc. | HMS Holdings
Hanger, Inc. | Option Care Health, Inc. |
| |
American Renal Associates Holdings, Inc. | LHCEnsign Group
| National HealthCare Corporation |
| |
Capital Senior Living Corporation | Option Care Health, Inc.(1)
|
| HMS Holdings | |
CorVel Corporation
| National HealthCare Corporation
|
| |
Hanger, Inc.
| Tivity Health |
(1) Option Care Health Inc. was formerly BioScrip, Inc.
In addition to
comparative market data
(peer group and survey data), the Compensation Committee takes into consideration other factors, including
global economic conditions and an individual’s role, tenure, experience, skills and performance when making compensation decisions.
2019
2022 Executive Compensation Program Decisions
The following decisions were made
infor fiscal year
20192022 regarding each of these compensation components:
The Compensation Committee has periodically reviewed and set salaries for NEOs at levels intended to be competitive, as further discussed under
the caption “—Approach for Developing the Executive Compensation 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 the Company, individual performance, overall financial performance of the Company, and market data, as appropriate.
SalariesAnnual base salaries for our NEOs were as follows:
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 | |
(1)
| | | | | | | | |
| Name | 2022(1) | 2021(1) |
L. Heath Sampson(2) | $750,000 | $475,000 |
Ilias Simpson(3) | $500,000 | $— |
Jason Anderson(4) | $510,000 | $300,000 |
| Daniel E. Greenleaf | $1,000,000 | $850,000 |
Brett Hickman(3) | $500,000 | $— |
| Grover N. Wray | $440,000 | $440,000 |
1.Reflects annual base salaries for our NEOs as ofestablished for the full calendar years ended December 31, 2019, except2022 and 2021, respectively, without adjustment for partial years worked.
2.Mr. Pate who stepped downSampson began serving as Interim CEO on December 11, 2019, William Severance, who stepped downour Chief Executive Officer in July 2022. The base salary in 2022 reflects his salary upon becoming the Chief Executive Officer.
3.Messrs. Hickman and Simpson began their employment with us in 2022 and, therefore, did not have base salaries in 2021.
4.Mr. Anderson began serving as EVP, Finance, Officethe President of ModivCare Home in January 2022 and his salary in 2021 reflects his base salary prior to serving in this role.
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Short-Term Incentive Plan
In the design of the
Providence CEO, effective May 10, 2019 and Laurence Orton, who stepped down as Interim Chief Accounting Officer and Senior Vice President Finance, effective March 1, 2019 and resigned May 10, 2019.2019 Cash Bonus Awards
Annual Incentive Program
For fiscal year 2019, Mr. Dotts and Ms. Smith participated2022 STI plan, the Compensation Committee, in consultation with management, adopted Compensation Adjusted EBITDA targets that were tied to the Company’s Board approved 2022 operating budget. As shown in the AIP,reconciliation included in Appendix A to this Proxy Statement, Compensation Adjusted EBITDA is calculated by reducing the Company’s publicly disclosed Adjusted EBITDA by the amount by which the operating expenses identified in such reconciliation exceeded the Company’s Board approved 2022 operating budget. As was the case in 2020 and 2021, the 2022 STI plan provided for a bonus opportunity for each executive based 75%50% on consolidated financial performance, measured in 2022 by EBITDA, as adjusted by the Compensation Committee for the AIP (“Compensation Adjusted EBITDA”),EBITDA, and 25%50% on individual performance goals established by the Compensation Committee provided, however, thatin consultation with the AIP was self-fundedCEO.
In February 2023, the Compensation Committee reviewed the financial and therefore ifoperational results of the Company for the 2022 fiscal year. The Compensation Committee calculated Compensation Adjusted EBITDA thresholdfor 2022 to be approximately $193 million and used this calculation to determine a potential STI payout of 80% of target under the 2022 STI. The Compensation Committee then exercised discretion and determined, in part as an intended retention tool, to make the payouts 75% in cash and 25% in newly structured PRSUs, with the receipt of the PRSU portion of the STI conditioned upon continued employment of the executives for the three-year time-based vesting condition included in the award.
| | | | | | | | |
| Named Executive Officer | Target Incentive Plan
Opportunity as a % of Salary | Target Incentive Plan Opportunity Value ($)(1) |
| L. Heath Sampson | 100 | % | 750,000 | |
Ilias Simpson(2) | 100 | % | 500,000 | |
| Jason Anderson | 125 | % | 637,500 | |
| Daniel E. Greenleaf | 125 | % | 1,250,000 | |
| Brett Hickman | 100 | % | 500,000 | |
| Grover N. Wray | 75 | % | 330,000 | |
1.The amounts listed in this column are annualized targets and do not necessarily reflect the amounts actually paid to NEOs.
2.Mr. Simpson was not achieved, no amount would be payable, despitealso eligible for an executive’sinitial one-time performance bonus of $100,000, based on the achievement of theircertain performance goals set by our Chief Executive Officer in collaboration with Mr. Simpson, payable either in cash or equity, at the option of Mr. Simpson.
With respect to the portion of the STI that was tied to individual goals. As described below,performance, the amount of the award for fiscal year 2019,each executive was calculated as (A) 50% of the Target Incentive Plan Opportunity Value set forth above, multiplied by (B) the percentage of individual performance objectives achieved, multiplied by (C) 80% (the 2022 STI payout determined by the Compensation Committee determined that on the basisCommittee). Mr. Sampson’s individual performance objectives centered around achievement of the Company’s financial results, the Company did not achieve its Compensation Adjusted EBITDA as well as achievement of MBOs determined during the time he served as CFO of the Company. For the other NEOs, performance objectives centered around, among other things:
•reducing cost overrides in our Mobility business;
•improving on-time performance in our Mobility business;
•expanding the sales pipeline;
•achieving revenue targets;
•increasing Caregiver supply in our Personal Care business;
•reducing annual real estate costs;
•implementing a leadership development program;
•building sustainable processes in governance and risk management; and
•achieving integration synergies.
As a result of their respective performance, each of Messrs. Hickman, Simpson and Wray was determined to have achieved 100% of his performance goals. As a result, such NEOs were awarded 80% of their total target bonuses (prorated from their respective start dates in April 2022, in the case of Messrs. Hickman and Simpson), payable 75% in cash and, if their employment was continuing, 25% in PRSUs. As a result of his respective performance first as CFO and then as CEO and CFO, Mr. Sampson was deemed to have achieved 50% of his performance goals due to the Company’s continued material weakness in financial reporting in the Personal
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| TABLE OF CONTENTS | Executive Compensation |
Care business and, therefore,
no AIP was
paid for Mr. Dotts, Ms. Smith orawarded 60% of this target bonus, prorated based on the
other participants in the AIP. Since Mr. Greenleaf and Ms. Stalmack were retained later inportion of the year
theyhe served as CEO and the portion of the year he served as CFO, payable 75% in cash and, since his employment was continuing, 25% in PRSUs. Due to the fact that the employment of Messrs. Hickman and Wray was not continuing, each only received the cash portion of the STI payout. Messrs. Anderson and Greenleaf, who both departed the Company in July 2022, were not eligible for
the AIP. Finally, Mr. Severance and Mr. Orton were entitled to the AIP in 2019, as provided in the retention agreements described below. The Compensation Committee created a
separate 2019 short-term incentive plan for Mr. 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 Audit Committee of Matrix’s Board of Directors, and completing the consolidation of the Company’s Connecticut and Arizona offices into the Atlanta corporate headquarters by 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.
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.
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 EBITDA under the AIP is calculated by modifying Adjusted EBITDA for LogistiCare and its subsidiaries to neutralize impact of changes in accounting rules, and exclude impact of acquisitions from actual results, earnings related to divested businesses after the date 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 awards, and items of an “Unusual Nature” on a case by case basis. (For a complete discussion of the method of calculating Adjusted EBITDA, see the Form 8-K filed with the SEC on February 27, 2020.)
Retention Bonuses
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”).
2022. Long-Term Incentives
Equity Grants
In an effort to retain, motivate, and continue to align the Company’s NEOsexecutive officers’ interests with stockholdersstockholders’ interests and stockholder value creation, the Compensation Committee grantedgrants long-term incentive awards in September 2019 inunder its LTI to the form of stock options and restricted share awardsexecutive officers as deemed appropriate by the Compensation Committee from year to certain executives and other employees. Theyear or as required by contractual arrangements, as applicable. In 2022, the Compensation Committee determined that an award consistingto further enhance the performance-based aspect of both (1)its compensation strategy by introducing PRSUs to the LTI grants to executive officers in a ratio of 50% PRSUs, 25% restricted stock units, which have inherent retention value, and 25% stock options, which align executives’ interests with stockholdersstockholders’ interests given their inherent performance-based value and (2) restricted share awards with their inherent retention value wastied to stock price appreciation. These PRSUs vest three years from the best vehicle mix to meetgrant date at various payout percentages depending on the Company’s objectivesachievement of the greatest 30-Day VWAP amount during 2019, given the transition periodvesting period.
In furtherance of the
Company was experiencing with respectforegoing, Mr. Sampson received an award in February 2022 related to
executive turnover. Given their level,his performance as the
Compensation Committee felt it appropriate to grant Mr. Dotts and Ms. Stalmack awardsChief Financial Officer that
were weighted more towards performance and consisting of 75% stock options and 25% restricted share awards. For Ms. Smith and other executives/employees, the Compensation Committee felt it was important to more evenly balance performance and retention objectives during this transition, as a result their awards consisted of 50%
stock options and 50% restrictedPRSUs with a fair value per share
awards. Mr. Greenleaf received awards in connection withbased on the
execution of his employment agreement as CEOprobable satisfaction of the
Company consistingstock price appreciation targets for these awards as of
RSUs,the grant date, 25% stock options with an exercise price
per share equal to the
Company’s commonclosing stock
price on the date of grant (“Market Priced Options”) and stock options with an exercise price equal to 115% of the closing price of the
Company’sunderlying shares of common stock on the
grant date
and 25% RSUs. Mr. Sampson received an additional award grant in November 2022 as recognition of
grant (the “Premium Priced Options”). Premium Priced Options further enhancehis appointment as Chief Executive Officer that consisted of 50% PRSUs, 25% stock options and 25% RSUs. Each of Messrs. Anderson, Greenleaf, and Wray received grants in February 2022 in connection with their employment arrangements with the
performance orientationCompany. In the case of
the program as they require a minimum 15% increase in the stock priceMessrs. Greenleaf and Anderson, these awards were cancelled prior to
vesting as a result of their respective departures from the
executive being able to shareCompany. Mr. Hickman and Mr. Simpson also received grants on April 18, 2022 and April 11, 2022, respectively, in
the stock price appreciation.connection with their respective appointments. The Compensation Committee considered various
multiple factors in determining the value of the individual equity grants,
including:including the 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 an option to purchase 13,710 shares of Company stock at a price of $71.67 per share, the closing price of the Company’s Common Stock on the grant date. This option became fully exercisable on May 10, 2019. Mr. Orton, Interim Chief Accounting Officer, received an option to purchase 23,313 shares of Company stock at a price of $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, 2018.
