Class III Directors. The following directors have terms ending in 2024:
Clifford G. Adlerz has served as a director of Surgery Partners since October 2017. Mr. Adlerz previously served as a Consultant to Surgery Partners from February 2018 until May 2019 and Interim Chief Executive Officer of Surgery Partners from September 2017 until January 2018. Before his time at Surgery Partners, Mr. Adlerz held several management roles at Symbion, Inc., a large multi-specialty provider of ambulatory surgery centers and hospitals, including as President from May 2002 until Symbion was acquired by Surgery Partners in November 2014. Prior to joining Symbion, Mr. Adlerz served as Division Vice President of HCA, a healthcare facilities operator, as well as Regional Vice President of Midsouth HealthTrust. Mr. Adlerz currently serves on the Board of Directors of Ovation Fertility. Mr. Adlerz previously served as a director for the National Ambulatory Surgery Center Association and was part of the leadership group for ASC Quality Collaboration. Mr. Adlerz holds a B.A. in Business and an M.B.A. from the University of Florida. Our Board believes that Mr. Adlerz is qualified to serve as a director based on, among other things, his experience with the Company and its predecessor as well as in the healthcare industry generally and his general business and financial acumen.
J. Eric Evans has served as a director of Surgery Partners since January 2020. Mr. Evans is currently Chief Executive Officer of Surgery Partners, a role he has held since January 2020 and previously served as Executive Vice President and Chief Operating Officer of Surgery Partners from April 2019 until January 2020. Mr. Evans previously served as President of Hospital Operations of Tenet Healthcare Corporation and prior to that as chief executive officer of Tenet Healthcare Corporation’s former Texas region from April 2015 to March 2016 and as market chief executive officer of The Hospitals of Providence (formerly known as the Sierra Providence Health Network) in El Paso from September 2012 to April 2015. Additionally, from 2004 until 2012, Mr. Evans held various positions with Tenet Healthcare Corporation’s former Dallas-area Lake Pointe Health Network including chief executive officer, chief operating officer and director of business development. Mr. Evans recently joined the board of directors of QuVa Pharma, effective March 2022. Mr. Evans holds a bachelor’s degree in industrial management from Purdue University and an M.B.A. from Harvard Business School. He is also a fellow in the American College of Healthcare Executives.
Blair E. Hendrix has served as a director of Surgery Partners since May 2021. Mr. Hendrix joined Bain Capital Private Equity in 2000 and currently serves as a Managing Director. Prior to joining Bain Capital, Mr. Hendrix was Executive Vice President and Chief Operating Officer of DigiTrace Care Services, Inc. (now SleepMed), a national healthcare services company he co-founded. Earlier in his career, Mr. Hendrix was employed by Corporate Decisions, Inc. (now Oliver Wyman Consulting), a management consulting firm with a focus in healthcare. He has served on numerous corporate boards within Bain Capital and been involved in many healthcare investments, including Vivra Asthma & Allergy, HCA and MC Communications (a.k.a Pri-Med). Additionally, Mr. Hendrix has served as a director of US Renal Care since 2019. He previously served as a director of BMC Software, iHeart Media, Clear Channel Outdoor and The Weather Company. Mr. Hendrix received an A.B. from Brown University. Our Board believes that Mr. Hendrix is qualified to serve as a director based on, among other things, his business and finance experience within the healthcare industry.
Andrew T. Kaplan has served as a director of Surgery Partners since August 2018. Mr. Kaplan joined Bain Capital Private Equity in 2009 and is a Managing Director. Prior to joining Bain Capital Private Equity, Mr. Kaplan was an investment banker with Goldman Sachs. He also co-founded EngagedHealth, LLC, a post-hospitalization service for chronically ill, low income patients aiming to improve outcomes, reduce readmissions, and save costs. Mr. Kaplan has served on the Board of Directors for QuVa Pharma since 2015, US Renal Care since 2019 and InnovaCare Health since 2021. He previously served as a director of Beacon Health Options from 2018 to 2020. Mr. Kaplan holds a B.S. in Economics from The Wharton School at the University of Pennsylvania and an M.B.A from Harvard Business School. Our Board believes that Mr. Kaplan is qualified to serve as a director based on, among other things, his experience in co-founding a healthcare company and his general financial experience.
CORPORATE GOVERNANCE
Our Board currently consists of fiveten directors. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The division of the three classes and their respective election dates are as follows:
•the Class I director’sII directors' term will expire at the annual meeting of stockholders to be held in 2016 .2023;
•the Class II director’sIII directors' term will expire at the annual meeting of stockholders to be held in 2017.2024; and
•the Class III directors’I directors' term will expire at the annual meeting of stockholders to be held in 2018. 2025.
Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.
Our amended and restated certificate of incorporationcharter provides that directors will be elected at the annual meeting of the stockholders and each director elected will hold office until his or her successor is elected and qualified. The size of the Board shall be fixed from time to timedetermined by, a majority vote ofand vacancies and newly created directorships on the Board with a maximum of 15 members, provided that, prior to the date H.I.G. (through one or more of its affiliates) ceases to beneficially own 50% or more of our common stock, the size of the Board willshall be determinedfilled by, either the affirmative vote of holders of a majority of our common stock. Directors will (except forthen outstanding capital stock of the fillingCompany entitled to vote generally in the election of directors (the "Voting Stock") or the vote of a majority of the directors then on the Board. However, on or after the date (the "Trigger Date") that the investment funds affiliated with Bain Capital Private Equity, LP ("Bain Capital Private Equity") and their successors, transferees and affiliates cease collectively to beneficially own 50% or more of the then outstanding Voting Stock, (i) the size of the Board shall be determined exclusively by a majority of the directors then in office and (ii) vacancies and newly created directorships)directorships on the Board shall be electedfilled exclusively by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, except in each case, that any vacancy created by the holdersremoval of a pluralitydirector by the stockholders for cause shall only be filled, in addition to any other vote otherwise required by law, by vote of a majority of the votes cast by the holders of shares present in person or represented by proxy at the meeting and entitled to vote on the election of such directors.then outstanding Voting Stock.
The following table sets forth the name, age (as of March 14, 2016) and position of individuals who currently serve as the directors of Surgery Partners, Inc.
|
| | | |
Name | Age | Position |
Christopher Laitala | 43 |
| Class III Director, Chairman |
Michael T. Doyle | 43 |
| Class III Director, Chief Executive Officer |
Adam Feinstein | 44 |
| Class I Director |
Matthew I. Lozow | 38 |
| Class II Director |
Brent Turner | 51 |
| Class II Director |
Director Independence
TheWe are a "controlled company" under the listing standards of The NASDAQNasdaq Stock Market LLC (“NASDAQ”("Nasdaq") generally require that listed companies have a majority of independent directors, that compensation committees of listed companies be comprised entirely of independent directors and that nominating committees of listed companies be comprised entirely of independent directors. We are “controlled company” under NASDAQ corporate governance standards as an affiliate of H.I.G. owns more than 50% of the total outstanding voting power of our common stock.. As a “controlled"controlled company,”" we may elect to not comply with certain governance requirements, including the requirements to (i) have a majority of independent directors, (ii) maintain a compensation committee composed entirely of independent directors and (iii) maintain a corporate governance and nominating committee composed of independent directors or have the responsibilities that would otherwise be undertaken by a corporate governance and nominating committee undertaken solely by the independent directors of the board of directors. We currently avail ourselves of each of the aforementionedthese available exemptions.
Accordingly, our stockholders will not have the same protectionprotections afforded to stockholders of companies that are subject to all of NASDAQthe Nasdaq corporate governance requirements and the ability of our independent directors to influence our business policies and affairs may be reduced. When we cease to be a controlled"controlled company," we will be required to comply with these provisions within the transition periods specified in NASDAQNasdaq rules.
The Board has reviewed the independence of our directors based on the corporate governance standards of NASDAQ.Nasdaq. Based on this review, the Board determined that each of Christopher Laitala, Adam Feinstein, Matthew I. LozowDrs. DeLuca and BrentMaryland and Messrs. Deane and Turner is independent within the meaning of the corporate governance standards of NASDAQ.Nasdaq. In making this determination, our Board considered the relationships that each of these non-employee directors has with the Company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock held by each non-employee director. As required under applicable NASDAQNasdaq rules, our independent directors will meet in regularly scheduled executive sessions at which only independent directors are present.
These exemptions do not modify the independence requirements for our Audit Committee, and we intend to comply with the applicable requirements of the Sarbanes-Oxley Act and NASDAQNasdaq rules with respect to our Audit Committee within the applicable time frame.Committee. See “Committees"Committees of the Board --- Audit Committee.”
Board Leadership Structure
Prior to the date on which affiliates of H.I.G. cease to beneficially own at least a majority of our then outstanding common stock, the size of our Board, and vacancies on our Board, will each be determined by the affirmative vote of at least a majority of our then outstanding common stock. Following such date, the size of our Board will be determined by the affirmative vote a majority of our Board and vacancies will be filled by the affirmative vote of our Board, provided that, any vacancy created by the removal of a director by the stockholders for cause shall only be filled, in addition to any other vote otherwise required by law, by affirmative vote of a majority of our then outstanding common stock. The term of office for each director will be until his or her successor is elected at our annual meeting or his or her death, resignation or removal, whichever is earliest to occur. Stockholders will elect directors each year at our annual meeting.
Our Bylawsbylaws provide maximum flexibility to the Board in choosing a Chairman of the Board and a Chief Executive Officer. The Bylawsbylaws provide that such offices may be held by different people or the same person, as determined by the Board. This flexibility allows the Board to determine whether it is in the best interest of the Company and our stockholders to combine the roles of Chief Executive Officer and Chairman of the Board in the same person. Christopher Laitala, an independent director,The roles of Chief Executive Officer and Chairman of the Board are currently separate. Mr. DeVeydt, our former Chief Executive Officer, was electedappointed by our pre-initial public offering stockholderthe Board to serve as theExecutive Chairman of the Board.Board in January 2020. The Board determined that Mr. DeVeydt’s experience as our former Chief Executive Officer gives him a unique and relevant perspective to serve as our Executive Chairman.
Selection of New Directors
The Board is responsible for selecting its own members for election by the stockholders with direct input from the Chief Executive Officer. It is the policyopinion of the Board that directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the Company’sCompany's stakeholders. It is also the policy of the Board that the composition of the Board at all times adhere to the standards of independence promulgated by the NASDAQ and as further clarified above under “Director Independence.” The Board believes that each director should possess a combination of skills, professional experience and diversity of viewpoints necessary to oversee the Company’sCompany's business. In addition, it believes that there are certain attributes that every director should possess, as reflected in its membership criteria. Accordingly, the Board considers the qualifications of directors and director candidates individually and in the broader context of its overall composition and the Company’sCompany's current and future needs. Among other things, the Board has determined that it is important to have directors with the following skills and experiences: leadership experience, as directors with experience in significant leadership positions possess strong abilities to motivate and manage others and to identify and develop leadership qualities in others; knowledge of the Company’sCompany's industry, particularly physician and patient relations, which is relevant to understanding the Company’sCompany's business and strategy; operations experience, as it gives directors a practical understanding of developing, implementing and assessing the Company’sCompany's business strategy and operating plan; risk management experience, which is relevant to oversight of the risks facing the Company’sCompany's business; financial/accounting experience, particularly knowledge of finance and financial reporting processes, which is relevant to understanding and evaluating the Company’sCompany's capital structure, financial statements and reporting requirements; and strategic planning experience, which is relevant to the Board’sBoard's review of the Company’sCompany's strategies and monitoring their implementation and results.
The Board also requires that each director be able to dedicate sufficient time to ensure the diligent performance of his or her duties on the Company’sCompany's behalf, including attending all Board and applicable committee meetings. In general, the Board does not have a policy limiting the number of other public company boards of directors upon which a director may sit. However, the Board shallwill consider the number of other boards of directors (or comparable governing bodies), particularly with respect to public companies, on which a prospective nominee is a member. Although the Board does not impose a limit on outside directorships, it does recognize the substantial time commitments attendant to membership on the Board and expects that directors devote all such time as is necessary to fulfill their accompanying responsibilities, both in terms of preparation for, and attendance and participation at, meetings.
Board Meeting Attendance
Under our Corporate Governance Guidelines, directors are expected to use their reasonable best efforts to attend all or substantially all Board meetings and meetings of the committees of the Board on which they serve, as well as annual meetings of stockholders. During 2015,2021, there was one meetingwere eight meetings of our Board, and the committees of the Board met a total of two times.Board. No current director attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board and (ii) the total number of meetings of committees of the Board for the period during which the director served on the Board or such committee in 2015. 2021. All directors who served on the Board at the time of the 2021 annual meeting of stockholders attended the meeting.
Board'sBoard’s Role in Risk Oversight
Our Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. Our Board, primarily through its Audit Committee, oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value.
Oversight of COVID-19 Response Efforts
The COVID-19 pandemic has significantly affected our facilities, employees, patients, communities, business operations and financial performance, as well as the United States economy and financial markets. The impact of the COVID-19 pandemic on our surgical facilities varies based on the market in which the facility operates, the type of surgical facility and the procedures typically performed. Although we cannot provide any certainty regarding the length and severity of the impact of the COVID-19 pandemic, which is difficult to predict and is dependent on factors beyond our control, we saw improvement in surgical case volumes as states re-opened and allowed for non-emergent procedures. Our Board continues to be involved extensively in discussions with management about the risks presented to the Company by COVID-19 and its variants and to actively oversee management's efforts to both slow the spread of COVID-19 and its variants and address the negative financial impact on the Company. We are committed to protecting the health of the communities in which we operate and continue to take steps to provide quality care and protect the health and safety of patients, employees, providers and visitors.
Committees of the Board
We have an Audit Committee, a Compensation Committee and a CompensationCompliance and Ethics Committee with the composition and responsibilities described below. Each committee operates under a charter that is approved by our Board. The members of each committee are appointed by the Board and serve until their successor is elected and qualified, unless they are earlier removed or resign. In addition, from time to time, special committees may be established under the direction of the Board when necessary to address specific issues. Our Board has determined that Christopher Laitala, Adam Feinstein, Matthew I. Lozow and Brent Turner are independent directors under NASDAQ rules and Exchange Act rules.
Because we avail ourselves of certain exceptions applicable to “controlled companies”"controlled companies" under NASDAQ listingNasdaq rules, thesome responsibilities that would otherwise be undertaken by a nominating committee or solely by a majority of independent directors of the board of directors will be undertaken by the full board of directors, or, at its discretion, by a special committee established under the direction of the full board of directors. The controlled company exception does not modify the independence requirements for the audit committeeour Audit Committee and we intend to comply with the audit committee requirements of the Sarbanes-Oxley Act and the rules of NASDAQ. These rules require that our Audit Committee be composed of at least three members, a majority of whom will be independent within 90 days following the effective date of the registration statement we filed in connection with our initial public offering and exclusively of independent directors within one year following the effective date of such registration statement.Nasdaq.
Audit Committee
We have a separately standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The purpose of the Audit Committee is set forth in the Audit Committee charter. The Audit Committee’sCommittee's primary duties and responsibilities are to:
•Appoint or replace, compensate and oversee the outside auditorsCompany's independent auditor;
•Assist the Board with its oversight of the integrity of the Company's financial statements, the Company's compliance with legal and regulatory requirements, the independent auditor's qualifications, independence and audits, and the performance of the Company's internal audit function and the independent auditor; and
•Prepare the report for inclusion in the Company's annual Proxy Statement as required by the rules of the SEC.
The Audit Committee is responsible for the purposeappointment, compensation, retention, oversight and replacement, if necessary, of preparing or issuing an audit report or related work or performing other audit, review or attest services for us.the Company's independent auditor. The outside auditors will report directly to the Audit Committee.
