DEF 14A of Davita Inc.
Filed Apr 26, 2024 · FY20230000927066-24-000078
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| Table of Contents | | | Compensation of Directors | 68 | | Compensation Committee Interlocks and Insider Participation | 71 | | Certain Relationships and Related Person Transactions | 71 | | Audit Committee Report | 72 | | Stockholder Proposals and Nominations for 2025 Annual Meeting | 73 | | General Information | 74 | | Voting Information | 75 | | How to Vote | 75 | | Votes Required for Proposals | 77 | | Proxy Solicitation Costs | 77 | | Delivery of Proxy Statement and Annual Report | 78 | | Forward-Looking Statements | 78 | | Other Matters | 79 | | Annex A | 80 |
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| Former President of the Japan, Asia-Pacific, Australia Region, American Express International, Inc. Independent Director Since: 2009 Board Chair Since: 2020 Committee Service: Compensation Committee; Nominating and Governance Committee Other Public Company Boards: — Iron Mountain Inc. (NYSE: IRM) — The Hershey Company (NYSE:HSY) | Pamela M. Arway, 70, served as the President of the Japan, Asia-Pacific, Australia region for American Express International, Inc., a global payment services and travel company, from 2005 to 2008. Ms. Arway joined the American Express Company in 1987, and subsequently served in various capacities, including as Chief Executive Officer ("CEO") of American Express Australia Limited from 2004 to 2005 and as Executive Vice President of Corporate Travel, North America from 2000 to 2004. Prior to her retirement in October 2008, she also served as advisor to the American Express Company’s Chairman and CEO. Since May 2010 Ms. Arway has served as a member of the Board of Directors of The Hershey Company, a chocolate and confectionery company, and she will not stand for re-election at their 2024 Annual Meeting of Stockholders. Ms. Arway has been a member of the Board of Directors of Iron Mountain Incorporated, an enterprise information management services company since March 2014. Ms. Arway brings to the Board significant leadership experience as a global executive, with extensive management experience in the areas of marketing, international business, finance and government affairs. With her service as a director on the boards of other large public companies, Ms. Arway also brings significant experience in corporate governance and executive compensation-related matters. | | Former Senior Advisor, The Cigna Group Independent Director Since: 2022 Director Since: 2007 Committee Service: Compliance and Quality Committee; Nominating and Governance Committee | Charles G. Berg, 66, served as a Senior Advisor for The Cigna Group (“Cigna”), a global health service company, from January 2023 to June 2023, and served as President of U.S. Government Business and Senior Advisor for Cigna from January 2022 to January 2023. Mr. Berg served as Executive Chair of DaVita Medical Group, DaVita's former integrated healthcare business, from November 2016 until December 2017. From 2008 to 2013, Mr. Berg served as Executive Chair of WellCare Health Plans, Inc. (“WellCare”), a provider of managed care services for government-sponsored healthcare programs. Mr. Berg served as Non-Executive Chair of the Board of Directors of WellCare from January 2011 until May 2013. From January 2007 to April 2009, Mr. Berg was a Senior Advisor to Welsh, Carson, Anderson & Stowe, a private equity firm. From April 1998 to July 2004, Mr. Berg held various executive positions, including Executive Vice President - Medical Delivery, President and Chief Operating Officer ("COO") with Oxford Health Plans, Inc. (“Oxford”), a health benefit plan provider. He was the CEO when Oxford was acquired by UnitedHealth Group. He then became an executive of UnitedHealth Group and was primarily responsible for integrating the Oxford business. Mr. Berg also currently serves as a member of the Operating Council & Senior Advisory Board of Consonance Capital Partners, a private equity firm. Mr. Berg is an experienced business leader with significant experience in the healthcare industry and brings to the Board an understanding of the operational, financial and regulatory aspects of our industry and business. |
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| Former Chief Executive Officer, Citibank, N.A. Independent Director Since: 2015 Committee Service: Compensation Committee, Chair; Audit Committee Other Public Company Boards: — Citigroup Inc. (NYSE: C) | Barbara J. Desoer, 71, served as the CEO and a member of the Board of Directors of Citibank, N.A., a wholly owned subsidiary of Citigroup, Inc., a diversified global financial services company, both positions she held from April 2014 through April 2019, and COO of Citibank, N.A. from October 2013 to April 2014. Prior to Citibank, N.A., Ms. Desoer spent 35 years at Bank of America, a diversified global financial services company, most recently as President, Bank of America Home Loans, where she led the integration of Countrywide, the largest mortgage originator and servicer in the United States. In previous Bank of America roles, Ms. Desoer served as a Global Technology & Operations executive, an international market-focused position leading teams in the United Kingdom, Asia and Latin America, and President, Consumer Products. Since April 2019, Ms. Desoer has served as Chair of Citibank, N.A. and as a director of Citigroup, Inc. She serves on the Advisory Board of InStride. Ms. Desoer is an experienced business leader with extensive management and international experience and brings to the Board a deep understanding of regulated businesses. | | Chief Executive Officer, Cardinal Health, Inc. Independent Director Since: 2022 Committee Service: Audit Committee, Chair Other Public Company Boards: — Cardinal Health, Inc.(NYSE: CAH) | Jason M. Hollar, 51, has served as the CEO and a member of the Board of Directors of Cardinal Health, Inc. ("Cardinal"), a global integrated healthcare services and products company, since September 2022. Prior to his appointment as CEO, Mr. Hollar served as Chief Financial Officer for Cardinal from May 2020 to September 2022, where he led financial activities across the enterprise including financial strategy, capital deployment, treasury, tax, investor relations, accounting and reporting. Prior to Cardinal, from June 2018 until April 2020, Mr. Hollar served as Executive Vice President and Chief Financial Officer of Tenneco Inc. ("Tenneco"), a global automotive products and services company, where he was responsible for financial planning and analysis, accounting and reporting, tax, treasury and investor relations for the company. At Tenneco, Mr. Hollar also served as Senior Vice President, Finance from June 2017 to June 2018. From October 2016 to June 2017, Mr. Hollar served as the Chief Financial Officer of Sears Holding Corporation ("Sears"), a holding company for large consumer retailers across the U.S., and as Senior Vice President, Finance from October 2014 to October 2016. Sears filed for Chapter 11 bankruptcy in October 2018. Mr. Hollar is an experienced finance leader who brings to the Board more than 25 years of financial and operational experience spanning the healthcare, transportation, manufacturing and retail sectors. |
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| Former Corporate Vice President, Microsoft Health and Life Sciences Independent Director Since: 2021 Committee Service: Compliance and Quality Committee, Chair; Nominating and Governance Committee Other Public Company Boards: –Olink Holding AB (publ) (NASDAQ: OLK) | Gregory J. Moore, M.D., Ph.D., 59, served as Corporate Vice President for Microsoft Health and Life Sciences, a division of Microsoft Corporation ("Microsoft"), a multinational technology company that produces computer software, cloud computing services, personal computers and electronics, and other related services, from 2019 to 2023, where he led Microsoft's health and life sciences research and artificial intelligence ("AI") and cloud product development portfolio. Prior to Microsoft, Dr. Moore served as Vice President of Google Inc. ("Google"), a multinational technology company that specializes in Internet-related products and services, from 2016 to 2019, and was the founder and leader of Google Cloud Healthcare and Life Sciences globally. Dr. Moore is an engineer, practicing physician, and experienced educator. He is board certified in Diagnostic Radiology, Neuroradiology and Clinical Informatics. Prior to his leadership roles at Microsoft and Google, Dr. Moore served as the Chief Emerging Technology and Informatics Officer at Geisinger Health System, a regional healthcare provider, where he was also Director of the Institute of Advanced Application. His prior academic and clinical appointments include Stanford University School of Medicine, Penn State University College of Medicine, and Wayne State University School of Medicine. Since 2023, Dr. Moore has served as a director of Olink Holding AB, a biotechnology company focused on proteomics. From 2019 until its merger with Baxter International Inc. in 2021, Dr. Moore was a member of the Board of Directors of Hill-Rom Holdings, Inc., a medical