DEF 14A of U S Physical Therapy Inc /NV
Filed Apr 15, 2024 · FY20230001140361-24-019890
PROPOSAL 1 — ELECTION OF DIRECTORS
PROPOSAL 1 — ELECTION OF DIRECTORS The accompanying proxy card, unless marked to the contrary, will be voted in favor of the election of Christopher J. Reading, Kathleen A. Gilmartin, Nancy J. Ham, Dr. Bernard A. Harris, Jr., Anne B. Motsenbocker, Regg E. Swanson and Clayton K. Trier. All of these nominees are current directors standing for re-election at the Annual Meeting to serve until the next annual meeting of stockholders or until their successor is elected and qualified. The Governance and Nominating Committee, which consists solely of directors who are independent under the applicable New York Stock Exchange (“NYSE”) listing standards, recommended that from and after the Annual Meeting the Board consist of seven directors and recommended the nomination of all seven directors to the Board of Directors. Our current chairman, Mr. Edward Kuntz, is retiring from the Board effective as of the completion of the Annual Meeting. Based on that recommendation, the Board resolved that from and after the Annual Meeting the Board shall consist of seven directors and nominated each of the foregoing seven nominees recommended by the Governance and Nominating Committee for election at the Annual Meeting. We thank Mr. Kuntz for his distinguished service and the leadership he has provided to the Company during his tenure. As discussed further under the heading “Corporate Governance and Board Matters - Board Leadership Structure” below, the Board has appointed Mr. Reading, our President and Chief Executive Officer, also to serve as the Chairman of the Board of Directors effective as of his re-election as a director at this Annual Meeting. The Board of Directors has affirmatively determined that Messrs. Trier and Swanson, Dr. Harris and Mses. Gilmartin, Ham and Motsenbocker, are independent under the NYSE listing standards. Mr. Reading, who is an executive officer of the Company, was determined not to be independent under the NYSE listing standards. The nominees for director are:
PROPOSAL 1 — ELECTION OF DIRECTORS
| Nominees: | Age | Director Since | Position(s) Held | | Christopher J. Reading | 60 | 2004 | President, Chief Executive Officer and Director | | Kathleen A. Gilmartin | 72 | 2018 | Director | | Dr. Bernard A. Harris, Jr. | 67 | 2005 | Director | | Anne B. Motsenbocker | 62 | 2022 | Director | | Regg E. Swanson | 70 | 2007 | Director | | Clayton K. Trier | 72 | 2005 | Director | | Nancy J. Ham | 63 | 2023 | Director |
PROPOSAL 1 — ELECTION OF DIRECTORS
Director Biographies:
Race/Ethnicity: Caucasian
Race/Ethnicity: Caucasian Ms. Gilmartin joined our Board on May 22, 2018. Ms. Gilmartin is the former President and Chief Executive Officer of Caring Brands International and Interim HealthCare Inc., providers of home healthcare, skilled nursing, therapy and hospice care. Ms. Gilmartin’s career spanned twenty-five years with Interim HealthCare Inc. where she served as President and Chief Executive Officer from September 2008 until her retirement in February 2017. Ms. Gilmartin served as a director of Caring Brands International and Interim Healthcare, Inc. from February 2017 through October 2021. Ms. Gilmartin served as a director of the Research Institute for Home Care (formerly the Alliance of Home Health Quality and Innovation), a non-profit, national consortium of home health care providers and organizations from 2009 through 2023. Since December 2022, Ms. Gilmartin has served as a director of Harmar Mobility LLC, a manufacturer of specialty mobility products and provider of a range of mobility and accessibility solutions. Ms. Gilmartin also serves as a director since December 2022, for 101 Mobility LLC, a national network of franchised providers that install and service mobility devices and solutions in client homes throughout the U.S. Also, Ms. Gilmartin is a Registered Nurse.
Race/Ethnicity: Caucasian
Race/Ethnicity: Caucasian Ms. Motsenbocker joined our Board effective January 1, 2022. Ms. Motsenbocker was a Managing Director at J.P. Morgan Chase, a global financial services company, until she retired in 2021. Over her 36 years with the firm, she held roles of increasing responsibility focusing on helping companies develop and implement capital strategies, manage risk, achieve operational excellence, and grow organically and through mergers and acquisitions. In her last position, she was the functional Chief Executive Officer of the southwest region of the Commercial Bank, a position that she held for seven years. Since 2022, Ms. Motsenbocker has served as an independent director of CSW Industrials (NASDAQ: CSWI), a diversified industrial growth company, where she serves as a member of the Audit Committee and the Compensation and Talent Development Committee. From 2016 to 2022, she was a Director of Children’s Health System of Texas, one of the nation’s largest pediatric healthcare systems, where she served as Chair of the HR and Compensation Committee and as a member of the Audit Committee. Since October 2022, Ms. Motsenbocker has served as a Director of the National Kidney Foundation. She also currently serves on the board of the United Way Foundation of Metropolitan Dallas and the NACD of North Texas.
Director Compensation Table
Director Compensation Table The following table discloses the cash, equity awards and other compensation earned, paid or awarded, as the case may be, to each of the Company’s directors who are not Named Executive Officers during the fiscal year ended December 31, 2023.
Director Compensation Table
| Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards | Non-equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | | Mark J. Brookner(3) | $31,250 | $— | $— | $— | $— | $— | $31,250 | | Harry S. Chapman(3) | $45,250 | $— | $— | $— | $— | $— | $45,250 | | Kathleen A. Gilmartin | $78,750 | $177,792 | $— | $— | $— | $— | $256,542 | | Nancy J. Ham | $38,125 | $177,792 | $— | $— | $— | $— | $215,917 | | Dr. Bernard A. Harris, Jr. | $86,500 | $177,792 | $— | $— | $— | $— | $264,292 | | Edward L. Kuntz | $162,500 | $177,792 | $— | $— | $— | $— | $340,292 | | Anne B. Motsenbocker | $61,250 | $177,792 | $— | $— | $— | $— | $239,042 | | Regg E. Swanson | $58,750 | $177,792 | $— | $— | $— | $— | $236,542 | | Clayton K. Trier | $91,500 | $177,792 | $— | $— | $— | $— | $269,292 |
Director Compensation Table
| (1) Includes Retainer Fees, Chairman Fees and Meeting Fees, all of which are described below. |
Director Compensation Table
| (2) A total of 1,600 shares of restricted common stock were granted to each director under the terms of the Stock Incentive Plan. The restrictions lapsed as to 400 shares on each of July 1, 2023, October 1, 2023, January 1, 2024 and April 1, 2024. Amounts shown are the grant date fair value of the awards computed in accordance with FASB ASC Topic 718, which amounted to $111.12 per share. Assumptions used in the calculation of these amounts are included in “Note 16 — Equity Based Plans” of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K filed with SEC on February 29, 2024. |
Director Compensation Table
| (3) Effective May 16, 2023, Messrs. Brookner and Chapman were no longer members of the Board of Directors. |
Compensation of Directors
Compensation of Directors During 2023, each of our non-employee directors received a quarterly retainer fee (“Retainer Fee”) for serving as a member of our Board of Directors. The Retainer Fee for the first two quarters in 2023 was $11,250 per quarter. In addition, for these first two quarters, directors were paid $1,250 for each committee meeting attended in person or telephonically (hereinafter referred to as “Meeting Fees”). Finally, for these same two quarters of 2023, in addition to the Retainer Fee and Meeting Fees, the Chairman of our Board of Directors and Chairs of our Committees were paid an annual fee (“Chair Fees”) at the rate of $70,000 per year (Board Chairman), $15,000 per year (Chair of Governance and Nominating Committee), $23,000 per year (Chair of Audit Committee), and $18,000 per year (Chairs of Compensation Committee and Compliance Committee). In May 2023, at the recommendation of the Compensation Committee, the Board of Directors modified the fees paid to directors and eliminated the Meeting Fees. Starting for the third quarter of 2023, each of our non-employee directors received a Retainer Fee of $16,250 per quarter. In addition, starting for the third quarter of 2023, the annual Chair Fees were modified as follows: Chairman of the Board of Directors: $70,000; Chair of Audit Committee: $30,000; Chairs of Governance and Nominating Committee, Compensation Committee and Compliance Committee: $20,000. In addition, in May 2023, each of the non-employee directors who were elected at the 2023 annual meeting received a grant of 1,600 shares of restricted stock under the terms of the Stock Incentive Plan. The restrictions on 400 shares of this grant lapsed on each of July 1, 2023, October 1, 2023, January 1, 2024 and April 1, 2024. The Board of Directors has not approved any further changes to director the compensation thus far for 2024, except that in February 2024, at the recommendation of the Compensation Committee, the Board approved an additional annual fee of $35,000 to be paid to the Lead Independent Director in addition to the Retainer Fee and any other Chair Fees. Directors are also reimbursed for their out-of-pocket travel and related expenses incurred in attending Board and committee meetings. Mr. Reading is not compensated separately for serving on our Board nor will he be compensated separately for service as Chairman.