Pre-approveCommittee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for us by our outside auditors, subject to de minimis exceptions which are approved by the independent auditor. The Audit Committee prior to the completion of the audit.
Reviewreviews and discussdiscusses with management and the outside auditorsindependent auditor the Company's annual audited and quarterly unaudited financial statements ourand the disclosures under the section entitled “Management’s"Management's Discussion and Analysis of Financial Condition and Results of Operations”Operations" in the Company's annual and quarterly reports filed with the selection, application and disclosureSEC, including disclosures of critical accounting policies therein. The Audit Committee also reviews and practices used in such financial statements.
Review and approveapproves all related party transactions.
Discusstransactions in accordance with managementCompany policy and reviews matters related to the Company's related party transaction policy and the outside auditors significantCompany's system of internal control, its financial reporting issues and judgments made in connection with the preparation of our financial statements,critical accounting practices, and policies relating to risk assessment and management, including any significant changes in our selection or application of accounting principles, any major issues as to the adequacy of our internal controls and any special steps adopted in light of material control deficiencies.cybersecurity risks.
The Audit Committee currently consists of Christopher Laitala, Adam FeinsteinBrent Turner (chair), Teresa DeLuca, M.D. and Brent Turner. Messr. FeinsteinJohn A. Deane. Mr. Turner is both an independent director and an “audit"audit committee financial expert”expert" within the meaning of Item 407 of Regulation S-K, and serves as chair of the audit committee.Audit Committee. In addition, Messr. Turner isDr. DeLuca and Mr. Deane are also an independent directordirectors within the meaning of Item 407 of Regulation S-K. Messr. Laitala is an “affiliated person” under Rule 10A-3 of the Exchange Act and therefore does not meet the independence criteria for audit committee membership pursuant to NASDAQ rules. We are permitted to phase in our compliance with the independent audit committee requirements set forth in NASDAQ rules and relevant Exchange Act rules as follows: (i) one independent member at the time of listing, (ii) a majority of independent members within 90 days of listing and (iii) all independent members within one year of listing. We expect that, within one year of our listing on NASDAQ, Messr. Laitala will have resigned from ourThe Audit Committee and an independent director for audit committee
purposes (as determined under NASDAQ rules and Exchange Act rules) will have been added to the Audit Committee.met seven times in 2021. A copy of the Audit Committee charter, which satisfies the applicable standards of the SEC and NASDAQ,Nasdaq, is available on the “Investors-Corporate Governance”"Investors - Highlights" page of our website at www.surgerypartners.com.
Compensation Committee
The purpose of the Compensation Committee is to assist the Board in fulfilling its responsibilities relating to oversight of the compensation of our directors, executive officers and other employees and the administration of our benefits and equity-based compensation programs. Our Board has adopted a written charter under which the Compensation Committee operates. A copy of the charter,operates, which satisfies the applicable standards of the SEC and NASDAQ,Nasdaq. A copy of the Compensation Committee charter is available on the “Investors-Corporate Governance”"Investors - Highlights" page of our website at www.surgerypartners.com. The Compensation Committee annually reviews and assesses the adequacy of its charter.
The Compensation Committee’sCommittee's primary duties and responsibilities are to:
•Review and approve corporate goals and objectives relevant to the compensation of the Company’sCompany's Chief Executive Officer (the “CEO”"CEO") and the officers of the Company who report directly to the CEO and all officers who are “insiders” subject to“officers” as defined in Section 16 of the Exchange Act (collectively, the “Senior Officers”"Senior Officers"), evaluate the performance of the CEO and other Senior Officers in light of those goals and objectives and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve, or recommend to the Board for approval, the compensation levels for the CEO and other Senior Officers based on this evaluation, with the deliberations and voting on the CEO’sCEO's compensation to be conducted without the CEO present;
•Make recommendations to the Board about the compensation of thenon-employee directors;
•Review and administer the Company’sCompany's equity-based compensation plans, management incentive compensation plans and deferred compensation plans for the Senior Officers and make recommendations to the Board about amendments to such plans and the adoption of any new compensation plans;plans for the Senior Officers;
•Recommend to the Board any ownership guidelines for the Senior Officers, other executives and non-employee directors, and periodically assess these guidelines and recommend revisions as appropriate;
•Review and establish the Company’sCompany's overall management compensation and benefits philosophy and policies;
Produce
•Review and discuss the “Compensation Discussion and Analysis” required to be included in the Company’s proxy statement and annual report on Form 10-K by the rules and regulations of the SEC with management, and produce a Compensation Committeecompensation committee report on executive compensation for inclusion in the Company’s annual proxy statement in accordance with Securities and Exchange Commissionthe SEC proxy and disclosure rules;
•Review and recommend to the Board for approval the frequency with which the Company will conduct say-on-pay votes, taking into account the results of the most recent stockholder advisory vote on frequency of say-on-pay votes required by Section 14A of the Exchange Act;
•Review and approve all Senior Officer employment contracts and other compensatory, severance and change-in-control arrangements for current and former Senior Officers;
•Establish and review periodically policies and procedures with respect to perquisites;
•Review the Company’sCompany's incentive compensation arrangements to determine whether they encourage excessive risk-taking, review and discuss at least annually the relationship between risk management policies and practices and compensation, and evaluate compensation policies and practices that could mitigate any such risk;
•Review and assess the adequacy of the committee's charter and submit any changes to the Board for approval on an annual basis;
•Maintain minutes of the committee's meetings and report its actions and any recommendations to the Board on a periodic basis; and
•Annually perform, or participate in, an evaluation of the performance of the committee against the requirements of this Compensation Committee charter, the results of which shall be presented to the Board.
As long as we are a controlled company, we are not required by NASDAQNasdaq rules to maintain a compensation committee comprised of independent directors. Notwithstanding that,As of the date of this Proxy Statement, our Compensation Committee consistsconsisted of Christopher Laitala, Matthew I. LozowBrent Turner and Adam Feinstein, who are all independent.John A. Deane, each of whom is independent under Nasdaq rules, and T. Devin O'Reilly (chair) and Andrew T. Kaplan. The Compensation Committee met six times during 2021.
Compliance and Ethics Committee
The purpose of the Compliance and Ethics Committee is to assist the Board in discharging its responsibilities relating to our compliance with laws, regulations, internal procedures and industry standards that may cause significant business, regulatory, or reputational damage to us, as well as legal and business trends and public policy issues. The Compliance and Ethics Committee, among other things, oversees the activities of, and receives regular reports from, our Chief Compliance Officer, and reports to the Board on the effectiveness of the Company’s compliance, ethics and quality programs. Our Chief Executive OfficerBoard has participated in discussions related to compensationadopted a written charter under which the Compliance and Ethics Committee operates. A copy of certainthe Compliance and Ethics Committee charter is available on the "Investors - Highlights" page of our executive officers, but has not participated in any discussions regarding his own compensation. We have also retained a compensation consultant sincewebsite at www.surgerypartners.com. The Compliance and Ethics Committee periodically reviews and assesses the adequacy of its charter.
As of the date of this Proxy Statement, our IPO to review the compensationCompliance and Ethics Committee consisted of executive officers at peer group companiesTeresa DeLuca, M.D. (chair), Clifford G. Adlerz, John A. Deane and assist in benchmarking appropriate compensation of our executive officers on a forward-looking basis, but was not involved in determining compensation amounts for 2015.
Patricia A. Maryland, Dr.PH. The Compliance and Ethics Committee met four times during 2021.
13
Compensation Committee Interlocks and Insider Participation
All compensation and related matters are reviewed by our Compensation Committee. Our Compensation Committee consists of Christopher Laitala, Matthew I. Lozow and Adam Feinstein. None of the members
No member of our Compensation Committee is or has at any time during the past year been an officer or employee of ours.ours or any of our subsidiaries. None of our executive officers currently serves or in the past year has served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. Our CEO has participated in discussions related to compensation of certain of our executive officers, but has not participated in any discussions regarding his own compensation. We have also retained a compensation consultant since our initial public offering to review the compensation of executive officers at peer group companies and assist in benchmarking appropriate compensation of our executive officers on a forward-looking basis.
ContactingEmployee, Officer and Director Hedging
The Company’s Insider Trading Policy expressly prohibits our employees, officers or directors from engaging in transactions that involve the purchase of financial instruments, including prepaid variable forward contracts, instruments for the short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a decrease in the market value of any securities of the Company. In addition, all of our employees, officers and directors are subject to the Company's Code of Conduct, which includes conflicts of interest provisions broadly prohibiting actions or activities that involve obtaining improper personal gain or advantage, or adversely affecting the interests of the Company.
Stock Ownership Guidelines
The Compensation Committee recently adopted share ownership and retention guidelines applicable to the Company’s named executive officers and non-employee directors. Please refer to "Compensation Discussion and Analysis -- Compensation Policies and Practices" for more information.
PROPOSAL NO. 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, the Board of Directors is asking stockholders to approve a non-binding, advisory resolution on the compensation of Surgery Partners' executive officers who are named in the Summary Compensation Table appearing in this Proxy Statement (our "named executive officers" or "NEOs"). The compensation of our named executive officers is described in the "Compensation Discussion and Analysis" and "Executive Compensation" sections of this Proxy Statement.
Stockholders wishing
The compensation program for our named executive officers is designed to communicate withattract and retain highly qualified individuals and to motivate and reward them for performance that benefits Surgery Partners and its stockholders. The Compensation Committee and the Board of Directors believe that the policies and procedures detailed in "Compensation Discussion and Analysis" achieve these goals.
This advisory resolution, commonly referred to as a "Say-On-Pay" resolution, is non-binding on the Board of Directors. Although non-binding, the Board of Directors and the Compensation Committee value the views of Surgery Partners' stockholders and will review and consider the voting results when (i) evaluating the effectiveness of Surgery Partners' compensation policies and practices and (ii) making future compensation decisions for our Board may do so by writingnamed executive officers.
We are requesting your vote on the following resolution:
"RESOLVED, that the Company's stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company's Proxy Statement for the 2022 annual meeting of stockholders pursuant to the Board or to the non-employee memberscompensation disclosure rules of the Board as a group, at:SEC, including the "Compensation Discussion and Analysis" and "Executive Compensation" sections and the other related tables and disclosure."
Surgery Partners, Inc.
40 Burton Hills Boulevard, Suite 500THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
Attention: General Counsel and Secretary
The communication must prominently display the legend "BOARD COMMUNICATION" in order to indicate to the General Counsel and Secretary that it is a communication for the Board. Upon receiving such a communication, the General Counsel and Secretary will promptly forward the communication to the relevant individual or group to which it is addressed. Certain items that are unrelated to the Board's duties and responsibilities may be excluded, such as spam, junk mail and mass mailings, resumes and other forms of job inquiries, surveys and business solicitations or advertisements. The General Counsel and Secretary will not forward any communication determined in his or her good faith belief to be frivolous, unduly hostile, threatening, illegal or similarly unsuitable.
EXECUTIVE OFFICERS
|
| | | | | | | |
| Name | Age | Position |
Michael T. DoyleWayne S. DeVeydt | 4352 |
Executive Chairman and Class I Director |
| J. Eric Evans | 45 | Chief Executive Officer and Class III Director |
Teresa F. SparksDavid T. Doherty | 47 |
49 | Executive Vice President and Chief Financial Officer |
| Jennifer B. Baldock | 4551 |
Executive Vice President, Chief Administrative and Development Officer |
| George M. Goodwin | 61 | President, American Group |
| Anthony W. Taparo | 56 | Chief Growth Officer |
| Bradley R. Owens | 52 | President, National Group |
| Laura L. Brocklehurst | 52 | Senior Vice President General Counsel and SecretaryChief Human Resources Officer |
John CryselMarissa A. Brittenham | 6237 |
| Group President of Surgery Partners' National Group |
Dennis Dean | 43 |
| SeniorExecutive Vice President Corporate Controllerand Chief Strategy Officer |
Executive Officer Biographies
Michael T. Doyle Wayne S. DeVeydthas served as Executive Chairman of Surgery Partners since January 2020 and director of Surgery Partners since January 2018. Mr. DeVeydt’s biography is included elsewhere in this Proxy Statement under the heading "Proposal No. 1: Election of Directors - Class I Director Nominees for Election."
J. Eric Evans has served as Chief Executive Officer and Director of Surgery Center Holdings, Inc. since 2009, Chief Executive Officerdirector of Surgery Partners Inc. since April 2015 and DirectorJanuary 2020. Mr. Evans’ biography is included elsewhere in this Proxy Statement under the heading "Proposal No. 1: Election of Surgery Partners, Inc. since August 2015. He has been with the Company since 2004, previously as President and Chief Operating Officer. Prior to joining our Company, Mr. Doyle worked at HealthSouth, Corporation, a large healthcare organization, for nine years where he held a variety of leadership positions and left as Senior Vice President of Operations. Mr. Doyle holds a B.S.Directors - Directors Continuing in Physiotherapy from Dalhousie University in Halifax, Nova Scotia and an M.B.A. from Troy State University.Office."
Teresa F. Sparks
David T. Doherty has served as our Executive Vice President and Chief Financial Officer since February 1, 2022. Previously, Mr. Doherty was our Senior Vice President of Corporate Finance and Controller. Prior to joining Surgery Center Holdings,Partners in 2018, Mr. Doherty held various senior financial management roles at Aetna Inc. since, including leading Aetna’s internal audit organization, planning and risk management, and serving as Aetna’s assistant controller. Mr. Doherty earned his CPA while working at Arthur Andersen, LLP. Mr. Doherty holds a bachelor's degree in Accounting from the University of Connecticut.
Jennifer B. Baldock has served as our acquisition of Symbion in November 2014, and as Executive Vice President and Chief FinancialAdministrative and Development Officer of Surgery Partners, Inc. since April 2015.February 2020. Previously, Ms. Sparks previouslyBaldock served as Seniorour Executive Vice President and Chief FinancialLegal Officer of Symbion Holdings Corporation and Symbion, Inc. from August 2007May 2018 to November 2014 and as Corporate Controller from Symbion’s inception in 1996 through August 2007 and was named Vice President in December 2002. Prior to joining Symbion, she served as Assistant Controller for HealthWise of America, Inc., a managed care organization. Prior to joining HealthWise of America, Inc., Ms. Sparks was a senior healthcare auditor for Deloitte & Touche LLP. Ms. Sparks is a Certified Public Accountant (inactive) and holds a BS in Accounting and Business Administration from Trevecca Nazarene University.
Jennifer B. Baldock has served asFebruary 2020, Senior Vice President, Secretary and General Counsel of Surgery Center Holdings, Inc. since our acquisition of Symbion Holdings Corporation in November 2014 and as Vice President, Secretary and General Counsel of Surgery Partners, Inc. since April 2015. In addition, Ms. Baldock previously served as General Counsel and Chief Compliance Officer of Symbion Holdings Corporation and Symbion, Inc. Prior to joining Symbion in 2010, she served as Assistant General Counsel for both Ambulatory Services of America and Renal Care Group. Prior to that, Ms. Baldock practiced law with Waller Lansden Dortch and Davis in Nashville, Tennessee, concentrating in corporate law with an emphasis on healthcare mergers and acquisitions. She is also a Certified Public Accountant (inactive). Ms. Baldock holds a Bachelor of ArtsB.A. in Economics and Accounting from Lipscomb University and a Juris DoctorJ.D. from the University of Alabama.