On February 18, 2019, in connection with her appointment as Chief Accounting Officer, Ms. Smith was granted options to purchase 4,600 shares of Common Stock at $73.09 per share, the closing price of the Company’s stock on 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
outlinessummarizes 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Named Executive
Officer | Grant Date | | Exercise Price of
Stock Options ($) | Stock Options
(# of underlying shares) | Restricted
Stock Units | Performance Restricted
Stock Units | Grant Date Fair Value ($)(1) | |
| | | | | | | | |
| L. Heath Sampson | 2/8/2022 | (2) | | 110.07 | 6,733 | | 2,200 | | 4,401 | | 1,142,947 | | |
| 11/21/2022 | (3) | | 85.99 | 1,579 | | 573 | | 1,147 | | 217,995 | | |
| Ilias Simpson | 4/11/2022 | (4) | | 109.70 | | 3,262 | | 1,139 | | 2,278 | | 599,621 | | |
| Jason Anderson | 2/8/2022 | (5) | | 110.07 | 3,474 | | 1,135 | | 2,271 | | 589,666 | | |
| 2/22/2022 | (6) | | 101.51 | 2,743 | | 903 | | 1,807 | | 453,717 | | |
| Daniel E. Greenleaf | 2/8/2022 | (7) | | 110.07 | 26,136 | | 9,170 | | 18,340 | | 4,762,378 | | |
| Brett Hickman | 4/18/2022 | (8) | | 114.24 | 5,013 | | 1,750 | | 3,501 | | 981,405 | | |
| Grover N. Wray | 2/8/2022 | (9) | | 110.07 | | 4,586 | | 1,499 | | 2,998 | | 778,500 | | |
1.This column shows the aggregate grant date fair value of the stock options, restricted stock units and performance restricted stock units calculated in accordance with FASB ASC Topic 718, based on the assumptions set forth in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022 (Note 15, Stock-Based Compensation and Similar Arrangements). The grant date fair value of the performance restricted stock units is calculated using a Monte-Carlo valuation model, as determined under FASB ASC 718 for awards with a market condition, based on the probable outcome of the performance condition as of the grant date, with inputs to the model of risk-free rate, closing stock price, and volatility.
2.The stock options and RSUs vest in approximately 1/3 increments on February 8, 2023, February 8, 2024 and February 8, 2025, and the PRSUs vest on February 8, 2025 subject to the satisfaction of the performance conditions, and in each case, subject to continued employment through such dates.
3.Granted in connection with Mr. Sampson’s appointment as Chief Executive Officer. The stock options and RSUs vest in approximately 1/3 increments on November 21, 2023, November 21, 2024 and November 21, 2025, and the PRSUs vest on November 21, 2025 subject to the satisfaction of the performance conditions, and in each case, subject to continued employment through such dates.
| (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.
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| Modivcare 2023 Proxy Statement | 41 |
| (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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| Executive Compensation | TABLE OF CONTENTS |
4.Granted in connection with Mr. Simpson’s appointment as President of ModivCare Mobility. The stock options and RSUs vest in approximately 1/3 increments on April 11, 2023, April 11, 2024, and April 11, 2025, and the PRSUs vest on April 11, 2025 subject to the satisfaction of the performance conditions, and, in each case subject to continued employment through such dates.
5.Granted in connection with Mr. Anderson’s appointment as President of ModivCare Home. Since Mr. Anderson’s employment terminated as of July 2022 prior to the initial vesting date of the stock options, RSUs and PRSUs, none of these equity grants will vest.
6.Since Mr. Anderson’s employment terminated as of July 2022 prior to the initial vesting date of the stock options, RSUs and PRSUs, none of these equity grants will vest.
7.Since Mr. Greenleaf’s employment terminated as of July 2022 prior to the initial vesting date of the stock options, RSUs and PRSUs, none of these equity grants will vest.
8.Granted in connection with Mr. Hickman’s appointment as Chief Commercial Officer. Since Mr. Hickman’s employment terminated as of March 2023, none of these equity grants will vest.
9.The option became exercisable with respect to 1,529 shares and the RSUs vested as to 500 shares on February 8, 2023. Since Mr. Wray’s employment terminated as of May 1, 2023, the remaining options, RSUs and PRSUs will not vest.
All NEOs are eligible to participate in our 401(k) Plan and to receive a companyCompany match, subject to plan requirements and contribution limits established byunder the Internal Revenue Service.Code of 1986, as amended (the “IRC”). NEOs are eligible to receive matching contributions under our 401(k) Plan equalup to 4% of the amount of the participant’s elective contributions.
Executive Non-Qualified Deferred Compensation Plan
Our NEOs are eligible to participate in our Executive Deferred Compensation Plan (the “Deferred Compensation Plan”), pursuant to which participants may elect to defer up to 10% of participant elective contributionstheir annual base salary and up to 100% of their annual cash bonus. Amounts deferred under the Deferred Compensation Plan, as adjusted for applicable earnings gains and losses and fees, are credited to an account in the participant’s name and remain fully vested at all times. Participants may allocate account balances to one or more notional investments, and the value of their Deferred Compensation Plan account balance may increase or decrease based on the performance of their selected investment options.
Under the Deferred Compensation Plan, participants may elect to receive distributions of their deferred amounts either upon separation from service or as of a maximum amountspecified in-service distribution date. Upon separation from service for any reason, the deferred amounts will be paid in a lump sum within eight months following the separation date. In addition, participants may elect to receive a hardship distribution of $400. Atdeferred amounts due to an eligible unforeseeable emergency.
During fiscal year 2022, none of our NEOs elected to participate in 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.Deferred Compensation Plan.
Other Benefits and Perquisites
During fiscal year
2019,2022, 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. More detail on these benefits and perquisites may be found in the “Summary Compensation Table.”
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| TABLE OF CONTENTS | Executive Compensation |
Other Compensation Policies
Stock Ownership Guidelines for NEOs
We believe that promoting stock ownership aligns the interests of our
continuing NEOs with those of our stockholders and provides strong motivation to build stockholder value. Under
theour stock ownership guidelines,
continuing NEOs are expected to own shares of our Common Stock with a value equal to the following multiple of their respective
base salaries:
Executive
|
| | | | |
| Executive | Stock Ownership Guideline as aMultiple of Salary |
CEO | 5x annual base salary |
| Other NEOs | 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 underlying any vested restricted shareRSUs or RSUs heldPRSUs received under our annual equity-based compensation program;
•shares underlying any unvested time-based restricted shareshares or RSUs heldreceived under our annual equity-based compensation program (calculated on an assumed net after-tax basis);
•shares underlying any unvested PRSUs received under our equity-based compensation program to the extent that any volume-weighted average price performance-based vesting thresholds have been met (calculated on an assumed net after-tax basis);
•shares underlying 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.
Continuing NEOs are required to hold all compensatory shares of our Common Stock until they have reached the required holding level 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 allSampson joined the Company in
20192021 and Mr.
DottsSimpson joined
the Company in
2018, none of them2022, neither met these guidelines at December 31,
2019.2022. The Company expects,
however, that these executives
towill meet the guidelines over the next
threetwo to
fivefour years.
Since Messrs. Anderson, Greenleaf, Hickman, and Wray are no longer employees of the Company, this requirement is no longer applicable to them.
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.
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
During fiscal year
2019,2022, we had
either employment agreements or
employment offer letters with each of our NEOs. The employment
agreementsletters with Messrs. Sampson, Hickman, Simpson, Anderson and Wray and the employment agreement with Mr. Greenleaf
Mr. Dotts, Ms. Stalmack and Ms. Smith providedprovide for a severance payment upon the termination of employment under
certainspecified circumstances,
and for a paymentincluding termination upon
or following 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.”
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.
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| Executive Compensation | TABLE OF CONTENTS |
Impact of Tax Treatment on Compensation
While the
The Compensation Committee endeavors to structure compensation so that we may take a tax deduction,
but 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. For taxable years beginning after
December 31, 2017,
(including the Company’s 2018 fiscal year), Internal Revenue Code (“IRC”) Section 162(m)
of the IRC generally disallows tax deductions for annual compensation in excess of
$1$1.0 million paid to
certain executive officers unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.our NEOs. 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,
our CEO’s employment
agreements with certain of our NEOs containagreement contains provisions reducing
in certain circumstances parachute payments to an amount that will not constitute an excess parachute
payment in certain circumstances.payment.
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.rules. 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’sModivCare’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
20192022 Annual Report through filing of this Proxy Statement.
Compensation Committee
Richard A. Kerley (Chairperson)
Todd J. Carter
Stacy Saal
The information contained above in this section titled “Compensation Committee Report” will not be considered “soliciting material” or to be “filed” with the SEC, nor will that information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing.
Compensation Committee
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| 44 | Modivcare 2023 Proxy Statement |
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Richard A. Kerley
(Chairperson)
TABLE OF CONTENTS | Todd J. Carter
| David A. Coulter
| Executive Compensation |
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,
2019, 20182022, 2021 and
20172020 to our NEOs, which group is
comprisedcomposed of (1) each person who served as our CEO during fiscal year
2019,2022, (2) each person who served as our CFO during fiscal year
2019, and2022, (3) each of our
twothree other most highly compensated executive officers
who were employed
by us on December 31,
2019:| 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 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Year | Salary
($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | | Total
($) | |
L. Heath Sampson(5) President, Chief Executive Officer, and Chief Financial Officer | 2022 | 602,481 | | 1,069,368 | | 291,573 | | 271,116 | | 32,247 | | | 2,266,785 | | |
| 2021 | 400,822 | | 356,306 | | 356,265 | | 360,740 | | 33,313 | | | 1,507,446 | | |
Ilias Simpson(6) President of Mobility | 2022 | 365,385 | | 474,621 | | 125,000 | | 319,231 | | 174,657 | | (7) | 1,458,894 | | |
Jason Anderson(8) Former President of Home | 2022 | 285,514 | | 826,662 | | 216,720 | | — | | 17,014 | | | 1,345,910 | | |
Daniel E. Greenleaf(9) Former President and Chief Executive Officer | 2022 | 592,500 | | 3,753,006 | | 1,009,372 | | — | | 18,455 | | | 5,373,333 | | |
| 2021 | 850,000 | | 849,956 | | 849,991 | | 1,062,500 | | 25,103 | | | 3,637,550 | | |
| 2020 | 850,000 | | 850,015 | | 849,630 | | 2,125,000 | | 16,494 | | | 4,691,139 | | |
Brett Hickman(10) Former Chief Commercial Officer | 2022 | 340,385 | | 781,436 | | 199,969 | | 204,231 | | 25,192 | | | 1,551,213 | | |
Grover N. Wray(11) Former Chief Human Resources Officer | 2022 | 440,000 | | 613,496 | | 165,004 | | 198,000 | | 130,360 | | (12) | 1,546,860 | | |
| 2021 | 345,019 | | 70,514 | | 70,515 | | 70,521 | | 4,470 | | | 561,039 | | |
1.The compensation included in this column represents the aggregate grant date fair value of the equity awards granted during the year indicated, calculated in accordance with FASB ASC Topic 718, based on the assumptions set forth in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022 (Note15, Stock-Based Compensation and Similar Arrangements). Stock awards are a combination of time-based restricted stock units and restricted shares, as well as performance stock units. The grant date fair value of the performance restricted stock units is calculated using a Monte-Carlo valuation model, as determined under FASB ASC 718 for awards with a market condition, based on the probable outcome of the performance condition as of the grant date, with inputs to the model of risk-free rate, closing stock price and volatility. The amounts do not necessarily reflect the actual value received by the executive, which may be more or less than the amount shown or zero. Assuming the maximum level of performance were achieved, the grant date fair value of the performance restricted stock units granted during fiscal year 2022 to each NEO would equal the following:
(1)
| 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.”
| | | | |
| Name | Value of PRSUs Assuming Maximum Performance ($) |
| L. Heath Sampson | 1,555,585 | |
| Ilias Simpson | 699,346 | |
| Jason Anderson | 1,220,138 | |
| Daniel E. Greenleaf | 5,487,328 | |
| Brett Hickman | 1,163,032 | |
| Grover N. Wray | 897,002 | |
(2)
| Includes discretionary bonus, sign on bonus or retention bonus.