COMPENSATION DISCUSSION AND ANALYSIS
| • | Compensate executive officers within market standards. We believe that competitive pay, together with our significant growth opportunities and employee-centered corporate culture, allow us to attract and retain top-quality executives. To ensure the competitiveness of our compensation levels within the comparable markets for executive talent, we review our executive compensation program in comparison to pertinent market data and specified peer companies. |
Compensation Policies and Practices
| • | 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. |
Compensation Policies and Practices
| • | Capped Annual Incentive Award Opportunities. The value of our NEO incentive awards is determined by performance-based metrics that promote long-term stockholder value. |
Compensation Policies and Practices
| • | Multi-Year Vesting Periods. Our vesting periods 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. |
Compensation Policies and Practices
| • | Competitive Compensation Practices. The competitiveness of our executive compensation program is monitored annually by comparison to a group of peer companies that are comparable based on industry, revenue, market capitalization and other factors. |
Compensation Policies and Practices
| • | Double-Trigger Change in Control Benefits. 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 in addition to a change in control in order to become fully vested). |
Compensation Policies and Practices
| • | Limited Perquisites. We provide our NEOs with limited perquisites that are narrowly tailored to enhance our retention of talent over the long term. |
Role of the Independent Consultant
Role of the Independent Consultant The Compensation Committee has the authority to retain a consultant or obtain advice from external legal, accounting or other advisors to assist in the evaluation of executive compensation. The Compensation Committee retained an outside resource during 2023 for the limited purpose of providing the committee with certain updated benchmarking information (as discussed below) to assist the committee with evaluating and establishing the Company’s performance-based cash and equity compensation plans. The outside resource has no other business or financial relationship with the Company and his work for the Compensation Committee does not raise any conflict of interest. This outside resource provided no other services to the Company and only received fees from the Company on behalf of the Compensation Committee.
Benchmarking
Benchmarking To ensure that our executive compensation program is competitive, the Compensation Committee has periodically reviewed data regarding executive compensation at peer group companies assembled by its outside resource. The Compensation Committee uses the comparative peer group data as a point of reference for compensation, but not as the determinative factor. The purpose of the comparison data is not to supplant the analyses of internal pay equity, wealth accumulation and the individual performance of the executive officers that the Compensation Committee considers when making compensation decisions. The Compensation Committee has full discretion in determining the nature and extent of the use of comparative compensation data, including to elect not to use the data at all. There are very few directly comparable, publicly-traded peer companies in our sector, so in determining our peer group, we selected companies with similar industry focus, business complexity, and size and operating characteristics. The most recent targeted peer group consisted of the following companies:
Benchmarking
| • | Select Medical Corporation |
Benchmarking
| • | ATI Physical Therapy, Inc. |
Benchmarking
| • | Surgery Partners, Inc. |
Benchmarking
| • | RadNet, Inc. |
Benchmarking
| • | Addus HomeCare Corporation |
Benchmarking
| • | Cross Country Healthcare, Inc. |
Benchmarking
| • | Apollo Medical Holdings, Inc. |
Benchmarking
| • | National Healthcare Corp |
Benchmarking
| • | Ensign Group, Inc. |
Benchmarking
For each of these companies, the Compensation Committee reviewed base salary information, annual cash incentives, annual equity incentives, and other compensation. In addition, the Compensation Committee reviews and considers the pay for performance and benchmarking information provided by ISS in its ISS Proxy Analysis & Benchmark Policy Voting Recommendations relating to the Company’s prior fiscal year. The Compensation Committee considered the relative portion of overall executive compensation consisting of equity compensation as compared to cash compensation, objective versus subjective measures, and how the Company compared to the other publicly-traded companies in areas such as shareholder return, revenue and Adjusted EBITDA growth. Adjusted EBITDA is defined as earnings before interest income, interest expense, taxes, depreciation, and amortization, changes in revaluation of put-right liability, equity-based awards compensation expense, asset impairment charges and other extraordinary or unusual items, and the related portion for non-controlling interests. Considering all these factors and comparable company information, the Compensation Committee determined that the 2023 compensation program for the NEOs appropriately motivates the Company’s executives to manage the Company effectively and in a manner that is in the best interests of the Company and its stockholders.
Annual Cash Incentive Compensation
Annual Cash Incentive Compensation Based on individual and Company performance, incentive compensation opportunities are available to a wide range of our employees. We believe that incentive compensation is effective in reinforcing both the overall values of our Company and our specific operating goals. Incentive compensation programs are designed to focus employees’ attention on our key performance goals, to identify the expected levels of performance and to reward individuals who meet or exceed our expectations. The aggregate amounts available for incentive awards are determined by our overall financial performance. The actual awards paid to individual recipients, other than to executive officers, are formulated by management, generally payable on an annual basis and reviewed by the committee prior to payment. The committee formulates and determines incentive awards for Named Executive Officers. See “Summary Compensation Table” below. For 2023, the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer–West, Chief Operating Officer – East and Executive Vice President and General Counsel (the “2023 Executive Participants”) were eligible to receive cash bonus awards and/or shares of restricted common stock under the Company’s Objective Cash/RSA Bonus Plan and Discretionary Cash/RSA Bonus Plan. For a detailed description of these plans, see the Company’s Current Report on Form 8-K filed with the SEC on March 2, 2023. Under the Objective Cash/RSA Bonus Plan, the 2023 Executive Participants were eligible to earn a bonus award, payable in cash and/or restricted common stock at the discretion of the Compensation Committee, having a value of up to 75% of their respective base salaries, dependent upon the Company achieving Adjusted EBITDA in the range of $74,597,377 to $82,012,249 or more. In determining Adjusted EBITDA for purposes of the Objective Cash/RSA Bonus Plan, the Objective Cash/RSA Bonus Plan provides that such determination shall be made before interest income, interest expense, taxes, depreciation, and amortization, changes in revaluation of put-right liability, equity-based awards compensation expense, and other extraordinary or unusual items, and related portion for non-controlling interests. Based on the Adjusted EBITDA for the year ended 2023 of $77.7 million, Objective Cash/RSA Bonus awards equal to 31% of base salary was paid on March 6, 2024, to the 2023 Executive Participants. Under the Discretionary Cash/RSA Bonus Plan, the Executive Participants were eligible to receive cash bonus awards and/or shares of restricted stock as determined by the Compensation Committee, having a value of up to 50% of their respective base salaries. The criteria established for each of the 2023 Executive Participants considered by the Compensation Committee in determining the respective awards for 2023 (the “2023 Executive Subjective Criteria”) were as follows: Mr. Reading – Chief Executive Officer
Annual Cash Incentive Compensation
| 1. | Company leadership; |
Annual Cash Incentive Compensation
| 2. | Cost aligned with revenue and volume growth; |
Annual Cash Incentive Compensation
| 3. | Continued development of COOs (or direct reports); |
Annual Cash Incentive Compensation
| 4. | Maintain effective Compliance Culture; |
Annual Cash Incentive Compensation