John Crysel
George M. Goodwin has served as Groupour President, of Surgery Partner’s NationalAmerican Group since our acquisition of Symbion in November 2014. Mr. CryselGoodwin previously served as National Group President of Symbion.Symbion's American Group since 2013 and also served as Vice President of Mergers and Acquisitions and Senior Vice President and Chief Development Officer. Prior to joining Symbion, in 2011, heMr. Goodwin served in a varietyas President and Chief Executive Officer of hospital management positions with Hospital Corporation of America and HealthTrust in addition to pursuing various healthcare investment interests.American Pathology Resources. Mr. CryselGoodwin holds a B.S. in Business AdministrationAccounting from the University of AlabamaAlabama. On February 25, 2022, Mr. Goodwin notified the Company of his intention to retire in 2022. Mr. Goodwin will continue to provide certain consulting services after retirement to the Company in order to assure an orderly transition of his duties and an MSHA from the University of Alabama at Birmingham.responsibilities to successors.
Dennis Dean
Anthony W. Taparohas served as Viceour Chief Growth Officer since August 2019. Previously, Mr. Taparo served as our Atlantic Group President and Corporate Controller of Surgery Center Holdings, Inc. sincefrom our acquisition of Symbion in November 2014 to August 2019. Mr. Taparo previously served as President of Symbion's Atlantic Group since 2006 and as Regional Vice President for Symbion from 1999 to 2006. Prior to joining Symbion, Mr. Taparo served as Chief Operating Officer of Columbia Physician Services. Mr. Taparo holds a B.A in Accounting from Indiana State University.
Bradley R.Owens has served as our National Group President since December 2019. Previously, Mr. Owens served as the Senior Vice President Operations - CFO for Arete Health from April 2019 to December 2019. He previously held several positions at LifePoint Hospitals, including Western Group Chief Operating Officer (COO), Vice President Clinical and Business Informatics, COO of the Continental Division, Operations CFO and American Division Chief Financial Officer (CFO). Prior to his time at LifePoint Hospitals, he worked at HCA Healthcare as CFO for three east coast hospitals. Mr. Owens holds a B.S. in Accounting from Marshall University and a Master of Health Administration degree from Ohio University.
Laura L. Brocklehurst has served as Senior Vice President and Corporate ControllerChief Human Resources Officer since July 2019. Previously, Ms. Brocklehurst served as our Vice President, HR Business Partner from August 2018 to July 2019. She previously held several positions at SC Johnson, including Sr. Director Human Resources Business Partner - Latin America and Sr. Director and Human Resources Business Partner - Global Product Supply from January 2013 to May 2018. She has also been a human resources executive for 20 years for large corporations, including Newell Rubbermaid and Healthways. Ms. Brocklehurst holds a bachelor's degree in Personnel Management from Michigan State University.
Marissa A. Brittenham has served as our Chief Strategy Officer since January 2022. Previously, Ms. Brittenham led Growth at Cityblock Health and Medicaid Partnerships at Evolent Health (NYSE: EVH) and was an Associate Partner at McKinsey & Company. She received a bachelor’s degree in Ethics, Politics and Economics from Yale University and earned her JD/ MBA from University of Surgery Partners, Inc. since April 2015. Pennsylvania Carey Law School and the Wharton School.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis ("CD&A") is designed to provide an overview of our compensation philosophy and objectives, our compensation programs, and our decision making processes as they relate to our named executive officers for the year ended December 31, 2021.
This discussion is intended to, among other things, help our stockholders understand the information provided in the compensation tables included in this Proxy Statement, and to put that information in the context of our overall compensation program for our NEOs.
Pursuant to SEC rules, our NEOs for 2021 were:
| | | | | |
| Named Executive Officer | Title |
| J. Eric Evans | Chief Executive Officer |
Thomas F. Cowhey (1) | Former Executive Vice President and Chief Financial Officer (1) |
| Jennifer B. Baldock | Executive Vice President, Chief Administrative and Development Officer |
| Anthony W. Taparo | Chief Growth Officer |
| Bradley R. Owens | President, National Group |
_______
(1)Mr. Dean previously servedCowhey resigned as our Executive Vice President and Corporate ControllerChief Financial Officer effective January 31, 2022.
Overview of Symbion Holdings Corporation2021 Company Performance
The following summary of the Company's performance is intended to provide additional context for the Compensation Committee's evaluation of the Company's performance against its 2021 goals for compensation-related purposes. Despite continued disruptions and Symbion, Inc.challenges to our business in 2021 as a result of the COVID-19 pandemic, our NEOs were instrumental in helping us drive Company performance results in 2021, and in assessing our competitive position and shaping a plan that will best position us for continued growth in 2022 and beyond.
We present below key business highlights to assist our stockholders in understanding the compensation decisions made with respect to our NEOs that relate to 2021 performance. Key performance highlights from January 20082021 include:
•Revenues increased 19.6% over 2020 to November 2014. Prior$2.2 billion.
•Days adjusted same-facility revenues increased 18.1% from 2020.
•Net loss attributable to joining Symbion, he co-founded Resource Partners, LLC,common stockholders of $81.2 million, resulting in a healthcare-focusednet loss per share of $1.12.
•Adjusted EBITDA increased 32.3% from 2020 to $339.6 million.
Overview of Our Executive Compensation Objectives and Pay for Performance Philosophy
Our executive compensation program reflects the Company's commitment to pay for performance and to align the interests of the Company's management with those of our stockholders. In addition, our executive compensation program is designed to encourage our executives to take actions that support the Company's short-term financial consulting firm,goals but that also ensure the Company's ability to sustain strong stockholder value creation over the long term, irrespective of annual performance variability.
Our long-term success is based on achieving key strategic, financial and began his career at Deloitte & Touche LLP. Heoperational goals each year. To drive achievement of and align focus with these goals, our executive compensation program is alsodesigned to:
•Attract, retain and motivate talented executives with significant industry knowledge and the experience and leadership capability necessary for our corporate success.
•Align the interests of our NEOs with those of our stockholders by delivering a Certified Public Accountant. Mr. Dean holdssubstantial portion of each officer's compensation through incentives that drive long-term enterprise value.
•Provide a B.S. in Accountingstrong link between pay and an MAcc from Western Kentucky University.performance by weighting total direct compensation toward performance-based incentive compensation that promotes achievement of short-term performance with annual cash incentive awards and supports long-term business objectives with performance-based equity grants.
Compensation Policies and Practices
We maintain the following compensation policies and practices that reflect our pay-for-performance philosophy and support long-term stockholder value:
•Well-Balanced Compensation Program. The structure of our executive compensation program includes a balanced mix of cash and equity compensation with a strong emphasis on performance-based and at-risk compensation.
•Capped Annual Incentive Award Opportunities. The value of our NEOs' incentive awards is determined by performance based metrics that promote long-term stockholder value. Additionally, for 2021, although there is not a specific performance metric tied to clinical quality, the Compensation Committee used its discretionary authority to emphasize clinical quality in determining the level of award payout achieved by our NEOs.
•Performance-Based Long-Term Incentives. To align pay with performance, 50% of our long-term incentive awards for NEOs granted in 2021 were subject to vesting based on key financial performance objectives.
•Multi-Year Vesting Periods. To enhance retention and alignment with stockholders' interests, our long-term incentive awards are comprised of time-based and performance-based equity awards that vest over multiple years.
•Independent Decision Makers. Members of our Compensation Committee are independent and the committee works closely with an independent compensation consultant to monitor trends and best practices.
•Competitive Compensation Practices. The competitiveness of our executive compensation program is determined by comparison to a group of peer companies that are comparable based on industry, revenue, market capitalization and other factors.
•Double-Trigger Change in Control Benefits. Options and restricted stock grants are subject to "double-trigger" vesting in connection with a change in control (i.e., awards that require a qualifying termination of employment following the change in control in order to become fully vested).
•Limited Perquisites. We provide our NEOs with limited perquisites that are narrowly tailored to enhance our retention of talent over the long term.
•Share Ownership and Retention Guidelines. In order to demonstrate alignment of the interests of management and the directors with the stockholders of the Company, in February 2022, the Compensation Committee adopted share ownership and retention guidelines applicable to the NEOs and non-employee directors.
Compensation Framework and Process
Role of the Compensation Committee in Compensation Decisions
Our Compensation Committee oversees our total compensation philosophy, compensation programs, equity incentive programs and benefit plans, and is responsible for reviewing and approving, or recommending that the Board approve, as applicable, all components of our executive compensation program. Our Compensation Committee reviews and recommends the compensation of our Chief Executive Officer. After considering the assessment and recommendation of the Chief Executive Officer, our Compensation Committee determines and approves compensation decisions relating to our other NEOs.
Role of the Independent Compensation Consultant
For 2021, our Compensation Committee retained Frederic W. Cook & Co., Inc. ("FW Cook"), an independent compensation consulting firm, to provide advice on executive compensation matters, including the types, levels and the competitiveness of our programs. FW Cook reports directly to our Compensation Committee and interacts with management at the Compensation Committee's direction. Our Compensation Committee and its chairperson have regular opportunities to meet with FW Cook in executive sessions without management present. The Compensation Committee considered the independence of FW Cook in light of current SEC rules and Nasdaq listing standards and concluded that no conflict of interest exists that would prevent FW Cook from independently advising the Compensation Committee.
Role of our Chief Executive Officer
Our Chief Executive Officer annually reviews the performance of the other NEOs, after which the Chief Executive Officer presents his conclusions and recommendations to the Compensation Committee for approval. Our Compensation Committee has absolute discretion as to whether it approves the recommendations of the Chief Executive Officer or makes adjustments, as it deems
appropriate. The Chief Executive Officer may also work with the Compensation Committee to gather and compile data needed for benchmarking purposes or for other analysis conducted by the Compensation Committee's independent consultants and advisors.
Benchmarking
Our Compensation Committee reviews competitive data for comparable executive positions in the market. External market data is used by the Compensation Committee as a point of reference in its executive pay decisions in conjunction with financial and individual performance data. The Compensation Committee reviews compensation information disclosed by a peer group of comparably sized companies with which we compete for business and executive talent and information derived from published survey data that compares the elements of each executive officer's target total direct compensation to the market information for executives with similar roles. FW Cook compiles this information for the Compensation Committee and size-adjusts the published survey data to reflect our size in relation to the survey participants to more accurately reflect the scope of responsibility for each NEO.
The Compensation Committee, in consultation with FW Cook, annually reviews and selects the peer companies, which generally consist of publicly-traded healthcare companies. The peer group companies selected for purposes of analyzing and determining the compensation of our executive officers, including our NEOs, were selected primarily based upon the following criteria: (i) similar business operations/industry/competitors for investor capital, (ii) comparable sales, market capitalization and profitability levels, and (iii) competitors for executive talent.
The Compensation Committee worked with FW Cook to evaluate our peer group and selected the following companies as our peer group for 2021 primarily because they are similar healthcare companies with revenues between approximately 1/3 and three times our pro-forma sales estimate of $2 billion:
| | | | | | | | |
| Acadia Healthcare Company, Inc. | Hanger | Mednax, Inc. |
| Amedisys, Inc. | Chemed Corporation | Brookdale Senior Living |
| Encompass Health (formerly HealthSouth Corporation) | LHC Group, Inc. | The Ensign Group, Inc. |
| Genesis Healthcare | Tivity Health | RadNet, Inc. |
| ModivCare (formerly The Providence Service Corp) | Select Medical Holdings Corp | |
Elements of Named Executive Officer Compensation
The following is a discussion of the primary elements of compensation for each of our NEOs for 2021, which consisted of the following:
| | | | | | | | | | | | | | |
| Element | | Description | | Primary Objectives |
| Base Salary | | ● Fixed cash payments paid over the fiscal year | | ● Attract and retain key talent ● Provide competitive compensation ● Recognize experience and performance |
| Short-Term Incentives | | ● Performance-based annual cash and equity incentives | | ● Promote and reward achievement of the Company's annual financial and strategic objectives |
| Long-Term Incentives | | ● Restricted stock ● Performance restricted stock units ● Non-qualified stock options | | ● Retain and motivate senior management over a multi-year vesting period ● Tie value earned to achievement of the Company's long-term goals |
| Retirement and Welfare Benefits | | ● 401(k) Plan ● Supplemental executive retirement plan ● Medical, dental, vision, life insurance and disability insurance | | ● Provide tax-efficient retirement savings ● Provide tax-efficient opportunity to supplement retirement savings ● Provide competitive health and welfare benefits |
| Perquisites | | ● Cell phone allowance | | ● Provide competitive ancillary benefits |
| Severance Benefits | | ● Cash and non-cash payments and benefits upon an involuntary termination of employment | | ● Provide protection in the event of an involuntary termination of employment |
The Compensation Committee does not have a pre-established policy for the allocation between fixed compensation, such as base salary, and variable or "at risk" compensation, such as short-term cash and equity incentives. However, our Compensation Committee places a significant portion of total direct compensation for the NEOs at risk. At risk compensation under the Company’s annual cash incentives plan (the "Cash Incentive Plan") incentivizes our NEOs to reach or exceed desired financial operating goals. Moreover, at risk equity compensation under the Company's 2015 Omnibus Incentive Plan, as amended and restated effective January 1, 2020, as amended (the "Omnibus Incentive Plan") incentivizes our NEOs because the full benefit of equity-based compensation cannot be realized unless our NEOs are able to grow the value of our stock over multiple years.
Base Salary
It is a part of the Company's compensation philosophy that employees be paid a base salary that is competitive with the salaries paid by comparable companies based on each employee's experience, performance and any other unique factors or qualifications. Generally, the Company has chosen to position cash compensation in a range around market median levels in order to remain competitive in attracting and retaining executive talent. FW Cook provides the Compensation Committee with benchmarking data, and our NEOs are provided with a base salary within the market benchmarked range based on their unique situation. Actual base salaries paid vary within a range based on performance over time. Our Compensation Committee reviews the base salaries of our NEOs on an annual basis, and takes into consideration the following factors when determining whether such amounts should be adjusted:
•the executive's performance;
•the performance of the Company;
•the impact of the executive's performance on the individual businesses or corporate functions for which the executive is responsible;
•the nature and importance of the executive's position and role within the Company;
•the scope of the executive's responsibility;
•the market data provided by the independent compensation consultant; and
•the current compensation package in place for the executive, including the executive's current annual salary and potential bonus awards under the Company's bonus plan.
The annual base salaries for applicable NEOs for 2020 and 2021 were as follows:
| | | | | | | | | | | |
| Named Executive Officer | 2020 Base Salary (1) | | 2021 Base Salary |
| J. Eric Evans | $1,050,000 | | $1,050,000 |
| Thomas F. Cowhey | 500,000 | | 525,000 |
| Jennifer B. Baldock | 420,000 | | 420,000 |
| Anthony W. Taparo | 410,000 | | 410,000 |
Bradley R. Owens (2) | N/A | | 400,000 |
_______
(1)On March 17, 2020, the Compensation Committee temporarily reduced the base salaries of the NEOs in response to the challenges facing the Company as a result of the COVID-19 pandemic to the following: Mr. Evans - $525,000, Mr. Cowhey - $400,000, Ms. Baldock - $336,000, Mr. Taparo - $328,000 and Mr. Owens - $292,000. Subsequently, on June 28, 2020, the Compensation Committee restored the base salaries for the NEOs to their original base salary amounts.
(2)Mr. Owens was not a named executive officer in 2020. Therefore, in accordance with SEC rules, his compensation is only disclosed for the year ended December 31, 2021.
In February 2022, the Compensation Committee determined that 2022 base salary for Mr. Evans would remain the same as 2021, and the 2022 base salaries for Ms. Baldock and Messrs. Taparo and Owens would be set at $535,000, $450,000 and $500,000, respectively. The Compensation Committee believes that the base salary for the NEOs is competitive and reasonable compared to the peer group and survey benchmark data.