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| Modivcare 2023 Proxy Statement | 45 |
(3)
| The compensation included in this column represents the aggregate grant date fair value of the equity awards granted during the year indicated. For additional information on the valuation assumptions with respect to the expense, 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 the amount shown or zero
|
(4)
| This column shows the aggregate grant date fair value of the stock option awards granted. The grant date fair values have been determined based on the assumptions set forth in our Annual Report on Form 10-K for the year ended December 31, 2019 (Note 14, Stock-Based Compensation and Similar Arrangements), calculated in accordance with FASB ASC Topic 718.
|
(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 fiscal year 2019, the amounts in this column include the following:
|
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| Executive Compensation | TABLE OF CONTENTS |
2.This column shows the aggregate grant date fair value of the stock option awards granted. The grant date fair values have been calculated in accordance with FASB ASC Topic 718, based on the assumptions set forth in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022 (Note 15, Stock-Based Compensation and Similar Arrangements).
3.Includes annual incentive bonuses earned for the year indicated, but paid in March of the following year. With respect to Mr. Simpson, this includes a one-time performance bonus of $100,000, as provided in his offer letter.
4.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 fiscal year 2022, the amounts in this column include, among other things, the following:
| | | | | | | | |
| | |
| Name | Health, Dental, Life and
Disability Insurance Premiums | Matching Contributions under
Retirement Savings Plans |
| | |
| L. Heath Sampson | 20,047 | | 12,200 | |
| Ilias Simpson | 5,456 | | 12,200 | |
| Jason Anderson | 6,578 | | 10,436 | |
| Daniel E. Greenleaf | 6,255 | | 12,200 | |
| Brett Hickman | 12,992 | | 12,200 | |
| Grover N. Wray | 11,845 | | 12,200 | |
5.Mr. Sampson has served as President and Chief Executive Officer since July 27, 2022 and as Chief Financial Officer since February 26, 2021.
6.Mr. Simpson has served as President of ModivCare Mobility since April 12, 2022.
7.In addition to certain group life, health, medical and other non-cash benefits generally available to all salaried employees disclosed above under footnote 4, the total for Mr. Simpson in this column also includes relocation expenses of $157,001 and a one-time performance bonus of $100,000 for 2022.
8.Mr. Anderson served as President of ModivCare Home between January 10, 2022 until July 1, 2022, and as Chief Executive Officer of the Company’s VRI subsidiary, which comprises its remote patient monitoring business, since its acquisition in September 2021 until January 10, 2022.
9.Mr. Greenleaf’s employment was terminated on July 27, 2022.
10.Mr. Hickman served as the Chief Commercial Officer from April 19, 2022 until March 31, 2023.
11.Mr. Wray served as Chief Human Resources Officer from October 25, 2021 until February 17, 2023, although his employment with the Company continued in a transitional role until May 1, 2023. Amount listed in the “Salary” column includes payments made during 2021 to Mr. Wray’s consulting company, Animus Advisors LLC, for outsourced human resources services provided by his consulting company.
12.In addition to certain group life, health, medical and other non-cash benefits generally available to all salaried employees disclosed above under footnote 4, the total for Mr. Wray in this column also includes relocation expenses of $106,315.
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 $71.67 (the closing price of the Company’s common stock as of the grant date). In 2018, Mr. Pate volunteered to forego 98,500 of the options in order to fund other incentive awards to key employees in amounts and values determined by the Compensation Committee.
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| TABLE OF CONTENTS | Executive Compensation |
Grants of Plan Based Awards Table
The following Grants of Plan Based Awards Table* provides additional information about stock and option awards and non-equity incentive plan awards granted to the NEOs during the fiscal year ended December 31,
2019.2022. The compensation plans under which the grants in the following table were made are described under
“2019“2022 Executive Compensation Program Decisions—
2019 Cash Bonus Awards”Annual Incentive Program” and
“2019“2022 Executive Compensation Program Decisions—Long-Term Incentives” in the “Compensation Discussion and Analysis” section.
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | | | | | | | |
Name | Grant Date | Threshold ($) | 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
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Possible Payouts Under Equity Incentive Plan Awards | 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
($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | |
| | | | | | | | | | |
| | | | | | | | | | |
| Name | Award | Grant Date | Threshold
($) | Target
($) | Maximum
($) | | Threshold (#)(2) | Target (#)(3) | Maximum (#)(4) | |
| | | | | | | | | | | | | | |
| L. Heath Sampson | STI | N/A | 375,000 | | 750,000 | | 1,500,000 | | | — | | — | | — | | — | | — | | — | | — | | |
| RSU | 2/8/2022 | — | | — | | — | | | — | | — | | — | | 2,200 | | — | | — | | 242,155 | | |
| Option | 2/8/2022 | — | | — | | — | | | — | | — | | — | | — | | 6,733 | | 110.07 | | 242,253 | | |
| PRSU | 2/8/2022 | — | | — | | — | | | 2,201 | | 4,401 | | 8,802 | | — | | — | | — | | 658,539 | | |
| RSU | 11/21/2022 | — | | — | | — | | | — | | — | | — | | 573 | | — | | — | | 49,272 | | |
| Option | 11/21/2022 | — | | — | | — | | | — | | — | | — | | — | | 1,579 | | 85.99 | | 49,320 | | |
| PRSU | 11/21/2022 | — | | — | | — | | | 574 | | 1,147 | | 2,294 | | — | | — | | — | | 119,403 | | |
| Ilias Simpson | STI | N/A | 250,000 | | 500,000 | | 1,000,000 | | | — | | — | | — | | — | | — | | — | | — | | |
| RSU | 4/11/2022 | — | | — | | — | | | — | | — | | — | | 1,139 | | — | | — | | 124,948 | | |
| Option | 4/11/2022 | — | | — | | — | | | — | | — | | — | | — | | 3,262 | | 109.70 | | 125,000 | | |
| PRSU | 4/11/2022 | — | | — | | — | | | 1,139 | | 2,278 | | 4,556 | | — | | — | | — | | 349,673 | | |
| Jason Anderson | STI | N/A | 318,750 | | 637,500 | | 1,275,000 | | | — | | — | | — | | — | | — | | — | | — | | |
| RSU | 2/8/2022 | — | | — | | — | | | — | | — | | — | | 1,135 | | — | | — | | 124,929 | | |
| Option | 2/8/2022 | — | | — | | — | | | — | | — | | — | | — | | 3,474 | | 110.07 | | 124,995 | | |
| PRSU | 2/8/2022 | — | | — | | — | | | 1,136 | | 2,271 | | 4,542 | | — | | — | | — | | 339,742 | | |
| RSU | 2/22/2022 | — | | — | | — | | | — | | — | | — | | 903 | | — | | — | | 91,664 | | |
| Option | 2/22/2022 | — | | — | | — | | | — | | — | | — | | — | | 2,743 | | 101.51 | | 91,726 | | |
| PRSU | 2/22/2022 | — | | — | | — | | | 904 | | 1,807 | | 3,614 | | — | | — | | — | | 270,327 | | |
| Daniel E. Greenleaf | STI | N/A | 625,000 | | 1,250,000 | | 2,500,000 | | | — | | — | | — | | — | | — | | — | | — | | |
| RSU | 2/8/2022 | — | | — | | — | | | — | | — | | — | | 9,170 | | — | | — | | 1,009,342 | | |
| Option | 2/8/2022 | — | | — | | — | | | — | | — | | — | | — | | 26,136 | | 110.07 | | 1,009,372 | | |
| PRSU | 2/8/2022 | — | | — | | — | | | 9,170 | | 18,340 | | 36,680 | | — | | — | | — | | 2,743,664 | | |
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| Brett Hickman | STI | N/A | 250,000 | | 500,000 | | 1,000,000 | | | — | | — | | — | | — | | — | | — | | — | | |
| RSU | 4/18/2022 | — | | — | | — | | | — | | — | | — | | 1,750 | | — | | — | | 199,920 | | |
| Option | 4/18/2022 | — | | — | | — | | | — | | — | | — | | — | | 5,013 | | 114.24 | | 199,969 | | |
| PRSU | 4/18/2022 | — | | — | | — | | | 1,751 | | 3,501 | | 7,002 | | — | | — | | — | | 581,516 | | |
| Grover N. Wray | STI | N/A | 165,000 | | 330,000 | | 660,000 | | | — | | — | | — | | — | | — | | — | | — | | |
| RSU | 2/8/2022 | — | | — | | — | | | — | | — | | — | | 1,499 | | — | | — | | 164,995 | | |
| Option | 2/8/2022 | — | | — | | — | | | — | | — | | — | | — | | 4,586 | | 110.07 | | 165,004 | | |
| PRSU | 2/8/2022 | — | | — | | — | | | 1,499 | | 2,998 | | 5,996 | | — | | — | | — | | 448,501 | | |
1.Amounts represent the threshold, target and to the extent applicable, maximum, under the STI for fiscal year 2022 or similar provisions of the NEOs’ employment agreements or offer letters.
2.Amounts represent the number of shares of common stock to be received upon the threshold payout of 50% of target on the performance restricted stock units granted.
3.Amounts represent the number of shares of common stock to be received upon the target payout of 100% of target on the performance restricted stock units granted.
4.Amounts represent the number of shares of common stock to be received upon the maximum payout of 200% of target on the performance restricted stock units granted.