| 5. | Acquisition, Tuck in and De Novo development; and |
Annual Cash Incentive Compensation
| 6. | Buffer net rate impact with rate strategies and initiatives. |
Annual Cash Incentive Compensation
Mr. Hendrickson – Chief Financial Officer
Annual Cash Incentive Compensation
| 1. | Rate negotiations through strategic negotiations along with purging of sub-optimal contracts; |
Annual Cash Incentive Compensation
| 2. | Effective and accurate Board and Stockholder communication, guidance, modeling, projections and planning; |
Annual Cash Incentive Compensation
| 3. | Improve efficiencies in Finance/AP and IT areas through technology improvements and staffing adjustments; |
Annual Cash Incentive Compensation
| 4. | Maintain effective capital structure to allow for continued growth; |
Annual Cash Incentive Compensation
| 5. | Enact cost improvement opportunities across the company and within the corporate services area; and |
Annual Cash Incentive Compensation
| 6. | Successful audit implementation. |
Annual Cash Incentive Compensation
Mr. Reeve – Chief Operating Officer-West
Annual Cash Incentive Compensation
| 1. | Align cost and revenue growth for physical therapy; |
Annual Cash Incentive Compensation
| 2. | Create development plan for top 30 partnerships to ensure organic as well as acquired growth; |
Annual Cash Incentive Compensation
| 3. | Work on industrial injury prevention (“IIP”) opportunities for sales and expansion and cost efficiency in light of broad economic environment; |
Annual Cash Incentive Compensation
| 4. | Leadership development, succession and effective relationship integration to allow for seamless transitions to accommodate growth and succession-related changes; |
Annual Cash Incentive Compensation
| 5. | Maintain effective compliance culture; and |
Annual Cash Incentive Compensation
| 6. | Effective acquisition-related due diligence and integrated coordination and execution. |
Annual Cash Incentive Compensation
Mr. Williams – Chief Operating Officer-East
Annual Cash Incentive Compensation
| 1. | Align cost and revenue growth for physical therapy; |
Annual Cash Incentive Compensation
| 2. | Create development plan for top 30 partnerships to ensure organic as well as acquired growth; |
Annual Cash Incentive Compensation
| 3. | Work on IIP opportunities for sales and expansion and cost efficiency in light of broad economic environment; |
Annual Cash Incentive Compensation
| 4. | Leadership development, succession and effective relationship integration to allow for seamless transitions to accommodate growth and succession-related changes; |
Annual Cash Incentive Compensation
| 5. | Maintain effective compliance culture; and |
Annual Cash Incentive Compensation
| 6. | Effective acquisition-related due diligence and integrated coordination and execution. |
Annual Cash Incentive Compensation
Mr. Binstein – Executive Vice President, General Counsel and Secretary
Annual Cash Incentive Compensation
| 1. | Coordinate with CEO and other executives to facilitate growth through development; |
Annual Cash Incentive Compensation
| 2. | Assist in any compliance matters as needed to maintain an effective compliance culture and assist in any communications internally as needed with the CCO and executive team; |
Annual Cash Incentive Compensation
| 3. | Maintain legal department in a manner which successfully supports our partners as well as our corporate and infrastructure needs; and |
Annual Cash Incentive Compensation
| 4. | Assist CEO and other executives in evaluating new opportunities for growth whether acquired or home grown. |
Annual Cash Incentive Compensation
The Compensation Committee considered the performance of the 2023 Executive Participants against these criteria. Based on the review and scoring by the Compensation Committee of each of these criteria, the Compensation Committee awarded a bonus to each of the 2023 Executive Participants as a percentage of the maximum award value (i.e., maximum of 50% of base salary) as follows: Mr. Reading – 100% of the maximum award value; Mr. Reeve – 100% of the maximum award value; Mr. Williams – 100% of the maximum award value; Mr. Hendrickson – 100% of the maximum award value; and Mr. Binstein – 100% of the maximum award value. Accordingly, the Compensation Committee determined that the following awards would be paid in cash and as follows: Mr. Reading: $480,000; Mr. Williams: $270,000; Mr. Reeve: $302,500; Hendrickson: $240,000; and Mr. Binstein: $187,500. These cash bonuses were paid on March 6, 2024.
Long-term Equity Incentive Awards
Long-term Equity Incentive Awards The Objective Cash Bonus Plan, Discretionary Cash Bonus Plan, Objective Long-Term Incentive Plan, and Discretionary Long-Term Incentive Plan for 2023, collectively, are hereinafter referred to as the “2023 Executive Incentive Plan.” The Stock Incentive Plan is intended to align employee and outside director interests with stockholders’ interests, to provide incentives to our key employees by encouraging their ownership of our common stock and to aid us in attracting and retaining key employees, upon whose efforts our success and future growth depends. Equity grants are made at the discretion of the committee, which administers the Company’s equity compensation plans. The objective of such long-term equity-based awards, which generally vest over four years, is primarily to incentivize management and key employees for future performance rather than to reward specific past performance. Individual grant sizes are primarily determined based on the employee’s duties and level of responsibility and his or her ability to exert significant influence and make meaningful contributions to the overall future success of the Company and, to a lesser degree, organizational and individual performance. At the discretion of the committee, and based on the recommendation of management, equity grants may also be used as an incentive for candidates recruited to fill key positions and for existing employees who receive significant promotions with increased responsibilities. For the 2023 year, the 2023 Executive Participants were eligible to receive awards consisting of shares of restricted common stock under the Company’s Objective Long-Term Incentive Plan and Discretionary Long-Term Incentive Plan. For a detailed description of these plans, see the Company’s Current Report on Form 8-K filed with the SEC on March 8, 2023. Under the Objective Long-Term Incentive Plan, Mr. Reading was eligible to earn up to 10,000 shares of restricted common stock, and Messrs. Williams, Reeve, Hendrickson and Binstein each were eligible to earn up to 5,000 shares of restricted common stock, dependent upon the Company achieving Adjusted EBITDA in the range of $74,597,377 to $79,594,370 or more. In determining Adjusted EBITDA for purposes of the Objective Cash/RSA Bonus Plan, the Objective Cash/RSA Bonus Plan provides that such determination shall be made before interest income, interest expense, taxes, depreciation, and amortization, changes in revaluation of put-right liability, equity-based awards compensation expense, and other extraordinary or unusual items, and related portion for non-controlling interests. Based on the Adjusted EBITDA of $77.7 million for 2023, Mr. Reading was awarded 6,200 shares of restricted common stock under this Objective Long-Term Incentive Plan, and Messrs. Williams, Reeve, Hendrickson and Binstein each were awarded 3,100 shares of restricted common stock under this Objective Long-Term Incentive Plan. Under the Discretionary Long-Term Incentive Plan, Mr. Reading was eligible to earn up to 10,000 shares of restricted common stock, and Messrs. Williams, Reeve, Hendrickson and Binstein each were eligible to earn up to 5,000 shares of restricted common stock, based upon a subjective determination of the committee. The committee determined for each 2023 Executive Participant such executive’s achievement of his respective Executive Subjective Criteria. Based on this review, the Compensation Committee determined that the achievement score for each of the 2023 Executive Participants was as follows: Mr. Reading – 100% of the maximum award value; Mr. Williams – 100% of the maximum award value; Mr. Reeve – 100% of the maximum award value; Mr. Hendrickson – 100% of the maximum award value; and Mr. Binstein – 100% of the maximum award value. For 2023, Mr. Reading was awarded 10,000 shares of restricted common stock under the Discretionary Long-Term Incentive Plan, and Messrs. Williams, Reeve, Hendrickson and Binstein each were awarded 5,000 shares of restricted common stock under the Discretionary Long-Term Incentive Plan. These shares of restricted common stock were granted on February 26, 2024 with restrictions on these shares lapsing evenly over 16 quarters starting on April 1, 2024.