technology provider and in 2024, Dr. Moore earned the CERT Certificate in Cybersecurity Oversight. Dr. Moore brings to the Board substantial experience both in the medical field as a practitioner and as a technology executive experienced in digital health and AI. | | President and CEO, Virtua Health Independent Director Since: 2024 Committee Service: Compliance and Quality Committee Other Public Company Boards: –Hillenbrand, Inc., (NYSE: HI) | Dennis W. Pullin, 64, has served as President and CEO of Virtua Health ("Virtua"), an academic health system in New Jersey offering a range of preventative, primary, ambulatory, acute and tertiary care since 2017. From 2009 to 2017, Mr. Pullin served as President of MedStar Harbor Hospital, a not-for-profit, community-based health care organization in the U.S. Mid-Atlantic region. From 2006 to 2009, Mr. Pullin served as Chief Operating Officer and Senior Vice President of MedStar Washington Hospital Center, the largest private teaching and research hospital based in Washington, D.C. Mr. Pullin served as Vice President of Operations and Business Development at CHI St. Luke’s Health, a tertiary community teaching hospital in the Texas Medical Center from 2002 to 2006. Mr. Pullin brings to the Board his deep executive leadership experience in the healthcare space, including in hospitals, academic medical centers, physician group practices, and private industry. He also brings to the Board a unique and valuable perspective on transforming patient experience through the use of technology. |
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| Chief Executive Officer, DaVita Inc. Director Since: 2019 Other Public Company Boards: –Gilead Sciences, Inc. (NASDAQ: GILD) | Javier J. Rodriguez, 53, has served as our CEO since June 2019. From March 2014 until June 2019, he served as the CEO of DaVita Kidney Care. Since joining the Company in 1998, Mr. Rodriguez has served in a number of different capacities. From February 2012 to March 2014, he served as our President. From April 2006 through February 2012, he served as our Senior Vice President. From 2000 to 2006 he served as a Vice President of Operations and Payor Contracting. Mr. Rodriguez joined the Company in 1998 as a Director of Value Management. Prior to joining the Company, Mr. Rodriguez worked for Baxter Healthcare Corporation in Finance from 1995 to 1996. He also previously served as Director of Operations for CBS Marketing Inc. in Mexico City. Since June 2020, Mr. Rodriguez has been a member of the Board of Directors of Gilead Sciences, Inc., a research-based pharmaceutical company. Mr. Rodriguez provides extensive knowledge of our industry, business, regulatory environment and operations as well as significant executive leadership and management experience. | | President, Chief Executive Officer and Chairman of the Board, Labcorp Independent Director Since: 2022 Committee Service: Audit Committee; Compensation Committee Other Public Company Boards: –Labcorp (NYSE: LH) | Adam H. Schechter, 59, has served as Chairman of the Board of Laboratory Corporation of America Holdings ("Labcorp"), a leading global life sciences company, since May 2020, as a director of Labcorp since April 2013, and President and CEO since November 2019. Mr. Schechter previously served as special advisor to the CEO of Merck & Co., Inc. (“Merck”), a multinational pharmaceutical company, from January 2019 to July 2019. From 2010 to 2018, Mr. Schechter was an Executive Vice President of Merck, where he was a member of Merck’s executive committee, pharmaceutical and vaccines operating committee, and President of Merck’s Global Human Health Division, which included Merck’s worldwide pharmaceutical and vaccine businesses. Prior to becoming President, Global Human Health, Mr. Schechter served as President, Global Pharmaceutical Business of Merck from 2007 to 2010. In 2022, Mr. Schechter earned the CERT Certificate in Cybersecurity Oversight. Mr. Schechter brings to the Board extensive knowledge of the healthcare industry, operations and regulatory environment, significant executive leadership and management experience. In addition, his CERT Certificate in Cybersecurity Oversight strengthens and further complements the experience and expertise of the Board with respect to cybersecurity matters. |
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| Former Chief Financial Officer, Sleep Number Corp. Independent Director Since: 2023 Committee Service: Audit Committee; Compliance and Quality Committee Other Public Company Boards: –The ODP Corporation (NASDAQ: ODP) –Big Lots, Inc. (NYSE: BIG) | Wendy L. Schoppert, 57, served as Executive Vice President and Chief Financial Officer of Sleep Number Corp. ("Sleep Number"), a smart bed and wellness technology manufacturer and retailer, from 2011 to 2014, where she also previously served as Chief Information Officer and led Marketing, Digital, International, and New Channel Development. Prior to joining Sleep Number in 2005, Ms. Schoppert led U.S. Bank’s Private Asset Management team and served as Head of Product, Marketing & Corporate Development for U.S. Bank’s Asset Management division. She began her career in the airline industry, serving in various financial, strategic and general management leadership positions at American Airlines, Northwest Airlines and America West Airlines. Ms. Schoppert is also a member of the boards of The ODP Corporation, the parent company of Office Depot/OfficeMax and related B2B businesses, and Big Lots, Inc., a discount home retailer, and from 2017 to 2023 served on the Board of The Hershey Company. Ms. Schoppert is a former co-chair of the Minnesota Chapter of Women Corporate Directors and has also earned the CERT Certificate in Cybersecurity Oversight. Ms. Schoppert is an experienced finance leader who brings to the Board financial, information technology, marketing and operational experience spanning the consumer goods, transportation, and retail sectors. Her CERT Certificate in Cybersecurity Oversight strengthens and further complements the experience and expertise of the Board with respect to cybersecurity matters. | | Advisory Partner, Bain & Company, Inc. Independent Director Since: 2016 Committee Service: Nominating and Governance Committee, Chair; Compliance and Quality Committee Other Public Company Boards: –Bristol-Myers Squibb Company (NYSE: BMY) | Phyllis R. Yale, 66, has been an Advisory Partner with Bain & Company, Inc. (“Bain”), a global management consulting firm, since July 2010. Ms. Yale was a Partner with Bain from 1987 to July 2010, and a leader in building Bain’s healthcare practice. In her role at Bain, Ms. Yale works with healthcare payors, providers, and medical device companies, and frequently advises the world’s leading private equity firms on their investments in the healthcare sector. She has served as a member of the board of directors of several public and private companies in the healthcare sector, and since November 2019 has served as a member of the Board of Directors of Bristol-Myers Squibb Company, a global biopharmaceutical company, and since 2014 has served as a member of the Board of Directors of Blue Cross Blue Shield of Massachusetts ("BCBS MA"). Ms. Yale previously served as Chair of the BCBS MA Board of Directors from 2014 to 2019 and Chair of the Board of Directors of Kindred Healthcare, Inc. from 2010 to 2018. Ms. Yale has a deep knowledge base in the U.S. healthcare sector and has experience in many aspects of the healthcare industry, including corporate strategies, marketing and cost and quality management, as well as mergers and acquisitions. |
Our Executive Compensation Structure
Our Executive Compensation Structure Given our emphasis on performance-based compensation, the Compensation Committee generally limits increases to fixed compensation amounts for our executives and delivers a greater percentage of compensation increases in the form of variable (or "at-risk") compensation, with a significant portion of such variable compensation being performance-based. The following chart illustrates the average allocation of the total direct compensation that our NEOs, other than our CEO, are eligible to earn, including annual bonus at target, and in the case of the long-term incentives, those that were granted in 2023. As described in more detail in the section titled "CEO Compensation" below, Mr. Rodriguez did not receive a long-term incentive award in 2023 due to a grant of premium-priced SSARs that he received in 2019, which was intended to be in lieu of any other equity grants for five years following the date on which the Board approved the award (the "CEO Premium-Priced SSAR Award"). As a result, because the allocation of Mr. Rodriguez's total direct compensation for 2023 did not reflect a typical annual compensation structure, Mr. Rodriguez is excluded from the chart below. We believe it to be in the best interests of our stockholders to have a balanced executive compensation program that includes a blend of fixed and at-risk compensation, including short- and long-term compensation and that emphasizes a pay-for-performance culture. The following table generally summarizes the key elements of our executive compensation program in 2023.
