DEF 14A of Fortrea Holdings Inc.
Filed Apr 28, 2025 · FY20240001193125-25-100451
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| Executive Compensation | 26 | | Compensation Discussion & Analysis | 26 | | Summary Compensation Table | 39 | | Grants of Plan-Based Awards | 40 | | Equity Incentive Awards | | | Outstanding Equity Awards at Fiscal Year-End | 41 | | Option Exercises and Stock Vested | 42 | | Nonqualified Deferred Compensation | 42 | | Potential Payments Upon Termination or Change in Control | 43 | | Pay versus Performance | 46 | | Proposal 3: Advisory Vote on the Compensation of Our Named Executive Officers | 48 | | Vote Required | 48 | | Recommendation of the Board of Directors | 48 | | Proposal 4: Approval of the Amended and Restated Fortrea Holdings Inc. 2023 Omnibus Incentive Plan | 49 | | Vote Required | 57 | | Recommendation of the Board of Directors | 57 | | Equity Compensation Plan Information | 58 | | Director Compensation | 59 | | 2024 Director Compensation Table | 59 | | Security Ownership of Certain Beneficial Owners and Management | 60 | | Certain Relationships | 62 | | Delinquent Section 16(a) Reports | 62 | | Compensation Committee Interlocks and Insider Participation | 62 | | Stockholders’ Proposals | 63 | | Other Matters | 63 | | Solicitation of Proxies | 63 | | Fortrea’s Annual Report on Form 10-K | 64 | | Appendix A - Supplemental Non-GAAP Financial Information Used in Compensation Performance Metrics | 65 | | Appendix B - 2023 Omnibus Incentive Plan, as proposed to be amended and restated | 67 |
Where can I find the voting results of the Annual Meeting?
Where can I find the voting results of the Annual Meeting? We plan to announce preliminary voting results at the Annual Meeting and we will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC after the Annual Meeting. At the Annual Meeting, three (3) Class II Directors are to be elected to hold office until the Annual Meeting of Stockholders to be held in 2028 and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. We currently have seven (7) directors on our Board, including three (3) Class II Directors. Our current Class II Directors are: (i) Dr. Amrit Ray, who has served on our Board since June 29, 2023; (ii) Erin L. Russell, who has served on our Board since March 7, 2025; and (iii) Machelle Sanders, who has served on our Board since May 14, 2024. The Board has nominated Dr. Amrit Ray, Erin L. Russell, and Machelle Sanders for election as Class II Directors at the Annual Meeting. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proposal. Each share of Common Stock is entitled to one vote on each of the director nominees and one vote on each other matter that is properly presented at the 2025 Annual Meeting. In accordance with Fortrea’s Amended and Restated Bylaws (the “Bylaws”), director nominees in an uncontested election must receive a majority of the votes cast to be elected, which under the Bylaws means that the number of shares voted “FOR” a director must exceed 50% of the votes cast with respect to that director. The Board has adopted a policy under which an incumbent director who does not receive the required vote for election as provided in the Bylaws will submit their resignation for consideration by the Board. Abstentions and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal. As set forth in our Amended and Restated Certificate of Incorporation, the Board is currently divided into three classes with staggered, three-year terms. At each annual meeting, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election, except as described below. The current class structure is as follows: Class II, whose current term expires at the 2025 Annual Meeting and whose new term will expire at the 2028 Annual Meeting; Class III, whose current term expires at the 2026 Annual Meeting and whose subsequent term will expire at the 2028 Annual Meeting; and Class I, whose current term expires at the 2027 Annual Meeting and whose subsequent term will expire at the 2028 Annual Meeting. Commencing at the 2028 Annual Meeting and at all subsequent Annual Meetings, the Board will no longer be classified, and all directors will be elected for a term of office to expire at the next succeeding Annual Meeting. The current Class I Directors are Edward Pesicka and David Smith and the current Class III Directors are Thomas Pike and Peter M. Neupert. There are no family relationships among any of our executive officers or directors. For information regarding each of their compensation arrangements, see “Director Compensation” and “Executive Compensation.” If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of Common Stock represented thereby for the election as Class II Directors of the persons whose names and biographies appear below. All of the persons whose names and biographies appear below are currently serving as our directors. In the event any of the nominees should become unable to serve, or for good cause will not serve as a director, it is intended that votes will be cast for a substitute nominee designated by the Board or the Board may elect to reduce its size. The Board has no reason to believe that the nominees named below will be unable to serve if elected. Each of the nominees has consented to being named in this proxy statement and to serve if elected.
Director Candidate Qualifications
Director Candidate Qualifications When evaluating prospective candidates for director, the Nominating, Corporate Governance and Compliance Committee establishes and recommends to the Board the appropriate skills and characteristics required of Board members for the selection of new directors, and evaluates the qualifications of potential candidates for director, including any nominees submitted by stockholders. The Nominating, Corporate Governance and Compliance Committee also evaluates director independence. Further, the Nominating, Corporate Governance and Compliance Committee is committed to strengthening the board by identifying talented and highly qualified individuals who bring diverse backgrounds, professional skills, and experiences. Our current directors’ primary skills and experiences are highlighted in the following matrix. The matrix is intended as a high-level summary and not an exhaustive list of each director’s skills or contributions to our Board.