5.The amounts included in this column represent the grant date fair value of each equity award granted during the year indicated, calculated in accordance with FASB ASC Topic 718, based on the assumptions set forth in our 2022 Annual Report on Form 10-K for the year ended December 31, 2022 (Note15, Stock-Based Compensation and Similar Arrangements). The grant date fair value of the performance restricted stock units is calculated using a Monte-Carlo valuation model, as determined under FASB ASC 718 for awards with a market condition, based on the probable outcome of the performance condition as of the grant date, with inputs to the model of risk-free rate, closing stock price, and volatility. The amounts do not apply havenecessarily reflect the actual value that has been, deleted.(1)
| Amounts represent the threshold, target and to the extent applicable, maximum, under the short-term incentive plan or the AIP for fiscal year 2019 or similar provisions of the NEOs’ employment agreements or offer letters. The actual amounts earnedor will be, received by the NEOs in fiscal year 2019 under the AIP or short-term incentive plan are set forth under the Non-Equity Incentive Plan Compensation column of the “Summary Compensation Table.”
|
(2)
| The amounts shown in this column, include the grant date fair value of option awards granted in 2019 determined based on the assumptions set forth in our 2019 Annual Report on Form 10-K for the year ended December 31, 2019 (Note 14, Stock-Based Compensation and Similar Arrangements)
|
Employment Agreements and Offer Letters with the Named Executive Officers
executive, which may be more or less than the amount shown or zero.
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
L. Heath Sampson
On July 27, 2022, L. Heath Sampson was appointed to serve as our Interim Chief Executive Officer, and on November 1, 2022, he was confirmed as our President and Chief Executive Officer. Mr. Sampson will continue to serve as our Chief Financial Officer until a result of their participation in the Retention Plan, neithersuccessor is identified. In connection with Mr. Severance norSampson’s prior appointment as Chief Financial Officer, effective February 26, 2021, we entered into an employment letter with 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 underSampson. Under the terms of anyMr. Sampson’s employment letter dated February 24, 2021, he had an initial base salary of $475,000 and was eligible to receive a pro-rata portion of a short-term incentive bonus for 2021 at a target of 90% of his base salary based on performance targets set by the Compensation Committee of the Board of Directors. Mr. Sampson was granted a long-term incentive equity grant on February 26, 2021 with a target grant date value equal to 150% of his base salary, composed of 50% restricted stock units and 50% stock options. In connection with his appointment as President and Chief Executive Officer, on November 21, 2022, the Compensation Committee approved an increase in Mr. Sampson’s base salary to $750,000, with retroactive effect from July 27, 2022, and his short-term incentive and long-term incentive plan targets for fiscal year 2022 remained at the 100% and 190% levels, respectively, previously set by the Compensation Committee in February 2022.
While employed, Mr. Sampson is entitled to participate in all employee fringe benefits generally available to the Company’s senior executives. In the event Mr. Sampson’s employment is terminated without cause, Mr. Sampson will be entitled to twelve (12) months of severance pay, at his base compensation in effect at that time. The severance benefits will be contingent upon Mr. Sampson’s execution of a release of claims in favor of the Company. Additional information with respect to the severance payments to which Mr. Sampson is entitled is set forth below under the caption “—Potential Payments Upon Termination or Change in Control.”
Mr. Sampson also entered into a restrictive covenants agreement
(see “Change in Control, Severance Arrangementsthat contains one-year post-employment non-competition and
Severance Payments”).Daniel E. Greenleaf
non-solicitation covenants, as well as non-disclosure and non-disparagement covenants.
Ilias Simpson
Effective DecemberApril 11, 2019, Daniel Greenleaf2022, Ilias Simpson was appointed to serve as President of ModivCare Mobility. Under the terms of Mr. Simpson’s employment letter dated March 25, 2022, he had an initial base salary of $500,000 and CEOwas eligible to receive a short-term
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| TABLE OF CONTENTS | Executive Compensation |
incentive bonus for 2022 at an initial target of 80% of his base-salary, based on performance targets set by the Compensation Committee of the Board of Directors. Mr. Simpson was also eligible for an initial performance bonus of $100,000, based on the achievement of certain performance goals set by our Chief Executive Officer in collaboration with Mr. Simpson, payable either in cash or equity, at the option of Mr. Simpson. In addition, Mr. Simpson was granted a long-term incentive equity grant on April 11, 2022 with a target grant date value equal to 100% of his base salary, comprised of 50% PRSUs, 25% RSUs and 25% stock options. Pursuant to the terms of his employment letter, Mr. Simpson was also reimbursed $157,001 in expenses for relocating to the Denver area.
While employed, Mr. Simpson is entitled to participate in all employee fringe benefits generally available to the Company’s senior executives. In the event Mr. Simpson’s employment is terminated without cause, Mr. Simpson will be entitled to twelve (12) months of severance pay, at his base compensation in effect at that time. The severance benefits will be contingent upon Mr. Simpson’s execution of a release of claims in favor of the Company. The Company, LogistiCare andAdditional information with respect to the severance payments to which Mr. GreenleafSimpson is entitled is set forth below under the caption “—Potential Payments Upon Termination or Change in Control.”
Mr. Simpson also entered into a restrictive covenants agreement that contains one-year post-employment non-competition and non-solicitation covenants, as well as non-disclosure and non-disparagement covenants.
Jason Anderson
Mr. Anderson’s employment letter, dated February 23, 2022, terminated as of July 1, 2022 when Mr. Anderson’s employment with the Company ended. Pursuant to Mr. Anderson’s employment letter, which was entered into in connection with his promotion to President of ModivCare Home, with retroactive effect to January 1, 2022, Mr. Anderson had a base salary of $510,000 and was eligible to receive a short-term incentive bonus for 2022 at a target of 125% of his base salary. In addition, Mr. Anderson was granted long-term incentive equity grants on February 8, 2022 and February 22, 2022 with an aggregated target grant date value equal to 170% of his base salary, comprised of PRSUs, RSUs and stock options, none of which vested prior to the termination of his employment.
While employed, Mr. Anderson was entitled to participate in all employee fringe benefits generally available to the Company’s senior executives, including the Company’s severance policy, which would have provided severance benefits to Mr. Anderson had his employment been terminated by the Company under certain circumstances. As detailed under the caption “—Potential Payments Upon Termination or Change in Control,” Mr. Anderson did not receive any severance benefits upon his termination.
Mr. Anderson also entered into a restrictive covenants agreement that contains one-year post-employment non-competition and non-solicitation covenants, as well as non-disclosure and non-disparagement covenants.
Daniel E. Greenleaf
Daniel Greenleaf’s employment agreement (the “Greenleaf Employment Agreement”), dated November 29, 2019,
terminated in
connection withJuly 2022 when Mr. Greenleaf’s
appointment. The Greenleaf Employment Agreement provides for a term commencing as of December 11, 2019 and continuing until his employment
is terminated in accordance with the
terms of the Greenleaf Employment Agreement (the “Term”).Company ended.
Under the terms of the Greenleaf Employment Agreement, Mr. Greenleaf’s annual base salary iswas $850,000. Mr. Greenleaf iswas 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 iswas subject to a maximum performance of up to 250% of his base salary. Mr. Greenleaf was also eligible to receive annual equity grants with a grant date value of at least 200% of his base salary, under the terms and conditions approved by the Compensation Committee.
In addition, on December 11, 2019,
pursuant to the Greenleaf Employment Agreement, 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 Optionspremium priced options to purchase shares of Company common stock with an exercise price of $68.14. The RSUs and the options
were scheduled to 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 continued employment through the applicable anniversary date and expire on December 11, 2026.
Due to Mr. Greenleaf’s departure, only the first two installments of the RSUs and options vested.
While employed, Mr. Greenleaf
iswas entitled to participate in all employee fringe benefits generally available to the Company’s senior
executives. Mr. Greenleaf isexecutives, and was also eligible to receive severance benefits in the event his employment
iswas terminated by the Company
without cause or by him for good reason. Details with respect to the severance and change in control provisions under
the Greenleaf Employment Agreement are set forth below under “Potential Payments Upon Termination or Change in Control.”certain circumstances. The Greenleaf Employment Agreement includesincluded restrictive covenants providing for Mr. Greenleaf’s non-competition, non-solicitation, non-piracy, non-disclosure and non-disparagement. The term of the non-competition, non-solicitation and non-piracy covenants is the period that includes the term of Mr. Greenleaf’s employment and two years thereafter.
Kevin M. Dotts
Effective August 27, 2018, Kevin Dotts, was appointed to serveafter the date of termination.
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| Executive Compensation | TABLE OF CONTENTS |
Brett Hickman
Mr. Hickman’s employment letter, dated March 22, 2022, terminated as
Chief Financial Officer of
March 31, 2023 when Mr. Hickman’s employment with the Company
and LogistiCare. The Company, LogistiCare andended. Pursuant to Mr.
Dotts entered intoHickman’s employment letter, he had an
employment agreement (the “Dotts Employment Agreement”), dated August 18, 2018, in connection with Mr. Dotts’s appointment. The Dotts Employment Agreement provides for a term commencing as of August 27, 2018 and ending on December 31, 2020 (the “Term”).Under the terms of the Dotts Employment Agreement, Mr. Dotts’s annualinitial base salary of $500,000 and was $400,000, which was increasedeligible to $450,000 effective March 1, 2019. Mr. Dotts is eligiblereceive a short-term incentive bonus for an annual bonus equal to 75%2022 at a target of 100% of his base salary, based upon achievement of 100% of theon performance targets establishedset by the Compensation Committee.Committee of the Board of Directors. In addition, Mr. Dotts is eligible to participate in the Company’s 2006 Plan, under the terms approved by the Compensation Committee.
In addition, Mr. DottsHickman was granted an option to purchase 24,685 shares of Company common stock,a long-term incentive equity grant on April 18, 2022 with the exercise price of each optiona target grant date value equal to the closing price160% of a sharehis base salary, comprised of the Company’s common50% PRSUs, 25% RSUs and 25% 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.
options.
While employed, Mr.
Dotts isHickman was entitled to participate in all employee fringe benefits generally available to the Company’s senior executives. Mr.
Dotts isHickman was also eligible to receive severance benefits in the event his employment
iswas terminated by the Company
without cause or by him for good reason.under certain circumstances. Details with respect to the severance
and change in control provisions underpayments Mr. Hickman received as a result of the
Dotts Employment Agreementtermination of his employment are set forth below under
“Potentialthe caption “—Potential Payments Upon Termination or Change in Control.”
The Dotts Employment Agreement includes
Mr. Hickman also entered into a restrictive covenants providing for Mr. Dotts’sagreement that contains one-year post-employment non-competition and non-solicitation non-piracy,covenants, as well as non-disclosure and non-disparagement. The termnon-disparagement covenants.
Grover N. Wray
Grover Wray’s employment letter, dated October 14, 2021, terminated as of February 17, 2023, when Mr. Wray’s employment as Chief Human Resources Officer ended, although his employment with the Company continued in a transitional role until May 1, 2023. Under his employment letter, he had an initial base salary of $440,000 and was eligible to receive a pro-rata portion of a short-term incentive bonus for 2021 at a target of 75% of his base-salary, based on performance targets set by the Compensation Committee of the
non-solicitationBoard of Directors. In addition, Mr. Wray was granted a long-term incentive equity grant on October 27, 2021 with a target grant date value equal to $141,029, comprised of 50% restricted stock units and
non-piracy covenants is 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 the termination of his employment.Kathryn Stalmack
Effective August 19, 2019, Kathryn Stalmack, was appointed50% stock options. Pursuant to serve as Senior Vice President. General Counsel & Corporate Secretary of the Company. The Company, LogistiCare and Ms. Stalmack entered into an employment agreement (the “Stalmack Employment Agreement”), dated August 8, 2019, in connection with Ms. Stalmack’s appointment. The Stalmack Employment Agreement provides for a term commencing as of August 19, 2019 and ending on December 31, 2021 (the “Term”).