Our Executive Compensation Structure
| Base Salary | Short-Term Incentive Program | Long-Term Incentive Program (other than CEO)(1) | | | It is appropriate that some portion of compensation be in a form that is fixed to provide executives with a base level of income. Base salaries can be adjusted based on individual performance, changes to portfolio of responsibilities and comparative market data. | Performance Measures •70% Financial: Adjusted Operating Income and Free Cash Flow •30% Strategic Objectives: ◦ESG-related factors(2) (70%) ◦Individual objectives for each NEO (30%) •Payout 0% to 200% of target | | | | | | Performance Stock Units ("PSUs") | Restricted Stock Units ("RSUs") | | | | | | | | | •Performance criteria 75% Adjusted EPS attributable to DaVita Inc., 25% Relative total shareholder return ("TSR") •Payout 0% to 200% of target shares •Vests 100% in three years, following the conclusion of the three-year performance period | •Vests 50% in three years and 50% in four years |
Role of Independent Compensation Consultant
Role of Independent Compensation Consultant The Compensation Committee has selected and directly retains the services of Compensia, a national compensation consulting firm, as its independent compensation consultant. The Compensation Committee has the sole authority to retain or replace Compensia in its discretion. Compensia does not provide consulting services to Company management and may not provide such services without prior approval of the Chair of the Compensation Committee. Accordingly, Compensia only provides compensation consulting services to the Compensation Committee, and works with the Company’s management only on matters for which the Compensation Committee provides direction and is responsible. The Compensation Committee periodically seeks input from Compensia on a range of external market factors, including evolving compensation trends, peer companies and market survey data. Compensia also provides general observations on the Company’s executive compensation program, but it does not determine the amount or form of compensation for the executive officers. Pursuant to the rules of the SEC and NYSE, the Compensation Committee has assessed the independence of Compensia. The Company has determined that the work of Compensia for the Compensation Committee did not raise any conflicts of interest.
Market Competitiveness
Market Competitiveness Each year, the Compensation Committee, starting with a recommendation from Compensia, identifies a group of peer companies for purposes of evaluating the overall competitiveness of our executive officers' compensation levels. We first focused on companies in our industry with revenues that are 0.4x to 2.5x our revenues and a market capitalization that is 0.2x to 5.0x our market capitalization. Because of the limited number of direct peers in the healthcare services and facilities industries that met this "size" criteria, we then expanded our industry scope to include the broader healthcare industry. We believe the compensation paid by the resultant comparator peer group is representative of the compensation required to attract, retain and motivate our executive talent. For purposes of evaluating compensation decisions in early 2023, we used the following compensation peer group, which was the same peer group used for purposes of evaluating compensation decisions in 2022:
Market Competitiveness
| 2023 Compensation Peer Group | | | Avantor | Laboratory Corp of America | | Baxter International | Molina Healthcare | | Centene | Revvity (f/k/a Perkin Elmer) | | Dentsply Sirona | Quest Diagnostics | | Encompass Health | Select Medical Holdings | | HCA Healthcare | Syneos Health | | Henry Schein | Tenet Healthcare | | Hologic | Universal Health Services | | IQVIA Holdings | Zimmer Biomet Holdings |
Short-Term Incentive Program for 2023
Short-Term Incentive Program for 2023 The participants in the 2023 STI Program had a target bonus approved by the Compensation Committee, and with respect to the CEO, ratified by the independent members of the Board. Participants are eligible to earn 0% to 200% of their target bonus based on performance against the predetermined and approved STI Program metrics. Based on a review of competitive market data, the Compensation Committee determined not to increase the target bonus opportunities for the NEOs from 2022 to 2023, except for Mr. Rodriguez, whose target bonus opportunity was increased from $1,800,000 to $2,250,000 in order to maintain his target incentive opportunity as 150% of his updated base salary for 2023. The following table summarizes the target bonus and target bonus as a percent of base salary for each of the NEOs:
Short-Term Incentive Program for 2023
| Name | 2023 Base Salary | 2023 Target Incentive Opportunity | 2023 Target Incentive Opportunity as a Percentage of Salary1 | | Javier J. Rodriguez | $1,500,000 | $2,250,000 | 150% | | Joel Ackerman | $700,000 | $750,000 | 107% | | Michael D. Staffieri | $800,000 | $1,050,000 | 131% | | Kathleen A. Waters | $700,000 | $650,000 | 93% | | James O. Hearty | $500,000 | $400,000 | 80% |
Short-Term Incentive Program for 2023
1 The target incentive opportunities for the NEOs other than the CEO were approved by the Compensation Committee in terms of an absolute dollar opportunity and this column includes the percentage opportunity determined by dividing the target dollar value by the NEO’s base salary. The following table summarizes the performance metrics, weightings, criteria ranges, performance-based eligibility ranges, actual performance and eligible payout percentages for the components of the 2023 STI Program:
Short-Term Incentive Program for 2023
| 2023 STI Program Performance Metrics | Performance Metrics Weightings | Criteria Range | Performance Based Eligibility Range (%) | Actual Performance | Eligible Payout Achieved (%) | | Financial: Adjusted Operating Income* | 50.0% | $1,375 million to $1,650 million ($1,500 million target) | 0%; 25% - 200% | $1,709 million** | 200.0% | | Financial: Free Cash Flow* | 20.0% | $650 million to $925 million ($775 million target) | 0%; 25% - 200% | $1,236 million | 200.0% | | Strategic Objectives: Home modalities penetration (Q4 2023) | 7.5% | 15.25% to 17.00% (16.00% target) | 0%; 25% - 200% | 15.47% | 47.0% | | Strategic Objectives: CKCC patient contact composite | 7.5% | 20.0% to 55.0% (45.0% target) | 0%; 25% - 200% | 54.8% | 198.0% | | Strategic Objectives: Teammate engagement (average of 2023 survey results) | 3.0% | 74.0% to 82.0% (78.0% target) | 0%; 25% - 200% | 80.2% | 155.0% | | Strategic Objectives: Water savings projects (millions of gallons) | 3.0% | 25 to 75 (50 target) | 0%; 25% - 200% | 100 | 200.0% | | Strategic Objectives: Individual objectives | 9.0% | Varies by NEO | 0% - 200% | Varies by NEO | Varies by NEO*** |
Short-Term Incentive Program for 2023
* “Adjusted Operating Income” and “Free Cash Flow” are non-GAAP financial measures. “Adjusted operating income" represents operating income excluding certain items which we do not believe are indicative of our ordinary results of operations, including, among other things, impairment charges, earn-out revaluations, capacity closure charges, restructuring charges, IKC adjustments and accruals for legal matters. “Free Cash Flow” represents net cash provided by operating activities from continuing operations less distributions to noncontrolling interests and all capital expenditures (including development capital expenditures, routine maintenance and information technology), plus contributions from noncontrolling interests and sale leaseback proceeds related to certain self-developed properties. ** For purposes of the 2023 STI Program and as presented above, “adjusted operating income” also includes certain adjustments approved by the Compensation Committee at the time it approved the 2023 STI Program and resulted in a $25 million deduction to our 2023 adjusted operating income as reported in our Company's Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) ($1,734 million). This deduction is associated with a COVID-19 normalization adjustment relating to lower actual than budgeted impact of the ongoing COVID-19 Pandemic in 2023, offset by foreign exchange losses on the mark-to-market impact of cash held in a non-functional currency in our Asia-Pacific joint venture in 2023 of $0.5 million. As a result, adjusted operating income presented above for purposes of the 2023 STI Program differs from the non-GAAP financial results we report in our 2023 Form 10-K. None of these non-GAAP financial measures should be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Please see Annex A for a presentation of the most directly comparable GAAP financial measure and a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. *** Actual payouts with respect to the individual objectives vary by NEO, but are subject to a maximum payout of 200% of target.
2023 STI Program Payouts
2023 STI Program Payouts The table below summarizes the performance metrics and their relative weights, and the eligible payout achieved, target incentive opportunity, and total eligible and actual STI Program award by NEO. Certain columns or rows may not precisely recalculate due to the presentation of rounded numbers.