Short-Term Incentive Awards
The Company maintains the Cash Incentive Plan under which our Compensation Committee determines annual cash incentives for the Company's key employees, including our NEOs, based on achievement of pre-established annual financial goals. We provide
an annual award opportunity under the Cash Incentive Plan in order to tie a significant part of the overall compensation of each of our executive officers to short-term corporate goals and objectives. Payments under the Cash Incentive Plan can be paid in cash or in common stock that is issued through the Omnibus Incentive Plan.
2021 Awards
The target bonus opportunity for each of our NEOs is based on a percentage of base salary and is established based on each NEO's respective level of management responsibility. For 2021, the target bonus opportunity as a percentage of base salary for each of our eligible NEOs, except for Mr. Evans, was as follows: Mr. Cowhey - 75%, Ms. Baldock - 60%, Mr. Taparo - 60% and Mr. Owens - 60%. For 2021, the target bonus opportunity for Mr. Evans was $750,000.
For 2021, the Compensation Committee determined that the financial metric to be measured for purposes of determining the annual cash awards payable to our NEOs would be Adjusted EBITDA. Other metrics applicable to certain NEOs are described below. In February 2021, the Compensation Committee established 2021 Adjusted EBITDA levels. Performance levels were set relative to the prior fiscal year's actual results and current fiscal year projections. The threshold performance level is the minimum performance level required for a payout under the Cash Incentive Plan, and the maximum performance level is the maximum payout. Performance targets are set with the intent that achievement will enhance stockholder value.
| | | | | | | | | | | | | | |
| 2021 Cash Incentive Plan Performance Goals | Threshold | Target | Above Target | Maximum |
| Adjusted EBITDA (in millions) | $299.0 | $315.0 | $323.0 | $331.0 |
| Payout | 25% | 100% | 150% | 200% |
If the Company's Adjusted EBITDA for 2021 is equal to or greater than $299.0 million, but less than $315.0 million, then the percentage of the target award that may be earned will be determined using a straight line interpolation between 25% and 100%. If the Company’s Adjusted EBITDA is equal to or greater than $315.0 million, but less than $323.0 million, the percentage of the target award that can be earned will be determined using a straight line interpolation (between 100% and 150%). If the Company’s Adjusted EBITDA is equal to or greater than $323.0 million, but less than $331.0 million, the percentage of the target award that shall become earned will be determined using a straight line interpolation (between 150% and 200%).
With respect to Ms. Baldock’s target bonus opportunity for 2021, 50% is earned based on the Company’s Adjusted EBITDA performance goals and, as a result of her role as the Chief Administrative and Development Officer, 50% is earned based on the achievement of certain goals associated with the Company’s acquisition and divestiture activity. With respect to Mr. Taparo’s target bonus opportunity for 2021, 50% is earned based on the Company’s Adjusted EBITDA performance goals and 50% is earned based on the achievement of certain goals associated with Company’s physician recruitment efforts. With respect to the target bonus opportunity of Mr. Owens for 2021, 50% is earned based on the Company’s Adjusted EBITDA performance goals and 50% is earned based on the achievement of performance goals specific to the National Group over which Mr. Owens is President. Ms. Baldock and Messrs. Taparo and Owens may earn above the target award applicable to their specific roles. Notwithstanding the foregoing, if the Company's Adjusted EBITDA is less than the threshold, no cash incentive award may be earned by the NEOs.
For 2021, the Company's Adjusted EBITDA was $339.6 million. After evaluating the Company's 2021 performance, both with and without the impact of government stimulus funds under the CARES Act, the Compensation Committee determined that the Company's Adjusted EBITDA performance goals were achieved at the target level. The Compensation Committee further determined that Ms. Baldock, Mr. Taparo and Mr. Owens each earned additional awards above the target level due to the achievement of certain goals associated with their roles as discussed above. As a result, the NEOs earned the following incentive payments:
| | | | | |
| Named Executive Officer | 2021 Cash Incentive Award Earned |
| J. Eric Evans | $750,000 |
Thomas F. Cowhey (1) | N/A |
| Jennifer B. Baldock | 452,000 |
| Anthony W. Taparo | 326,440 |
| Bradley R. Owens | 390,000 |
_______
(1)Mr. Cowhey resigned as our Executive Vice President and Chief Financial Officer effective January 31, 2022, and as a result, did not receive an incentive payment for 2021.
2022 Awards
In February 2022, the Compensation Committee granted incentive awards for 2022 to our eligible NEOs under the Cash Incentive Plan. The Compensation Committee determined that payment would be based on the Company's performance with respect to Adjusted EBITDA for 2022 as well as other metrics applicable to certain NEOs described below.
The target amount that may be earned by each NEO for 2022 under the Cash Incentive Plan is set forth below:
| | | | | |
| Named Executive Officer | 2022 Short-Term Incentive Award Target |
| J. Eric Evans | $1,050,000 |
Thomas F. Cowhey (1) | N/A |
| Jennifer B. Baldock | 425,000 |
| Anthony W. Taparo | 270,000 |
| Bradley R. Owens | 300,000 |
_______
(1)Mr. Cowhey resigned as our Executive Vice President and Chief Financial Officer effective January 31, 2022, and as a result, will not receive an incentive award for 2022.
If the Company's Adjusted EBITDA for the year ending December 31, 2022 is equal to or greater than the threshold, but less than the target range, then the percentage of the target award that may be earned will be determined using a straight line interpolation between 25% and 100% of the target award. Additionally, up to 200% of the target award can be earned depending on the extent to which the Company's Adjusted EBITDA exceeds the target. If the Company's Adjusted EBITDA is less than the threshold, no cash incentive award may be earned.
With respect to Ms. Baldock’s target bonus opportunity for 2022, consistent with 2021, 50% is earned based on the Company’s Adjusted EBITDA performance goals and 50% is earned based on the achievement of certain goals associated with the Company’s acquisition and divestiture activity. With respect to Mr. Taparo’s target bonus opportunity for 2022, consistent with 2021, 50% is earned based on the Company’s Adjusted EBITDA performance goals and 50% is earned based on the achievement of certain goals associated with Company’s physician recruitment efforts. With respect to the target bonus opportunity of Mr. Owens for 2022, consistent with 2021, 50% is earned based on the Company’s Adjusted EBITDA performance goals and 50% is earned based on the achievement of performance goals specific to the National Group over which Mr. Owens is President. Ms. Baldock and Messrs. Taparo and Owens may earn above the target award applicable to their specific roles. Notwithstanding the foregoing, if the Company's Adjusted EBITDA is less than the threshold, no cash incentive award may be earned by the NEOs.
Long-Term Incentive Awards
Our long-term equity incentive program is designed to reward our NEOs for Company performance, drive sustainable, long-term growth for our Company and our stockholders, and reinforce retention.
2021 Annual Awards
Each of our eligible NEOs received equity grants in 2021 under the Omnibus Incentive Plan. Except as otherwise described herein, the long-term incentive award opportunity for each of our eligible NEOs for 2021 is shown in the table below:
| | | | | | | | | | | | | | |
| Named Executive Officer | Time-based restricted stock | PSUs (at Target) |
| $ value | # shares of common stock | $ value | # units of common stock |
| J. Eric Evans | 625,000 | 14,866 | 625,000 | 14,866 |
| Thomas F. Cowhey | 262,500 | 6,244 | 262,500 | 6,244 |
| Jennifer B. Baldock | 225,000 | 5,352 | 225,000 | 5,352 |
| Anthony W. Taparo | 205,000 | 4,876 | 205,000 | 4,876 |
| Bradley R. Owens | 200,000 | 4,757 | 200,000 | 4,757 |
For our annual grants in 2021, the Compensation Committee generally determined that 50% of the grant date value to be delivered under the Company's long-term equity incentive program would consist of time-based restricted stock and the remaining 50% would consist of PSUs.
The time-based restricted stock awards vest in increments of one-third on each of the first, second and third anniversaries of the date of grant, generally subject to the executive's continued employment. The Compensation Committee believes that grants of time-based restricted stock foster employee share ownership, align the interests of our NEOs with those of our stockholders, and enhance retention by requiring continued employment over a period of years.
The PSUs provide our NEOs with the opportunity to earn a specified number of shares of common stock based on achievement of certain Company performance objectives over a one-year period. The number of shares earned during that period are then subject to an additional two-year employment period in which they become vested in increments of 50% each year. This creates a three-year incentive and alignment period.
For 2021, the Compensation Committee set the target performance level for the PSUs as Adjusted EBITDA of $315.0 million. If Adjusted EBITDA of $299.0 million was achieved, 25% of the PSUs subject to the award would be earned subject to the additional time-vesting criteria. If the Company's Adjusted EBITDA for 2021 is equal to or greater than $299.0, but less than $315.0 million, then the percentage of the PSUs subject to the award that may be earned will be determined using a straight line interpolation (between 25% and 100%). If the Company’s Adjusted EBITDA is equal to or greater than $315.0 million, but less than $331.0 million, the percentage of the PSUs subject to the award that shall become earned will be determined using a straight line interpolation (between 100% and 200%). The Company's Adjusted EBITDA for 2021 was $339.6 million. After evaluating the Company's 2021 performance, both with and without the impact of government stimulus funds under the CARES Act, the Compensation Committee deemed 100% of the PSUs granted to the NEOs during 2021 as earned and eligible to vest in accordance with their terms.
2021 Special Awards
In February 2021, the Compensation Committee also determined to grant additional special long-term equity-based incentive awards to certain NEOs based on their key roles in Adjusted EBITDA generation and growth of the Company. The special long-term incentive award opportunity for these NEOs is shown in the table below:
| | | | | | | | | | | | | | |
| Named Executive Officer | Time-based restricted stock | PSUs (at Target) |
| $ value | # shares of common stock | $ value | # units of common stock |
| J. Eric Evans | 625,000 | 14,866 | 625,000 | 14,866 |
| Thomas F. Cowhey | 250,000 | 5,946 | 262,500 | 6,244 |
| Jennifer B. Baldock | 150,000 | 3,568 | — | — |
| Bradley R. Owens | 200,000 | 4,757 | — | — |
The special time-based restricted stock awards vest 50% on the first anniversary and 50% on the second anniversary of the date of grant, generally subject to the executive's continued employment. For the special PSUs, performance is determined with respect to an Adjusted EBITDA target for 2021 that is higher than the Adjusted EBITDA target for the annual 2021 PSU awards. The Company's Adjusted EBITDA for 2021 was $339.6 million. After evaluating the Company's 2021 performance, both with and without the impact of government stimulus funds under the CARES Act, the Compensation Committee deemed 100% of the special PSUs granted to Mr. Evans during 2021 as earned and eligible to vest in accordance with their terms. The special PSUs granted to Mr. Cowhey, and 50% of the time-based restricted stock awards, were forfeited due to his resignation as of January 31, 2022.
2022 Annual Awards
In February 2022, the Compensation Committee continued the practice of utilizing long-term equity-based incentive awards consisting of (i) 50% in the form of three-year time vesting restricted stock awards and (ii) 50% in the form of PSUs subject to Company performance; however, the performance awards have been revised to provide for a one-time vesting on the third anniversary of the grant date if the performance criterion is achieved during the three-year period. The long-term incentive award opportunity for each of our eligible NEOs for 2022 is shown in the table below:
| | | | | | | | | | | | | | |
| Named Executive Officer | Time-based restricted stock | PSUs (at Target) |
| $ value | # shares of common stock | $ value | # units of common stock |
| J. Eric Evans | 2,000,000 | 37,016 | 2,000,000 | 37,016 |
Thomas F. Cowhey (1) | N/A | N/A | N/A | N/A |
| Jennifer B. Baldock | 400,000 | 7,403 | 400,000 | 7,403 |
| Anthony W. Taparo | 325,000 | 6,015 | 325,000 | 6,015 |
| Bradley R. Owens | 400,000 | 7,403 | 400,000 | 7,403 |
(1)Mr. Cowhey resigned as our Executive Vice President and Chief Financial Officer effective January 31, 2022, and as a result, did not receive an incentive award opportunity for 2022.
As with the 2021 awards, the time-based restricted stock awards vest in one-third increments on each anniversary of the date of grant, generally subject to the executive's continued employment. With respect to the 2022 PSUs, performance is determined with respect to the achievement of an Adjusted EBITDA goal by the third anniversary of the grant date. If the Company's Adjusted EBITDA is equal to or greater than the threshold, then the percentage of the target award that may be paid out to the NEOs is 100%, and up to 300%, subject to varying levels of performance in excess of the threshold. No shares are earned for performance below threshold. The shares that are earned will be subject to a one-time cliff vesting on the third anniversary of the grant date.
2022 Special Awards
In October 2021, the Compensation Committee also determined to grant an additional special long-term equity-based incentive award in March 2022 to Mr. Owens as a further retention incentive due to his inability to participate in the executive option program. The special long-term incentive award opportunity for Mr. Owens provided for a time-based restricted stock award of $500,000, granting Mr. Owens 9,254 shares of common stock. The time-based restricted stock award vests 50% on the second anniversary of the date of grant, and 50% on the third anniversary of the grant, generally subject to Mr. Owens' continued employment.
For purposes of the calculation of 2022 Adjusted EBITDA, the Compensation Committee, in its reasonable discretion, intends to make adjustments that are appropriate to account for extraordinary corporate events. The accretive earnings resulting from any acquisitions completed during 2022 will result in an adjustment that increases the performance goal, as calculated by the Compensation Committee in its discretion. Additionally, the Compensation Committee may consider such other adjustments to the calculation of Adjusted EBITDA as it reasonably determines are appropriate in accordance with the discretion provided to the Compensation Committee under the Omnibus Incentive Plan.
Retirement and Welfare Benefits and Perquisites
All of our full-time employees, including our NEOs, are eligible to participate in our health and welfare plans, including medical, dental, vision, life and disability insurance. Our NEOs participate in these plans on the same basis as other eligible employees. We do not maintain any supplemental health and welfare plans for our NEOs.
In addition, the Company maintains a 401(k) plan in which eligible employees are permitted to participate. The Company’s 401(k) plan is a tax-qualified defined contribution retirement plan under which eligible employees may defer their eligible compensation, subject to the limits imposed by the Internal Revenue Code, and under which the Company may make discretionary matching contributions.
We also maintain the Symbion, Inc. Supplemental Executive Retirement Plan (the "SERP"), a nonqualified deferred compensation plan, for certain former management of Symbion, Inc., including Ms. Baldock and Mr. Taparo. Under the SERP, participants may elect to defer up to 25% of annual base salary and up to 50% of bonus each year. Eligible employees who elect to defer are also entitled to an annual Company contribution under the SERP equal to 2% of base salary.
Severance Arrangements
The Company provides severance protection to each of our NEOs pursuant to employment agreements in the event that his or her employment is terminated by the Company without cause or he or she resigns for good reason. For a description of the severance protections provided to our NEOs please see "Executive Compensation - Potential Payments upon Termination or Change in Control" below.
Use of Non-GAAP Financial Metrics in our Executive Compensation Program
We believe that presenting certain non-GAAP measures can be helpful to investors who may wish to use some or all of this information to analyze the Company’s performance, prospects, and valuation. The items excluded from these non-GAAP metrics are
significant components in understanding and evaluating our financial performance. We believe such adjustments are appropriate, as the magnitude and frequency of such items can vary significantly and are not related to the assessment of normal operating performance. We believe that the non-GAAP measures discussed below are appropriate for evaluating the performance of the Company for compensation-related purposes.