Director Candidate Qualifications
| Experience, Expertise or Attribute | Thomas Pike | Peter Neupert | Edward Pesicka | Amrit Ray | Erin Russell | Machelle Sanders | David Smith | | General Management and Business Operations | X | X | X | X | X | X | X | | CEO Experience | X | X | X | | | | | | CFO Experience | | | X | | | | X | | Technology | X | X | | | | | | | Finance/Accounting | X | X | X | | X | X | X | | Mergers and Acquisitions | X | X | X | X | X | | X | | Risk Management | X | X | X | | | X | X | | International Business | X | X | X | X | X | X | X | | Healthcare/Drug Development | X | X | X | X | X | X | X | | Human Resources | | | | | | X | | | Quality and Regulatory | | | | X | | X | | | Science and Medicine | X | | | X | | X | X | | Spin Experience | | | | X | | X | X |
Director Candidate Qualifications
NOMINEES FOR CLASS II DIRECTORS (TERMS TO EXPIRE AT THE 2028 ANNUAL MEETING) The current members of the Board who are also nominees for election to the Board as Class II Directors are as follows:
Director Candidate Qualifications
| Name | Age | Served as a Director Since | Position with Fortrea | | Dr. Amrit Ray | 52 | 2023 | Director | | Erin L. Russell | 51 | 2025 | Director | | Machelle Sanders | 61 | 2024 | Director |
Director Candidate Qualifications
The principal occupations and business experience, for at least the past five years, of each Class II Director are as follows:
Director Candidate Qualifications
| Age: 52 Director Since: June 29, 2023 | Dr. Amrit Ray Dr. Ray was appointed to our Board of Directors in connection with the Spin. Dr. Ray has over 25 years of biopharmaceutical industry experience. Dr. Ray is a physician researcher and advisor to life sciences companies. From March 2022 until December 2022, Dr. Ray served as the Chief Patient Officer at Biohaven Pharmaceuticals, a biopharmaceutical company. From 2017 until January 2021, Dr. Ray served as the Global President, Head of R&D and Medical, overseeing all aspects of R&D worldwide for the Essential Health and later Upjohn divisions at Pfizer, a biopharmaceutical company. Previously from 2009-2017, Dr. Ray served in positions of increasing responsibility including as the Chief Medical Officer and as the Chief Safety Officer for global pharmaceuticals at Johnson & Johnson, a healthcare company. Dr. Ray earned his degrees in Immunology and in Medicine at Edinburgh University, and his Master of Business Administration from the Tuck School of Business at Dartmouth College. Dr. Ray is a Visiting Professor of Practice at the Faculty of Medical Sciences of Newcastle University, UK, and serves on the Board of Trustees at The Hastings Center for Bioethics. Since 2022, Dr. Ray has served as a director of Ultragenyx Pharmaceutical Inc., a biopharmaceutical company. |
Director Candidate Qualifications
| Age: 51 Director Since: March 7, 2025 | Erin L. Russell Ms. Russell was appointed to our Board of Directors on March 7, 2025. She was appointed to serve on the board of Modivcare, a technology-enabled healthcare services company, in February 2025, and also serves on the boards of eHealth, Inc., a leading online health insurance marketplace, since July 2021, and Kadant Inc., a global supplier of high-value engineered systems used in process industries worldwide, since January 2019. Her previous board experience in the healthcare sector includes Tivity Health Inc., a leading provider of healthy living, fitness and social engagement solutions, DeVilbiss Healthcare LLC, a company that designs, manufactures and markets respiratory medical products, DynaVox Inc., a communications device manufacturer, and 21st Century Oncology Inc., a provider of state-of-the-art radiation therapy and integrated cancer treatments. Previously, Ms. Russell served as an industry advisor of Starboard Value Acquisition Corporation, a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, from August 2020 until August 2021. Ms. Russell spent 16 years as a principal of Vestar Capital Partners, L.P., a leading private equity firm specializing in management buyouts, recapitalizations, and growth equity investments. Ms. Russell is currently chair of the board of St. Thomas Aquinas Catholic School, where she has served since June 2018, and chair of the advisory board of McIntire School of Commerce and member of advisory board of the Jefferson Scholars Foundation at the University of Virginia, where she has served since June 2016 and April 2008, respectively. Ms. Russell earned her Bachelor of Science in Commerce, with a concentration in Accounting, from the McIntire School of Commerce at the University of Virginia and her Master of Business Administration from Harvard Business School. |
Director Candidate Qualifications
| Age: 61 Director Since: May 14, 2024 | Machelle Sanders Ms. Sanders was appointed to our Board of Directors on May 14, 2024. Ms. Sanders is a seasoned executive with over 30 years of pharmaceutical and biotechnology experience. Ms. Sanders served as the North Carolina Secretary of Commerce until January 2025. Prior to her appointment as the North Carolina Secretary of Commerce in February 2021, Ms. Sanders served as Secretary of the North Carolina Department of Administration from January 2017 to February 2021. In the private sector, Ms. Sanders has experienced increasing levels of quality assurance and manufacturing operations responsibilities with Biogen, Inc. (“Biogen”), Purdue Pharmaceuticals, and AkzoNobel and was most recently responsible for the pharmaceutical operations and technology operational strategy for Biogen’s multiple sclerosis franchise. Since February 2022, Ms. Sanders has served on the board of directors, science committee, and compensation committee of BioCryst Pharmaceuticals, Inc., a global, public biotechnology company. Ms. Sanders previously served as a member of the boards of directors of Novan, Inc. from 2017 to April 2024 and Radius Health, Inc. from 2021 to August 2022. Ms. Sanders earned her Bachelor of Science in Biochemistry from North Carolina State University and her master’s degree in Health Administration from Pfeiffer University. |
Director Candidate Qualifications
CLASS III DIRECTORS (TERMS TO EXPIRE AT THE 2026 ANNUAL MEETING) The current members of the Board who are Class III Directors are as follows:
Director Candidate Qualifications
| Name | Age | Served as a Director Since | Position with Fortrea | | Thomas Pike | 65 | 2023 | Chief Executive Officer and Chairman of the Board | | Peter M. Neupert | 69 | 2023 | Lead Independent Director |
Director Candidate Qualifications
The principal occupations and business experience, for at least the past five years, of each Class III Director are as follows:
Director Candidate Qualifications
| Age: 65 Director Since: June 29, 2023 | Thomas Pike Mr. Pike has served as our Chief Executive Officer and Chairman of our Board of Directors since the Spin. Mr. Pike has more than 30 years of industry experience. Mr. Pike joined Labcorp in January 2023 as President and Chief Executive Officer of its Drug Development, Clinical Development and Commercialization Services business unit. Prior to joining Labcorp, he co-founded, advised and served as a director for several healthcare and technology services companies, including companies with a focus on patients and clinical research sites from 2017 to 2023. Prior to that, Mr. Pike served as CEO and board member of Quintiles Transnational Holdings Inc. (“Quintiles”), a leading fully integrated biopharmaceutical services company offering clinical, commercial and consulting solutions worldwide. Under Mr. Pike’s leadership, Quintiles was named one of the world’s Most Ethical Companies and Most Admired Companies by Fortune magazine. During his tenure, he also led the launch of Q2 Solutions, a clinical trial laboratory services organization, in a joint-venture transaction. Mr. Pike led Quintiles through a successful IPO, helping it grow into a Fortune 500 company with 36,000 employees worldwide. Mr. Pike retired as vice chairman of the merged Quintiles and IMS Health. Prior to Quintiles, Mr. Pike had a distinguished career at Accenture in executive roles, including Chief Risk Officer and Managing Director of the North America Health and Products business areas. Prior to that, he was the global Chief Operating Officer for Accenture’s Resources operating group, and he also served as Accenture’s Chief Strategy Officer and a member of the executive leadership team for Accenture’s IPO in July 2001. Earlier, he was at McKinsey & Company and, since 2019, serves on the board of Martin Marietta Materials, Inc. Mr. Pike earned his Bachelor of Science in Accounting from the University of Delaware. |
Director Candidate Qualifications