2023 STI Program Payouts
| | | Eligible Payout Achieved | | | | | | 2023 STI Program Performance Metrics | Performance Metrics Weightings | Javier J. Rodriguez | Joel Ackerman | Michael D. Staffieri | Kathleen A. Waters | James O. Hearty | | Financial: Adjusted Operating Income | 50.0% | 200.0% | 200.0% | 200.0% | 200.0% | 200.0% | | Financial: Free Cash Flow | 20.0% | 200.0% | 200.0% | 200.0% | 200.0% | 200.0% | | Strategic Objectives: Home modalities penetration | 7.5% | 47.0% | 47.0% | 47.0% | 47.0% | 47.0% | | Strategic Objectives: CKCC patient contact composite | 7.5% | 198.0% | 198.0% | 198.0% | 198.0% | 198.0% | | Strategic Objectives: Teammate engagement | 3.0% | 155.0% | 155.0% | 155.0% | 155.0% | 155.0% | | Strategic Objectives: Water savings projects | 3.0% | 200.0% | 200.0% | 200.0% | 200.0% | 200.0% | | Strategic Objectives: Individual objectives | 9.0% | 200.0% | 200.0% | 200.0% | 200.0% | 200.0% | | Total Weighted Eligible Payout Achieved | | 187.0% | 187.0% | 187.0% | 187.0% | 187.0% | | Target Incentive Opportunity | | $2,250,000 | $750,000 | $1,050,000 | $650,000 | $400,000 | | Total Eligible and Actual STI Program Award | | $4,208,063 | $1,402,688 | $1,963,763 | $1,215,663 | $748,100 |
Long-Term Incentive Program for 2023
Long-Term Incentive Program for 2023 LTI Program awards are designed to provide a link to long-term stockholder value through equity awards for our executives. Under our LTI Program, the Compensation Committee has the authority to award various forms of long-term incentive grants, such as PSUs and RSUs. Consistent with past practice, annual LTI Program awards for 2023 were granted in March to each of the NEOs other than our CEO. As noted above, in light of the CEO Premium-Priced SSAR Award that Mr. Rodriguez received in 2019, he did not participate in the Company's 2023 LTI Program as such award was intended to replace grants under the Company's LTI Program for five years following the date on which the Board approved the CEO Premium-Priced SSAR Award.
Strong Pay-for-Performance Alignment
Strong Pay-for-Performance Alignment For 2023, the Compensation Committee approved the 2023 LTI Program equity awards in the form of PSUs and RSUs, weighted 60% and 40%, respectively, for each NEO participant. After consideration of stockholder feedback and with input from Compensia, in order to further align with market practices and to support retention during the vesting period, the Compensation Committee determined to eliminate SSARs from the 2023 LTI Program for NEO participants and to grant the time-based portion of the 2023 LTI Program solely in the form of RSUs. With this change, the 2023 LTI Program remains entirely in the form of at-risk equity awards, with the value fluctuating based on our stock price performance and, in the case of the PSUs, our performance against the pre-established performance goals. In addition, after considering stockholder feedback and input from Compensia, the 2023 PSUs with vesting tied to adjusted EPS will vest based on the Company's cumulative performance over a three-year performance period rather than the prior practice of measuring adjusted EPS based on performance in each of years three and four of the performance period. We believe that these changes further align the Company's compensation program with the Company's sustained, long-term performance. The annual LTI Program grants for 2023 include the following key elements to help drive Company performance and align with stockholder interests:
Strong Pay-for-Performance Alignment
| PSUs | –Performance Goals: 75% related to adjusted EPS and 25% related to relative TSR as compared to the constituents of the S&P Health Care Services Select Industry Index ("Relative TSR"). –Threshold performance required for payout at 25% of target shares, with potential to earn up to 200% of target shares. –Three-year vesting schedule, with 100% vesting on March 15, 2026, following conclusion of the three-year performance period, subject to continued service and achievement of the applicable performance goals. | | RSUs | –Multi-year vesting schedule, with 50% vesting on each of March 15, 2026 and March 15, 2027. |
PSU Performance Metrics
PSU Performance Metrics The table below summarizes the performance criteria range and percent range of target PSUs for the 2023 annual PSU grants. Given the market and operating conditions at the time the targets were set, the target payout levels were designed to be achievable with strong management performance, while maximum payout levels were designed to be difficult to achieve.
PSU Performance Metrics
| 2023 PSU Performance Metrics | Performance Metrics Weightings | Criteria Range | Percent of Target PSUs | Vesting | | 2023-2025 Cumulative Adjusted Earnings per Share1 | 75% | $18.97 - $21.33 (Target: $20.13) | 0%; 25% - 200% | 100% March 15, 2026 | | Relative TSR v. S&P Health Care Services Select Industry Index2 | 25% | 10th - 90th percentile (Target: 55th percentile) | 0%; 25% - 200% | 100% March 15, 2026 |
PSU Performance Metrics
1“Adjusted Earnings per Share” is a non-GAAP financial measure that represents a per share measure of adjusted net income. For purposes of the 2023 PSUs, “Adjusted Earnings per Share” represents our net income per share, adjusted as reported in our earnings release in the year of measurement, to exclude certain items from net income that we do not believe are indicative of our ordinary results of operations, generally including as applicable in that year, among other things, impairment charges, gains and losses on ownership changes, capacity closure charges, restructuring charges, accruals for legal matters and debt prepayment and refinancing charges. In addition, in accordance with the 2023 LTI Program, performance targets are subject to adjustment in the event that certain corporate transactions occur during the performance period. 2Vesting based on the percentile position represented by the return on investment in DaVita stock ("DaVita TSR") within the range of returns on investments in each of the constituents of the S&P Healthcare Services Select Industry Index (assuming dividend reinvestment). The percentage of target shares that vest are a function of the percentile ranking of DaVita's TSR. If our TSR is negative, then vesting is capped at the target number of PSUs regardless of our relative TSR performance. We have used adjusted EPS as a criterion for all participants in the LTI Program since 2017 and, since 2021, the weighting of the PSUs for the NEOs has been 60% of their LTI Program opportunity. Relative TSR has been a component of the LTI Program since 2014. The Compensation Committee set rigorous goals for the 2023 LTI Program, requiring strong performance over the three-year performance period based on compounded growth over the midpoint of our initial adjusted EPS guidance provided to stockholders on February 22, 2023. Specifically, in order for the 2023 PSU awards to vest at target, we must achieve an average adjusted EPS growth rate of 8% for each of 2024 and 2025. Consistent with prior years, after discussion and consideration of input from Compensia, the Compensation Committee decided that it was appropriate not to adjust the EPS targets for the volume of share repurchases because the expected share repurchase volume is incorporated into our EPS forecasts and target setting.
Setting Awards Under 2023 LTI Program
Setting Awards Under 2023 LTI Program The Compensation Committee determines the annual LTI Program awards for our NEOs and other executives with the input of the CEO and Compensia, and after consideration of market data provided by Compensia. Each year, the CEO considers the following in recommending equity awards for executives other than himself to the Compensation Committee: (i) recent performance and trajectory of historical performance; (ii) level of responsibilities and expected changes to responsibilities; (iii) market levels of total compensation and long-term incentives for similar positions; (iv) the historical amounts granted and expected vesting levels; and (v) the "in-the-money value" of unvested equity currently held by participants. The table below shows the aggregate number of shares subject to RSUs and target PSUs granted to each of our participating NEOs in 2023. When determining the size of the awards, the Compensation Committee considered market data and the competitive labor market for executive talent at the time of grant.
Setting Awards Under 2023 LTI Program
| 2023 Long-term Incentive Awards | Shares Subject to PSUs (#) | Shares Subject to RSUs (#) | | Joel Ackerman | 35,508 | 23,672 | | Michael D. Staffieri | 55,234 | 36,823 | | Kathleen A. Waters | 27,617 | 18,411 | | James O. Hearty | 11,047 | 7,365 |
2020 and 2021 PSU Results and Payouts
2020 and 2021 PSU Results and Payouts We began granting PSUs to executive officers in 2014. The performance metrics associated with the PSUs granted in 2020 and 2021 have been measured through the end of the relevant performance periods, with the exception of (i) the PSUs granted in 2021 for which the remaining performance metric is adjusted EPS for fiscal year 2024 and (ii) the PSUs granted in 2021 for which the remaining performance metric is Relative TSR measured through February 28, 2025. The tables below summarize the criteria range and percentage range of target PSUs and detail the relative weightings of each performance metric for the 2020 and 2021 PSUs. The Compensation Committee did not make any COVID-related adjustments to the performance metrics applicable to the 2020 or 2021 PSUs.