Adjusted EBITDA
For compensation purposes, "Adjusted EBITDA" is calculated as income before income taxes, adjusted for net income attributable to noncontrolling interests; depreciation and amortization; interest expense, net; equity-based compensation expense; transaction and integration related costs; loss (gain) on disposals, net; impairment charges; litigation settlements and other litigation costs; loss on debt extinguishment; gain on escrow release; and hurricane-related impacts. We use Adjusted EBITDA as a measure of financial performance. Adjusted EBITDA is a key measure used by our management to assess operating performance, make business decisions and allocate resources.
A reconciliation of Adjusted EBITDA to income before income taxes, the most directly comparable GAAP financial measure can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Non-GAAP Measures" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Risk Management and Compensation
Our Compensation Committee believes that the Company’s compensation policies and practices are an integral part of the Board’s risk management. Our Compensation Committee considers various features of our compensation policies and practices that discourage excessive or unnecessary risk taking, including but not limited to the following:
•Appropriate pay philosophy, peer group and other market comparability data and market positioning to align with and support business objectives;
•Effective balance in:
◦Cash and equity pay mix, including the use of restricted stock, PSUs and stock options, used to focus employees on mitigating downside risk while generating long-term gains;
◦Short- and longer-term performance focus;
◦Management and Board discretion to manage pay as it deems appropriate in light of Company and industry developments; and
•Compensation Committee oversight of our compensation policies and practices to determine whether they encourage excessive risk-taking and evaluate compensation policies and practices that could mitigate any such risk.
Our Compensation Committee believes that the Company's executive compensation program does not encourage inappropriate risk-taking and the level of risk associated with the Company's compensation programs is not reasonably likely to have a material adverse effect on the Company.
Stock Ownership Guidelines
The Compensation Committee believes that, in order to demonstrate alignment of the interests of management and the directors with the stockholders of the Company, NEO’s and non-employee directors should have and maintain a significant equity stake in the Company. As a result, in February 2022, the Compensation Committee adopted share ownership and retention guidelines applicable to the NEOs and non-employee directors, which require:
•The CEO and the Executive Chairman to hold shares of Company common stock with a fair market value equal to five times their current base salary;
•Other named executive officers to hold shares of Company common stock with a fair market value equal to three times their current base salary; and
•Non-employee directors of the Company to hold shares of Company common stock with a fair market value equal to three times their annual retainer.
The guidelines provide that all owned stock, restricted stock awards and vested performance stock unit awards count towards the ownership guidelines.
The Compensation Committee will monitor compliance with these guidelines on an annual basis. Until the minimum share ownership requirement applicable to an NEO or non-employee director is satisfied, and thereafter whenever the minimum share ownership requirement is not satisfied, such NEO or non-employee director must retain 50% of the net shares received by such person as a result of the exercise of stock options, payout of performance unit awards, or any other award under the Omnibus Incentive Plan. As of March 30, 2022, all of the Company’s NEOs and non-employee directors met the minimum share ownership guidelines, except for Dr. Maryland, who became a member of our Board of Directors in February 2021. The NEOs and non-employee directors must make good faith efforts to satisfy the minimum share ownership requirements described above; however, there is no specific time period in which an NEO or non-employee director must satisfy the minimum share ownership requirements.
Say-on-Pay Feedback from Stockholders
Each year, the Compensation Committee considers the results of the prior year's advisory vote as it reviews and determines the compensation packages of our NEOs. In 2021, we received strong support for our executive compensation program, as approximately 99% of total votes cast on the advisory vote on executive compensation voted to approve the proposal.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with the Company's management and, based on such review and discussions, has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by the Compensation Committee:
T. Devin O'Reilly, Chairman
Brent Turner
Andrew T. Kaplan
John A. Deane
EXECUTIVE COMPENSATION
Overview
This section describes the compensation awarded to, earned by, or paid to our Chief Executive Officer, Michael Doyle, and our two most highly compensated executive officers (other than Mr. Doyle) during 2015, our Executive Vice President and Chief Financial Officer, Teresa Sparks, and our Group President of Surgery Partners’ National Group, John Crysel, who are collectively referred to herein as our “named executive officers.” In 2014, prior to the Symbion acquisition, Ms. Sparks and Mr. Crysel were employed by and received compensation and benefits from Symbion, and decisions regarding the compensation of Ms. Sparks and Mr. Crysel were made by Symbion’s board of directors. Following the Symbion acquisition, our board of directors was responsible for making decisions regarding the compensation of Ms. Sparks and Mr. Crysel. Prior to our IPO, the board of managers of Surgery Center Holdings, LLC was responsible for making decisions regarding the compensation of our named executive officers. Following our IPO, our Compensation Committee oversees our executive compensation program and is responsible for approving the nature and amount of the compensation paid to our executive officers, and administering our equity compensation plans and awards.
On September 30, 2015, Surgery Partners, Inc. became the direct parent and sole member of Surgery Center Holdings, LLC (the "Reorganization"). In connection with the Reorganization, all of the equity interests held by the equity owners of Surgery Center Holdings, LLC immediately prior to the IPO were contributed to Surgery Partners, Inc. in exchange for 33,871,990 shares of common stock of Surgery Partners, Inc. and certain rights to additional payments under a tax receivable agreement. All units and amounts herein reflect the Reorganization that occurred in September 2015.
This section contains certain statements regarding our performance targets and goals. These targets and goals are disclosed in the limited context of our compensation program and should not be understood to be statements of our expectation or estimates of financial results or other guidance. We specifically caution investors not to apply these statements to other contexts.
Summary Compensation Table
The following table summarizes information regarding the compensation awarded to, earned by or paid to our named executive officers during 2015the years ended December 31, 2021, 2020 and 2014.2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(5)(6) | Option Awards(7) | Non-Equity Incentive Plan Compensation (8) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation (9) | Total |
J. Eric Evans Chief Executive Officer | 2021 | 1,050,000 | — | 2,500,000 | — | 750,000 | — | 7,123 | 4,307,123 |
| 2020 | 915,963 | — | 2,250,000 | — | 375,000 | — | 900 | 3,541,863 |
| 2019 | 435,157 | 300,000(4) | 1,382,500 | 2,526,598 | — | — | 675 | 4,644,930 |
Thomas F. Cowhey Former Executive Vice President and Chief Financial Officer (1) | 2021 | 519,231 | — | 1,037,500 | — | 393,750 | — | 7,700 | 1,958,181 |
| 2020 | 481,581 | — | 937,500 | — | 187,500 | — | 3,323 | 1,609,904 |
| 2019 | 469,030 | — | 500,000 | 1,632,464 | 286,875 | — | 900 | 2,889,269 |
Jennifer B. Baldock Executive Vice President, Chief Administrative and Development Officer | 2021 | 420,000 | — | 600,000 | — | 452,000 | 34,036 | 16,100 | 1,522,136 |
| 2020 | 411,097 | — | 576,000 | — | 126,000 | 18,963 | 14,600 | 1,146,659 |
| 2019 | 440,481 | — | 450,000 | 766,372 | 170,000 | 27,991 | 14,500 | 1,869,343 |
Anthony W. Taparo Chief Growth Officer (2) | 2021 | 410,000 | — | 410,000 | — | 326,440 | 133,218 | 15,400 | 1,295,058 |
| 2020 | 404,230 | — | 533,000 | — | 123,000 | 76,749 | 13,577 | 1,150,556 |
Bradley R. Owens President, National Group (3) | 2021 | 391,923 | — | 600,000 | — | 390,000 | — | 6,800 | 1,388,723 |
|
| | | | | | | | | | | | | |
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) |
Michael Doyle Chief Executive Officer | 2015 | 442,308 |
| — |
| — |
| 350,000 |
| 33,310 |
| 825,618 |
|
| | 2014 | 350,000 |
| — |
| — |
| 250,000 |
| 3,840,799 |
| 4,440,799 |
|
Teresa Sparks Executive Vice President and Chief Financial Officer | 2015 | 335,000 |
| 100,000 |
| — |
| 167,500 |
| 8,672 |
| 611,172 |
|
| | 2014 | 267,348 |
| — |
| 940,109 |
| 167,500 |
| 282,793 |
| 1,657,750 |
|
John Crysel Group President of Surgery Partners' National Group | 2015 | 325,000 |
| — |
| — |
| 162,500 |
| 8,445 |
| 495,945 |
|
| | 2014 | 265,682 |
| — |
| 578,528 |
| 133,291 |
| 263,598 |
| 1,241,099 |
|
(1) Amount reflects a bonus payment approved by the BoardMr. Cowhey served as our Executive Vice President and paid to Ms. Sparks in connection with her work during the IPO process.Chief Financial Officer until January 31, 2022.
(2) Amount reflects the full grant date fair value of Class B UnitsMr. Taparo was not a named executive officer in Surgery Center Holdings, LLC, computed2019. Therefore, in accordance with ASC Topic 718,SEC rules, his compensation is only disclosed for the years ended December 31, 2020 and grantedDecember 31, 2021.
(3)Mr. Owens was not a named executive officer in 2014; the Class B Units held by Ms. Sparks were converted into 145,850 shares of common stock of Surgery Partners, Inc. and the Class B Units held by Mr. Crysel were converted into 89,754 shares of common stock of Surgery Partners, Inc., each2020 or 2019. Therefore, in connectionaccordance with the IPO. The assumptions used in the valuation of share awards are set forth in Note 11 to our consolidated financial statements contained in our Annual Report on Form 10-KSEC rules, his compensation is only disclosed for the year ended December 31, 2015.2021.
(3)(4) AmountsReflects a cash payment made in connection with the commencement of Mr. Evans' employment with the Company on April 1, 2019.
(5)Reflects the dollar amounts of the aggregate grant date fair value of stock and PSUs granted to our NEOs, as determined in accordance with FASB ASC Topic 718. These amounts do not reflect the actual amounts that may be paid or realized by our NEOs and exclude the effect of estimated forfeitures. The aggregate grant date fair value of the time-based restricted stock awards was calculated using the closing price of our common stock on the grant date. The aggregate grant date fair value of the PSUs was determined based on the probable outcome of the applicable performance conditions associated with such award. The PSU awards were valued based on a grant date fair value of $42.04 per share (for awards granted in 2021), $6.39 per share (for awards granted in 2020) and $13.42 per share (for awards granted in 2019).
Assuming that the maximum performance goals are attained for the PSUs granted in 2021, 2020 and 2019, the aggregate grant date fair value of the annual bonusesgrants of PSUs would have been:
| | | | | | | | | | | | | | | | | |
| Name | 2021 PSU Awards | | 2020 PSU Awards | | 2019 PSU Awards |
| J. Eric Evans | 1,875,000 | | 1,875,000 | | — |
| Thomas F. Cowhey | 787,500 | | 750,000 | | 374,982 |
| Jennifer B. Baldock | 450,000 | | 450,000 | | 337,500 |
| Anthony W. Taparo | 410,000 | | 410,000 | | — |
| Bradley R. Owens | 400,000 | | — | | — |
The underlying valuation assumptions for PSUs are further disclosed in footnotes to our consolidated financial statements filed with our annual report on Form 10-K for the years ended December 31, 2021 and 2020.
(6)In lieu of making the cash incentive payment earned by Mr. Evans for achieving 2019 performance goals, the Compensation Committee determined that Mr. Evans would be granted a number of shares of common stock in the Company equivalent in value to the cash amounts that each would have received, which was determined based on the closing price of a share of common stock on the Nasdaq Stock Market as of the close of business on March 27, 2020.
In lieu of making the full cash incentive payment earned by each of our named executive officers pursuant to his or her employment agreement, as described below.
(4) Amounts shownshares of common stock in the “All Other Compensation”Company equivalent in value to 50% of the cash amounts that each would have received, which was determined based on the closing price of a share of common stock on the Nasdaq Stock Market as of the close of business on March 26, 2021.
(7)Reflects the grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718. In 2019, after careful analysis and consideration, including consultation with FW Cook, the Compensation Committee determined that the terms of the Leveraged Performance Units ("LPUs") award in 2018 were no longer appropriate to incentivize and retain the Company's current executive management team. As such, in March 2019, the Compensation Committee took action to permit certain NEOs to exchange their LPUs for new stock option awards. For Mr. Cowhey and Ms. Baldock, the amount disclosed reflects the incremental fair value of the stock option awards received in exchange for LPUs, computed in accordance with FASB ASC Topic 718. As a result of the exchanges in March 2019, each of the NEOs set forth in the table below voluntarily exchanged their LPUs for new stock option awards:
| | | | | | | | | | | | | | | | | |
| Named Executive Officer | Exchange/ Grant Date | | Target Number of LPUs replaced with Option Award Shares on Grant Date | | Stock Option Grants |
| Thomas F. Cowhey | 3/15/2019 | | 29,603 | | 403,500 |
| Jennifer B. Baldock | 3/15/2019 | | 22,943 | | 199,500 |
(8)Reflects the dollar amounts of cash incentives earned by our NEOs under our Cash Incentive Plan. Please refer to the section titled "Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Short-Term Incentive Awards" above for additional details regarding our cash incentive program. Does not include awards under the Cash Incentive Plan for which shares of common stock have been issued in lieu of cash incentive payments, which awards are included in the “Stock Awards” column for 2015 and 2014 includeof the Summary Compensation Table.
(9)Reflects the items set forth in the table below, as applicable to each named executive officer for 2015 and 2014:NEO:
| | | | | | | | | | | | | | | | | |
| Name | Year | Company 401(k) match contributions (a) | Company contributions under the SERP (b) | Other (c) | Total |
| J. Eric Evans | 2021 | 5,800 | — | 1,323 | 7,123 |
| 2020 | — | — | 900 | 900 |
| 2019 | — | — | 675 | 675 |
| Thomas F. Cowhey | 2021 | 5,800 | — | 1,900 | 7,700 |
| 2020 | 2,423 | — | 900 | 3,323 |
| 2019 | — | — | 900 | 900 |
| Jennifer B. Baldock | 2021 | 5,800 | 8,400 | 1,900 | 16,100 |
| 2020 | 5,700 | 8,000 | 900 | 14,600 |
| 2019 | 5,600 | 8,000 | 900 | 14,500 |
| Anthony W. Taparo | 2021 | 5,800 | 8,200 | 1,400 | 15,400 |
| 2020 | 4,677 | 8,000 | 900 | 13,577 |
| Bradley R. Owens | 2021 | 5,800 | — | 1,000 | 6,800 |
|
| | | | | | | | | | | | | |
| Name | Year | Company 401(k) match contributions ($)(a) | Company contributions under the SERP ($)(b) | Equity award related payments ($) | Company reimbursements for business-related housing ($) | Other | Total ($) |
| Michael Doyle | 2015 | 5,300 |
| — |
| — |
| 28,010(e) |
| — |
| 33,310 |
|
| | 2014 | 5,200 |
| — |
| 3,807,411(c) |
| 28,188(e) |
| — |
| 3,840,799 |
|
| Teresa Sparks | 2015 | 1,072 |
| 6,700 |
| — |
| — |
| 900(f) |
| 8,672 |
|
| | 2014 | 1,076 |
| 4,998 |
| 275,819(d) |
| — |
| 900(f) |
| 282,793 |
|
| John Crysel | 2015 | 1,045 |
| 6,500 |
| — |
| — |
| 900(f) |
| 8,445 |
|
| | 2014 | 1,179 |
| 4,998 |
| 256,521(d) |
| — |
| 900(f) |
| 263,598 |
|
(a)Reflects ourCompany matching contributions to the Surgery PartnersCompany's 401(k) Plan on behalf of Mr. Doyle, or to the Symbion, Inc. 401(k) Plan on behalf of Ms. Sparks and Mr. Crysel, both of which areis a broad-based tax-qualified defined contribution plans.plan.
(b)Reflects ourCompany contributions to the Symbion, Inc. Supplemental Executive Retirement Plan, a nonqualified deferred compensation plan, on behalfplan.