Under the terms of his employment letter, Mr. Wray was also reimbursed $106,315 in expenses for relocating to the Stalmack Employment Agreement, Ms. Stalmack’s annual base salary was $375,000. Beginning in 2020, Ms. Stalmack is eligible for an annual bonus equal to 75% of her base salary, based upon achievement of 100% of the performance targets established by the Compensation Committee. Ms. Stalmack’s annual bonus is subject to a maximum performance of up to 150% of her base salary. Ms. Stalmack is eligible to participate in the 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.
Denver area.
While employed,
Ms. Stalmack isMr. Wray was entitled to participate in all employee fringe benefits generally available to the Company’s senior executives.
Ms. Stalmack isMr. Wray was also eligible to receive severance benefits in the event
herhis employment
iswas terminated by the Company
without cause or by her for good reason.under certain circumstances. Details with respect to the severance
and change in control provisions underpayments Mr. Wray received as a result of the
Stalmack Employment Agreementtermination of his employment are set forth below under
“Potentialthe caption “—Potential Payments Upon Termination or Change in Control.”
The Stalmack Employment Agreement includes
Mr. Wray also entered into a restrictive covenants
providing for Ms. Stalmack’s non-competition, non-solicitation, non-piracy, non-disclosure and non-disparagement. The term of the non-solicitation and non-piracy covenants is the periodagreement 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 the termination of her employment.Suzanne 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 employment agreement (the “Pate Employment Agreement”). The Pate 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 services as Interim CEO.
Under the terms of the Pate Employment Agreement, Mr. Pate’s annual base salary was $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 employment 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. 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.
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 the mentorship 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 remain exercisable until April 8, 2021.
The Pate Option Agreement also includes restrictive covenants in favor of the Company, including acontains one-year post-employment 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 of $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’s stock on the grant date. See our current report on Form 8-K filed with the SEC on February 11, 2019.
William Severance
The Company entered into an offer letter with Mr. Severance on November 23, 2015 (the “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. Effective January 10, 2018, the Company and Mr. Severance entered into a new offer letter (the “Amended Severance Offer 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 was $300,000. The 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 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 financial goalscovenants, as well as certain personal performance targets, in each case consistent with other senior executives of the Companynon-disclosure and to be determined by the Board. 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 Stock on the date of the grant. As long as Mr. Severance remained employed by the Company, he would 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 $290,000. In addition to his annual base salary, Mr. Orton was entitled to payment of a short-term incentive bonus in an amount targeted to equal 50% of his annual base salary upon the achievement of certain goals determined by the Board or Compensation Committee. Mr. Orton was also eligible to participate in the Company’s 2006 Plan, under the terms approved by the Compensation Committee, and the Company’s fringe benefit programs as may be in effect from time to time.
In addition, Mr. Orton is covered by the Retention Plan, which became effective on April 9, 2018 (see “Change in Control, Severance Arrangements and Severance Payments - Employee Retention Plan”), pursuant to which he was paid.
non-disparagement covenants.
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| TABLE OF CONTENTS | Executive Compensation |
Outstanding Equity Awards at December
OUTSTANDING EQUITY AWARDS AT DECEMBER 31,
20192022
The following table reflects the equity awards granted by us to the NEOs outstanding at December 31,
2019: | | Option Awards | | Stock Awards |
Name and Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | | Number of Securities Underlying Unexercised Options (#) Unexercisable (2) | | Option Exercise Price ($) | | 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 | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| 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 (#)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that have not Vested ($)(6) | |
| | | | | | | | | | |
| L. Heath Sampson | | | | | | | | | | |
| 2/26/2021 | 3,123 | | 6,245 | | 128.26 | | 2/26/2026 | | 1,852 | | 166,180 | | — | | — | | |
| 2/8/2022 | — | | 6,733 | | 110.07 | | 2/8/2027 | | 2,200 | | 197,406 | | 2,201 | | 197,451 | | |
| 11/21/2022 | — | | 1,579 | | 85.99 | | 11/21/2027 | | 573 | | 51,415 | | 574 | | 51,460 | | |
| Ilias Simpson | | | | | | | | | | |
| 4/11/2022 | — | | 3,262 | | 109.70 | | 4/11/2027 | | 1,139 | | 102,202 | | 1,139 | | 102,202 | | |
| Brett Hickman | | | | | | | | | | |
| 4/18/2022 | — | | 5,013 | | 114.24 | | 4/18/2027 | | 1,750 | | 157,028 | | 1,751 | | 157,072 | | |
| Grover N. Wray | | | | | | | | | | |
| 10/27/2021 | 468 | | 935 | | 160.26 | | 10/27/2026 | | 293 | | 26,291 | | — | | — | | |
| 2/8/2022 | — | | 4,586 | | 110.07 | | 2/8/2027 | | 1,499 | | 134,505 | | 1,499 | | 134,505 | | |
1.The options listed in this table have an exercise price equal to the closing market price of our Common Stock on the grant date.
2.The options granted to each of Messrs. Sampson, Hickman, Simpson and Wray during fiscal periods 2021 and 2022, as applicable, vest in three approximately equal installments on each of the first, second, and third anniversary of the grant date, in each case, subject to the executive’s continued employment. Due to the termination of Mr. Hickman’s employment as of March 31, 2023 and Mr. Wray’s employment as of May 1, 2023, unvested options as of those respective dates were forfeited and will not vest.
3.The RSUs granted to each of Messrs. Sampson, Hickman, Simpson and Wray during fiscal periods 2021 and 2022, as applicable, vest in three approximately equal installments on each of the first, second, and third anniversary of the grant date, in each case, subject to the executive’s continued employment. Due to the termination of Mr. Hickman’s employment as of March 31, 2023 and Mr. Wray’s employment as of May 1, 2023, unvested RSUs as of those respective dates were forfeited and will not vest.
4.The market value of the unvested restricted share awards was calculated using a value of $89.73 per share of Common Stock, which was the closing market price of our Common Stock on December 30, 2022.
5.Amounts represent the threshold payout of 50% of target on the performance restricted stock units granted. The PRSUs granted to each of Messrs. Sampson, Hickman, Simpson and Wray during fiscal period 2022 vest on the third anniversary of the grant date, subject to the executive’s continued employment. Due to the termination of Mr. Hickman and Mr. Wray’s employment in 2023, unvested PRSUs were forfeited and will not vest.
6.The market value of the unvested PRSUs is based on the threshold payout of 50% and was calculated using a value of $89.73 per share of Common Stock, which was the closing market price of our Common Stock on December 30, 2022.
(1)
| The options have an exercise price equal to the closing market price of our Common Stock on the grant date.
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| Modivcare 2023 Proxy Statement | 51 |
(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.
|
(3)
| Represents restricted share awards or RSUs. The RSUs granted to Mr. Greenleaf on December 11, 2019 vest 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.
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| Executive Compensation | TABLE OF CONTENTS |
(4)
| The market value of the unvested restricted share awards was calculated using a value of $59.18 per share of Common Stock, which was the closing market price of our Common Stock on December 31, 2019.
|
Option Exercises and Stock Vested Table
The following table provides additional information about the value realized by the NEOs on option award exercises and stock award vesting during the year ended December 31,
2019. | | Option Awards | | Stock Awards |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) |
Daniel E. Greenleaf | | — | | | — | | | — | | | — | |
Kevin M. Dotts | | — | | | — | | | — | | | — | |
Kathryn Stalmack | | — | | | — | | | — | | | — | |
Suzanne G. Smith | | — | | | — | | | — | | | — | |
R. Carter Pate | | — | | | — | | | 23,317 | | | 1,375,237 | |
William Severance | | 2,115 | | | 37,139 | | | 3,730 | | | 238,069 | |
Laurence Orton | | 24,520 | | | 324,677 | | | 1,422 | | | 90,432 | |
2022.
| | | | | | | | | | | | | | | | | |
| Option Awards | | Stock Awards |
| Name | Number of Shares
Acquired on Exercise
(#) | Value Realized on Exercise ($)(1) | | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) |
| L. Heath Sampson | — | | — | | | 926 | | 105,573 | |
| Ilias Simpson | — | | — | | | — | | — | |
| Jason Anderson | — | | — | | | — | | — | |
| Daniel E. Greenleaf | 83,842 | | 877,943 | | | 5,677 | | 621,472 | |
| Brett Hickman | — | | — | | | — | | — | |
| Grover N. Wray | — | | — | | | 147 | | 14,015 | |
1.Value realized upon exercise is determined by calculating the difference between the market price of the shares underlying the options, as reported by Nasdaq on the date of exercise, and the exercise price of the options.
2.The amounts in this column reflect the full number of shares that vested and does not take into account shares withheld to satisfy tax obligations upon vesting.
3.Value realized on vesting is determined by multiplying the number of shares underlying the stock award by the closing stock price on the date of vesting, as reported by Nasdaq.
Non-qualified Deferred Compensation
None
As discussed above, although all of our NEOs are eligible to participate in our Deferred Compensation Plan, 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
2019.2022.
Equity Compensation Plan Information
The following table provides information, as of December 31, 2022, regarding shares of our common stock that may be issued under our 2006 Plan, which was approved by stockholders, and plans not approved by stockholders (if any). Under the 2006 Plan, no option or stock appreciation rights may be repriced, replaced, regranted through cancellation, repurchased for cash or other consideration, or modified without stockholder approval (except in connection with a change in our capitalization) if the effect would be to reduce the exercise price for the shares underlying the award.
| | | | | | | | | | | | | | | | | |
| | | | | |
| Plan category | 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 | 250,077 | | | 115.33 | | | 1,177,991 | |
| Equity compensation plans not approved by security holders | — | | | — | | | — | |
| Total | 250,077 | | | 115.33 | | | 1,177,991 | |
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, 2022 under the 2006 Plan.
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Pay Versus Performance
The following disclosure illustrates the relationship between the compensation actually paid to our executive officers and the performance of the Company. The table below presents information for each of the last three fiscal years regarding (i) the total compensation for our principal executive officers serving in that capacity during the applicable fiscal year (each, a “PEO”) and the average total compensation of our other NEOs (excluding the PEO(s)) who were serving in that capacity during the applicable fiscal year as disclosed in the Summary Compensation Table (“SCT”), (ii) total compensation actually paid (“CAP”) to each PEO and the CAP to the other NEOs on average, (iii) total shareholder return (“TSR”) for the Company and its peer group, (iv) the Company’s net income (loss), and (v) the Company’s Compensation Adjusted EBITDA, which is the most important financial measure used by the Company in determining executive compensation.