2020 and 2021 PSU Results and Payouts
| | | | Performance Based Eligibility Range | | Eligible Payout Achieved | | 2020 PSU Performance Metrics | Weight | Criteria Range | (%) | Actual Performance | (%) | | 2022 Adjusted Earnings Per Share1 | 37.5% | $6.49 - $8.07 | 0%; 50% - 200% | $7.13 | 113% | | 2023 Adjusted Earnings Per Share1 | 37.5% | $6.75 - $9.37 | 0%; 50% - 200% | $8.39 | 148% | | Relative TSR (2023 vesting) | 12.5% | 100% + 2 x (Company TSR - S&P 500 Health Care Services Select Industry Index Total Return) | 0% - 200% | (21.9)% | 56% | | Relative TSR (2024 vesting) | 12.5% | 100% + 2 x (Company TSR - S&P 500 Health Care Services Select Industry Index Total Return) | 0% - 200% | 18.8% | 138% |
2020 and 2021 PSU Results and Payouts
| | | | Performance Based Eligibility Range | | Eligible Payout Achieved | | 2021 PSU Performance Metrics | Weight | Criteria Range | (%) | Actual Performance | (%) | | 2023 Adjusted Earnings Per Share1 | 37.5% | $9.19 - $12.75 | 0%; 50% - 200% | $8.39 | 0% | | 2024 Adjusted Earnings Per Share1 | 37.5% | $9.56 - $14.80 | 0%; 50% - 200% | In Progress2 | N/A2 | | Relative TSR (2024 vesting) | 12.5% | 25th to 90th percentile of S&P Health Care Services Select Industry Index | 0%; 50% - 200% | 37th percentile | 70% | | Relative TSR (2025 vesting) | 12.5% | 25th to 90th percentile of S&P Health Care Services Select Industry Index | 0%; 50% - 200% | In Progress2 | N/A2 |
2020 and 2021 PSU Results and Payouts
1“Adjusted Earnings per Share” or "Adjusted EPS" is a non-GAAP financial measure that represents a per share measure of adjusted net income. Adjusted net income excludes certain items from net income that we do not believe are indicative of our ordinary results of operations, including, among other things, impairment charges, earn-out revaluations, capacity closure charges, restructuring charges, IKC adjustments and accruals for legal matters. The 2022 Adjusted EPS targets for the 2020 PSUs that were approved at the time of grant exclude costs, net of taxes, of $0.53 per share associated with our opposition of a California ballot initiative. As a result, 2022 Adjusted EPS presented above for purposes of the 2020 PSU performance metrics differs from the non-GAAP financial results we reported in our 2022 Form 10-K. The 2023 Adjusted EPS targets for the 2020 and 2021 PSUs that were approved at the time of grant also exclude income, net of taxes, of $0.08 per share associated with a refund received in 2023 related to our opposition of a California ballot initiative in 2022. As a result, 2023 Adjusted EPS presented above for purposes of the 2020 and 2021 PSU performance metrics differs from the non-GAAP financial results we report in our 2023 Form 10-K. 2In progress as of April 26, 2024.
CEO Compensation
price of an option) that was a significant premium to the then-current market price in lieu of any other equity grants through the five-year period from the Board's approval of the grant was the most appropriate form of compensation for Mr. Rodriguez to drive long-term stockholder value creation. Accordingly, the Company has not granted Mr. Rodriguez any long-term incentive awards since the grant of the CEO Premium-Priced SSAR Award. The terms of the CEO Premium-Priced SSAR Award were designed with input from Compensia, and the award was structured to reflect stockholder feedback and incentivize the creation of sustained stockholder value, resulting in the following key features in the CEO Premium-Priced SSAR Award design: (i) premium-price (specifically, the base price was set at a 56% premium to the price per share on the day before Mr. Rodriguez assumed the CEO role on June 1, 2019 and a 20% premium to the price per share at which the Company purchased shares in its then recently completed modified "Dutch Auction" tender offer); (ii) multi-year vesting (50% on each of November 4, 2022 and November 4, 2023, respectively); (iii) five-year holding period (through November 4, 2024); and (iv) a five year term (expiring on November 4, 2024), requiring the CEO to generate significant stockholder value creation over this period of time in order to realize significant value for himself. Any exercised portion of the CEO Premium-Priced SSAR Award remains subject to the five-year holding period described above. The ultimate value realized by Mr. Rodriguez under the CEO Premium-Priced SSAR Award is highly uncertain and linked to the long-term sustained value created under Mr. Rodriguez's leadership. The summary of the CEO Premium-Priced SSAR Award presented in this section is qualified in its entirety by reference to the CEO Premium-Priced SSAR Award itself, which is filed with the SEC as Appendix A to our Definitive Proxy Statement on Schedule 14A, filed with the SEC on December 6, 2019.
Severance and Change of Control Arrangements
Severance and Change of Control Arrangements We have entered into employment or severance arrangements with each of our NEOs, including a new employment agreement with Mr. Rodriguez in 2019 in connection with his transition to CEO. These arrangements, among other things, provide for severance benefits in the event of a termination of employment in certain circumstances, including, with respect to certain NEOs, the departure of the NEO following a change of control of our Company. When entering into employment or severance arrangements with our NEOs, we attempt to provide severance and change of control benefits which strike a balance between providing sufficient protections for the NEO while still providing post-termination compensation that we consider reasonable and in the interests of the Company and our stockholders. The terms of individual agreements vary, but under our current stock-based award agreements, accelerated vesting of stock-based awards is generally triggered when a change of control event occurs and either the acquiring entity fails to assume, convert or replace the stock-based award or if the executive resigns for “good reason” or is terminated by the Company without “cause” as provided in his or her applicable employment agreement, all within a certain period of time after the effective date of the change of control event. The additional acceleration provisions in our stock-based award agreements further serve to secure the continued employment and commitment of our NEOs prior to or following a change of control. See the subsection titled “Potential Payments Upon Termination or Change of Control” below for a description of the severance and change in control arrangements for our NEOs, and for more information regarding accelerated vesting under our stock-based award agreements.