(c) Reflects the dollar amount of a cash distribution received by Mr. Doyle in respect of his vested Class B Units in connection with a recapitalization of the Company that occurred in January 2014. All Class B Units were converted to shares of our common stock in connection with the IPO (as described below).
(d) Reflects the dollar amounts received by Ms. Sparks and Mr. Crysel in connection with the cancellation of their Symbion stock options in connection with the Symbion acquisition.
(e) Reflects our reimbursements of business travel related housing costs for Mr. Doyle.
(f) Reflects cell phone reimbursement and Company contributions to the NEOs health savings accounts for the respective officers.applicable year.
2021 Grants of Plan-Based Awards
The following table sets forth information regarding grants of non-equity and equity-based awards granted to each of our NEOs during the year ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All other stock awards: Number of shares of stock (# of shares) | Grant Date fair value of stock and option awards |
| Name | Type of Award | Grant Date | Threshold | Target | Maximum | Threshold (# of shares) | Target (# of shares) | Maximum (# of shares) |
| J. Eric Evans | Cash Incentive | — | 187,500 | 750,000 | 1,500,000 | — | — | — | — | — |
Restricted Stock (2) | 3/10/21 | — | — | — | — | — | — | 14,866 | 625,000 (7) |
Restricted Stock (6) | 3/10/21 | — | — | — | — | — | — | 14,866 | 625,000 (7) |
PSUs (3) | 3/10/21 | — | — | — | 3,717 | 14,866 | 29,732 | — | 625,000 (8) |
PSUs (4) | 3/10/21 | — | — | — | — | 14,866 | — | — | 625,000 (8) |
Unrestricted Stock (5) | 3/26/21 | — | — | — | — | — | — | 8,571 | 375,000 |
| Thomas F. Cowhey | Cash Incentive | — | 98,438 | 393,750 | 787,500 | — | — | — | — | — |
Restricted Stock (2) | 3/10/21 | — | — | — | — | — | — | 6,244 | 262,500 (7) |
Restricted Stock (6) | 3/10/21 | — | — | — | — | — | — | 5,946 | 250,000 (7) |
PSUs (3) | 3/10/21 | — | — | — | 1,561 | 6,244 | 12,488 | — | 262,500 (8) |
PSUs (4) | 3/10/21 | — | — | — | — | 6,244 | — | — | 262,500 (8) |
Unrestricted Stock (5) | 3/26/21 | — | — | — | — | — | — | 4,285 | 187,500 |
| Jennifer B. Baldock | Cash Incentive | — | 63,000 | 252,000 | 504,000 | — | — | — | — | — |
Restricted Stock (2) | 3/10/21 | — | — | — | — | — | — | 5,352 | 225,000 (7) |
Restricted Stock (6) | 3/10/21 | — | — | — | — | — | — | 3,568 | 150,000 (7) |
PSUs (3) | 3/10/21 | — | — | — | 1,338 | 5,352 | 10,704 | — | 225,000 (8) |
Unrestricted Stock (5) | 3/26/21 | — | — | — | — | — | — | 2,880 | 126,000 |
| Anthony W. Taparo | Cash Incentive | — | 61,500 | 246,000 | 492,000 | — | — | — | — | — |
Restricted Stock (6) | 3/10/21 | — | — | — | — | — | — | 4,876 | 205,000 (7) |
PSUs (3) | 3/10/21 | — | — | — | 1,219 | 4,876 | 9,752 | — | 205,000 (8) |
Unrestricted Stock (5) | 3/26/21 | — | — | — | — | — | — | 2,811 | 123,000 |
| Bradley R. Owens | Cash Incentive | — | 60,000 | 240,000 | 480,000 | — | — | — | — | — |
Restricted Stock (2) | 3/10/21 | — | — | — | — | — | — | 4,757 | 200,000 (7) |
Restricted Stock (6) | 3/10/21 | — | — | — | — | — | — | 4,757 | 200,000 (7) |
PSUs (3) | 3/10/21 | — | — | — | 1,189 | 4,757 | 9,514 | — | 200,000 (8) |
Unrestricted Stock (5) | 3/26/21 | — | — | — | — | — | — | 2,085 | 91,250 |
_______
(1)Reflects annual cash incentive opportunities granted under our Cash Incentive Plan. Each eligible NEO was eligible to receive a target annual bonus that is equal to a percentage of his or her annual base salary. For 2021, the target bonus opportunity as a percentage of base salary for each of our eligible NEOs, except for Mr. Evans was as follows: Mr. Cowhey - 75%, Ms. Baldock - 60%, Mr. Taparo - 60% and Mr. Owens - 60%. For 2021, the target bonus opportunity for Mr. Evans was $750,000. Mr. Cowhey resigned as our Executive Vice President and Chief Financial Officer effective January 31, 2022, and as a result, did not receive an incentive payment for 2021. See "Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Short-Term Incentive Awards" for additional information.
(2)Reflects grants of restricted stock awards to our NEOs under our equity incentive plan, as described in "Compensation Discussion and Analysis - Long-Term Incentive Awards - 2021 Annual Awards" above. Each restricted stock award will vest as to one-third of the award on each of the first, second and third anniversaries of the date of grant, generally contingent upon continued employment through each such vesting date (except as expressly provided in the award agreement evidencing the grant of such restricted stock award).
(3)Reflects the threshold, target and maximum future payouts under the PSUs granted to our NEOs under our equity incentive plan. PSUs provide our NEOs with the opportunity to earn a specified number of shares of common stock based on achievement of certain Company performance objectives over a one-year period, and then are subject to an additional two-year vesting schedule (generally subject to the executive's continued employment), thereby creating a three-year incentive and alignment period. For a
description of the PSU vesting terms, see "Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Long-Term Incentive Awards - 2021 Annual Awards."
(4)Reflects the target future payout under special PSUs granted to the NEO. These PSUs provide the NEOs with the opportunity to earn an additional specified number of shares of common stock based on achievement of certain Company performance objectives over a one-year period, and then are subject to an additional two-year vesting schedule (generally subject to the executive's continued employment), thereby creating a three-year incentive and alignment period. For a description of the PSU vesting terms, see "Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Long-Term Incentive Awards - 2021 Special Awards."
(5)Reflects award of unrestricted common stock in lieu of, and in full settlement of, 50% of the cash incentive award earned by the NEO in 2020 under the Cash Incentive Plan. The grant date fair value of these awards is included in the 2021 “Stock Awards” column in the Summary Compensation Table.
(6)Reflects grants of restricted stock awards to our NEOs under our equity incentive plan, as described in "Compensation Discussion and Analysis - Long-Term Incentive Awards - 2021 Special Awards" above. Each restricted stock award will vest as to one-half of the award on each of the first and second anniversaries of the date of grant, generally contingent upon continued employment through each such vesting date (except as expressly provided in the award agreement evidencing the grant of such restricted stock award).
(7)Reflects the aggregate grant date fair value of time-based restricted stock awards granted to our NEOs in 2021, as determined in accordance with FASB ASC Topic 718. These amounts do not reflect the actual amounts that may be paid or realized by our NEOs and exclude the effect of estimated forfeitures. The aggregate grant date fair value of the time-based restricted stock awards was calculated using the closing price of a share of the Company's common stock on the date of grant.
(8)Reflects the aggregate grant date fair value of PSUs granted to NEOs in 2021, as determined in accordance with FASB ASC Topic 718. These amounts do not reflect the actual amounts that may be paid or realized by our NEOs and exclude the effect of estimated forfeitures. The aggregate grant date fair value of the PSUs was determined based on the probable outcome of the applicable performance conditions associated with such award. The award was valued using the closing price of a share of the Company's common stock on the date of grant.
Narrative Disclosure to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table
2015 Base Salaries
EachWe have entered into employment agreements with each of our named executive officers is paid a base salary reflecting his or her skill set, experience, role and responsibilities. TheNEOs. A summary of certain terms follows:
J. Eric Evans. Pursuant to Mr. Evans' employment agreement, as amended, Mr. Evans receives an annual base salary of each$1,050,000, subject to adjustment at the discretion of our named executive officers is set forth in his or her employment agreement (described below under “--Agreements with our named executive officers - Base salaries and performance bonus opportunities”)Compensation Committee, and is subject to annual review and adjustment by our board of directors.
Effective as of January 2015, Mr. Doyle's base salary was increased from $350,000 to $450,000, in connection with the amendment and restatement of his prior employment agreement.
2015 Cash Bonuses
In 2015, each of our named executive officers was eligible to earn a cash bonus based on the achievement of specified financial performance targets for the Company that are established by the Board annually as stated within the named executive officer’s employment agreement. Mr. Doyle was eligible to earnreceive an annual bonus upwith a target amount equal to $350,000 and Ms. Sparks was$750,000. Mr. Evans is eligible to earn a target annual bonus equal to 50% of her base salary,participate in each case under the Company's annual cash bonus program based on the achievementemployee benefit programs for senior executives. Mr. Evans is entitled to benefits upon certain terminations of specified EBITDA targets for the Company for 2015employment, as established by the Board. Mr. Crysel was eligible to earn a target annual bonus equal to 50% of his base salary under the Company's annual cash bonus program based equally on the achievement of specified EBITDA targets for 2015 and certain operational targets specific to the business unit Mr. Crysel was responsible for operating.described in "Executive Compensation - Potential Payments upon Termination or Change in Control" below.
The actual amount earned by each named executive officer was determined by our Board based on the level of achievement of the applicable performance targets. The Company’s financial performance targets were achieved at 100%
Thomas F. Cowhey. As a result, each named executive officer earned a bonus at the target levels described above.
In addition, Ms. Sparks received a one-time cash bonus of $100,000 approved by the Board related to her work during the IPO process.
The actual amount of each of the bonuses paid to our named executive officers for 2015 is set forth above in the Summary Compensation Table in the columns entitled “Non-Equity Incentive Plan Compensation” and “Bonus.”
Agreements With Our Named Executive Officers
Each of our named executive officers entered into an amended and restated employment agreement with both us and either Surgery Centers, LLC (Mr. Doyle) or Symbion, Inc. (Ms. Sparks and Mr. Crysel) in connection with our IPO. The terms of the employment agreements, as so amended, are reflected below.
Base Salaries & Performance Bonus Opportunities
Pursuant to his amended and restatedMr. Cowhey's employment agreement, Mr. Doyle is entitled toCowhey receives an annual base salary of $450,000, whichsubject to adjustment at the discretion of the Board or our Compensation Committee, and is eligible to receive an annual bonus with a target amount equal to 75% of his base salary. For information regarding Mr. Cowhey's base salary and bonus eligibility in 2021, please see "Compensation Discussion and Analysis." Mr. Cowhey is eligible to participate in the Company's employee benefit programs for senior executives. For a description of the payments and benefits Mr. Cowhey may be entitled to in connection with a termination of employment, see "- Potential Payments upon Termination or Change in Control" below.
Jennifer B. Baldock. Pursuant to Ms. Baldock's amended and restated employment agreement, Ms. Baldock receives an annual base salary that was increased from $420,000 in 2021 to $535,000 in 2022 and is subject to increase by the Board or the Compensation Committee of the Board. Mr. DoyleCommittee. Ms. Baldock is also eligible to earn an annual cash bonus of up to $350,000, based uponon the achievement of certain performance goals determinedwith a target of 60% of her base salary. For information regarding Ms. Baldock's base salary and bonus eligibility in 2021, please see "Compensation Discussion and Analysis." Ms. Baldock is eligible to participate in our employee benefit plans, as may be in effect from time to time. For a description of the payments and benefits Ms. Baldock may be entitled to in connection with a termination of employment, see "- Potential Payments upon Termination or Change in Control" below.
Anthony W. Taparo. Pursuant to Mr. Taparo’s employment agreement, Mr. Taparo receives an annual base salary that was increased from $410,000 in 2021 to $450,000 in 2022 and is subject to modification by the Board or the Compensation Committee of the Board.
Pursuant to her amended and restated employment agreement, Ms. Sparks is entitled to an annual base salary of $335,000, which is subject to adjustment by the Board or the Compensation Committee of the Board. Ms. SparksCommittee. Mr. Taparo is also eligible to earn an annual cash bonus based on the achievement of certain performance goals with a target of 50%60% of herhis base salary. For information regarding Mr. Taparo's base salary and bonus eligibility in 2021, please see "Compensation Discussion and Analysis." Mr. Taparo is eligible to participate in our employee benefit plans, as may be in effect from time to time. For a description of the payments and benefits Mr. Taparo may be entitled to in connection with a termination of employment, see "- Potential Payments upon Termination or Change in Control" below.
Bradley R. Owens. Pursuant to Mr. Owens' employment agreement, Mr. Owens receives an annual base salary based upon the achievement of performance goals determinedthat was increased from $400,000 in 2021 to $500,000 in 2022 and is subject to modification by the Board or the Compensation Committee of the Board.
Pursuant to his amended and restated employment agreement,Committee. Mr. CryselOwens is entitled to an annual base salary of $325,000, which is subject to adjustment by the Board or the Compensation Committee of the Board. Mr. Crysel is also eligible to earn an annual cash bonus based on the achievement of certain performance goals with a target of 50%60% of his annualbase salary. For information regarding Mr. Owens' base salary based uponand bonus eligibility in 2021, please see "Compensation Discussion and Analysis." Mr. Owens is eligible to participate in the achievement of performance goals determined by the Board or the Compensation CommitteeCompany's employee benefit plans, as may be in effect from time to time. For a description of the Board.
Restrictive Covenants
Pursuantpayments and benefits Mr. Owens may be entitled to their respective employment agreements, our named executive officers are bound by certain restrictive covenants, including covenants relating to confidentiality and assignment of intellectual property rights, as well as covenants not to competein connection with us or to solicit our employees or other service providers during employment and for a specified period following termination of employment. Mr. Doyle is bound by a non-competition covenant for two years following termination of employment, or at the Company’s option and in exchange for a payment equal to two times his annual base salary for three years following termination of employment, and is bound by a non-solicitation covenant for three years following termination of employment. Ms. Sparks and Mr. Crysel are bound by a non-competition covenant for one year following termination of employment, and by a non-solicitation covenant for two years following termination of employment.
Severance
Each employment agreement provides for severance upon a termination of employment, by us without causesee "- Potential Payments upon Termination or by the named executive officer for good reason,Change in each case conditioned on the named executive officer’s timely and effective execution of a release of claims acceptable to Surgery Partners, Inc. and either Surgery Centers, LLC (Mr. Doyle) or Symbion, Inc. (Ms. Sparks and Mr. Crysel), as applicable, and other customary terms and conditions. Mr. Doyle is entitled to severance consisting of continued base salary and fully-reimbursed health care premium payments including a tax gross-up for a period of 12 months following termination, and a pro rata bonus for the year of termination. Ms. Sparks and Mr. Crysel are each entitled to severance consisting of 12 months of continued base salary, an amount equal to their target bonus payable within two and a half months following the end of the fiscal year of termination, and continued health and welfare plan benefits at no cost to the executive during the severance period. Under Ms. Sparks and Mr. Crysel’s employment agreements, if a qualifying termination occurs within 12 months following a change in control, Ms. Sparks and Mr. Crysel are entitled to be paid the severance benefits described above in a single lump-sum payment no later than 30 days following termination.Control" below.
Equity-Based Compensation
Our named executive officers were not granted any Class B Units or equity awards in respect of shares of our common stock during 2015.