| Age: 69 Director Since: June 29, 2023 | Peter M. Neupert Mr. Neupert was appointed to our Board of Directors in connection with the Spin. Mr. Neupert served as an Operating Partner at Health Evolution Partners, a private equity fund, from February 2012 to July 2014. Prior to joining Health Evolution Partners, Mr. Neupert served as Corporate Vice President, Health Solutions Group at Microsoft from August 2005 to 2012, and as the Chief Executive Officer and Chairman of the board of directors of drugstore.com, which he joined in July 1998. Prior to drugstore.com, Mr. Neupert was Corporate Vice President for News and Publishing at Microsoft, where he created and led MSNBC.com and MSNBC Cable and managed Microsoft’s other online publishing entities including Slate.com. Since 2013, Mr. Neupert has served as a director of Labcorp and as a director of Adaptive Biotechnologies Corporation. Mr. Neupert previously served as a member of the board of directors of NextGen Healthcare, Inc., a public software company, and several private companies. Mr. Neupert served as a member of the Board of Trustees of Fred Hutchinson Cancer Research Center from June 2007 to June 2020. Mr. Neupert earned his Bachelor of Arts in Philosophy from Colorado College and his Master of Business Administration from the Tuck School of Business at Dartmouth College. |
Director Candidate Qualifications
CLASS I DIRECTORS (TERMS TO EXPIRE AT THE 2027 ANNUAL MEETING) The current members of the Board who are Class I Directors are as follows:
Director Candidate Qualifications
| Name | Age | Served as a Director Since | Position with Fortrea | | Edward Pesicka | 58 | 2023 | Director | | David Smith | 59 | 2023 | Director |
Director Candidate Qualifications
The principal occupations and business experience, for at least the past five years, of each Class I Director Nominee are as follows:
Director Candidate Qualifications
| Age: 58 Director Since: June 29, 2023 | Edward Pesicka Mr. Pesicka was appointed to our Board of Directors in connection with the Spin. Since March 2019, Mr. Pesicka has served as President and Chief Executive Officer, as well as on the board of directors, of Owens & Minor, Inc., a global healthcare solutions company. From January 2016 until March 2019, Mr. Pesicka was an independent consultant and advisor in the healthcare, life science and distribution industries. From January 2000 until April 2015, Mr. Pesicka served in various roles of increasing responsibility at Thermo Fisher Scientific Inc., an American supplier of scientific instrumentation, reagents and consumables and software services, including Chief Commercial Officer and Senior Vice President from January 2014 to April 2015. Prior to Thermo Fisher Scientific, Mr. Pesicka spent eight years with TRW Inc., an aerospace company, in its finance department and three years with PricewaterhouseCoopers as an auditor. Mr. Pesicka earned his Bachelor of Arts in Business Administration and Management from Muskingum College and his Master of Business Administration from Weatherhead School of Management at Case Western Reserve University. |
Director Candidate Qualifications
| Age: 59 Director Since: June 15, 2023 | David Smith Mr. Smith was appointed to our Board of Directors in connection with the Spin. Mr. Smith has over 25 years of pharmaceutical industry experience. Mr. Smith served as Executive Vice President and Chief Financial Officer for Charles River Laboratories International, Inc., a global pre-clinical contract research organization supporting the global pharmaceutical industry. Mr. Smith joined Charles River in April 2014 through their acquisition of the Galapagos Services Division, which was carved out from its parent company Galapagos NV, a Belgian pharmaceutical research company. Mr. Smith served as the Chief Executive Officer for that division and, on its acquisition, continued to manage its operation as Corporate Vice President at Charles River. In October that year, Mr. Smith was promoted to Corporate Senior Vice President with responsibilities for all Discovery Services at Charles River. In the following February, he was nominated as the successor to the incumbent Chief Financial Officer, formally taking the helm in August 2015, a post Mr. Smith held until his retirement in May 2022. During Mr. Smith’s tenure as Chief Financial Officer, Charles River entered the S&P 500 in May 2021. Previously, Mr. Smith also served as Chief Financial Officer at Cambridge University Hospitals in the United Kingdom and Galapagos NV. He held management positions at AstraZeneca in the Netherlands, Hungary, Sweden and the U.K. and held a variety of leadership roles, including in the R&D division where he helped determine which molecules progressed through the pipeline. Mr. Smith trained as a Chartered Accountant in the U.K., with what is now called PricewaterhouseCoopers, before relocating with the firm to Dubai. Mr. Smith earned his Bachelor of Sciences Honors degree in Molecular Biophysics at the University of Leeds, U.K. |
Director Candidate Qualifications
Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm Our Audit Committee has appointed Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2025. Our Board has directed that the appointment for the fiscal year ending December 31, 2025, be submitted to our stockholders for ratification. Although ratification of our appointment of Deloitte & Touche LLP is not required, we value the opinions of our stockholders and believe that stockholder ratification of our appointment is a good corporate governance practice. Deloitte & Touche LLP has served as our independent registered accounting firm since it was engaged by Labcorp (and later ratified by Fortrea) in connection with the Spin in 2023. Neither the accounting firm nor any of its members has any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors, providing audit and non-audit related services. A representative of Deloitte & Touche LLP is expected to attend the Annual Meeting and to have an opportunity to make a statement and be available to respond to appropriate questions from stockholders. In the event that the appointment of Deloitte & Touche LLP is not ratified by the stockholders, the Audit Committee will consider this fact when it appoints the independent registered public accounting firm for the fiscal year ending December 31, 2026. Even if the appointment of Deloitte & Touche LLP is ratified, the Audit Committee retains the discretion to appoint a different independent registered public accounting firm at any time if it determines that such a change is in the interests of the Company.
The Audit Committee
| Name | Biographical Information | | Thomas Pike Age: 65 Chief Executive Officer and Chairman of the Board | See biography on page 12 of this proxy statement. | | Jill McConnell Age: 51 Chief Financial Officer | Jill McConnell has served as our Chief Financial Officer since the Spin and previously served as Chief Financial Officer of the Labcorp Drug Development segment since 2018. In the approximately 20 years prior to 2018, Ms. McConnell served in a variety of finance roles of increasing responsibility at GSK, a British multinational pharmaceutical and biotechnology company, including Senior Vice President and Chief Financial Officer of its ViiV Healthcare division and Vice President and Head of Finance of its US Pharmaceuticals division, among others. Ms. McConnell earned her Bachelor of Arts degree from Gettysburg College, and her Master of Business Administration and Management, Health & Medical Services from Saint Joseph’s University. | | Mark Morais, Age: 49 Chief Operating Officer and President, Clinical Services | Mark Morais has served as our Chief Operating Officer and President, Clinical Services, since the Spin. Previously, Mr. Morais served as President of Clinical Services and Commercial Solutions, within the Labcorp Drug Development segment, since September 2020 and Chief Operating Officer and President of Clinical Development and Commercialization Services, since October 2022. Prior to September 2020, Mr. Morais served as Senior Vice President Strategic Deal Development, Enterprise Client Solutions and Alliance Management at Covance, Labcorp’s drug development company, from May 2018 to September 2020 and from June 2017 to May 2018 he served as Covance’s Vice President of Strategic Deal Development and Pricing. Prior to Covance, Mr. Morais served in various positions of increasing responsibility at Quintiles from April 2001 to 2017. Mr. Morais earned his Bachelor of Science degree from North Carolina State University. |
Pay-for-Performance
Pay-for-Performance Our executive compensation program is comprised of three primary elements: base salary, annual performance-based incentive compensation (which, for 2024, is paid in the form of cash and equity that vests over a period of 18 months), and long-term incentive compensation in the form of Performance Share Awards (“PSAs”) and Restricted Stock Units (“RSUs”). A significant percentage of the target total direct compensation opportunities for our NEOs is structured as “performance-based” compensation, comprised of an annual short-term bonus opportunity and PSAs. In 2024, as detailed later in this Compensation Discussion and Analysis, the pay-for-performance structure of our executive compensation program operated as designed and intended. The annual bonus and long-term incentive compensation, in particular our PSAs, paid out or vested at levels well below target based on our financial performance during 2024.