Policies Regarding Recoupment of Incentive Compensation
awarded on the basis of the erroneous results, and which is greater than the amount such person would have received had the Company’s financial statements been correctly reported. In addition, we continue to maintain a separate recoupment policy that, among other things, includes "significant misconduct" by a domestic Senior Vice President or above of the Company as another possible triggering event for the recoupment of certain compensation, including through the cancellation of, or reimbursement of amounts received with respect to, certain equity awards. In general, the maximum amount of compensation that may be subject to recoupment under this policy is an amount equivalent to up to three years of a covered executive’s annual incentive compensation (including time-based equity awards), and such compensation is generally at risk for a period of three years from the date of such misconduct.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table contains compensation information for our NEOs for the fiscal years ended December 31, 2023, 2022 and 2021.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards1 ($) | Option Awards2 ($) | Non-Equity Incentive Plan Compensation3 ($) | All Other Compensation4 ($) | Total ($) | | Javier J. Rodriguez Chief Executive Officer | 2023 | 1,407,692 | — | — | — | 4,208,063 | 1,096,573 | 6,712,328 | | | 2022 | 1,200,000 | — | — | — | 1,173,805 | 610,776 | 2,984,581 | | | 2021 | 1,200,000 | — | — | — | 1,743,799 | 354,640 | 3,298,439 | | Joel Ackerman Chief Financial Officer and Treasurer | 2023 | 700,000 | — | 4,761,653 | — | 1,402,688 | 3,840 | 6,868,181 | | | 2022 | 700,000 | — | 1,985,362 | 1,524,421 | 489,085 | 3,840 | 4,702,708 | | | 2021 | 700,000 | — | 1,893,770 | 1,416,602 | 726,583 | 3,865 | 4,740,820 | | Michael D. Staffieri Chief Operating Officer, DaVita Kidney Care | 2023 | 800,000 | — | 7,406,966 | — | 1,963,763 | 252,129 | 10,422,858 | | | 2022 | 800,000 | — | 2,978,226 | 2,286,561 | 684,720 | 169,176 | 6,918,683 | | | 2021 | 800,000 | — | 2,840,778 | 2,124,886 | 1,017,216 | 157,805 | 6,940,685 | | Kathleen A. Waters Chief Legal and Public Affairs Officer | 2023 | 684,615 | — | 3,703,459 | — | 1,215,663 | 3,840 | 5,607,577 | | | 2022 | 650,000 | — | 1,896,006 | 558,922 | 423,874 | 3,840 | 3,532,642 | | | 2021 | 642,308 | — | 1,828,766 | 519,415 | 629,705 | 3,840 | 3,624,034 | | James O. Hearty Chief Compliance Officer | 2023 | 500,000 | — | 1,481,445 | — | 748,100 | 3,840 | 2,733,385 | | | 2022 | 500,000 | — | 689,414 | 203,219 | 264,446 | 3,840 | 1,660,919 | | | 2021 | 500,000 | — | 664,963 | 188,870 | 387,511 | 4,068 | 1,745,412 |
2023 Summary Compensation Table
1The amounts reported in this column reflect RSU and PSU awards and represent the aggregate grant date fair value of all such awards granted to the NEO during the year as estimated by the Company in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation ("FASB ASC Topic 718"). In accordance with SEC rules, the amounts included in the Stock Awards column for the 2023 PSU awards are calculated based on the probable outcome of the performance conditions for such awards on the grant date. If the probable outcome of the performance conditions as of the grant date had been maximum performance, then the grant date fair value of such PSUs would have been as follows: Mr. Ackerman — $5,923,267; Mr. Staffieri — $9,213,889; Ms. Waters — $4,606,974; and Mr. Hearty — $1,842,820. See Note 17 to the Consolidated Financial Statements included in our 2023 Form 10-K for a discussion of the relevant assumptions used in calculating these amounts pursuant to FASB ASC Topic 718. Please note that there were no equity awards granted to our CEO during 2021 - 2023 due to the grant of the CEO Premium-Priced SSAR Award, which was intended to be in lieu of any other equity grants for five years following the date on which the Board approved the award, as described in more detail in the CD&A in the section titled "CEO Compensation." 2The amounts reported in this column represent the aggregate grant date fair value of SSAR awards granted to the NEOs during the year as estimated by the Company in accordance with FASB ASC Topic 718. See Note 17 to the Consolidated Financial Statements included in the 2023 Form 10-K for a discussion of the relevant assumptions used in calculating these amounts pursuant to FASB ASC Topic 718. 3The amounts reported in this column represent amounts earned under the STI Programs for performance periods ending in 2023, 2022, and 2021, respectively. The awards are reported for the year with respect to which they were earned, regardless of when the award was granted or paid. 4The amounts reported in this column are set forth by category below. Other than the use of a fractionally-owned or chartered corporate aircraft, the amounts disclosed are the actual or share of actual costs to the Company of providing these benefits. With respect to the personal use of fractionally-owned or chartered corporate aircraft, the incremental personal cost is calculated based on the variable operating costs related to the operation of the aircraft, including fuel costs and landing fees, trip-related repairs and maintenance, catering and other miscellaneous variable costs, and excludes fixed costs that do not change based on usage as the fractionally-owned or chartered corporate aircraft is used primarily for business purposes. Occasionally, a spouse or other guest may accompany NEOs on corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers and, in such instances, the value of such spouse or guest usage is included in such NEO's personal income in accordance with applicable tax regulations. In those cases, there is no aggregate incremental cost to the Company, and, as a result, no amount is reflected in the 2023 Summary Compensation Table. The value of the personal use of a fractionally-owned or chartered corporate aircraft by our NEOs is included in their personal income in accordance with applicable tax regulations. Amounts reported in the "Other Personal Benefits" column below for Mr. Rodriguez includes amounts related to the use of fractionally-owned or chartered corporate aircraft ($667,166); amounts attributable to the one-time initial set-up costs and ongoing provision of executive security services ($393,191), which the Company does not view to be personal in nature, but is disclosing here in compliance with the applicable disclosure regulations; amounts attributable to personal use of Company tickets to certain sporting events; and amounts attributable to the Company's payment of the required filing fee incurred by Mr. Rodriguez under the Hart-Scott Rodino Act of 1976, or HSR Act, as approved by the independent members of the Board ($30,000). The amounts reflected for Mr. Staffieri are for use of fractionally-owned or chartered corporate aircraft ($246,693) and amounts attributable to personal use of Company tickets to certain sporting events.
2023 Summary Compensation Table
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2023 Summary Compensation Table
| Name | Year | Other Personal Benefits ($) | Life Insurance Premiums ($) | Company Contribution to Defined Contribution Plan ($) | Total All Other Compensation ($) | | Javier J. Rodriguez | 2023 | $1,092,397 | $576 | $3,600 | $1,096,573 | | Joel Ackerman | 2023 | $— | $240 | $3,600 | $3,840 | | Michael D. Staffieri | 2023 | $248,193 | $336 | $3,600 | $252,129 | | Kathleen A. Waters | 2023 | $— | $240 | $3,600 | $3,840 | | James O. Hearty | 2023 | $— | $240 | $3,600 | $3,840 |
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table sets forth information concerning plan-based awards made to each of the NEOs during 2023.
2023 Grants of Plan-Based Awards Table
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | | | | | Name | Grant Date | Approval Date | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Options Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)4 | | Javier J. Rodriguez | — | — | 1 | $— | $2,250,000 | $4,500,000 | — | — | — | — | — | — | $— | | Joel Ackerman | — | — | 1 | $— | $750,000 | $1,500,000 | — | — | — | — | — | — | $— | | | 3/15/2023 | 3/14/2023 | 2 | $— | $— | $— | 8,877 | 35,508 | 71,016 | — | — | — | $2,961,634 | | | 3/15/2023 | 3/14/2023 | 3 | $— | $— | $— | — | — | — | 23,672 | — | — | $1,800,019 | | Michael D. Staffieri | — | — | 1 | $— | $1,050,000 | $2,100,000 | — | — | — | — | — | — | $— | | | 3/15/2023 | 3/14/2023 | 2 | $— | $— | $— | 13,808 | 55,234 | 110,468 | — | — | — | $4,606,945 | | | 3/15/2023 | 3/14/2023 | 3 | $— | $— | $— | — | — | — | 36,823 | — | — | $2,800,021 | | Kathleen A. Waters | — | — | 1 | $— | $650,000 | $1,300,000 | — | — | — | — | — | — | $— | | | 3/15/2023 | 3/14/2023 | 2 | $— | $— | $— | 6,904 | 27,617 | 55,234 | — | — | — | $2,303,487 | | | 3/15/2023 | 3/14/2023 | 3 | $— | $— | $— | — | — | — | 18,411 | — | — | $1,399,972 | | James O. Hearty | — | — | 1 | $— | $400,000 | $800,000 | — | — | — | — | — | — | $— | | | 3/15/2023 | 3/14/2023 | 2 | $— | $— | $— | 2,762 | 11,047 | 22,094 | — | — | — | $921,410 | | | 3/15/2023 | 3/14/2023 | 3 | $— | $— | $— | — | — | — | 7,365 | — | — | $560,035 |
2023 Grants of Plan-Based Awards Table
1Represents applicable amounts for our 2023 STI Program under the DaVita Inc. 2020 Incentive Award Plan (the "2020 Plan"). The amount in the “Maximum” column represents the maximum amount the NEO was eligible to earn under the 2023 STI Program if all performance criteria were achieved at their highest payout level. The amount in the “Target” column represents the payout amount the NEO was eligible to earn under the 2023 STI Program if all performance criteria were achieved at their target payout level. 2This number represents PSUs awarded under the 2020 Plan. The PSU awards vest 100% on March 15, 2026, subject to the NEO’s continued employment and the achievement of the underlying performance conditions. For a description of the PSUs, see the subsection titled “Compensation Discussion and Analysis — What We Pay and Why — Long-Term Incentive Program for 2023” in this Proxy Statement. 3This number represents RSUs granted under the 2020 Plan. The RSUs vest 50% each on March 15, 2026 and March 15, 2027, subject to the NEO's continued employment. For a description of the RSUs, see the subsection titled “Compensation Discussion and Analysis — What We Pay and Why — Long-Term Incentive Program for 2023” in this Proxy Statement. 4The amounts for RSUs and PSUs represent the aggregate grant date fair values of each award determined pursuant to FASB ASC Topic 718 and, in the case of PSUs, are based upon the probable outcome of the applicable performance conditions on the grant date. See Note 17 to the Consolidated Financial Statements included in our 2023 Form 10-K for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FASB ASC Topic 718.