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| Year | SCT Total | | CAP(2) | Average SCT Total for non PEO NEOs ($) | Average CAP(2) to non PEO NEOs ($) | Value of Initial Fixed $100 Investment Based On: | Net Income (Loss)
($) | Adjusted EBITDA
($) | Comp. Adjusted EBITDA ($)(3) |
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| | | | | | |
First PEO ($)(1) | Second PEO ($)(1) | | First PEO ($)(1) | Second PEO ($)(1) | TSR | Peer Group TSR (Russell Index) |
| | | | | | | | | | | | |
2022(4) | 5,373,333 | | 2,266,785 | | | (9,416,369) | | 1,256,475 | | 1,475,719 | | 955,828 | | 151.62 | 105.56 | (31,806,000) | | 221,902,000 | | 192,969,000 | |
2021(5) | 3,637,550 | | N/A | | 4,708,503 | | N/A | 1,092,956 | | 802,089 | | 250.57 | 134.57 | (6,585,000) | | 205,008,000 | | 205,008,000 | |
2020(6) | 4,691,139 | | N/A | | 16,436,594 | | N/A | 925,246 | | 2,192,785 | | 234.25 | 118.36 | 88,836,000 | | 189,190,000 | | 189,190,000 | |
1.For fiscal year 2022, Daniel Greenleaf served as our CEO until his employment ended in July 2022. From July 27, 2022, L. Heath Sampson, our CFO, served as our CEO for the remainder of the fiscal year. Mr. Greenleaf is identified in the table as the “First PEO” and Mr. Sampson is identified as the “Second PEO.” Amounts earned by Mr. Sampson in fiscal year 2021 in his role as CFO are included in the NEO averages for 2021.
2.To calculate compensation actually paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for each of the PEOs and for the average of the non-PEO NEOs is set forth following the footnotes to this table.
3.Compensation Adjusted EBITDA is the metric used by the Compensation Committee to determine the STI payouts and is calculated by reducing the Company’s publicly disclosed Adjusted EBITDA by the amount by which the operating expenses identified in such reconciliation exceeded the Company’s Board approved 2022 operating budget. For 2021 and 2020, it was determined that no adjustments were required and the Compensation Committee determined the STI payouts for these years using the Adjusted EBITDA value. Compensation Adjusted EBITDA is a financial measure that is not presented in accordance with GAAP. A reconciliation of Compensation Adjusted EBITDA, is provided in Appendix A to this Proxy Statement.
4.For fiscal year 2022, our named executive officers, excluding the PEOs, included (i) Ilias Simpson, our President of ModivCare Mobility, (ii) Jason Anderson, our former President of ModivCare Home (iii) Brett Hickman, our former Chief Commercial Officer, and (iv) Grover N. Wray, our former Chief Human Resources Officer.
5.For fiscal year 2021, our named executive officers, excluding the PEO, included (i) L. Heath Sampson, who served as our Chief Financial Officer, (ii) Walt Meffert, who served as our Chief Information Officer, (iii) Grover N. Wray, who served as our Chief Human Resources Officer, (iv) Kevin M. Dotts, our former Chief Financial Officer, and (v) Kenneth W. Wilson, our former Chief Operating Officer.
6.For fiscal year 2020, our named executive officers, excluding the PEO, included (i) John McMahon, who served as our Chief Accounting Officer, (ii) Kathryn Stalmack, who served as our Senior Vice President, General Counsel and Corporate Secretary, (iii) Kenneth W. Wilson, who served as our Chief Operating Officer, (iv) Kevin M. Dotts, who served as our Chief Financial Officer, and (v) Suzanne G. Smith, our former Chief Accounting Officer.
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Reconciliation of Compensation Actually Paid Adjustments
The following reflects adjustments made to total compensation in the Summary Compensation Table (“SCT”), reported in columns (b) and (d) in the table above, to calculate CAP, reported in columns (c) and (e) in the table above, for each fiscal year:
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| First PEO(1) | | Second PEO(1) | | Average non-PEO NEOs(2) | |
| 2020
($) | 2021
($) | 2022
($) | | 2022
($) | | 2020
($) | 2021
($) | 2022
($) | |
| Summary Compensation Total | 4,691,139 | | 3,637,550 | | 5,373,333 | | | 2,266,785 | | | 925,246 | | 1,092,956 | | 1,475,719 | | |
(-) Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year(3) | (1,699,645) | | (1,699,947) | | (4,762,378) | | | (1,360,941) | | | (149,701) | | (420,720) | | (850,727) | | |
(+) Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year(4) | 5,066,337 | | 1,291,121 | | — | | | 936,226 | | | 516,965 | | 390,666 | | 356,906 | | |
(+/-) Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years(5) | 6,271,922 | | 858,909 | | — | | | (347,599) | | | 668,570 | | 40,318 | | (11,584) | | |
(+) Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year(6) | — | | — | | — | | | — | | | — | | — | | — | | |
(+/-) Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year(7) | 2,106,841 | | 620,870 | | (825,821) | | | (237,996) | | | 269,160 | | 24,657 | | (14,486) | | |
(-) Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year(8) | — | | — | | (9,201,503) | | | — | | | (37,455) | | (325,788) | | — | | |
| Compensation Actually Paid | 16,436,594 | | 4,708,503 | | (9,416,369) | | | 1,256,475 | | | 2,192,785 | | 802,089 | | 955,828 | | |
1.Refer to footnote 1 of the pay versus performance table above for information regarding who served as PEO during fiscal years 2020, 2021 and, partially, 2022, and who served as PEO for the remainder of fiscal year 2022.
2.Refer to footnotes 3,4 and 5 above for the NEOs included in the average for each of 2022, 2021 and 2020, respectively.
3.Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
4.Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested option awards and stock awards granted during such fiscal year, computed in accordance with the methodology used for financial reporting purposes.
5.Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year.
6.Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
7.Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
8.Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
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Performance Measures Used to Link Company Performance and Compensation Actually Paid to the Named Executive Officers
In the Company’s assessment, the most important financial performance measures used to link compensation actually paid to our NEOs, for the most recently completed fiscal year, to the Company’s performance were:
–Compensation Adjusted EBITDA
–Stock Price of ModivCare Common Stock
Relationship Between Pay and Performance
The illustrations below provide graphical descriptions of the relationships between the following:
–CAP and the Company’s & Peer Group’s Cumulative TSR
–CAP and the Company’s Net Income
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–CAP and the Company’s Compensation Adjusted EBITDA
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Potential Payments Upon Termination or Change in Control
The employment agreements,
offer letters and the Company’s executive severance policy, as applicable during 2022 to each of
Mr. Greenleaf, Mr. Dotts, and Ms. Stalmack provideour NEOs, provided 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 ofincluding termination following 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 circumstancesThe receipt of the payments and benefits to these NEOs under the employment agreements, letters and policies are generally conditioned upon their complying with non-competition, non-solicitation/non-piracy and non-disclosure provisions. By the terms of such agreements, letters and policies, 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
and letters and adopting the policy, 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,
letters and policies, as noted below.
Severance Payments
For
In fiscal year 2019, under their respective employment agreements or offer letters, as applicable,2022, Mr. Anderson and Mr. Greenleaf exited the Company and neither received any payments or benefits in connection with his termination of employment. In February 2023, Mr. Dotts, Ms. StalmackWray’s employment as Chief Human Resources Officer was terminated, but his employment continued in a transitional role until May 1, 2023. In accordance with Mr. Wray’s Separation Agreement, Mr. Wray’s severance included 12 months of base salary ($440,000) and Ms. Smith12 months of healthcare coverage following the date of termination. In March 2023, Mr. Hickman’s employment as Chief Commercial Officer was terminated. In accordance with Mr. Hickman’s Separation Agreement, Mr. Hickman’s severance included 12 months of base salary ($500,000) and 12 months of healthcare coverage following the date of termination. For each of Messrs. Anderson, Greenleaf, Hickman and Wray, the unvested portion of any outstanding PRSUs, RSUs and options as of the date of termination were immediately forfeited and will not vest. With respect to vested options held by Messrs. Greenleaf and Wray, those options were, or are, exercisable for 90 days following the date of termination. As detailed above under the caption “—Option Exercises and Stock Vested Table,” Mr. Greenleaf exercised certain of his vested options prior to the expiration of this 90-day period.
The following summaries describe payouts that would have been eligiblemade under the applicable arrangements 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,our continuing NEOs if the termination event described had happened at the end of 2022.
Resignation by the executiveEmployee for Good Reason
Each of Messrs. Sampson and Simpson is entitled to certain payments upon a resignation for Good Reason (as defined below). If termination had occurred only if such resignation for Good Reason is in connection with or within one-year following a Change in Control, as defined and detailed below under the caption “—Termination upon or following a Change in Control.”
Termination by Company without Cause
Each of
December 31, 2019, the severance payment to which Mr. Greenleaf would have beenMessrs. Sampson and Simpson is 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)certain payments upon a termination without “Cause”,
(ii) continued healthcare coverage for eighteen months following the date of termination and (iii) accelerated vesting of any 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. Dotts would have been entitled to equaled (i) twelve months’ base salary plus (ii) 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 Ms. Stalmack would have been entitled to equaled twelve months’ base salary and the severance payment to which Ms. Smith would have been entitled to equaled six months’ base salary.Under the employment agreements and offer letters, as applicable, with Mr. Greenleaf, Mr. Dotts, Ms. Stalmack, and Ms. 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•conviction of a felony or anya crime involving fraud or moral turpitude;
•theft, material act of dishonesty or fraud, intentional falsification of any employment or Company records, or commission of any criminal act which impairs Participant’s ability to perform appropriate employment duties for the Company;
•intentional or reckless conduct or gross negligence materially harmful to the Company or the successor to the Company after a Change in Control, including violation of a non-competition or confidentiality agreement;
•willful failure to follow lawful instructions of the employeeperson or body to which Participant reports; or
•gross negligence or willful misconduct byin the employee that results, in either case, in material economic or reputational harm to us or our Affiliates;
breachperformance 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;
Participant’s assigned duties.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;
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.
Action or inaction by the employee isConduct shall not be considered “willful” unless done, or omitted by him or her intentionallyto be done, not in good faith and without his or hera reasonable belief that his or her action or inactionthe conduct (or lack thereof) was in our or our Affiliates’the best interests of the Company.
In the event of termination without Cause each of Messrs. Sampson and does not include failureSimpson would be entitled to act by reason(i) twelve months’ base salary and (ii) continued healthcare coverage for six months following the date of total or partial incapacitytermination.
Termination due to physicalDeath
The Company’s current benefit program includes a Company-paid life insurance policy for all named executive officers. In the event an NEO’s employment were terminated due to the NEO’s death, the NEO’s heirs, personal representatives or
mental illness.Underestate would receive the life insurance proceeds.
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Termination due to Disability
The Company’s current benefit program includes a Company-paid disability insurance policy for all named executive officers.