Post-Employment Benefits
Post-Employment Benefits We have entered into employment agreements with our NEOs that provide for the payment of severance and other post-termination benefits depending on the nature of the termination, including severance payments in the event of a termination following a “change in control.” The committee believes that the terms and conditions of these agreements are reasonable and assist us in retaining the executive talent needed to achieve our objectives. In particular, the termination agreements, in the event of a “change in control,” help executives focus their attention on the performance of their duties in the best interests of the stockholders without being concerned about the consequences to them of a change in control and help promote continuity of senior management. Information regarding the specific payments that are applicable to each termination event, as well as the effect on unvested equity awards, is provided under the heading “Executive Compensation — Post Termination/Change-in-Control Benefits” below.
Actions Taken Subsequent to Year Ended 2023
Actions Taken Subsequent to Year Ended 2023 On March 6, 2024, the Compensation Committee approved and adopted the incentive plans for senior management as described below applicable to our Named Executive Officers. Objective Plans For 2024, the criteria used by the Company in determining awards to the executive officers under the Objective Cash/RSA Bonus Plan and Objective Long-Term Incentive Plan will be directly based on the Company’s Adjusted EBITDA. We use this objective measure because we believe it is a key driver in increasing shareholder value and because each of our executive officers can impact this objective measure in some way. The Compensation Committee approves the minimum and maximum goals for the objective financial measure, as defined in the plan, each year. The incentive for meeting these objective financial performance goals is set by the Compensation Committee. Under the Objective Cash/RSA Bonus Plan for 2024, the Company’s executive officers are eligible to earn a bonus award, payable in cash and/or restricted common stock at the discretion of the Compensation Committee, having a value of up to 75% for Messrs. Reading, Reeve, Williams, Hendrickson and Binstein (as a group referred to as “2024 Participants”) of their respective base salaries dependent upon the Company achieving Adjusted EBITDA in the range of $78,500,000 to $85,000,000 or more. Under the Objective Long-Term Incentive Plan, Mr. Reading is eligible to earn up to 12,500 shares of restricted stock, Mr. Williams is eligible to earn up to 7,500 shares of restricted stock, and Messrs. Reeve, Hendrickson and Binstein are eligible to earn up to 5,000 shares of restricted stock, respectively, dependent upon the Company Adjusted EBITDA in the range of $78,500,000 to $83,500,000 or more. Subjective Plans The Compensation Committee established the subjective criteria for each of the 2024 Participants under the Discretionary Cash/RSA Bonus Plan and the Discretionary Long-Term Incentive Plan based on a consideration of strategic and operational goals for the Company (the “2024 Executive Subjective Criteria”). The Compensation Committee evaluates the performance of 2024 Participants against those criteria in determining cash and restricted stock awards. Under the Discretionary Cash/RSA Bonus Plan for 2024, the executive officers are eligible to receive cash bonus awards and/or shares of restricted stock as determined by the Compensation Committee, if employed by the Company on the date of the award, having a value of up to 50% of their respective base salaries. Under the Discretionary Long-Term Incentive Plan, Mr. Reading is eligible to earn up to 12,500 shares of restricted stock, Mr. Williams is eligible to earn up to 7,500 shares of restricted stock, and Messrs. Reeve, Hendrickson and Binstein are eligible to earn up to 5,000 shares of restricted stock, respectively. The 2024 Executive Subjective Criteria established for each of the executive officers to be considered by the Compensation Committee in determining the respective awards for 2024 are as follows: Mr. Reading – Chief Executive Officer
Actions Taken Subsequent to Year Ended 2023
In order to be eligible to receive awards under the above discussed plans, the 2024 Participant must be employed on the date the awards are granted. The Objective Cash/RSA Bonus Plan, Discretionary Cash/RSA Bonus Plan, Objective Long-Term Incentive Plan, and Discretionary Long-Term Incentive Plan for 2024 collectively are hereinafter referred to as the “2024 Executive Incentive Plan”. For a detailed description of the 2024 Executive Incentive Plan, see the Company’s Current Report on Form 8-K filed with the SEC on March 7, 2024.
Employment Agreements, Severance and Change in Control Benefits
Employment Agreements, Severance and Change in Control Benefits The Company has entered into employment agreements with each of its Executive Officers.
Employment Agreements, Severance and Change in Control Benefits
| • | In May 2019, the Company entered into an amended and restated employment agreement with Mr. Reading, which presently expires on December 31, 2025, and provides for automatic two-year renewals as of the expiration of the current term. |
Employment Agreements, Severance and Change in Control Benefits
| • | In 2018, the Company entered into an employment agreement with Mr. Reeve, which presently expires on February 28, 2026, and provides for an automatic two-year renewal as of the expiration of the current term. |
Employment Agreements, Severance and Change in Control Benefits
| • | In 2020, the Company entered into an employment agreement with Mr. Williams, which presently expires on July 1, 2025, and provides for an automatic two-year renewal as of the expiration of the current term. |
Employment Agreements, Severance and Change in Control Benefits
| • | In 2020, the Company entered into an employment agreement with Mr. Hendrickson, which presently expires on November 8, 2024, and provides for an automatic two-year renewal as of the expiration of the current term. |
Employment Agreements, Severance and Change in Control Benefits
| • | In 2022, the Company entered into an amended and restated employment agreement with Mr. Binstein, which expires on March 22, 2026, and provides for an automatic two-year renewal as of the expiration of the current term. |
Employment Agreements, Severance and Change in Control Benefits
Each of the employment agreements may be terminated by the Company prior to the expiration of their respective terms for cause or without cause, and due to the death or disability of the Executive Officer, as well as by the Executive Officer for good reason or based a disability. In the event of (A) an involuntary termination by the Company without “cause” (as defined in each of the Employment Agreements) or (B) a voluntary termination by the Executive Officer for “good reason” (as defined in each of the Employment Agreements), the affected Executive Officer is entitled to receive (1) salary continuation for two years, based on his base compensation then in effect, (2) the greater of: (a) the bonus paid or payable to the Executive Officer with respect to the last fiscal year completed prior to such termination, or (b) the average of the bonuses paid to the Executive Officer over the last three fiscal years of employment ending with the last fiscal year prior to such termination, (3) the Executive Officer’s accrued but unused vacation days, (4) an immediate acceleration of vesting for all outstanding equity incentive awards, and (5) medical insurance benefits currently in effect for the twenty-four months following such termination. If an Employment Agreement is terminated based on a qualified disability (as described in the Employment Agreements), the terminated Executive Officer is entitled to receive a lump-sum payment equal to two times such Executive Officer’s base compensation then in effect, as well as an immediate acceleration of vesting for all outstanding equity incentive awards. If an Employment Agreement is terminated based on the death of an Executive Officer, the Executive Officers’ estate (or his heirs) will receive a lump-sum payment equal to such Executive Officers base compensation then in effect, and all outstanding equity incentive awards held by such Executive Officer shall immediately vest. Finally, in the event of a termination of employment in connection with a “change in control” (as defined in the Employment Agreements), Messrs. Reading, Hendrickson, Reeve, Williams, and Binstein, as applicable, will be entitled to (A) a change of control benefit of $500,000 for Mr. Reading and $283,333 for Messrs. Hendrickson, Reeve, Williams and Binstein, and (B) the immediate acceleration of vesting for all outstanding equity incentive awards held by such individual. The employment agreement also provides for certain non-competition and non-solicitation covenants that extend up to two years after termination of employment. Messrs. Reading, Hendrickson, Reeve, Williams and Binstein’s employment agreements may each be terminated by the Company prior to the expiration of their term. See “Executive Compensation — Post Termination/Change-in-Control Benefits” below for a detailed discussion of the termination and change in control provisions contained in these agreements. We do not have any additional executive retention and severance arrangements or change in control agreements with our Named Executive Officers.