2023 Grants of Plan-Based Awards Table
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2023 Outstanding Equity Awards at Fiscal Year-End Table
2023 Outstanding Equity Awards at Fiscal Year-End Table The following table sets forth information concerning outstanding SSARs and unvested stock awards held by each of the NEOs as of December 31, 2023.
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | | Option Awards | | | | | | Stock Awards | | | | | | | Name | Grant Date | 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 Vested1 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested1 ($) | | Javier J. Rodriguez | 1/23/2020 | 2,000,000 | | — | | $67.80 | 11/4/2024 | — | | — | — | | — | | Joel Ackerman | 6/20/2019 | 110,000 | | — | | $52.41 | 6/20/2024 | — | | — | — | | — | | | 3/15/2020 | 39,499 | 2 | 39,500 | 2 | $75.95 | 3/15/2025 | — | | — | — | | — | | | 3/15/2021 | — | | 44,065 | 2 | $108.93 | 3/15/2026 | — | | — | — | | — | | | 3/15/2022 | — | | 43,388 | 2 | $110.63 | 3/15/2027 | — | | — | — | | — | | | 3/15/2020 | — | | — | | — | — | 10,952 | 4 | $1,147,332 | 4,936 | 5 | $517,095 | | | 3/15/2021 | — | | — | | — | — | — | | — | 7,229 | 6 | $757,310 | | | 3/15/2022 | — | | — | | — | — | — | | — | 13,219 | 7 | $1,384,822 | | | 3/15/2023 | — | | — | | — | — | 23,672 | 3 | $2,479,879 | — | | — | | | 3/15/2023 | — | | — | | — | — | — | | — | 71,016 | 8 | $7,439,636 | | Michael D. Staffieri | 6/20/2019 | 200,000 | | — | | $52.41 | 6/20/2024 | — | | — | — | | — | | | 3/15/2020 | 59,249 | 2 | 59,250 | 2 | $75.95 | 3/15/2025 | — | | — | — | | — | | | 3/15/2021 | — | | 66,097 | 2 | $108.93 | 3/15/2026 | — | | — | — | | — | | | 3/15/2022 | — | | 65,080 | 2 | $110.63 | 3/15/2027 | — | | — | — | | — | | | 3/15/2020 | — | | — | | — | — | 16,428 | 4 | $1,720,997 | 7,406 | 5 | $775,853 | | | 3/15/2021 | — | | — | | — | — | — | | — | 10,845 | 6 | $1,136,122 | | | 3/15/2022 | — | | — | | — | — | — | | — | 19,830 | 7 | $2,077,391 | | | 3/15/2023 | — | | — | | — | — | 36,823 | 3 | $3,857,577 | — | | — | | | 3/15/2023 | — | | — | | — | — | — | | — | 110,468 | 8 | $11,572,628 | | Kathleen A. Waters | 6/20/2019 | 40,000 | | — | | $52.41 | 6/20/2024 | — | | — | — | | — | | | 3/15/2020 | 13,166 | 2 | 13,167 | 2 | $75.95 | 3/15/2025 | — | | — | — | | — | | | 3/15/2021 | — | | 16,157 | 2 | $108.93 | 3/15/2026 | — | | — | — | | — | | | 3/15/2022 | — | | 15,908 | 2 | $110.63 | 3/15/2027 | — | | — | — | | — | | | 3/15/2020 | — | | — | | — | — | 3,292 | 3 | $344,870 | — | | — | | | 3/15/2020 | — | | — | | — | — | 7,302 | 4 | $764,958 | 3,290 | 5 | $344,660 | | | 3/15/2021 | — | | — | | — | — | 4,039 | 3 | $423,126 | — | | — | | | 3/15/2021 | — | | — | | — | — | — | | — | 5,301 | 6 | $555,333 | | | 3/15/2022 | — | | — | | — | — | 3,977 | 3 | $416,631 | — | | — | | | 3/15/2022 | — | | — | | — | — | — | | — | 9,695 | 7 | $1,015,648 | | | 3/15/2023 | — | | — | | — | — | 18,411 | 3 | $1,928,736 | — | | — | | | 3/15/2023 | — | | — | | — | — | — | | — | 55,234 | 8 | $5,786,314 | | James O. Hearty | 6/20/2019 | 50,000 | | — | | $52.41 | 6/20/2024 | — | | — | — | | — | | | 3/15/2020 | 4,608 | 2 | 4,609 | 2 | $75.95 | 3/15/2025 | — | | — | — | | — | | | 3/15/2021 | — | | 5,875 | 2 | $108.93 | 3/15/2026 | — | | — | — | | — | | | 3/15/2022 | — | | 5,784 | 2 | $110.63 | 3/15/2027 | — | | — | — | | — | | | 3/15/2020 | — | | — | | — | — | 1,152 | 3 | $120,684 | — | | — | | | 3/15/2020 | — | | — | | — | — | 2,555 | 4 | $267,662 | 1,152 | 5 | $120,684 | | | 3/15/2021 | — | | — | | — | — | 1,469 | 3 | $153,892 | — | | — | | | 3/15/2021 | — | | — | | — | — | — | | — | 1,927 | 6 | $201,873 | | | 3/15/2022 | — | | — | | — | — | 1,446 | 3 | $151,483 | — | | — | | | 3/15/2022 | — | | — | | — | — | — | | — | 3,525 | 7 | $369,279 | | | 3/15/2023 | — | | — | | — | — | 7,365 | 3 | $771,557 | — | | — | | | 3/15/2023 | — | | — | | — | — | — | | — | 22,094 | 8 | $2,314,567 |
2023 Outstanding Equity Awards at Fiscal Year-End Table
1The market value of shares or units of stock that have not vested reflects the $104.76 per share closing price of our Common Stock on December 29, 2023, the last trading day of the year, as reported by the NYSE. 2These SSARs vest 50% each on the third and fourth anniversaries of the grant date. 3These RSUs vest 50% each on the third and fourth anniversaries of the grant date. 4These PSUs vested 100% on March 15, 2024. 5These PSUs vested 100% on March 15, 2024. The amounts listed here reflect the shares that may be earned upon achievement of the maximum Relative TSR performance criterion. 6These PSUs vested 28.6% on March 15, 2024 and vest 71.4% on March 15, 2025, subject to the achievement of the performance conditions for the PSUs. The amounts listed here reflect the shares that may be earned upon achievement of the threshold Adjusted Earnings per Share performance criterion and target Relative TSR performance criteria. 7These PSUs vest 38.5% on March 15, 2025 and 61.5% on March 15, 2026, subject to the achievement of the performance conditions for the PSUs. The amounts listed here reflect the shares that may be earned upon achievement of the performance criterion at threshold for the 2024 Adjusted Earnings per Share, target for the 2025 Adjusted Earnings per Share and target for the Relative TSR performance criteria. 8These PSUs vest 100% on March 15, 2026, subject to achievement of the performance conditions for the PSUs. The amounts listed here reflect the shares that may be earned upon achievement of the maximum performance criteria.
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table sets forth information concerning the exercise of SSARs (which are treated as options for this table), and the vesting of stock awards held by each of the NEOs during 2023.