2024 Compensation Highlights
| • | Annual Incentive Compensation: For 2024, the MDCC determined that the actual achievement against target was 36%, based on 2024 performance against corporate goals and their individual accomplishments. In particular, the MDCC determined that the financial objectives were not achieved but that the corporate goals associated with TSA exits from our agreement with Labcorp were achieved. The 2024 bonus was paid entirely in equity in the form of RSUs and vests in equal amounts on the 6-month and 18-month anniversaries of the grant date. |
2024 Compensation Highlights
| • | Long-term Incentive Compensation: In March 2024, long-term incentive (“LTI”) grants were made to Ms. McConnell and Mr. Morais in the form of PSAs and time-vested RSUs. These equity grants to Ms. McConnell and Mr. Morais were intended to provide competitive compensation while increasing their share ownership and alignment with stockholders. The 2024 PSAs have three, one-year performance periods based on revenue and adjusted EBITDA margin and include a three-year relative TSR modifier. The MDCC decided not to exercise its discretion concerning these awards. The MDCC did not elect to make an annual equity grant to Mr. Pike in 2024 or in connection with the annual grants made early in 2025, as Mr. Pike’s employment agreement previously approved by, and entered into with, Labcorp and subsequently ratified by our Board after the Spin (the “Pike Employment Agreement”) provided for sign-on and post-Spin grants that were intended to be granted early in the Spin process to align Mr. Pike’s compensation with the performance of the Company during the transition to a standalone company over the initial three years. |
2025 Compensation Highlights
| • | Approved the 2025 Bonus Plan, under which achievement is based on the following financial performance metrics: (i) Adjusted EBITDA, which aligns with the interests of stockholders, and (ii) net new business, which focuses on growth. |
2025 Compensation Highlights
| • | Adopted the A&R Incentive Plan (subject to stockholder approval), which as described in Proposal 4 of this proxy statement, includes stockholder-favorable provisions. |
2025 Compensation Highlights
| • | Approved the 2025 Long-term Incentive Plan (“LTIP”), as part of the Incentive Plan, under which achievement is based on the following absolute and relative metrics: (i) financial metrics, including revenue and Adjusted EBITDA Margin, which represent our focus on growth and profitability; and (ii) a relative Total Stockholder Return modifier that measures Fortrea’s long-term stockholder return versus an industry-relevant index to align with stockholders over the longer-term. |
2024 NAMED EXECUTIVE OFFICERS
| | What We Do | What We Don’t Do | | Compensation Program Elements | • Use balanced mix of cash and equity compensation and annual and long-term incentives. In 2024, the annual bonus was adjusted such that the first 50% of the annual bonus would be paid in equity and additional payments, if any, would be made in cash. • Provide competitive target total compensation to our NEOs. • Engage independent compensation consultant to provide MDCC advice and market trends on executive compensation. | • No single trigger arrangements. • No uncapped incentive opportunities. • No hedging or pledging of our shares. | | Pay for Performance | • Align executive compensation with the execution of our business strategy by using balanced performance metrics that are intended to reward behaviors that support our business objectives and long-term stockholder value and that measure performance over multiple performance periods. • Use relative total stockholder return metric in long-term plan for strong alignment with stockholders. | • While we emphasize “at risk” pay tied to performance, our program does not encourage excessive risk-taking by management. • No guaranteed salary increases or incentive awards for executive officers, outside of new-hire arrangements. • No defined benefit plans or retirement plans outside of the 401(k) Plan available to all eligible employees. | | Strong Compensation Policies | • Robust share ownership guidelines. • Insider Trading Policy prohibits pledging shares or hedging against the economic risk of ownership. • Executive Severance Plan and equity agreements provide “Double-trigger” change in control agreements with our executive officers, and double-trigger vesting provisions for equity compensation awards. • Clawback policies tied to financial restatements or breaches of restrictive covenants. | • No back-dating of stock options. No repricing of equity awards allowed without stockholder approval. • No individual change of control agreements with NEOs (other than as set out in Mr. Pike’s employment agreement). • No excise tax “gross-ups” in our change in control agreements. |
Role of our Independent Compensation Consultant
Role of our Independent Compensation Consultant Pursuant to its charter, the MDCC has the sole discretion to retain or obtain advice from compensation consultants. In November 2023, the MDCC retained Pay Governance to act as the compensation consultant to assist in its evaluation of executive compensation in 2024. For 2024, Pay Governance reported directly to the MDCC, participated in meetings with the MDCC, communicated with the MDCC Chair between meetings as necessary and worked with management at the direction of the MDCC. The MDCC reviewed Pay Governance’s independence and concluded that Pay Governance is an independent and conflict-free advisor to the Company pursuant to the standards of the Dodd-Frank Wall Street Reform and Consumer Protection Act and applicable rules of Nasdaq.
Use of Peer Group and Market Data
Use of Peer Group and Market Data In May 2024, the MDCC reviewed the peer group for Fortrea, with input from Pay Governance, for use in benchmarking executive and non-employee director compensation levels and other pay practices. In considering revisions to the peer group, the MDCC and Pay Governance considered competitors based on Fortrea’s projected size and business profile using objective screening criteria including revenue and market capitalization of similar publicly traded organizations. Based on discussions with, and recommendations from, Pay Governance and after a full evaluation, the MDCC decided to exclude ICON plc, Syneos Health and Viatris Inc. from the 2024 peer group and to add Alkermes plc, Bausch + Lomb Corporation, DENTSPLY SIRONA Inc., and Integra LifeSciences to the 2024 peer group. Syneos Health and Viatris Inc. were excluded due to mergers with other companies or going private transactions. ICON plc was excluded due to having limited publicly available data that would be comparable in an appropriate fashion for Fortrea’s compensation considerations. Alkermes plc, Bausch + Lomb Corporation, DENTSPLY SIRONA Inc., and Integra LifeSciences were added to create a peer group that, in the determination of the MDCC, is a better representation of the Company’s size and market capitalization and that also includes companies in similar industries and lines of business or that are subject to similar economic and business cycles. The 2024 peer group consisted of seventeen companies that were used as a reference to determine 2024 pay opportunity levels for the NEOs. The table below presents the 2024 peer group companies:
Use of Peer Group and Market Data
| Alkermes plc* | Integra LifeSciences* | | Bausch Health Companies Inc. | IQVIA Holdings, Inc. | | Bausch + Lomb Corporation* | Jazz Pharmaceuticals plc | | Bio-Rad Laboratories | Medpace Holdings, Inc. | | Bruker Corporation | Organon & Co. | | Catalent, Inc. | Perrigo Company plc | | Charles River Laboratories International, Inc. | Teleflex Incorporated | | DENTSPLY SIRONA Inc.* | Vir Biotechnology, Inc. | | Exelixis, Inc. | |
Use of Peer Group and Market Data
* Addition to the 2024 peer group This peer group served as the primary market reference point and was supplemented with other market data, where appropriate. For 2024 with the assistance of Pay Governance, the MDCC compared our size and complexity of operations to those of the companies identified in the peer group set forth above and also compared the peer group’s current executive compensation and compensation mix (percent of base salary, short-term, and long-term incentive) to our current practices. Pay Governance provided recommendations for adjustments based on current practices and policies within the peer group and trends within the industry.