Compensation of Named Executive Officers
Compensation of Named Executive Officers Mr. Reading joined our Company in November 2003 as Chief Operating Officer and, effective November 1, 2004, was promoted to President and Chief Executive Officer. Under his employment agreement with us, Mr. Reading’s annual base salary is subject to adjustment by the Compensation Committee. For the last three years, his annual base salary was $900,000 (during 2021), $927,000 (during 2022), $960,000 (during 2023) and further increased to $975,000 effective as of January 1, 2024. During each of 2021, 2022 and 2023, Mr. Reading participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. Reading (i) was paid a cash bonus of $1,125,000 and was granted 20,000 shares of restricted stock for 2021, and (ii) was paid a cash bonus of $463,500 and was granted 10,000 shares of restricted stock for 2022. For 2023, Mr. Reading was paid a cash bonus of $777,600 on March 6, 2024, and was granted 16,200 shares of restricted stock on February 26, 2024. Mr. Reeve joined our Company in March 2018 as Chief Operating Officer–East. Under his employment agreement with us (see “Employment and Consulting Agreements” above), Mr. Reeve’s annual base salary is subject to adjustment by the Compensation Committee. Mr. Reeve’s annual base salary was $567,000 (during 2021), $584,000 (during 2022), $605,000 (during 2023) and was further increased to $625,000 effective as of January 1, 2024. During each of 2021, 2022 and 2023, Mr. Reeve participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. Reeve (i) was paid a cash bonus of $708,750 and was granted 10,000 shares of restricted stock for 2021, and (ii) was paid a cash bonus of $292,005 and was granted 5,000 shares of restricted stock for 2022. For 2023, Mr. Reeve was paid a cash bonus of $490,050 on March 6, 2024 and was granted 8,100 shares of restricted stock on February 26, 2024. Mr. Hendrickson joined our Company in November 2020 as Chief Financial Officer. Under his employment agreement with us (see “Employment and Consulting Agreements” above), Mr. Hendrickson’s annual base salary is subject to adjustment by the Compensation Committee. Mr. Hendrickson’s annual base salary was $450,000 at the start of his employment through the end of 2021, $463,000 during 2022, $480,000 during 2023 and was further increased to $500,000 effective as of January 1, 2024. Mr. Hendrickson was granted 3,688 shares of restricted stock on November 16, 2020, and was paid a cash bonus of $25,000 on March 10, 2021. During each of 2022 and 2023, Mr. Hendrickson participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. Hendrickson was paid a cash bonus of $185,400 and was granted 3,750 shares of restricted stock for 2022. For 2023, Mr. Hendrickson was paid a cash bonus of $388,800 on March 6, 2024, and was granted 8,100 shares of restricted stock on February 26, 2024. Mr. Williams joined our Company on July 1, 2021 as Chief Operating Officer – East and, as indicated above, has been promoted to President effective as of May 21, 2024. Under his employment agreement with us (see “Employment and Consulting Agreements” above), Mr. Williams’ annual base salary is subject to adjustment by the Compensation Committee. Mr. Williams’ annual base salary was $450,000 at the start of his employment, was increased to $467,010 in 2022, $540,000 during 2023 and was further increased to $650,000 effective as of January 1, 2024. Mr. Williams was granted 4,454 shares of restricted stock on August 16, 2021. For 2021, Mr. Williams was paid a cash bonus of $225,000 and was granted 5,000 shares of restricted stock. During each of 2022 and 2023, Mr. Williams participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. Williams was paid a cash bonus of $233,505 and was granted 5,000 shares of restricted stock for 2022. For 2023, Mr. Williams was paid a cash bonus of $437,400 on March 6, 2024, and was granted 8,100 shares of restricted stock on February 26, 2024. Mr. Binstein joined our Company in May 2011 as Vice President, General Counsel and Secretary, and was promoted to Executive Vice President effective March 23, 2022. Mr. Binstein’s annual base salary was $315,000 (during 2021), $340,000 (during 2022) and $375,000 (during 2023) and was further increased to $400,000 effective as of January 1, 2024. Mr. Binstein was paid a cash bonus of $320,000 and was granted 4,883 shares of restricted stock for 2021. During each of 2022 and 2023, Mr. Binstein participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. Binstein was paid a cash bonus of $136,000 and was granted 3,750 shares of restricted stock for 2022. For 2023, Mr. Binstein was paid a cash bonus of $303,750 on March 6, 2024, and was granted 8,100 shares of restricted stock on February 26, 2024.
Summary Compensation Table – Years Ended 2021 to 2023
Summary Compensation Table – Years Ended 2021 to 2023 The following table sets forth the compensation paid or accrued for services rendered in all capacities on behalf of the Company during 2023, 2022 and 2021 to Messrs. Reading, Hendrickson, Reeve, Williams and Binstein who were the Company’s Named Executive Officers employed during 2023.
Summary Compensation Table – Years Ended 2021 to 2023
| Name and Principal Position | Year | Salary ($) | Bonus(2) ($) | Stock Awards(2) ($) | Option Awards ($) | Non- Equity Incentive Plan Compen- sation(3) ($) | Change in Pension Value and Non- Qualified Deferred Compen- sation Earnings ($) | All Other Compen- sation(4) ($) | Total ($) | | Christopher J. Reading Chief Executive Officer | 2023 | 958,731 | — | 1,632,482 | — | 777,600 | — | 3,564 | 3,372,377 | | | 2022 | 925,962 | — | 1,016,800 | — | 463,500 | — | 2,322 | 2,408,584 | | | 2021 | 896,154 | — | 2,120,100 | — | 1,125,000 | — | 2,322 | 4,143,576 | | Carey P. Hendrickson Chief Financial Officer | 2023 | 479,365 | — | 816,241 | — | 388,800 | — | 3,564 | 1,687,970 | | | 2022 | 462,981 | — | 381,300 | — | 185,400 | — | 3,564 | 1,033,245 | | | 2021 | 450,000 | — | 795,038 | — | 450,000 | — | 2,322 | 1,697,359 | | Graham D. Reeve Chief Operating Officer - West | 2023 | 604,193 | — | 816,241 | — | 490,050 | — | 2,322 | 1,912,806 | | | 2022 | 583,356 | — | 508,400 | — | 292,005 | — | 2,322 | 1,386,083 | | | 2021 | 565,961 | — | 1,060,050 | — | 708,750 | — | 2,322 | 2,337,083 | | Eric J. Williams(1) Chief Operating Officer - East | 2023 | 537,193 | — | 816,241 | — | 437,400 | — | 2,322 | 1,793,156 | | | 2022 | 466,356 | — | 508,400 | — | 233,505 | — | 2,322 | 1,210,583 | | | 2021 | 211,154 | 225,000 | 971,069 | — | — | — | 893 | 1,408,116 | | Richard S. Binstein(1) Executive Vice President, General Counsel and Secretary | 2023 | 373,654 | — | 816,241 | — | 303,750 | — | 3,564 | 1,497,209 | | | 2022 | 339,085 | — | 381,300 | — | 136,000 | — | 3,564 | 859,949 |
Summary Compensation Table – Years Ended 2021 to 2023
| (1) Mr. Williams was appointed executive officer on July 1, 2021, and Mr. Binstein was appointed executive officer on March 17, 2022. |
Summary Compensation Table – Years Ended 2021 to 2023
| (2) Mr. Williams did not participate in the 2021 Executive Incentive Plan, however, at the Board’s discretion, he was granted a bonus of $225,000 which was paid on March 14, 2022. |
Summary Compensation Table – Years Ended 2021 to 2023
For 2023, stock awards were granted in accordance with the 2023 Executive Incentive Plan as shares of restricted stock under the terms of the U.S. Physical Therapy 2003 Stock Incentive Plan, amended on March 1, 2022 (“Amended 2003 Plan”) as follows: Mr. Reading was awarded 6,200 shares of restricted common stock pursuant to Objective Long-Term Incentive Plan, and Messrs. Williams, Reeve, Hendrickson and Binstein each were awarded 3,100 shares of restricted common stock pursuant to the Objective Long-Term Incentive Plan. Mr. Reading was awarded 10,000 shares (pursuant to the Discretionary Long-Term Incentive Plan). Messrs. Reeve, Williams, Hendrickson, Binstein were each awarded 5,000 shares (pursuant to the Discretionary Long-Term Incentive Plan). For 2022, stock awards were granted in accordance with the 2022 Executive Incentive Plan as shares of restricted stock under the terms of the Amended 2003 Plan as follows: Mr. Reading was awarded 10,000 shares (10,000 pursuant to the Discretionary Long-Term Incentive Plan). Messrs. Reeve and Williams were each awarded 5,000 shares (pursuant to the Discretionary Long-Term Incentive Plan). Messrs. Hendrickson and Binstein were each awarded 3,750 shares (pursuant to the Discretionary Long-Term Incentive Plan). For 2022, there were no shares granted under the Objective Long-Term Incentive Plan. For 2021 stock awards were granted in accordance with the 2021 Executive Incentive Plan as restricted stock under the terms of the Amended 2003 Plan as follows: Mr. Reading was awarded 20,000 shares, (10,000 shares pursuant to the Objective Long-Term Incentive Plan and 10,000 pursuant to the Discretionary Long-Term Incentive Plan). Mr. Hendrickson was awarded 7,500 shares, (3,750 shares pursuant to the Objective Long-Term Incentive Plan and 3,750 pursuant to the Discretionary Long-Term Incentive Plan). Mr. Reeve was awarded 10,000 shares (5,000 shares pursuant to the Objective Long-Term Incentive Plan and 5,000 pursuant to the Discretionary Long-Term Incentive Plan).