Termination or Resignation for Good Reason upon or following a Change in Control
Each of Messrs. Sampson and Simpson is entitled to certain payments upon termination in connection with or within 12 months after a “Change in Control”, which is defined for these purposes as an event or events in which:
•any person (other than persons who were employees of the Company more than one year before the transaction becomes the “beneficial owner” of 50% or more of our outstanding voting securities; or
•we consummate (i) a merger or consolidation as more specifically described in the employment agreements or severance policy, as applicable, (ii) a liquidation or (iii) the sale or disposition of all or substantially all of our assets.
Each of Messrs. Sampson and Simpson is also entitled to certain payments if he resigns for Good Reason in connection with
Mr. Greenleaf and Ms. Stalmack,or within 12 months after a Change in Control. “Good Reason” is defined
as:for these purposes 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)or (ii) a
material breach by the Company or LogistiCarerelocation of the
employment agreement; provided that anyexecutive to another Company facility or location more than 50 miles from the executive’s current Company location. To be deemed a resignation for Good Reason,
notice must be made
by the executive to the Company within
6030 days of the occurrence
set forth in (i) –(iii) above. Mr. Dotts’ employment agreement defines Good Reasonestablishing the
same way, with an additional occurrencefacts supporting such termination and the resignation must occur within 120 days following the expiration 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) tothe Company’s 30-day cure period.
For each of
the NEOs employed by us as of December 31, 2019, under the employment agreements, assuming that such agreement had been in effectMessrs. Sampson and
the termination circumstance occurred on December 31, 2019 and did not involve a Change in Control (as defined below) is as follows:Under their employment agreements, in the event of a termination of employment by the Company without cause (or termination by the executive for good reason with respect to Mr. Greenleaf, Mr. Dotts and Ms. Stalmack), Mr. Greenleaf would have received cash severance payments totaling $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, the 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 or by the executive for good reason.
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 Mr. Greenleaf, Mr. Dotts, and Ms. Stalmack, 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
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.
For fiscal year 2019,Simpson, had a Change in Control occurred during the term of Mr. Greenleaf’s employment agreement and he was either terminated or resigned for Good Reason within 12 months following such Change in Control, Mr. Greenleaf’s employment agreementeach would have been entitled him to receive from the Company (i) thirtya lump sum payment of 12 months’ base salary, and 2.5 times the target bonus for the full fiscal year 2019, (ii) continued healthcare coverage for eighteensix months following the date of termination, and (iii) accelerated vesting of all unvested RSU and option awards.
Potential Payments upon Termination of Employment Table
Our NEOs are not entitled to any payments or accelerated vesting of any equity
awards. Hadawards solely in connection with or following a Change in Control. Our NEOs are only entitled to payment or accelerated vesting of equity awards (or other benefits) if there is a termination of employment in connection with or within 12 months after 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 Changewhich is commonly referred to as a so-called “double-trigger” change in
Control Mr. Dotts’ employment agreement would have entitled him to receive from the Company continued payment of base salary for twelve months and a pro rata portion of any bonus earned for the then fiscal year through the date of. Had a Change in Control occurred during the term of Ms. Stalmack’s employment agreement and she was terminated following such Change in Control Ms. Stalmack’s employment agreement would have entitled her to receive twelve months’ base salary, and accelerated vesting of all outstanding unvested restricted share units and performance stock units.Equity Awards
Upon a Change in Control, each of the NEOs are entitled to accelerated vesting of stock options and accelerated vesting and payment of restricted share awards granted to that executive officer, as applicable.
control arrangement.
The following table quantifies the estimated maximum amount of payments and benefits under the
employment agreements, offer letters,
the Company’s executive severance policy and agreements relating to awards granted under our 2006 Plan to which the NEOs
currently employed by us
as of December 31, 2019 would have been entitled upon
a Change in Controltermination of
our Company that occurred onemployment as of December 31,
2019 and termination of employment,2022 for the various reasons listed, as defined above, but without giving effect to any reduction for excess parachute payments.
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)
| 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.
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(2)
| Calculated based on the closing market price of our Common Stock on December 31, 2019.
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(3)
| No value has been assigned to any provisions of the employment agreements that remain in force following a Change in Control.
|
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| Name | Event Triggering Payment | Cash
Payment(s)
($) | Value of Accelerated Vesting of Stock Awards ($)(1) | Value of Accelerated Vesting of Option Awards ($)(1) | Value of
Health
Insurance
Payments
($) | Life or Disability Insurance Proceeds ($)(2) | Total ($)(3) | |
| | | | | | | | |
| L. Heath Sampson | Resignation for Good Reason(4) | 750,000 | | — | | — | | 15,537 | | — | | 765,537 | | |
Termination without Cause(5) | 750,000 | | — | | — | | 15,537 | | — | | 765,537 | | |
| Death | — | | — | | — | | — | | 100,000 | | 100,000 | | |
| Disability | — | | — | | — | | — | | 10,000 | | — | | |
Termination Upon Change in Control(6) | 750,000 | | 902,916 | | 283,791 | | 15,537 | | — | | 1,952,244 | | |
| | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Ilias Simpson | Resignation for Good Reason(4) | 500,000 | | — | | — | | 3,901 | | — | | 503,901 | | |
Termination without Cause(5) | 500,000 | | — | | — | | 3,901 | | — | | 503,901 | | |
| Death | — | | — | | — | | — | | 100,000 | | 100,000 | | |
| Disability | — | | — | | — | | — | | 10,000 | | — | | |
Termination Upon Change in Control(6) | 500,000 | | 297,883 | | 74,608 | | 3,901 | | — | | 876,392 | | |
1.Calculated based on the fair value of the awards as of December 31, 2022
2.Under our Long-Term Disability insurance, each NEO under the age of 60 who is terminated due to Disability is entitled to a monthly payment of $10,000 until he or she is 65 years old.
3.Amounts in the total column do not include the $10,000 monthly payments each NEO would receive until the age of 65 if terminated due to Disability.
4.Termination payment applicable only if the resignation for Good Reason occurs upon or within one-year following a Change in Control. Cash Payment includes 12 months of base salary, payable in one lump sum payment. The value of healthcare coverage is based on six months of coverage following the date of termination.
5.Cash Payment includes 12 months of base salary. The value of healthcare coverage is based on six months of coverage following the date of termination.
6.Cash Payment includes 12 months of base salary, payable in one lump sum payment. The value of healthcare coverage is based on six months of coverage following the date of termination.
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
3,80024,000 employees who
received paychecks during fiscal 2021 (excluding the CEO) and who were
on the payrollemployed by us as of December 31,
2019.2021, however, we did not include 7,213 employees of Care Finders or VRI, our recently-acquired subsidiaries. We
then used
base salarycompensation paid during fiscal year
2019 as the form of compensation2021 to determine our median employee, and annualized pay for those employees who commenced work during fiscal year
2019. We then2021. For 2022, we determined that there had been no material change in our employee population or employee compensation arrangements as compared to 2021 that would result in a significant change to our pay ratio disclosure, including the addition of previously omitted employees of Care Finders and VRI. As such, we would be permitted to use the same median employee as 2021. Due to a change in the circumstances of the individual identified
as our median employee
in 2021, however, for 2022 we substituted a median employee whose
pay was substantially similar to the median employee selected for 2021, as permitted by the SEC. The Summary Compensation Table (“SCT”) total compensation, as calculated in accordance with Item 402(u)(2) of Regulation S-K of the Securities Act,
of this median employee was
$24,940$14,027 in fiscal year
2019.2022. Our median employee is a caregiver working part-time with 20 hours per week or less.The CEO pay used for purposes of calculating the Pay Ratio is $2,831,031,$2,625,000, the SCT total compensation paid toof our Interim CEO, R. Carter Pate,L. Heath Sampson, assuming he had been paid from January 1, 20192022 through December 31, 2019.
2022 in his role as CEO. In accordance with Instruction 10 to Item 402(u), we looked only to the CEO serving in that position on the date we identified our median employee for fiscal year 2022, which was Mr. Sampson, and then annualized the compensation Mr. Sampson received as CEO. Under this approach, the compensation that Mr. Sampson received as Chief Financial Officer prior to his appointment as CEO was not included. As such, the CEO pay used for purposes of calculating the Pay Ratio does not represent the actual compensation Mr. Sampson received during fiscal year 2022.
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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
114:188:1. 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
Please keep in mind that under the SEC’s rules and
Consumer Protection Act of 2010 (the “Dodd-Frank Act”), enables our stockholdersguidance, there are numerous ways to
vote, on a non-binding advisory basis, ondetermine the compensation of
our NEOs as disclosed in this Proxy Statement in accordance witha company’s median employee, including the
SEC’s compensation disclosure rules.The Compensation Committee has considered thatemployee population sampled, the holderselements of approximately 82%pay and 80%benefits used, any assumptions made and the use of the votes cast at our 2019 and 2018 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 executivestatistical sampling. In addition, no two companies have identical employee populations or compensation programs, are designedand pay, benefits and retirement plans differ by country even within the same company. As such, our pay ratio may not be comparable 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 19 for additional details about our executive compensation programs, including information about the fiscal year 2019 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, 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-based pay practices and considers numerous factors when setting compensation for our NEOs including:
ratio reported by other companies. 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
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recommendations of an independent third-party executive compensation consultant.
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| TABLE OF CONTENTS | Proposal Three |
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Proposal Three:
Advisory vote to approve named executive officer compensation | | | | |
Section 14A of the Exchange Act provides stockholders an opportunity to cast a non-binding advisory vote to approve the compensation of the “named executive officers” identified in the Summary Compensation Table of this document. The Compensation Committee has considered that the holders of approximately 99% and 98% of the votes cast at each of our 2022 and 2021 annual meetings 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 [•] for additional details about our executive compensation programs, including information about the fiscal year 2022 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, 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-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 | | | Board Recommendation ____ The Board unanimously recommends that you vote “FOR” the compensation of our named executive officers, as disclosed in this Proxy Statement. | |
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| Proposal Three | TABLE OF CONTENTS |
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 and to incentivize achievement of the Company’s short- and long-term financial, operation and strategic goals. Our long-term incentive program
has historically useduses equity grants to incentivize performance
and reward our executives for
substantial stockholder value
creation and drive extraordinary stockholder value.creation. We believe this structure encourages an ownership mentality that
incentivizesmotivates our management to create stockholder value over a multi-year period.
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,named executive officers, as disclosed in the Company’s Proxy Statement for the
20202023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the
20192022 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
currently conduct this vote on an annual basis, and,
unless we determine subsequently to change our current practices concerning the frequency of the voting on executive compensation, based on our stockholders indicating a preference for a frequency of every two or three years for such vote pursuant to Proposal 4 or for other reasons, the next such vote will take place
withat our
20212024 annual meeting of stockholders.