Prior to our IPO,In addition, each of our named executive officers was granted Class B Unitseligible NEOs received equity grants under the Surgery Center Holdings, LLC AmendedOmnibus Incentive Plan, as described in "Short-Term Incentive Awards" and Restated Limited Liability Company Agreement (the “LLC Agreement”). In connection with our IPO, all of"Long-Term Incentive Awards" in the outstanding vested"Compensation Discussion and unvested Class B Units in Surgery Center Holdings, LLC were converted into a number of vested and unvested shares of our common stock, respectively. All outstanding unvested Class B Units held by our named executive officers at the time of the IPO became immediately vested.Analysis" section above.
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Employee Benefits and Perquisites
All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including medical, dental, vision, life and disability insurance. Our named executive officers participate in these plans on the same basis as other eligible employees. Ms. Sparks and Mr. Crysel participate in the health and welfare plans maintained for employees of Symbion, Inc. We do not maintain any supplemental health and welfare plans for our named executive officers.
In 2015, we reimbursed Mr. Doyle for housing costs necessary to support his traveling several days per week to work in our corporate offices in Chicago, Illinois and Nashville, Tennessee. The value of this benefit is included above in the “All Other Compensation” column of the Summary Compensation Table.
Our named executive officers were also entitled to cell phone reimbursement in 2015. The aggregate dollar value of these benefits is less than $1,000 per executive.
Retirement Plans
We maintain a 401(k) plan in which employees of the Company, including Mr. Doyle, who meet certain eligibility requirements are eligible to participate. We also continue to maintain the Symbion, Inc. 401(k) plan, in which employees of Symbion, Inc. who meet certain eligibility requirements, including Ms. Sparks and Mr. Crysel, are eligible to participate. Each of the 401(k) plans is a tax-qualified defined contribution retirement plan under which eligible employees may defer their eligible compensation, subject to the limits imposed by the Internal Revenue Code, and the Company may, in its discretion, make a matching contribution.
We also maintain the Symbion, Inc. Supplemental Executive Retirement Plan (the “SERP”), a nonqualified deferred compensation plan, for certain former management of Symbion, Inc., including Ms. Sparks and Mr. Crysel. Under the SERP, participants may elect to defer up to 25% of annual base salary and up to 50% of bonus each year. Eligible employees who elect to defer are also entitled to an annual Company contribution under the SERP equal to 2% of base salary.
Outstanding Equity Awards at Fiscal Year-End
In connection with our IPO, all of the outstanding unvested Class B Units in Surgery Center Holdings, LLCThe following table sets forth information regarding equity awards held by our named executive officers became immediatelyNEOs as of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price | Option Expiration Date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested (12) | Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not yet vested (#) | Equity Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not yet vested (12) |
| J. Eric Evans | 333,332 (1) | 166,668 (1) | 11.54 | 4/1/2029 | — | — | — | — |
| — | — | — | — | 28,885 (3) | 1,542,748 | — | — |
| — | — | — | — | 65,206 (6) | 3,482,652 | — | — |
| — | — | — | — | 97,809 (7) | 5,223,979 | — | — |
| — | — | — | — | 14,866 (8) | 793,993 | — | — |
| — | — | — | — | 14,866 (9) | 793,993 | — | — |
| — | — | — | — | — | — | 14,866 (10) | 793,993 |
| — | — | — | — | — | — | 14,866 (11) | 793,993 |
| Thomas F. Cowhey | 268,998 (2) | 134,502 (2) | 13.42 | 3/15/2029 | — | — | — | — |
| — | — | — | — | 6,210 (4) | 331,676 | — | — |
| — | — | — | — | 9,314 (5) | 497,461 | — | — |
| — | — | — | — | 26,082 (6) | 1,393,040 | — | — |
| — | — | — | — | 39,123 (7) | 2,089,559 | — | — |
| — | — | — | — | 6,244 (8) | 333,492 | — | — |
| — | — | — | — | 5,964 (9) | 318,537 | — | — |
| — | — | — | — | — | — | 6,244 (10) | 333,492 |
| — | — | — | — | — | — | 6,244 (11) | 333,492 |
| Jennifer B. Baldock | 132,999 (2) | 66,501 (2) | 13.42 | 3/15/2029 | — | — | — | — |
| — | — | — | — | 5,590 (4) | 298,562 | — | — |
| — | — | — | — | 8,383 (5) | 447,736 | — | — |
| — | — | — | — | 23,474 (6) | 1,253,746 | — | — |
| — | — | — | — | 35,211 (7) | 1,880,620 | — | — |
| — | — | — | — | 5,352 (8) | 285,850 | — | — |
| — | — | — | — | 3,568 (9) | 190,567 | — | — |
| — | — | — | — | — | — | 5,352 (10) | 285,850 |
| Anthony W. Taparo | 99,000 (2) | 49,500 (2) | 13.42 | 3/15/2029 | — | — | — | — |
| — | — | — | — | 4,348 (4) | 232,227 | — | — |
| — | — | — | — | 6,520 (5) | 348,233 | — | — |
| — | — | — | — | 21,388 (6) | 1,142,333 | — | — |
| — | — | — | — | 32,081 (7) | 1,713,446 | — | — |
| — | — | — | — | 4,876 (8) | 260,427 | — | — |
| — | — | — | — | — | — | 4,876 (10) | 260,427 |
| Bradley R. Owens | — | — | — | — | 19,040 (6) | 1,016,926 | — | — |
| — | — | — | — | 28,560 (7) | 1,525,390 | — | — |
| — | — | — | — | 4,757 (8) | 254,071 | — | — |
| — | — | — | — | 4,757 (9) | 254,071 | — | — |
| — | — | — | — | — | — | 4,757 (10) | 254,071 |
_______
(1)Represents non-qualified stock options granted on April 1, 2019 to Mr. Evans in connection with the commencement of his employment with the Company, which are generally subject to the following performance and time-vesting criteria: (a) one-third becomes vested in three equal installments on each of December 31, 2020, December 31, 2021 and December 31, 2022, generally contingent upon continued employment through each applicable vesting date (each, a "Time Condition"); (b) one-third becomes vested upon (I) satisfaction of each Time Condition and (II) achievement by the Company of an average closing price of a share
of common stock on the Nasdaq Stock Market of $25.00 over any period of 30 consecutive trading days; and (c) one-third becomes vested upon (I) satisfaction of each Time Condition and (II) achievement by the Company of an average closing price of a share of common stock on the Nasdaq Stock Market of $35.00 over any period of 30 consecutive trading days. The only remaining condition to be satisfied is the Time Condition vesting on December 31, 2022.
(2)Represents non-qualified stock options granted on March 15, 2019, in exchange for the cancellation of previously issued LPUs. The non-qualified stock options are generally subject to the following performance and vesting criteria: (a) one-third becomes vested in three equal installments on each of December 31, 2020, December 31, 2021, and December 31, 2022, generally contingent upon continued employment through each applicable vesting date (each, a "Time Condition"); (b) one-third becomes vested upon (I) satisfaction of each Time Condition and (II) achievement by the Company of an average closing price of a share of common stock on the Nasdaq Stock Market of $25.00 over any period of 30 consecutive trading days; and (c) one-third becomes vested upon (I) satisfaction of each Time Condition and (II) achievement by the Company of an average closing price of a share of common stock on the Nasdaq Stock Market of $35.00 over any period of 30 consecutive trading days. The only remaining condition to be satisfied is the Time Condition vesting on December 31, 2022.
(3)Represents remaining one-third of restricted stock awards granted on April 1, 2019 to Mr. Evans in connection with his employment by the Company, of which one-third of the original award vests upon the first, second and third anniversaries of the date of grant, generally subject to continued employment through each vesting date.
(4)Represents remaining one-third of restricted stock awards granted on March 15, 2019, of which one-third of the original award vests upon the first, second and third anniversaries of the date of grant, generally subject to continued employment through each vesting date.
(5)Represents PSUs granted on March 15, 2019, which were converted into sharesdeemed earned on March 13, 2020 of Surgery Partners, Inc. common stock. In addition, our named executive officerswhich one-half vest on each March 13, 2021 and 2022.
(6)Represents remaining one-third of restricted stock awards granted on March 13, 2020, of which one-third of the original award vests upon the first, second and third anniversaries of the date of grant, generally subject to continued employment through each vesting date.
(7)Represents PSUs granted on March 13, 2020, which were deemed earned on February 24, 2021 of which one-half vest on each February 24, 2022 and 2023.
(8)Represents restricted stock awards granted on March 10, 2021, of which one-third of the award vests upon the first, second and third anniversaries of the date of grant, generally subject to continued employment through each vesting date.
(9)Represents special restricted stock awards granted on March 10, 2021, of which one-half of the award vests upon the first and second anniversaries of the date of grant, generally subject to continued employment through each vesting date.
(10)Represents PSUs granted on March 10, 2021, which vest as set forth in the section titled "Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Long-Term Incentive Awards - 2021 Annual Awards."
(11)Represents special PSUs granted on March 10, 2021, which vest as set forth in the section titled "Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Long-Term Incentive Awards - 2021 Special Awards." These special awards were not granted any Class B Units or equity awards in respectdeemed earned by the Compensation Committee as the Adjusted EBITDA target was not met.
(12)Based on the closing price of sharesa share of our common stock on December 31, 2021 of $53.41, except as otherwise indicated.
2021 Option Exercises and Stock Vested
The NEOs did not exercise options during 2015. As a result, none2021. The following table sets forth information regarding stock awards held by our NEOs that vested during the year ended December 31, 2021.
| | | | | | | | | | | |
| | Stock Awards |
| Name | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting |
| J. Eric Evans | | 28,885 (5) | 1,278,450 |
| | 32,603 (6) | 1,371,282 |
| | 8,571 (7) | 374,981 |
| Thomas F. Cowhey | | 4,917 (2) | 214,381 |
| | 6,209 (3) | 261,151 |
| | 9,314 (4) | 391,747 |
| | 13,041 (6) | 548,504 |
| | 4,285 (7) | 187,469 |
| Jennifer B. Baldock | | 4,375 (1) | 190,356 |
| | 5,588 (3) | 235,031 |
| | 8,383 (4) | 352,589 |
| | 11,737 (6) | 493,658 |
| | 2,880 (7) | 126,000 |
| Anthony W. Taparo | | 3,402 (1) | 148,021 |
| | 4,346 (3) | 182,793 |
| | 6,520 (4) | 274,231 |
| | 10,693 (6) | 449,748 |
| | 2,811 (7) | 122,981 |
| Bradley R. Owens | | 9,520 (6) | 400,411 |
| | 2,085 (7) | 91,219 |
_______
(1)Represents one-third of the award of restricted stock granted on March 16, 2018 that vested on March 16, 2021. The closing price per share of our named executive officers held unvested sharescommon stock on March 15, 2021 (the last trading date prior to the vesting date) was $43.51.
(2)Represents one-third of Surgery Partners, Inc.the award of restricted stock granted on April 2, 2018 that vested on April 2, 2021. The closing price per share of our common stock on April 1, 2021 (the last trading date prior to the vesting date) was $43.60.
(3)Represents one-third of the award of restricted stock granted on March 15, 2019 that vested on March 15, 2021. The closing price per share of our common stock on March 12, 2021 (the last trading date prior to the vesting date) was $42.06.
(4)Represents PSUs granted on March 15, 2019 that became earned as of March 13, 2020, and of which one-half vested on March 13, 2021. The closing price per share of our common stock on March 12, 2021 (the last trading date prior to the vesting date) was $42.06.
(5)Represents one-third of the award of restricted stock granted on April 1, 2019 that vested on April 1, 2021. The closing price per share of our common stock on March 31, 2021 (the last trading date prior to the vesting date) was $44.26.
(6)Represents one-third of the award of restricted stock granted on March 13, 2020 that vested on March 13, 2021. The closing price per share of our common stock on March 12, 2021 (the last trading date prior to the vesting date) was $42.06.
(7)Represents unrestricted common stock granted on March 26, 2021 in lieu of, and in full settlement of, 50% of the cash incentive award under the cash incentive plan for performance in 2020. The closing price per share of our common stock on March 25, 2021 (the last trading date prior to the grant date) was $43.75.
Nonqualified Deferred Compensation
The following table sets forth information regarding the value of accumulated benefits of our NEOs under our nonqualified deferred compensation arrangements as of December 31, 2015.2021.
| | | | | | | | | | | | | | | | | |
| Name | Executive contributions in last fiscal year (1) | Company contributions in last fiscal year (2) | Aggregate earnings in last fiscal year (3) | Aggregate withdrawals/ distributions | Aggregate balance at last fiscal year end |
| J. Eric Evans | — | — | — | — | — |
| Thomas F. Cowhey | — | — | — | — | — |
| Jennifer B. Baldock | 10,920 | 8,400 | 34,036 | — | 217,300 |
| Anthony W. Taparo | 24,600 | 8,200 | 133,218 | — | 704,071 |
| Bradley R. Owens | — | — | — | — | — |
_______
(1)Reflects contributions by each of our eligible NEOs to the Symbion, Inc. Supplemental Executive Retirement Plan (the "SERP") during 2021.
(2)Reflects Company contributions to the SERP on behalf of each of our eligible NEOs during 2021.
(3)Reflects aggregate earnings accrued on the accounts of each of our eligible NEOs during 2021.
Ms. Baldock and Mr. Taparo have participated in the SERP, a nonqualified deferred compensation plan sponsored by Symbion, which is an unfunded plan available to executives and certain key employees and directors of Symbion, an indirect subsidiary of the Company. Under the SERP, participants are permitted to defer up to 25% of their annual base salary and up to 50% of their bonus each year. Symbion makes a matching contribution for each participant who contributed at least 2% of base salary earned during such plan year and who was employed as of the last day of the plan year. Each Symbion contribution is subject to forfeiture for one year following the contribution. Symbion does not provide above-market or preferential earnings on deferred compensation.
Potential Payments upon Termination or Change in Control
Employment Agreement-Related Severance Benefits for our NEOs Employed at the End of 2021
As described above under the heading "Executive Compensation - Narrative Disclosure to Summary Compensation Table and 2021 Grants of Plan-Based Awards Table," we have entered into employment agreements with each of our continuing NEOs, which were amended and restated effective March 8, 2022 (except for Mr. Evans). Each of our NEOs is entitled to receive certain benefits upon a qualifying termination of employment and/or upon certain change in control transactions accompanied by a qualifying termination of employment within a certain period of time following such transaction. The following discussion is based on the employment agreements in effect as of December 31, 2021. The employment agreements provide for severance upon a termination of employment by us without cause or by the executive for good reason (and in the case of Mr. Taparo, if his employment agreement is not renewed or expires upon its terms), in each case conditioned on the executive's timely and effective execution of a release of claims acceptable to the Company, and other customary terms and conditions.
Each of our NEOs (except Messrs. Cowhey, Evans and Owens) is entitled to severance consisting of 12 months of continued base salary, an amount equal to their target bonus payable within two and a half months following the end of the fiscal year of termination, and continued health and welfare plan benefits at no cost to the executive during the severance period. Under the employment agreements with each of our NEOs (except for Mr. Evans), if a qualifying termination occurs within 12 months following (or within the 90 days prior to or 18 months following in the case of Mr. Cowhey) a change in control, the executive is entitled to be paid the severance benefits described above in a single lump-sum payment no later than 30 days following termination.
Mr. Cowhey is entitled to severance consisting of 12 months of continued base salary, an amount equal to his target bonus payable within two and a half months following the end of the fiscal year of termination paid in a lump sum at the time that bonuses are regularly paid to employees, any awarded but unpaid bonus amount from the previous year and continued health and welfare plan benefits at no cost to the executive during the severance period. In addition, Mr. Cowhey is also entitled to one year of accelerated vesting for any outstanding time-based restricted stock awards and earned but unvested PSUs as of the termination date. However, if Mr. Cowhey’s employment is terminated without cause or for good reason by Mr. Cowhey before the Performance Period End Date (as defined in the PSU award agreement) and a change in control occurs within 90 days of such termination, then certain terms of the award agreement shall apply to determine earned shares as if Mr. Cowhey were still employed by the Company. Mr. Cowhey resigned as our Executive Vice President and Chief Financial Officer effective January 31, 2022, but Mr. Cowhey agreed to remain with the Company through the end of February 2022. In recognition of his service to the Company, the Board agreed to the vesting of all of Mr. Cowhey’s outstanding, unvested PSUs and restricted stock awards that vested in March 2022.