Summary Compensation Table – Years Ended 2021 to 2023
| (3) For 2023, the amounts represent the cash bonuses earned under the 2023 Executive Incentive Plan and paid in March 2024. For 2022, the amounts represent the cash bonuses earned under the 2022 Executive Incentive Plan and paid in March 2023. For 2021, the amounts represent the cash bonuses earned under the 2021 Executive Incentive Plan and paid in March 2022. See “Compensation Discussion and Analysis — Annual Cash Incentive Compensation” herein for further details. |
Summary Compensation Table – Years Ended 2021 to 2023
| (4) Represents the value of life insurance premiums for life insurance coverage provided to the Named Executive Officers. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards
Grants of Plan-Based Awards
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) : | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(1) : | | | Grant Date Fair Value of Stock Awards(2) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | Christopher J. Reading | 2/20/2023 | $144,000 | $1,200,000 | $1,200,000 | 3,000 | 20,000 | 20,000 | $2,012,200 | | Carey P. Hendrickson | 2/20/2023 | $72,000 | $600,000 | $600,000 | 1,500 | 10,000 | 10,000 | $1,006,100 | | Graham D. Reeve | 2/20/2023 | $90,750 | $756,250 | $756,250 | 1,500 | 10,000 | 10,000 | $1,006,100 | | Eric J. Williams | 2/20/2023 | $81,000 | $675,000 | $675,000 | 1,500 | 10,000 | 10,000 | $1,006,100 | | Richard S. Binstein | 2/20/2023 | $56,250 | $468,750 | $468,750 | 1,500 | 10,000 | 10,000 | $1,006,100 |
Grants of Plan-Based Awards
| (1) Represents possible payments and equity grants under the 2023 Executive Incentive Plan. Under the non-equity incentive plan, Messrs. Reading, Reeve, Williams, Hendrickson and Binstein were entitled to earn 75% of their respective annual base salary dependent on the Company achieving Adjusted EBITDA in the range of $74,597,377 to $82,012,249 or more. Messrs. Reading, Reeve, Williams, Hendrickson, and Binstein were also entitled to earn 50% of their respective annual base salary at the discretion of the Compensation Committee based on the achievement of pre-established subjective criteria. |
Grants of Plan-Based Awards
Under the equity incentive plans, each of the above were entitled to 50% of their respective number of shares detailed above based on achieving Adjusted EBITA in the range of $74,597,377 to $82,012,249 or more and 50% of their respective number of shares at the discretion of the Compensation Committee based on the achievement of pre-established subjective criteria. For a more detailed discussion, see the above “Compensation Discussion and Analysis — Annual Cash Incentive Compensation” section. Also, see the Summary Compensation Table above for actual amounts earned for 2023. The cash earned was paid on March 8, 2023, and the shares of restricted stock were granted on February 26, 2023.
Grants of Plan-Based Awards
| (2) Amounts shown are the grant date fair value of the awards computed in accordance with FASB ASC Topic 718 which amounted to $101.61 per share. See “Note 16 — Equity Based Plans” of the Notes to the Consolidated Financial Statements in Item 8 of the Form 10-K, filed on February 29, 2024, for a description of the valuations and a description of the equity plans. |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table See “Employment Agreements, Severance and Change of Control Benefits” above and “Post-Termination/Change-in-Control Benefits” below for the material terms of our employment agreements with our Named Executive Officers. See “Compensation Discussion and Analysis” above for an explanation of the amount of salary and bonus in proportion to total compensation. See the footnotes to the Summary Compensation Table above and Grants of Plan-Based Awards table paid to the Named Executive Officers above for narrative disclosure with respect to those tables.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table shows outstanding awards of shares of restricted common stock that have not vested as of December 31, 2023, for each Named Executive Officer. The table does not include the grants of restricted stock made in 2024. There are no outstanding stock option awards for the Named Executive Officers as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End
| | Stock Awards | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Christopher J. Reading | 23,785(2) | $2,215,335 | | Carey P. Hendrickson | 8,200(3) | $763,748 | | Graham D. Reeve | 11,890(4) | $1,107,435 | | Eric J. Williams | 8,832(5) | $822,612 | | Richard S. Binstein | 7,002(6) | $652,166 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Calculated based on the closing market price of our common stock on December 31, 2023 of $93.14 per share. |
Outstanding Equity Awards at Fiscal Year-End
| (2) The restrictions on these shares of common stock granted as restricted stock lapsed or will lapse as follows: |
Outstanding Equity Awards at Fiscal Year-End
| 1/1/2024 | 3,485 | 1/1/2025 | 2,575 | 1/1/2026 | 1,875 | 1/1/2027 | 625 | | 4/1/2024 | 2,575 | 4/1/2025 | 1,875 | 4/1/2026 | 625 | | | | 7/1/2024 | 2,575 | 7/1/2025 | 1,875 | 7/1/2026 | 625 | | | | 10/1/2024 | 2,575 | 10/1/2025 | 1,875 | 10/1/2026 | 625 | | |
Outstanding Equity Awards at Fiscal Year-End
| (3) The restrictions on these shares of common stock granted as restricted stock lapsed or will lapse as follows: |
Outstanding Equity Awards at Fiscal Year-End
| 1/1/2024 | 932 | 1/1/2025 | 702 | 1/1/2026 | 714 | 1/1/2027 | 240 | | 4/1/2024 | 932 | 4/1/2025 | 702 | 4/1/2026 | 234 | | | | 7/1/2024 | 932 | 7/1/2025 | 702 | 7/1/2026 | 234 | | | | 10/1/2024 | 940 | 10/1/2025 | 702 | 10/1/2026 | 234 | | |
Outstanding Equity Awards at Fiscal Year-End
| (4) The restrictions on these shares of common stock granted as restricted stock lapsed or will lapse as follows: |
Outstanding Equity Awards at Fiscal Year-End
| 1/1/2024 | 1,730 | 1/1/2025 | 1,286 | 1/1/2026 | 952 | 1/1/2027 | 320 | | 4/1/2024 | 1,286 | 4/1/2025 | 936 | 4/1/2026 | 312 | | | | 7/1/2024 | 1,286 | 7/1/2025 | 936 | 7/1/2026 | 312 | | | | 10/1/2024 | 1,286 | 10/1/2025 | 936 | 10/1/2026 | 312 | | |
Outstanding Equity Awards at Fiscal Year-End
| (5) The restrictions on these shares of common stock granted as restricted stock lapsed or will lapse as follows: |
Outstanding Equity Awards at Fiscal Year-End
| 1/1/2024 | 902 | 1/1/2025 | 902 | 1/1/2026 | 632 | 1/1/2027 | 320 | | 4/1/2024 | 902 | 4/1/2025 | 902 | 4/1/2026 | 312 | | | | 7/1/2024 | 902 | 7/1/2025 | 908 | 7/1/2026 | 312 | | | | 10/1/2024 | 902 | 10/1/2025 | 624 | 10/1/2026 | 312 | | |
Outstanding Equity Awards at Fiscal Year-End
| (6) The restrictions on these shares of common stock granted as restricted stock lapsed or will lapse as follows: |
Outstanding Equity Awards at Fiscal Year-End
| 1/1/2024 | 968 | 1/1/2025 | 734 | 1/1/2026 | 542 | 1/1/2027 | 240 | | 4/1/2024 | 733 | 4/1/2025 | 539 | 4/1/2026 | 234 | | | | 7/1/2024 | 733 | 7/1/2025 | 539 | 7/1/2026 | 234 | | | | 10/1/2024 | 733 | 10/1/2025 | 539 | 10/1/2026 | 234 | | |
Stock Vested Table
Stock Vested Table The following table shows the number of shares of our common stock acquired by each of our NEOs during 2023 upon the “vesting” of restricted stock (“vesting” refers to lapse of restrictions). As of December 31, 2023, there were no outstanding stock options for each of our NEOs.