Fiscal Year 2024 Earned Annual Bonus
Fiscal Year 2024 Earned Annual Bonus Based on the performance achievements described below, the following annual bonuses were earned by our NEOs for 2024 performance and paid in the form of equity.
Fiscal Year 2024 Earned Annual Bonus
| Executive | Applicable Bonus Plan | Base Salary | Bonus Target (% of Base Salary) | Fortrea Business Performance Factor | Individual Performance Modifier | Actual Bonus Payout | | Thomas Pike | Fortrea Bonus Plan | $1,100,000 | 150% | 36% | 100% | $594,000 | | Jill McConnell | Fortrea Bonus Plan | $500,000 | 85% | 36% | 100% | $153,000 | | Mark Morais | Fortrea Bonus Plan | $500,000 | 85% | 36% | 100% | $153,000 |
Fortrea 2024 Bonus Plan: Bonus Plan Design and Performance
Fortrea 2024 Bonus Plan: Bonus Plan Design and Performance Effective January 1, 2024, the MDCC evaluated the bonus target, as a percent of base salary, for Mr. Pike, Ms. McConnell and Mr. Morais and determined the bonus target for Mr. Pike, Ms. McConnell and Mr. Morais to be 150%, 85% and 85%, respectively, of their base salary, which did not represent a change to the target bonus from the prior year. The following factors were considered by the MDCC in evaluating and determining the bonus target:
Fortrea 2024 Bonus Plan: Bonus Plan Design and Performance
| • | Individual attributes of each NEO – such as responsibilities, skills, leadership and experience. |
Fortrea 2024 Bonus Plan: Bonus Plan Design and Performance
| • | The executive officer’s expected ongoing contributions to the Company. |
Fortrea 2024 Bonus Plan: Bonus Plan Design and Performance
| • | Overall market competitiveness of the executive officer’s target bonus. |
Fortrea 2024 Bonus Plan: Bonus Plan Design and Performance
In addition, the MDCC established the 2024 bonus plan under the Incentive Plan. The performance criteria for the 2024 bonus plan included financial performance and strategic objectives, which were: (i) Adjusted EBITDA, which aligns with the interests of stockholders, (ii) net new business, which focuses on growth and (iii) specific exit targets concerning the TSA with Labcorp, which supports compliance with our agreements with Labcorp. In May 2024, the MDCC approved adjustments to the 2024 bonus plan to modify the targets to account for the divestiture of the Endpoint Clinical and the Fortrea Patient Access business units. As originally established by the MDCC in the first quarter of 2024, adjusted in May 2024 to give effect to the divestiture of the Endpoint and Fortrea Patient Access businesses, and calculated as of December 31, 2024, the Adjusted EBITDA, net new business, and TSA criteria were weighted at 40%, 40%, and 20%, respectively. The Adjusted EBITDA and net new business criteria had original threshold values at $260 million and $3.2 billion, respectively, while the TSA metric was composed of two components, the TSA exit and percentage of TSA cost that was eliminated. Both components of the TSA metric had to be achieved in order to result in a payout. Neither the Adjusted EBITDA nor net new business criteria, as modified, were achieved, but based on the progress made on exiting the TSA with Labcorp and related cost savings, the MDCC determined that the TSA criterion was achieved above target. Using these performance criteria, we achieved a Fortrea business performance factor of 36%, which represented 180% of target achievement for the TSA criterion. The Individual Performance Modifier in the Fortrea Bonus Plan is used as a multiplier and is based on performance compared to 2024 goals. The MDCC assessed each NEO’s performance against the identified individual performance objectives and approved individual performance modifiers for each person at 100%. As a result, the MDCC determined that Mr. Pike, Ms. McConnell and Mr. Morais earned a payout at 36% of their 2024 bonus, which used a Fortrea business performance factor of 36% and an individual performance modifier of 100%.
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance The MDCC maintained the 2025 bonus plan largely as designed in 2024, including the right to use a discretionary individual performance-based modifier at 100% for the NEOs. Achievement is based on the following financial performance: (i) Adjusted EBITDA, weighted at 60%, which aligns with the interests of stockholders, and (ii) net new business, weighted at 40%, which focuses on growth.