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| The Board unanimously recommends that you vote “FOR”the compensation of our named executive officers, as disclosed in this Proxy Statement. | |
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| TABLE OF CONTENTS | Proposal Four |
Proposal Four: Advisory vote “FOR”on the frequency of future advisory votes on named executive officer compensation
Our stockholders are entitled, at least once every six years, to cast a non-binding advisory vote regarding how frequently (“Say on Frequency”) the Company should include a proposal asking for a non-binding advisory vote on the compensation of our Named Executive Officers,the Company’s NEOs (“Say on Pay”). Therefore, the Company’s stockholders are being asked at this annual meeting to express their preference as disclosedto whether an advisory vote to approve the compensation of the NEOs should be held every one, two or three years. Stockholders may also abstain from casting a vote on this proposal.
The Company has historically held an advisory vote on executive compensation every year, consistent with the frequency receiving the most votes cast by the Company’s stockholders at the Company’s annual meeting held in
this Proxy Statement.PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
2017. The Company’s independent registered public accounting firmBoard believes that an annual Say on Pay vote continues to be appropriate for the fiscal year ended December 31, 2019 was KPMG. The Auditfollowing reasons:
•It helps the Board and Compensation Committee obtain contemporaneous and more direct feedback from stockholders regarding the Company’s compensation practices and policies;
•It provides a higher level of accountability to the stockholders and fosters more frequent communication between the Compensation Committee and our stockholders;
•An annual vote furthers the Company’s commitment to maintaining high standards of corporate governance; and
•If a negative response to the “Say on Pay” vote is received, the Company will be able to make changes to its practices without having to wait two or three years to receive stockholder feedback about the changes.
Stockholders who may have concerns about executive compensation between advisory votes are welcome to bring their specific concerns to the attention of the Board. Information about communicating with the Board has selected KPMG asis included under the caption “Communication with the Board” above.
This Say on Frequency vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board. The Board and its
independent registered public accounting firm to auditCompensation Committee value the
Company’s consolidated financial statements foropinions of the
fiscal year ending December 31, 2020.Although we are not required to do so, we believestockholders, and therefore will take into account the outcome of the votes when considering the frequency of future advisory votes on executive compensation. Nevertheless, the Board may decide 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 interestinterests of the Company.
Company and its stockholders to hold an advisory vote on executive compensation on a different frequency than the frequency receiving the most votes cast by its stockholders or recommended by the Board, and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
The
Company has been advised that representativesnext advisory vote on the frequency of
KPMG will be present at the
Annual Meeting with the opportunity to make a statement if the representatives desire to do so. Itadvisory vote on executive compensation is expected
that the representatives will be available to
respond to appropriate questions.The Board unanimously recommends that you vote “FOR” the ratificationoccur at our 2029 annual meeting of the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
stockholders. | | | | | | | | | | | |
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| The Board unanimously recommends that you vote “ONE YEAR” for the frequency of future advisory votes on named executive officer compensation. | |
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| Proposal Five | TABLE OF CONTENTS |
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| Proposal Five: Ratification of Appointment of Independent Registered Public Accounting Firm | | | | |
The Company’s independent registered public accounting firm for the fiscal year ended December 31, 2022 was KPMG LLP. 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, 2023. 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. | | | Board Recommendation ____ 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, 2023. | |
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| 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, 2023. | |
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AUDIT COMMITTEE REPORT
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| TABLE OF CONTENTS | Audit Committee Report |
Audit Committee Report
The Audit Committee of the Board consists of Mr. Kerley, Ms. Norwalk,
Mr. Samant and Mr. Wright. Mr. 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.www.ModivCare.com/governance.
The Audit Committee has reviewed and discussed with management its assessment and report on the effectiveness of
Providence’sModivCare’s internal control over financial reporting as of December 31,
2019,2022, which it made using the criteria established in
Internal Control-IntegratedControl-Integrated Framework (2013) (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’sModivCare’s internal control over financial reporting.
ProvidenceModivCare published these reports in its
20192022 Annual Report.
The Audit Committee has reviewed and discussed with management and KPMG the audited consolidated financial statements of
ProvidenceModivCare for the fiscal year ended December 31,
2019.2022. Management represented to the Audit Committee that
Providence’sModivCare’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 the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”).
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.ModivCare.
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
20192022 Annual Report.
The Audit Committee
Richard A. Kerley (Chairperson)
Leslie V. Norwalk
Rahul Samant
Frank J. Wright
The information contained above in this section titled “Audit Committee Report” will not be considered “soliciting material” or to be “filed” with the SEC, nor will that information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into a filing.
The Audit Committee
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| Modivcare 2023 Proxy Statement | 65 |
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Richard A. Kerley (Chairperson)
Independent Registered Public Accountants | Leslie V. Norwalk
| Frank J. Wright
TABLE OF CONTENTS |
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
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,
20192022 and
2018,2021, in each of the following categories were:
| | | Fiscal Year Ended December 31, | |
| | | 2019 | | | 2018 | |
Audit fees | | $ | 1,532,083 | | | $ | 2,289,800 | |
Audit related fees | | | - | | | | 15,000 | |
Tax fees | | | 453,805 | | | | 1,971,768 | |
All other fees | | | - | | | | 472,862 | |
Total | | $ | 1,985,888 | | | $ | 4,749,430 | |
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| Fiscal Year Ended December 31, |
| 2022 ($) | 2021 ($) |
| Audit fees | 3,291,912 | | 2,870,512 |
| Audit related fees | 275,000 | | — |
| Tax fees | 246,733 | | 262,873 |
| All other fees | — | | — |
| Total | 3,813,645 | | 3,133,385 |
Audit Fees.
Audit fees consisted of amounts incurred for services performed in association with the annual financial statement audit (including required
quarterlyinterim reviews), the audit of the Company’s internal control over financial reporting, and for services provided in connection with
stand-alone or statutory
audits and regulatory filings or
engagements.engagements, as well as comfort letters rendered in connection with debt offerings.
Audit Related Fees.
Audit related fees consisted of
amounts incurred for internal control assurance services in fiscal year ended December 31, 2018.a real time IT system assessment related to the WorkDay IT system implementation.
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 for fiscal year 2018 consisted of
There were no other fees incurred for services rendered by KPMG
in connection withduring the
disposal of our workforce development services business.periods presented. Independence
The Audit Committee has considered and determined that the services provided by KPMG were compatible with KPMG maintaining their independence.
Audit Committee Pre-Approval Policies
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 ended December 31,
20192022 and
2018.STOCKHOLDER PROPOSALS FOR 2021 ANNUAL MEETING
2021.
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| TABLE OF CONTENTS | Stockholder Proposals for Annual Meeting |
Stockholder Proposals for 2024 Annual Meeting
Pursuant to the applicable 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
and included in the Company’s proxy statement within the Rule 14a-8 process for consideration at the Company’s annual meeting to be held in
20212024 (the
“2021“2024 Annual Meeting”) will be
December 30, 2020.January 2, 2024.
Pursuant to the Company’s Bylaws, in order for a stockholder to bring a proposal (other than proposals sought to be included in the Company’s
Proxy Statementproxy statement pursuant to Rule 14a-8 of the Exchange Act) before, or make a nomination
of a director at, the
20212024 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
1275 Peachtree Street, Sixth6900 Layton Avenue, 12th Floor,
Atlanta, GA 30309,Denver, CO 80237, no earlier than the close of business on February
16, 2021,14, 2024, and not later than the close of business on April
17, 2021.14, 2024. Stockholders are also advised to review the Company’s 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
17, 2021,14, 2024, discretionary authority shall be granted to the persons designated in the Company’s proxy related to the
20212024 Annual Meeting to vote on such proposal.
OTHER MATTERS
In addition, in order to comply with universal proxy rules, a person who intends to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company no later than April 14, 2024 that sets forth the information required by Rule 14a-19 under the Exchange Act, including a statement that such person intends to solicit the holders of shares representing at least 67% of the voting power of the Company’s shares entitled to vote in the election of directors in support of director nominees other than the Company’s nominees.
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| Modivcare 2023 Proxy Statement | 67 |
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| Other Matters | TABLE OF CONTENTS |
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
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| TABLE OF CONTENTS | Additional Information |
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
20192022 Annual Report, except for exhibits to the
20192022 Annual Report, without charge, by submitting a written request to the Company’s Corporate Secretary at
1275 Peachtree Street, Sixth6900 Layton Avenue, 12th Floor,
Atlanta, GA 30309.HOUSEHOLDING
Denver, CO 80237.
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| Householding | TABLE OF CONTENTS |
Householding
In order to reduce printing costs and postage fees, the Company has adopted the process called
“householding”.“householding.” Under this procedure, the Company may deliver a single copy of the Notice, and if applicable, this Proxy Statement and
20192022 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
20192022 Annual Report at the same address, you may obtain additional copies by writing to the Company’s Corporate Secretary at
1275 Peachtree Street, Sixth6900 Layton Avenue, 12th Floor,
Atlanta, GA 30309Denver, CO 80237 or by calling
(404) 888-5800.(303) 728-7030. We will deliver to you promptly any copies so requested. Eligible stockholders of record receiving multiple copies of this Proxy Statement and
20192022 Annual Report can request householding by contacting the Company in the same manner.
By Order of the Board of Directors:
L. Heath Sampson
President, Chief Executive Officer, and Chief Financial Officer
May 1, 2023
Denver, CO
On behalf of the Board of Directors
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| TABLE OF CONTENTS | Appendix A |
Appendix A
Non-GAAP Financial Measures and Adjustments
In addition to the financial results prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), this Proxy Statement includes EBITDA and Adjusted EBITDA for the Company, which are performance measures that are not recognized under GAAP but that we use to measure the Company’s performance and management’s performance against pre-established performance targets for purposes of determining payouts under our STI. EBITDA is defined as income (loss) before: (1) interest expense, net; (2) provision (benefit) for income taxes; and (3) depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before certain items, including (as applicable): (1) stock-based compensation; (2) cash settled equity; (3) equity in net (gain) loss of investee, net of tax; (4) restructuring and related costs, including severance and organizational consolidation costs and professional services fees; (5) certain transaction and integration costs; (6) certain settlement related costs; and (7) COVID-19 related costs. Our non-GAAP performance measures exclude certain expenses and amounts that are not driven by our core operating results and may be one time in nature. Excluding these expenses makes comparisons with prior periods as well as to other companies in our industry more meaningful. We believe such measures allow investors and other interested parties to gain a better understanding of the factors and trends affecting the ongoing operations of our business and how actual payouts under our STI were determined in 2022 and how they fit within the Company’s broader executive compensation program. We consider our core operations to be the ongoing activities to provide services from which we earn revenue, including direct operating costs and indirect costs to support these activities. As a result, our net income or loss in equity investee, net of tax is excluded from these measures, as we and our management do not have the ability to manage the venture in which we have made our investment, allocate resources within the venture, allocate resources within the venture, or directly control its operations or performance.
Our non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in our industry, as other companies in our industry may calculate non-GAAP financial measures differently. In addition, there are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies, and exclude expenses that may have a material impact on our reported financial results. The presentation of non-GAAP financial measures is not intended to be considered in isolation from or as a substitute for the most directly comparable financial measures prepared in accordance with GAAP. We urge you to review the reconciliations of our non-GAAP financial measures to the most directly comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business or the performance of our management.