2023 Option Exercises and Stock Vested Table
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)1 | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)2 | | Javier J. Rodriguez | 218,573 | $23,537,174 | 93,627 | $9,068,711 | | Joel Ackerman | 19,247 | $1,938,616 | 49,855 | $4,626,377 | | Michael D. Staffieri | 83,406 | $8,400,713 | 54,420 | $4,967,253 | | Kathleen A. Waters | 30,972 | $3,142,383 | 29,840 | $2,686,724 | | James O. Hearty | 8,982 | $904,683 | 12,784 | $1,167,012 |
2023 Option Exercises and Stock Vested Table
1Value realized on exercise is determined by subtracting the exercise or base price from the applicable closing stock price at exercise, as reported by the NYSE, and multiplying the remainder by the number of shares exercised. 2Value realized on vesting is determined by multiplying the number of shares underlying RSUs or PSUs by the closing stock price on the date of vesting, as reported by the NYSE.
No Pension Benefits
No Pension Benefits The Company does not sponsor or maintain a defined benefit pension plan that provides for payments or other benefits at, following, or in connection with retirement for any teammate, including the NEOs.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table sets forth information concerning the Company’s Deferred Compensation Plan, a nonqualified deferred compensation plan.
2023 Nonqualified Deferred Compensation Table
2023 Nonqualified Deferred Compensation Table
2023 Nonqualified Deferred Compensation Table
| Name | Executive Contributions in Last FY ($)1,2 | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)3 | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | | Javier J. Rodriguez | — | — | $202,492 | — | $1,234,848 | | Joel Ackerman | — | — | $229,374 | — | $1,746,654 | | Michael D. Staffieri4 | — | — | — | — | — | | Kathleen A. Waters | $281,003 | — | $185,412 | — | $1,729,196 | | James O. Hearty4 | — | — | — | — | — |
2023 Nonqualified Deferred Compensation Table
1These amounts are reported in the “Salary” and "Non-Equity Incentive Plan Compensation" columns in the 2023 Summary Compensation Table. 2Ms. Waters deferred $127,162 and $314,853 in 2022 and 2021, respectively. 3None of the earnings in this column are included in the 2023 Summary Compensation Table because they are not preferential or above market. 4Mr. Staffieri and Mr. Hearty did not participate in any of the Company’s nonqualified deferred compensation plans in 2023 or in any prior years.
2023 Nonqualified Deferred Compensation Table
| | Notice of 2024 Annual Meeting and Proxy Statement | 56 |
2023 Nonqualified Deferred Compensation Table
Deferred Compensation Plan The 2023 Nonqualified Deferred Compensation Table presents amounts deferred under our Deferred Compensation Plan.
Other Termination Events
| Pay Ratio Disclosure |
Identification of Median Teammate
| Pay Versus Performance |
Identification of Median Teammate
| Year 1 | Summary Compensation Table Total for PEO 2 ($) | Compensation Actually Paid to PEO 3 ($) | Average Summary Compensation Table Total for Non-PEO NEOs 2 ($) | | Average Compensation Actually Paid to Non-PEO NEOs 4 ($) | | Value of Initial Fixed $100 Investment Based On: 5 | | Net Income ($) | Adjusted Earnings per Share 7 ($) | | | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return 6 ($) | | | | (a) | (b) | (c) | (d) | | (e) | | (f) | (g) | (h) | (i) | | 2023 | 6,712,328 | 4,811,039 | 6,408,000 | | 14,576,297 | | 139.62 | 124.34 | 956,978,000 | 8.19 | | 2022 | 2,984,581 | (86,403,681) | 4,203,738 | | (8,601,804) | | 99.52 | 118.22 | 781,643,000 | 7.13 | | 2021 | 3,298,439 | (13,076,235) | 4,262,738 | | 3,784,342 | | 151.62 | 147.19 | 1,211,762,000 | 9.24 | | 2020 | 73,432,365 | 171,946,681 | 6,453,315 | 8 | 23,928,014 | 8 | 156.47 | 133.81 | 994,677,000 | 7.82 |
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE
| Name | Fees Earned or Paid in Cash ($)1 | Stock Awards ($)2 | Total ($) | | Pamela M. Arway | $297,500 | $199,959 | $497,459 | | Charles G. Berg | $122,500 | $199,959 | $322,459 | | Barbara J. Desoer | $185,000 | $199,959 | $384,959 | | Paul J. Diaz3 | $77,610 | $136,847 | $214,457 | | Jason M. Hollar | $165,000 | $199,959 | $364,959 | | Dr. Gregory J. Moore, M.D., Ph.D. | $155,934 | $199,959 | $355,893 | | John M. Nehra | $145,000 | $199,959 | $344,959 | | Adam H. Schechter | $135,000 | $199,959 | $334,959 | | Wendy L. Schoppert4 | $63,967 | $42,889 | $106,856 | | Phyllis R. Yale | $175,000 | $199,959 | $374,959 |
2023 DIRECTOR COMPENSATION TABLE
1Consists of the amounts described below under the subsections “— Annual Retainers” and “— Meeting Fees”. With respect to Mr. Diaz, includes the prorated portion of the $12,500 second quarter cash retainer for service as Chair of the Compliance and Quality Committee and prorated portion of the $25,000 second quarter cash retainer in the total amount of $27,610. With respect to Mr. Hollar, includes the prorated portion of the $12,500 first quarter cash retainer for service as Chair of the Audit Committee in the amount of $2,500. With respect to Dr. Moore, includes the prorated portion of the $12,500 second quarter cash retainer for service as Chair of the Compliance and Quality Committee in the amount of $3,434. With respect to Mr. Nehra, includes the prorated portion of the $12,500 first quarter cash retainer for service as Chair of the Audit Committee in the amount of $10,000. With respect to Ms. Schoppert, includes the prorated portion of the $25,000 third quarter cash retainer in the amount of $21,467. 2The amounts reported in this column reflect the aggregate grant date fair value of all direct stock issuance awards ("DSI") granted to our non-employee directors during 2023 as estimated by the Company in accordance with FASB ASC Topic 718. This includes four quarterly grants under the Director Compensation Policy (as defined below) granted on March 15, 2023, May 15, 2023, August 15, 2023, and November 15, 2023. Mr. Diaz received a prorated quarterly grant amount on his last day of board service, June 6, 2023. Ms. Schoppert received a prorated quarterly grant on November 15, 2023 for the quarter she joined the Board. See Note 17 to the Consolidated Financial Statements included in our 2023 Form 10-K for a discussion of the relevant assumptions used in calculating the grant date fair value pursuant to FASB ASC Topic 718. As of December 31, 2023, no non-employee director had any outstanding equity awards. 3Mr. Diaz stepped down from the Board, effective June 6, 2023. 4Ms. Schoppert was appointed to the Board, effective July 14, 2023.
2023 DIRECTOR COMPENSATION TABLE
| | Notice of 2024 Annual Meeting and Proxy Statement | 68 |
Director Compensation
Director Compensation Our non-employee director compensation program, which is embodied in our non-employee director compensation policy (the “Director Compensation Policy”), is designed to attract and retain highly-qualified directors and to align the interests of our directors with the long-term interests of our stockholders. The Compensation Committee is responsible for recommending to the Board the compensation of our non-employee directors. As part of this process, the Compensation Committee reviews the compensation program for our non-employee directors no less than annually and considers input from its independent compensation consultant, Compensia, regarding general market practices on director compensation as well as comparative market data for our comparator peer group, which is the same peer group used for purposes of evaluating the competitiveness of our executive compensation program. The Compensation Committee also considers feedback received on our director compensation program through engagement with our stockholders. The following describes the compensation paid to our non-employee directors for service as a director during 2023 under the Director Compensation Policy as set forth in the table above. Under the Director Compensation Policy, effective January 1, 2023, among other things, the value of the aggregate annual DSI grants increased by $10,000 (representing the first increase in the annual grant value since 2017), the annual retainer increased by $20,000 (representing the first increase in the annual retainer since 2014), and the Chair Retainer for the Nominating and Governance Committee was increased by $15,000 (so that it would align with the value of the retainer for Chairs of other Board committees). Directors who are current teammates or officers do not receive compensation for service on the Board or any committee of the Board.