Stock Vested Table
| | Stock Awards | | | Name | Number of shares acquired on vesting (#) | Value realized on Vesting(1) | | Christopher J. Reading | 14,548 | $1,414,780 | | Carey P. Hendrickson | 3,494 | $346,439 | | Graham D. Reeve | 7,244 | $704,110 | | Eric J. Williams | 3,296 | $328,357 | | Richard S. Binstein | 3,815 | $374,895 |
Stock Vested Table
| (1) The value realized on vesting is computed by multiplying the number of shares by stock by the market value of the underlying shares on the vesting date. The closing price of the stock is used as the market value. |
Pay Ratio
Pay Ratio The Company analyzed the annual total compensation for all of its employees and the employees of its consolidated subsidiaries (including part-time – “on call”– and full-time employees as per SEC rules), other than our CEO, in order to identify the employee with the median annual total compensation. In making this determination, the Company examined only payroll records of individuals who were employed by the Company or one of its consolidated subsidiaries on December 31, 2023. No cost-of-living adjustments were made to any such employee’s compensation, but the Company did annualize the compensation of individuals who commenced employment after January 1, 2023. After the median compensated employee was identified, that employee’s annual total compensation for fiscal year 2023 was determined in the same manner as if such individual was a named executive officer for 2023 whose compensation was required to be determined in accordance with SEC rules and reported in our “Summary Compensation Table” on page 31. Based on the foregoing, the annual total compensation of such employee, as determined in accordance with SEC rules, was $43,660. As provided in our Summary Compensation Table, the annual total compensation for our CEO for the 2023 fiscal year was $3,372,377, which was 77.2 to 1.0 times the annual total compensation of our median compensated employee for the 2023 fiscal year. The above figures were reported in accordance with SEC rules. However, the Company believes that a more accurate disclosure would exclude “on-call” employees who have no set schedule and work only on an as-needed basis, which may be a few times a year. If these on-call employees were excluded from the determination of our median compensated employee for the 2023 fiscal year, the annual total compensation would be $50,090 resulting in a ratio of the annual total compensation of our CEO to such employee of 67.3 to 1.0. Because a significant amount of our CEO’s compensation for 2023 was in the form of equity compensation, and only a very small number of our employees receive equity compensation, we thought it would be helpful to our stockholders to see how the above ratios are impacted by excluding equity compensation. Excluding equity compensation, the annual total compensation of our median compensated employee was $43,657 and the annual total compensation for our Chief Executive Officer would be $1,739,895, resulting in a ratio of 39.9 to 1.0 if on-call employees are included. If on-call employees are excluded, the ratio is 34.7 to 1.0.
Pay Versus Performance
Pay Versus Performance The Company’s compensation objectives and philosophy, which are discussed above, are designed to reward the contributions of its NEOs to the Company’s financial performance and provide compensation which is sufficient to attract and retain individuals who are motivated to contribute to the Company’s financial performance. To achieve these goals, the Company has implemented incentive plans which tie a significant portion of each NEOs compensation to pre-determined financial goals. For the year ended December 31, 2023, the most important financial performance measure used by the Company to link executive compensation actually paid to the executive officers was Adjusted EBITDA. For the years ended December 31, 2022, 2021, and 2020, the most important financial performance measure used by the Company to link executive compensation actually paid to the executive officers was Operating Results, which is described in the accompanying footnotes below. The following table summarizes the executive compensation earned by the Company’s Principal Executive Officer (“PEO”), and other Named Executive Officers (“NEOs”), the executive compensation actually paid to the Company’s PEO and other NEOs, and certain financial performance measures of the Company for the years ended December 31, 2023, 2022, 2021, and 2020.
Pay Versus Performance
| Year(1) | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(5) ($) | Average Summary Compensation Table Total for non-PEO NEOs(1) ($) | Average Compensation Actually Paid to non-PEO NEOs(5) ($) | Value of Initial Fixed $100 Investment Based on | | Net Income(2) ($) | Operating Results(3) ($) | Adjusted EBITDA(6) ($) | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return(4) ($) | | | | | 2023 | $3,372,377 | 3,822,626 | $1,722,785 | 1,865,290 | 81 | 134 | 37,220,000 | 36,265,000 | 77,717,000 | | 2022 | 2,408,584 | 1,859,559 | 1,122,465 | 920,090 | 71 | 130 | 43,407,000 | 35,034,000 | 73,661,000 | | 2021 | 4,143,576 | 3,275,545 | 1,454,841 | 1,110,753 | 84 | 135 | 57,924,000 | 43,732,000 | 73,780,000 | | 2020 | 2,961,147 | 2,446,657 | 1,056,375 | 829,949 | 105 | 111 | 52,491,000 | 38,435,000 | 70,017,000 |
Pay Versus Performance
| 1) | The PEO is Christopher J. Reading for each of the years presented. The non-PEO NEOs are Carey P. Hendrickson, Eric J. Williams, Graham D. Reeve, and Richard Binstein for the years 2023 and 2022, Carey P. Hendrickson, Eric J. Williams, Glenn D. McDowell, and Graham D. Reeve for 2021 and Carey P. Hendrickson, Lawrance W. MacAfee, Glenn D. McDowell, and Graham D. Reeve for 2020. |
Pay Versus Performance
| 2) | Net income includes earnings attributable to non-controlling interests. |
Pay Versus Performance
| 3) | Operating Results, a non-GAAP measure, equals net income attributable to our stockholders less non-cash asset impairment charge, changes in revaluation of put-right liability, Relief Funds, changes in fair value of contingent earn-out consideration, and any allocations to non-controlling interests, all net of taxes. For additional information regarding Operating Results, please see Item 7 in the Company’s Form 10-K filed with the SEC on February 29, 2024. |
Pay Versus Performance
| 4) | Total Shareholder Return assumes that $100 was invested in our common stock and the common stock on each of the companies listed on The NYSE Heathcare Index (the Company’s Peer Group), on December 31, 2019, and that any dividends were reinvested. |
Pay Versus Performance
| 5) | For a computation of compensation actually paid to PEO and average compensation actually paid to non-PE NEOs, please refer to the subsequent table. |
Pay Versus Performance
| 6) | For additional information regarding Adjusted EBITDA, please see Item 7 in the Company’s Form 10-K filed with the SEC on February 29, 2024. |
Pay Versus Performance
The following table outlines the adjustments made to the compensation earned by the Company’s PEO and other NEOs, as presented in the Summary Compensation Table on page 31, to derive the compensation actually paid to the Company’s PEO and other NEOs.