Mr. Evans is entitled to severance consisting of 12 months of continued base salary, an amount equal to his target bonus payable when such bonuses are paid to employees, and 12 months of COBRA coverage following the date of such termination at no cost to Mr. Evans during the severance period.
In addition to the severance described above, pursuant to each of their employment agreements, each of Ms. Baldock and Mr. Taparo are also entitled to one year of accelerated vesting for any outstanding time-based restricted stock awards and earned but unvested PSUs as of the termination date.
Mr. Owens is entitled to severance consisting of 12 months of continued base salary, an amount equal to his target bonus payable within two and a half months following the end of the fiscal year of termination, and continued health and welfare plan benefits at the same cost to Executive as if Executive were an active employee of the Company during the severance period. In addition, if Mr. Owens’ employment is terminated without cause or for good reason by Mr. Owens before the Performance Period End Date (as defined in the PSU award agreement) he is also entitled to accelerated vesting for any outstanding time-based restricted stock awards and earned but unvested PSUs to the vesting event next following the termination date.
Recent Amendments to NEO Employment Agreements
Effective as of March 8, 2022, the Company amended and restated existing employment agreements with Ms. Baldock and Messrs. Owens and Taparo. Although the amended and restated agreements did not result in material changes to each applicable NEO’s existing compensation arrangements, they were adopted to, among other things, (i) update each applicable NEO’s base compensation to 2022 levels (see “Compensation Discussion and Analysis - Elements of Named Executive Officer Compensation - Base Salary”) and (ii) align and update severance terms.
Following the adoption of the amended and restated employment agreements, if Ms. Baldock’s or Messrs. Owens’ or Taparo’s employment is terminated without cause or for good reason, then such NEO is entitled to severance consisting of 12 months of continued base salary, an amount equal to their target bonus payable within three months following the end of the fiscal year of termination, and continued health and welfare plan benefits at the same cost to such NEO as if the NEO were an active employee of the Company during the severance period. In addition, if Ms. Baldock’s of Messrs. Owens’ or Taparo’s employment is terminated without cause or for good reason such NEO is entitled to accelerated vesting of time-based restricted stock awards and of earned PSUs to the vesting event next following the date on which the employment period is terminated. Furthermore, with respect to PSU awards granted after December 31, 2021, held by such as of the date on which the employment is terminated without cause or for good reason that have not been converted to earned PSUs, such NEO’s rights under the award will be fully vested based on the number of shares that would be earned under the award based on performance measured through the end of the employment period.
Finally, under the amended and restated employment agreements with each of Ms. Baldock and Messrs. Owens and Taparo, if a qualifying termination occurs within the 90 days prior to or 12 months following a change in control, the applicable NEO is entitled to be paid the severance benefits described above in a single lump-sum payment.
Other Equity-Related Severance and Change of Control Benefits
Restricted Stock Awards
In accordance with our NEOs' restricted stock award agreements, unvested restricted stock is forfeited upon a termination of employment, except that the vesting of any unvested restricted stock will become immediately accelerated in full (1) on a termination of employment by the NEO due to death or disability, or (2) on a termination of employment by the Company without "cause" or resignation by the executive for "good reason" (each as defined in the applicable award agreement) within 90 days prior to or 18 months following a change in control. If, in connection with a change in control, unvested shares of restricted stock are not assumed or continued, or a new award substituted for the unvested shares of restricted stock, such unvested shares will automatically vest in full.
Performance Stock Units
In accordance with our NEOs' PSU award agreements, upon a termination of employment for any reason, (1) any PSUs that are not yet earned are immediately forfeited, and (2) any PSUs that are earned but unvested are immediately forfeited, except that the vesting of any unvested earned PSUs will become immediately accelerated in full (a) on a termination of employment by the NEO due to death or disability, or (b) on a termination of employment by the Company without "cause" or resignation by the executive for "good reason" (each as defined in the applicable award agreement) within 90 days prior to or 18 months following a change in control.
If a change in control occurs during the performance period, the Compensation Committee will determine the extent to which the performance criteria has been satisfied and the number of PSUs that have been earned based on such performance criteria as of the change in control (which is prorated based on the number of days that have elapsed during the performance period). Thereafter, earned PSUs, if any, continue to vest solely based on time in accordance with the terms of the award agreement. If, in connection with a
change in control, earned PSUs are not assumed or continued, or a new award substituted for the earned PSUs, the earned PSUs will automatically vest in full.
Stock Option Awards
In accordance with our NEOs' stock option award agreements, if any of our continuing NEOs employment is terminated without cause or for good reason by such NEO within 90 days prior to or 18 months following a change in control, then the stock option awards, to the extent outstanding and which have not previously vested in accordance with Time Condition shall automatically be deemed to have vested immediately prior to such NEO’s cessation of employment with the Company; provided, however, that the performance vesting requirements of such stock option awards shall remain in full force and effect. For purposes of satisfying the "Time Condition" portion of the stock option awards vesting, one-third (1/3) shall vest in three equal installments on each of December 31, 2020, December 31, 2021, and December 31, 2022, generally contingent upon continued employment through each applicable vesting date.
Other Terms and Conditions
Pursuant to their respective employment agreements, our NEOs are bound by certain restrictive covenants, including covenants relating to confidentiality and assignment of intellectual property rights, as well as covenants not to compete with us or to solicit our employees or other service providers during employment and for a specified period following termination of employment. Each of our NEOs is bound by a non-competition covenant for one year following termination of employment, and by a non-solicitation covenant for two years following termination of employment.
The following table summarizes the payments that would have been made to our continuing NEOs upon the occurrence of a termination of employment or a change in control, assuming that each NEO's termination of employment with the Company or a change in control occurred on December 31, 2021. Amounts shown do not include (i) accrued but unpaid salary, and (ii) other benefits earned or accrued by the continuing NEO during his or her employment that are available to all salaried employees and that do not discriminate in scope, terms or operations in favor of executive officers.
| | | | | | | | | | | | | | |
| Name | Benefit | Death/Disability | Termination Without Cause / Resignation for Good Reason | Termination Without Cause / Resignation for Good Reason In Connection with a Change in Control |
| J. Eric Evans | Cash Severance (1) | $— | $1,800,000 | $1,800,000 |
| Equity Payout / Acceleration | 11,837,365 (3) | 6,978,389 (4) | 18,815,754 (6) |
Health Benefits (2) | — | 18,318 | 18,318 |
| Thomas F. Cowhey | Cash Severance (1) | — | 918,750 | 918,750 |
| Equity Payout / Acceleration | 4,963,765 (3) | 7,970,838 (5) | 10,342,500 (6) |
Health Benefits (2) | — | 18,496 | 18,496 |
| Jennifer B. Baldock | Cash Severance (1) | — | 672,000 | 672,000 |
| Equity Payout / Acceleration | 4,357,081 (3) | 5,163,423 (5) | 7,016,456 (6) |
Health Benefits (2) | — | 24,751 | 24,751 |
| Anthony W. Taparo | Cash Severance (1) | — | 656,000 | 656,000 |
| Equity Payout / Acceleration | 3,696,666 (3) | 4,074,664 (5) | 5,676,171 (6) |
Health Benefits (2) | — | 8,047 | 8,047 |
| Bradley R. Owens | Cash Severance (1) | — | 640,000 | 640,000 |
| Equity Payout / Acceleration | 3,050,459 (3) | 1,482,884 (5) | 3,050,459 (6) |
Health Benefits (2) | — | — | — |
_________
(1)Represents an amount equal to (a) 12 months of base salary continuation, and (b) the executive's target bonus for the year of termination. Under each of the continuing NEO's employment agreements, if a qualifying termination occurs within 12 months following a change in control, the executive is entitled to be paid the severance benefits described above in a single lump-sum payment no later than 30 days following termination.
(2)Represents the dollar value of 12 months Company-paid continued health and welfare benefits.
(3)Represents the value of the unvested portion of the NEO's time-based restricted stock awards and the value of the unvested portion of the NEO's earned PSUs, in each case, as of December 31, 2021. The value of the awards is calculated by multiplying
the number of shares of Company stock subject to acceleration by $53.41, the closing price of our common stock on December 31, 2021.
(4)Represents an amount equal to the value of the NEO's stock option awards that are subject to time-vesting conditions as if vesting occurred on December 31, 2021 (but not with respect to stock option awards with time-vesting conditions that would be satisfied after December 31, 2022). The value of the stock option awards is calculated by multiplying the number of stock options subject to acceleration by the difference between $53.41, which is the closing price of our common stock on December 31, 2021, and the exercise price of the applicable awards.
(5)Represents an amount equal to the value of the NEO's restricted stock awards, earned PSUs and stock option awards that are subject to time-vesting conditions, in each case, as if vesting occurred on December 31, 2021 (but not with respect to awards with time-vesting conditions that would be satisfied after December 31, 2022). The value of the restricted stock awards and PSUs is calculated by multiplying the number of shares of Company stock subject to acceleration by $53.41, which is the closing price of our common stock on December 31, 2021. The value of the stock option awards is calculated by multiplying the number of stock options subject to acceleration by the difference between $53.41, which is the closing price of our common stock on December 31, 2021, and the exercise price of the applicable awards.
(6)Represents an amount equal to the value of the unvested portion of all of the NEO's time-based restricted stock awards, earned PSUs, stock option awards. The value of the restricted stock awards and PSUs is calculated by multiplying the number of shares of Company stock subject to acceleration by $53.41, which is the closing price of our common stock on December 31, 2021. The value of the stock option awards is calculated by multiplying the number of stock options, subject to acceleration by the difference between $53.41, which is the closing price of our common stock on December 31, 2021, and the exercise price of the applicable awards.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of total annual compensation for Mr. Evans, our Chief Executive Officer, to the median of the annual total compensation of all our employees (other than the Chief Executive Officer) (the "CEO Pay Ratio"). For 2021:
•Total annual compensation for Mr. Evans: $4,307,123
•Median annual total compensation of all employees (other than Chief Executive Officer): $55,154
•Ratio of the annual total compensation of the Chief Executive Officer to the median of the annual total compensation of all employees (other than the Chief Executive Officer): 78:1
In determining the median employee, we chose December 31, 2021 as the date to identify our median employee, and we identified our median employee using a consistently applied compensation measure which included total gross payroll wages received in 2021. Our total employee population as of December 31, 2021 was approximately 10,900. After we identified our median employee, we measured the annual total compensation under SEC rules using: base salary earned in 2021, annual cash bonus earned for the 2021 performance year, the grant date value of any equity awards he or she received in 2021, and the 401(k) match provided by the Company in 2021, in each case, to the extent applicable. Pay was annualized for permanent employees not employed for a full year in 2021. We calculated the median employee's total annual compensation using the same methodology we used to calculate Mr. Evans’ annual total compensation, as reflected in the "Total" column of the Summary Compensation Table.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above.
DIRECTOR COMPENSATION
The following table sets forth information concerning the compensation earned by our directors during 2015. Directorsfor the year ended December 31, 2021. Each director who areis affiliated with H.I.G. doBain Capital did not receive compensation for their service as directors. In addition, Michael T. Doyle, our Chief Executive Officer, receives no additional compensation for his service as a director and, consequently, is in 2021. Mr. Evans did not includedreceive compensation in this table.his capacity as a director of the Company. The compensation received by Mr. DoyleEvans receives in his capacity as an employee ofNEO during 2015the year ended December 31, 2021 is reflected in the “Summary"Executive Compensation Table”- Summary Compensation Table" on page 16.30.
| | | | | | | | | | | |
| Name | Fees Earned or Paid in Cash | Stock Awards(4) | Total |
Wayne S. DeVeydt (1) | $500,000 | $250,000 | $750,000 |
| Brent Turner | 95,000 | 140,000 | 235,000 |
| Teresa DeLuca, M.D. | 90,000 | 140,000 | 230,000 |
| John A. Deane | 75,000 | 140,000 | 215,000 |
| Clifford G. Adlerz | 75,000 | 140,000 | 215,000 |
T. Devin O'Reilly (2) | — | — | — |
Andrew T. Kaplan (2) | — | — | — |
Patricia A. Maryland, Dr.PH (3) | 56,250 | 140,000 | 196,250 |
Blair E. Hendrix (2) | — | — | — |
|
| | | | | |
| Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | Total ($) |
Christopher Laitala(2) | — | — |
| — |
|
| Adam Feinstein | 22,500(3) | 17,981 |
| 40,481 |
|
Matthew I. Lozow(2) | — | — |
| — |
|
Brent Turner(4) | — | 23,006 |
| 23,006 |
|
(1)Mr. DeVeydt is compensated for serving as our Executive Chairman pursuant to the terms of that certain Employment Agreement, dated January 4, 2018, as amended, with Surgery Partners, Inc., and Surgery Partners, LLC. Fees earned or paid in cash consists of $250,000 in base salary and $250,000 was earned under the non-equity incentive plan. Effective March 2022, Mr. DeVeydt became an Operating Partner with Bain Capital.
(2)Messrs. O'Reilly, Kaplan and Hendrix are affiliated with Bain Capital and did not receive compensation for their service on the Board.
(3)Dr. Maryland became a member of our Board of Directors in February 2021 and thus did not receive any compensation for the first quarter of 2021.
(4)Amounts reflect the aggregate grant date fair value of therestricted stock options,awards granted on March 10, 2021, determined in accordance with FASB ASC Topic 718. The assumptions used in the valuation of share awards are set forth in Note 11 to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015.2021. As of December 31, 2021, each of Dr. DeLuca and Messrs. Adlerz, Dean and Turner held unvested restricted stock awards of 3,300 shares. Also, Mr. Turner held 4,015 shares of common stock underlying stock options exercisable as of December 31, 2021.
(2) Messr. Laitala and Turner are affiliated with H.I.G. and do not receive compensation for their service on our Board.
(3) Messr.. Feinstein’s annual cash retainer is pro-rated for the portion of the year during which he served on our Board.
(4) Messr. Turner did not receive an annual cash retainer for 2015 as he became aWith respect to 2021, each member of our Board on December 30, 2015.
Each member of our board of directorsDirectors who iswas not an employee and who iswas not affiliated with H.I.G. isBain Capital was eligible to receive an annual cash retainer paymentspayment of $75,000 and an annual award of restricted stock having an aggregate grant date fair value equal to $140,000. The restricted stock awards vest in full on the first anniversary of stock options. the grant date.
In addition, Mr. Feinstein receivesthe chair of the Audit Committee is entitled to an additional cash retainer payment of $20,000, the chair of the Compensation Committee is entitled to an additional cash retainer payment of $15,000, for service as the Auditchair of the Compliance and Ethics Committee Chairperson.is entitled to an additional cash retainer payment of $15,000, and the chair of the Nominating/Corporate Governance Committee (if formed) will be entitled to an additional cash retainer payment of $10,000.
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PROPOSAL NO. 2:3: RATIFICATION OF THE AUDIT COMMITTEE’S APPOINTMENT OF THE
The Audit Committee annually reviews the independent registered public accounting firm's independence, including reviewing all relationships between the independent registered public accounting firm and us and any disclosed relationships or services that may impact the objectivity and independence of the independent registered public accounting firm, and the independent registered public accounting firm's performance.