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| Fortrea 2024 Long-Term Incentive Compensation – Performance Share Awards and Restricted Stock Units |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
Our long-term incentive plan is intended to motivate the attainment of our long-term goals and provide direct alignment to the experience of stockholders through the link to key financial measures and stock price performance. In 2024, awards were granted as a combination of PSAs and RSUs, balancing complementary priorities of financial performance, stockholder value creation, alignment of interests and executive retention. We grant long-term incentives generally in the form of PSAs and RSUs under our 2023 Omnibus Incentive Plan. We generally grant equity awards on an annual basis as part of annual performance reviews of our employees. We award PSAs and RSUs to deliver long-term incentive compensation because they directly align executive compensation with the creation of stockholder value, and the ultimate value received from equity grants depends on stock price appreciation after the grant date. Equity grants also encourage retention through time-based vesting. Awards of PSAs and RSUs to employees in connection with our long-term incentive awards generally vest over three years with equal annual installments vesting on the first anniversary of the grant date and annually thereafter. In establishing annual long-term incentive award levels for our NEOs, other than our Chief Executive Officer, and in formulating a recommendation to the Board of Directors on the long-term incentive compensation for our Chief Executive Officer, the MDCC evaluates long-term incentives awarded to executives holding comparable positions at our peer companies. The MDCC and the Board also evaluate overall Company performance over the fiscal year prior to which the awards are granted, the successful achievement of our financial goals, and the development of our organizational capabilities. At the February 2024 MDCC meeting, after a review of and in connection with their contributions to the Company based on their 2023 performance as well as review of the competitiveness of each NEO’s total compensation, the following NEOs received annual long-term incentive awards on March 13, 2024:
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| Name | 2024 Performance Share Awards Awarded (1) # | Restricted Stock Units Awarded # | | Thomas Pike | 0 | 0 | | Jill McConnell | 11,447 | 12,851 | | Mark Morais | 11,447 | 12,851 |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| (1) The PSAs utilize two metrics, revenue and adjusted EBITDA margin, weighted 60% and 40%, respectively. These metrics are measured across three, 1-year performance periods and adjusted at the end of the three-year period based on a relative Total Shareholder Return modifier, which compares Fortrea’s total shareholder return against the S&P 1500 Healthcare Index. The final payout being made at the end of the three-year period. For the first of the three performance periods, the revenue metric was achieved between threshold and target, while the adjusted EBITDA margin metric was not achieved. This resulted in approximately 34.8% of the first third of the overall award being earned, which represents approximately 11.6% of the entire intended value of the award at target. The awards will not vest until the completion of the entire three-year performance period. |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| Additional detail regarding each of the foregoing awards can be found in the “Grants of Plan-Based Awards” table and “Outstanding Equity Awards at 2024 Fiscal Year-End” table elsewhere in this proxy statement. |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| Fortrea 2022 and 2023 Long-Term Incentive Compensation |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
Prior to Spin, the Compensation and Human Capital Committee of Labcorp’s Board of Directors (the “Labcorp CHCC”) established an approved methodology for converting unvested Labcorp long-term incentive awards into Fortrea long-term incentive awards. This was done to fairly preserve value by mitigating any impact in stock price volatility that may be experienced for Labcorp and Fortrea common stock before and after Spin. The methodology was applied consistently for all unvested Labcorp long-term incentive awards held by Fortrea employees. The Equity Adjustment Ratio was calculated by dividing Labcorp’s pre-Spin 10-trading day average stock price by Fortrea’s post-Spin 10-trading day average stock price. The resulting calculation is as follows: Labcorp’s Pre-Spin 10-trading day average stock price = $235.171 Fortrea’s Post-Spin 10-trading day average stock price = $33.054 = Equity Adjustment Ratio = 7.1148 The Equity Adjustment Ratio was applied to all unvested Labcorp RSUs held by Fortrea employees. All original award terms and vesting schedules for the RSUs were maintained with no acceleration. Unvested PSAs were converted depending on how much of the three-year performance period had elapsed at the time of Spin, with the value preserved either on an actual or target basis as follows:
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| PSA Cycle | Treatment | | 2022 – 2024 | • 50% of the awards were converted to RSUs based on Labcorp performance of 18 months (out of 36-month performance measurement period) utilizing the stated Equity Adjustment Ratio • The other 50% of the awards were converted to Fortrea PSAs using the stated Equity Adjustment Ratio • For those converted to RSUs at time of Spin, the Labcorp CHCC considered Labcorp’s performance in connection with the previously approved cumulative EPS growth, cumulative Revenue and relative Total Stockholder return through June 30, 2023. The Labcorp CHCC approved a combined payout factor of 58.3% of target, reflecting performance through June 30, 2023 • For example, 50% of 100 outstanding 2022 Labcorp PSAs were measured at 58.3% payout, resulting in an actual payout of 29 PSAs. These 29 Labcorp PSAs were then converted to Fortrea RSUs: 29 x 7.1148 = 206 Fortrea RSUs. The other 50% of the outstanding 2022 PSAs were converted to Fortrea PSAs: 50 x 7.1148 = 355 Fortrea PSAs • Such awards were subject to the original three-year vesting period. | | 2023 – 2025 | • Converted into Fortrea PSAs based on the target number of shares • For example, 100% of 100 outstanding 2023 Labcorp PSAs were converted to Fortrea PSAs: 100 x 7.1148 = 711 Fortrea PSAs • Awards continue to be subject to the original three-year vesting period |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
The converted Fortrea PSAs, are subject to Fortrea-specific performance metrics as determined by the MDCC. Both the 2022 and 2023 outstanding converted PSAs utilize revenue (50% weight) and Adjusted EBITDA (50% weight) for the remaining portion of the performance measurement period. For the 2022 awards, the remainder of the time-based RSUs vested in 2024, whereas the performance objectives in the 2022 converted PSAs were achieved between threshold and target performance only for the Revenue portion of the award only. As a result, the final payout resulted in a 26.8% payout when compared to overall target expectations. Retirement Plans, Deferred Compensation Plan and Perquisites:
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| • | Retirement Plans: Our NEOs were eligible to participate in the Fortrea’s 401(k) plan, which is a defined contribution retirement savings plan. Participation in the plan is available to substantially all eligible US-based employees, including executives. |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| • | Deferred compensation Plan: Fortrea adopted the Fortrea Inc. Nonqualified Deferred Compensation Plan (“Fortrea NQDC Plan”) and assumed the obligations and liabilities associated with Company participants in the Labcorp NQDC Plan. The Fortrea NQDC Plan allows participants to defer up to 50% of their base salary and up to 90% of their annual incentive or bonus. The Fortrea NQDC Plan provides for similar investment options as our 401(k) plan. The Fortrea NQDC Plan does not provide any match on employee contributions. The Fortrea NQDC Plan accounts are paid based on the participant’s selection at the time of the deferral, subject to the requirements of Section 409A of the Internal Revenue Code and may be paid in a lump sum, or a series of annual installments. Participants may elect to receive these distributions upon separation from |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| service or upon the occurrence of one or more specified dates. All Fortrea NQDC Plan accounts are considered unfunded general contractual obligations and are subject to the claims of our general, unsecured creditors. |
Fortrea 2025 Bonus Plan: Bonus Plan Design and Performance
| • | Perquisites: Our NEOs were eligible to receive a reimbursement for financial and tax planning services, long-term disability, and a wellness exam in 2024, all of which were determined by Fortrea to be appropriate benefits that help ensure that Fortrea executives maintain appropriate fiscal and physical health, which contributes to stable executive leadership for Fortrea. Fortrea believes that the perquisites it provides are appropriate and beneficial to Fortrea. The maximum reimbursement allowed is $20,000 for financial and tax planning services and $1,500 for the wellness exam. Enhanced long-term disability is made available to all employees as a voluntary benefit, and in the case of the NEOs is paid for by the Company. |
CEO Employment Agreement
CEO Employment Agreement In January 2023, Labcorp entered into an employment agreement with Thomas Pike. At the time of Mr. Pike’s hire, the Labcorp CHCC approved an employment agreement that provides for a base salary of $1,100,000 and an annual target bonus equal to 150% of his base salary. Mr. Pike received a sign-on equity grant of $4,000,000 (the “Sign-On Equity Grant”) in the form of time-vested RSUs. In addition, the employment agreement provided that if Labcorp successfully completed the Spin of Fortrea into an independent public company, Mr. Pike would receive equity awards with an aggregate grant date value of $20,000,000 (the “Initial Equity Grant”) consisting of RSUs and stock options. Following completion of the Spin, Mr. Pike was issued the Initial Equity Grant on August 17, 2023. The total value of equity granted in 2023 in connection with the employment agreement was $24,000,000 on the respective date of grant, consisting of the Sign-On Equity Grant and the Initial Equity Grant. Under the terms of the employment agreement, these equity grants are intended to cover the three-year period of the initial term of the employment agreement, which ends on December 31, 2025, and no further equity grants are intended to be made as long-term incentives during that period. As a result, Mr. Pike did not receive an annual equity grant in 2024 nor in 2025. The intended value of Mr. Pike’s long-term incentives under the full term of the employment agreement amounts to $8,000,000 per year on an annualized basis. Including his target cash compensation, Mr. Pike’s annual target direct compensation is $10,750,000, which we believe is appropriate and competitive for a highly experienced CEO. As detailed later in this Compensation Discussion and Analysis, in fiscal year 2024, the pay-for-performance structure of Mr. Pike’s annual target compensation operated as designed and intended. The annual bonus paid at levels below the target and the exercise price of Mr. Pike’s stock options that were granted at the outset of his employment in 2023 were significantly above the market price of the stock (i.e. “under water”) based on our financial performance during fiscal year 2024. The employment agreement also provides that Mr. Pike will be eligible to participate in all employee benefit plans, practices and programs that are generally made available to senior executives (except for Fortrea’s Master Senior Executive Severance Plan). Mr. Pike has also entered into a confidentiality, non-competition and non-solicitation agreement, which includes a perpetual confidentiality covenant and covenants not to compete or solicit employees and/or customers for twelve months following termination of his employment. See “Potential Payments Upon Termination or Change in Control” for a discussion of payments to Mr. Pike that may be triggered upon termination or a change in control.