Pay Versus Performance
| | Adjustments | | | | | | | | Year | Summary Compensation Table Total ($) | Less: Reported Value of Stock Awards ($)(1) | Plus: Year End Fair Value of Restricted Stock Awards Granted During the Year ($)(2)(3) | Plus: Change in Fair Value of Outstanding and Unvested Restricted Stock Awards ($)(2)(3) | Plus: Changes in Fair Value of Restricted Stock in Prior Years that Vested During the Year ($)(2)(3) | Dividends paid on Unvested Restricted Stock Awards During the Fiscal Year ($)(4) | Compensation Actually Paid ($) | | PEO | | | | | | | | | 2023 | 3,372,377 | 1,632,482 | 1,508,868 | 288,036 | 235,956 | 49,871 | 3,822,626 | | 2022 | 2,408,584 | 1,016,800 | 810,300 | (411,395) | 22,404 | 46,466 | 1,859,559 | | 2021 | 4,143,576 | 2,120,100 | 1,911,000 | (613,844) | (81,371) | 36,284 | 3,275,545 | | 2020 | 2,961,147 | 1,533,056 | 1,346,800 | 180,251 | (518,261) | 9,776 | 2,446,657 | | Non-PEO NEOs | | | | | | | | | 2023 | 1,722,785 | 816,241 | 754,434 | 108,759 | 76,874 | 18,679 | 1,865,290 | | 2022 | 1,122,465 | 444,850 | 354,506 | (132,671) | 5,768 | 14,872 | 920,090 | | 2021 | 1,454,841 | 706,539 | 537,469 | (157,849) | (26,493) | 9,325 | 1,110,753 | | 2020 | 1,056,375 | 484,122 | 447,571 | 63,051 | (256,345) | 3,419 | 829,949 |
Pay Versus Performance
| (1) Represents the grant date fair value of restricted stock awards earned and as reported in the “Stock Awards” column of the Summary Compensation Table for each applicable year. These shares were issued in March of the succeeding year. |
Pay Versus Performance
| (2) Adjustments are equal to (i) the year-end fair value of restricted stock awards granted during the applicable year that are earned but not issued and therefore deemed outstanding and unvested as of the end of the year, (ii) the amount of the change in fair value as of the end of the applicable year (from the end of the prior fiscal year) of any restricted stock awards granted in prior years that are outstanding and unvested as of the end of the applicable year, and (iii) for restricted stock awards granted in prior years that vest in the applicable year, an amount equal to the change in fair value as of the vesting date (from the end of the prior fiscal year). |
Pay Versus Performance
| (3) Restricted stock awards are valued using the market price of our stock. The closing market price of our stock was $93.14, $81.03, $95.55, $120.25, and $114.35 as of December 31, 2023, 2022, 2021, 2020, and 2019, respectively. The closing market price of our stock when the PEO and other NEOs’ restricted stock awards vested was $81.03 on January 1, 2023, $97.91 on April 1, 2023, $121.39 on July 1, 2023, $91.73 on October 1, 2023, $95.55 on January 1, 2022, $103.76 on April 1, 2022, $112.30 on July 1, 2022, $760.02 on October 1, 2022, $120.25 on January 1, 2021, $110.21 on April 1, 2021, $119.34 on July 1, 2021, $111.55 on October 1, 2021, $114.35 on January 1, 2020, $59.00 on April 1, 2020, $81.02 on July 1, 2020 and $86.88 on October 1, 2020. |
Pay Versus Performance
| (4) Includes dividends paid and declared on outstanding and unvested shares as of December 31, 2023, 2022, 2021 and 2020. Dividends declared per common share were $1.72, $1.64, $1.46, and $0.32 for the fiscal years ended December 31, 2023, 2022, 2021 and 2020, respectively. |
Pay Versus Performance
Relationship between Pay and TSR The graph below illustrates the relationship between compensation actually paid to the Company’s PEO and other NEOs, the cumulative total stockholder return (“TSR”) on $100 invested in the Company at the close of the market on December 31, 2019, with dividends being reinvested on the date paid through December 31, 2023, and the cumulative TSR of the NYSE Health Care Index. The NYSE Health Care Index TSR is calculated in a similar manner as the Company’s TSR. Relationship between Pay and Net Income The graph below illustrates the relationship between compensation actually paid to the Company’s PEO and other NEOs and the Company’s net income. Relationship between Pay and Operating Results The graph below illustrates the relationship between compensation actually paid to the Company’s PEO and other NEOs and the Company’s After-tax Operating Results. Relationship between Pay and Adjusted EBITDA The graph below illustrates the relationship between compensation actually paid to the Company’s PEO and other NEOs and the Company’s Adjusted EBITDA.
Christopher J. Reading, President and Chief Executive Officer
| Executive Benefits and Payments Upon Termination(1) | Voluntary Termination or For Cause | Without Cause | Executive Resigns For Good Reason | In Conjunction with a Change In Control | | Compensation | | | | | | Severance(2) | $— | $1,920,000 | $1,920,000 | $1,920,000 | | Annual Cash Incentive(3) | — | 777,600 | 777,600 | 777,600 | | Change of Control Benefit(4) | — | — | — | 500,000 | | Restricted Stock (Unvested and (Accelerated)(5) | — | 2,215,335 | 2,215,335 | 2,215,335 | | Benefits and Perquisites | | | | | | Health and Dental Coverage(6) | — | 39,475 | 39,475 | 39,475 | | Total | $— | $4,952,410 | $4,952,410 | $5,452,410 |
Carey P. Hendrickson, Chief Financial Officer
| Executive Benefits and Payments Upon Termination(1) | Voluntary Termination or For Cause | Without Cause | Executive Resigns For Good Reason | In Conjunction with a Change In Control | | Compensation | | | | | | Severance(2) | $— | $960,000 | $960,000 | $960,000 | | Annual Cash Incentive(3) | — | 388,800 | 388,800 | 388,800 | | Change of Control Benefit(4) | — | — | — | 283,333 | | Restricted Stock (Unvested and (Accelerated)(5) | — | 763,748 | 763,748 | 763,748 | | Benefits and Perquisites | | | | | | Health and Dental Coverage(6) | — | 27,543 | 27,543 | 27,543 | | Total | $— | $2,140,091 | $2,140,091 | $2,423,424 |
Graham D. Reeve, Chief Operating Officer – West
| Executive Benefits and Payments Upon Termination(1) | Voluntary Termination or For Cause | Without Cause | Executive Resigns For Good Reason | In Conjunction with a Change In Control | | Compensation | | | | | | Severance(2) | $— | $1,210,000 | $1,210,000 | $1,210,000 | | Annual Cash Incentive(3) | — | 490,050 | 490,050 | 490,050 | | Change of Control Benefit(4) | — | — | — | 283,333 | | Restricted Stock (Unvested and (Accelerated)(5) | — | 1,107,435 | 1,107,435 | 1,107,435 | | Benefits and Perquisites | | | | | | Health and Dental Coverage(6) | — | 15,102 | 15,102 | 15,102 | | Total | $— | $2,822,587 | $2,822,587 | $3,105,920 |
Eric J. Williams, Chief Operating Officer – East
| Executive Benefits and Payments Upon Termination(1) | Voluntary Termination or For Cause | Without Cause | Executive Resigns For Good Reason | In Conjunction with a Change In Control | | Compensation | | | | | | Severance(2) | $— | $1,080,000 | $1,080,000 | $1,080,000 | | Annual Cash Incentive(3) | — | 437,400 | 437,400 | 437,400 | | Change of Control Benefit(4) | — | — | — | 283,333 | | Restricted Stock (Unvested and (Accelerated)(5) | — | 822,612 | 822,612 | 822,612 | | Benefits and Perquisites | | | | | | Health and Dental Coverage(6) | — | 39,475 | 39,475 | 39,475 | | Total | $— | $2,379,487 | $2,379,487 | $2,662,820 |
Richard S. Binstein, Executive Vice President, General Counsel and Secretary
| Executive Benefits and Payments Upon Termination(1) | Voluntary Termination or For Cause | Without Cause | Executive Resigns For Good Reason | In Conjunction with a Change In Control | | Compensation | | | | | | Severance(2) | $— | $750,000 | $750,000 | $750,000 | | Annual Cash Incentive(3) | — | 303,750 | 303,750 | 303,750 | | Change of Control Benefit(4) | — | — | — | 283,333 | | Restricted Stock (Unvested and (Accelerated)(5) | — | 652,166 | 652,166 | 652,166 | | Benefits and Perquisites | | | | | | Accrued but unused vacation | — | — | — | — | | Health and Dental Coverage(6) | — | 27,791 | 27,791 | 27,791 | | Total | $— | $1,733,707 | $1,733,707 | $2,017,040 |