Policies and Practices on the Timing of Awards of Options in Relation to the Disclosure of Material Nonpublic Information
Policies and Practices on the Timing of Awards of Options in Relation to the Disclosure of Material Nonpublic Information It is the Company’s practice not to time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. In addition, the Company does not grant stock options or similar awards during periods in which there 2025 Proxy Statement • FORTREA is material nonpublic information about the Company, including during “blackout” periods or outside a “trading window” established pursuant to our Insider Trading Policy. During 2024, none of the Company’s Named Executive Officers were awarded stock options, and we did not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
Change-in-Control
Change-in-Control
Payments
Payments Ms. McConnell and Mr. Morais are covered by Fortrea’s Master Senior Executive Severance Plan (the “Executive Severance Plan”) that provides participants with financial protection in circumstances involving a qualifying termination. For additional information on the termination benefits under the Executive Severance Plan, see “Potential Payments Upon Termination or Change in Control.” In addition, the 2023 Omnibus Incentive Plan provides that if awards are assumed or substituted in connection with a change in control, only a qualifying termination event will result in accelerated vesting (i.e., “double trigger”). The plan does not provide for any tax gross-ups. Fortrea believes these provisions are consistent with current market practice.
Summary Compensation Table
Summary Compensation Table The following table sets forth the portion of compensation paid to the NEOs that is attributable to services performed during the fiscal years ended December 31, 2024, 2023, and 2022. The information provided below includes compensation earned by our NEOs for services provided to Labcorp and us prior to the Spin.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards (2)($) | Option Awards (3)($) | Non-Equity Incentive Plan Compensation (4)($) | All Other Compensation (5)($) | Total ($) | | Thomas Pike(1) Chief Executive Officer | | | | | | | | | | | 2024 | $1,108,461 | $0 | $594,000 | $0 | $0 | $11,445 | $1,713,906 | | | 2023 | $1,078,846 | $0 | $14,128,948 | $9,999,692 | $1,100,000 | $12,909 | $26,320,395 | | Jill McConnell Chief Financial Officer | | | | | | | | | | | 2024 | $503,846 | $0 | $819,671 | $0 | $0 | $17,513 | $1,342,017 | | | 2023 | $455,607 | $200,000 | $2,343,409 | $0 | $62,266 | $17,513 | $3,078,795 | | | 2022 | $411,215 | $0 | $460,682 | $0 | $174,355 | $29,557 | $1,075,809 | | Mark Morais Chief Operating Officer; President, Clinical Services | | | | | | | | | | | 2024 | $503,846 | $0 | $819,671 | $0 | $0 | $13,244 | $1,336,761 | | | 2023 | $456,900 | $200,000 | $2,497,701 | $0 | $62,658 | $12,914 | $3,230,173 | | | 2022 | $413,800 | $0 | $358,899 | $0 | $96,111 | $27,541 | $896,351 |
Summary Compensation Table
| (1) Mr. Pike joined Labcorp in January 2023 as President and Chief Executive Officer of its Drug Development, Clinical Development and Commercialization Services business unit and was appointed Chief Executive Officer of Fortrea effective June 30, 2023. Under the terms of Mr. Pike’s employment agreement, Mr. Pike’s 2023 equity grants are intended to provide an equivalent value of three years of grants and the employment agreement does not contemplate additional equity grants through the remaining initial term of his employment agreement, which ends on December 31, 2025. In accordance with these terms, Mr. Pike did not receive an annual equity grant in 2024. |
Summary Compensation Table
| (2) Amounts represent the aggregate grant date fair value of RSU and PSA awards in the year of grant in accordance with the same standard applied for financial accounting purposes, Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Under FASB ASC Topic 718, the grant date for a PSA occurs when objectively determinable performance goals are approved. Therefore, the reported value for 2024 is calculated for the portion of the PSAs for which performance goals were set in 2024 and is shown based on the probable performance (target) value of the awards. If valued assuming a maximum payout on the PSA program, the value of the 2024 awards would be: Ms. McConnell, $564,224; and Mr. Morais $754,100. See Grants of Plan-Based Awards Table for additional details. Mr. Pike, Ms. McConnell and Mr. Morais received their earned 2024 bonus payments in the form of equity. |
Summary Compensation Table
| (3) Amounts represent the aggregate grant date fair value of stock options computed in accordance with FASB ASC Topic 718 in the year of grant. A discussion of the assumptions used in calculating these values can be found in Note 14 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. This column does not represent the stock-based compensation expense recognized in the Company’s financial statements for the year ended December 31, 2023. |
Summary Compensation Table
| (4) The 2024 bonus was structured to be paid so that the first 50% of achievement would be paid in the form of RSUs and the next 50% of achievement would be paid in cash. The RSUs received based on achievement of the bonus were granted on March 20, 2025 for Mr. Pike and March 6, 2025 for Ms. McConnell and Mr. Morais by reference to the Company’s closing share price for its shares on those dates, $8.70 and $10.69, respectively. Such amounts are reflected in the “Stock Awards” column. The RSUs vest in equal tranches on the six- and eighteen-month anniversaries of the grant date, subject to the NEO’s continued employment on those dates. No cash was paid with respect to 2024. For 2023 amounts disclosed in this column, the values reflect the amounts earned by each NEO pursuant to the Labcorp LBP and the Fortrea Bonus Plan. |
Summary Compensation Table
| (5) Amounts shown in this column include Company-paid supplemental long-term disability insurance provided to the executive as well as Fortrea’s company-provided match to the 401(k) on the same basis as provided to U.S.-based employees, inclusive of those contributions made by Labcorp under the plan prior to the Spin. The supplemental long-term disability insurance benefit is considered taxable to the executive and no gross-ups are provided to offset the taxable amount and contributions to qualified defined contribution plans. See “Executive Compensation—Retirement Plans, Deferred Compensation Plan and Perquisites” for a discussion of other perquisites available to our NEOs in 2024. For 2024, the 401(k) provided a Company match of 100% of the first 5% of the employee’s contribution. Additional details are provided in the table below: |
Summary Compensation Table
| Executive | Supplemental Long-term Disability Insurance ($) | Fortrea’s Contributions to Qualified Defined Contribution Plan ($) | | Thomas Pike | $1,560 | $9,885 | | Jill McConnell | $1,250 | $17,250 | | Mark Morais | $1,250 | $11,994 |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table summarizes the awards granted to each of the NEOs during the fiscal year ended December 31, 2024.
Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(i)(3) | Grant Date Fair Value of Stock and Option Awards ($)(j)(4) | | Name (a) | Award Type | Grant Date (b) | Threshold ($)(c) | Target ($)(d) | Maximum ($)(e) | Threshold (#)(f) | Target (#)(g) | Maximum (#)(h) | | | | Thomas Pike | FTRE 2024 Bonus Plan | | $825,000 | $1,650,000 | $3,300,000 | — | — | — | — | — | | Jill McConnell | FTRE 2024 Bonus Plan | | $212,500 | $425,000 | $850,000 | — | — | — | — | — | | | 2024 PSA | 3/13/2024 | — | — | — | 1,908 | 3,815 | 7,630 | — | $166,639 | | | 2024 RSU | 3/13/2024 | — | — | — | — | — | — | 12,851 | $500,032 | | Mark Morais | FTRE 2024 Bonus Plan | | $212,500 | $425,000 | $850,000 | — | — | — | — | — | | | 2024 PSA | 3/13/2024 | — | — | — | 1,908 | 3,815 | 7,630 | — | $166,639 | | | 2024 RSU | 3/13/2024 | — | — | — | — | — | — | 12,851 | $500,032 |
Grants of Plan-Based Awards
| (1) Amounts represent the range of possible payouts denominated in dollars pursuant to the total amount of the Fortrea Bonus Plan, as established by the MDCC in February 2024. For 2024, actual amounts paid out pursuant to the plan were issued as restricted stock units and are included in the Stock Awards column of the Summary Compensation Table above. For a discussion of the performance criteria applicable to these awards, see “Compensation Discussion and Analysis—Annual Incentive Pay.” |
Grants of Plan-Based Awards
| (2) Estimated Future Payouts Under Equity Incentive Plan Awards represent the range of estimated potential shares to be earned under performance-based share awards. NEOs were awarded PSAs during 2024 with the number of shares to be earned depending on the performance outcomes of revenue and Adjusted EBITDA margin over three, 1-year periods and our TSR compared against the S&P 1500 Healthcare index over a three-year period. These PSAs require a minimum threshold of cumulative annual TSR performance, before threshold shares are earned, and they require cumulative TSR performance before target shares are earned, each as measured over a three-year performance period. For a discussion of the performance criteria applicable to these awards, see “Compensation Discussion and Analysis—Long-Term Incentive Awards” above. |
Grants of Plan-Based Awards
| (3) Amounts represent restricted stock unit awards that vest ratably over three years, beginning on the first anniversary of the grant date, based on continued service. |
Grants of Plan-Based Awards
| (4) Amounts represent the grant date fair value as computed in accordance with FASB ASC Topic 718. |
Grants of Plan-Based Awards
| Under FASB ASC Topic 718, the “grant date” for the PSA occurs only when objectively determinable performance goals are approved and therefore, the reported number of units is calculated for the various portions of the PSAs for which performance goals were set in 2024. The amounts referenced in this footnote (4) represent the first tranche of the 2024 award year, which represent one-third of the total number of PSAs granted to the eligible NEOs. This tranche and subsequent tranches are deemed to be separate “grants” for fair value purposes, and each is or will be deemed to have a “grant date” corresponding to when the underlying performance goals are objectively determinable. |
Grants of Plan-Based Awards
| The amounts shown in this column will likely vary from the amount realized by any NEO based on several factors, including the number of shares that ultimately vest, the satisfaction or failure to meet any performance criteria, the timing of any exercise or sale of shares, and the price of Fortrea’s common stock. The value of the PSAs granted in March 2024, as of the grant date if they are achieved at the maximum payout is as follows: Ms. McConnell - $333,278 and Mr. Morais - $333,278. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table provides information concerning outstanding equity awards (including underlying exercisable and unexercisable options, as well as unvested RSUs and unearned PSAs) for each of our NEOs as of December 31, 2024. As of December 31, 2024, the last trading day of 2024, the fair market value of a share of our common stock was $18.65.
Outstanding Equity Awards at Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that have Not Yet Vested (#)(2) | Market Value of Shares of Units of Stock that have Not Yet Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | | Thomas Pike(5) | 1/9/2023 | | | | | 80,448 | $1,500,355 | | | | | 8/17/2023 | 266,424 | 532,848 | 26.52 | 8/17/2033 | 251,383 | $4,688,293 | | | | Jill McConnell | | | | | | | | | | | | 2/7/2023 | | | | | 3,372 | $62,888 | 7,613 | $141,982 | | | 6/1/2023 | | | | | 22,013 | $410,542 | | | | | 8/17/2023 | | | | | 22,625 | $421,956 | | | | | 3/13/2024 | | | | | 12,851 | $239,671 | 3,815 | $71,150 | | Mark Morais | | | | | | | | | | | | 2/7/2023 | | | | | 4,511 | $84,130 | 10,175 | $189,764 | | | 6/1/2023 | | | | | 22,013 | $410,542 | | | | | 8/17/2023 | | | | | 22,625 | $421,956 | | | | | 3/13/2024 | | | | | 12,851 | $239,671 | 3,815 | $$71,150 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Stock options granted to Mr. Pike vest equally in three tranches with the first two occurring on the first and second anniversary of the grant date, and the third occurring on January 9, 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (2) RSUs generally vest ratably over three years, beginning on the first anniversary of the grant date, except the RSUs granted to Mr. Pike on August 17, 2023 vest equally in three tranches with the first two occurring on the first and second anniversary of the grant date, and the third occurring on January 9, 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (3) At time of Spin, 50% of the Labcorp PSAs granted on February 11, 2022 to Ms. McConnell and Mr. Morais were scored for performance across an 18-month period and converted to Fortrea RSUs. The other 50% of shares granted on February 11, 2022 were converted to Fortrea PSAs with new performance criteria established by the MDCC and are representative of Fortrea performance goals from time of Spin until December 31, 2024. For more information on the conversion in connection with the Spin, see “Other Long-Term Incentive Compensation.” |
Outstanding Equity Awards at Fiscal Year-End
| (4) At time of the Spin, the Labcorp PSAs granted on February 7, 2023 to Ms. McConnell and Mr. Morais were converted to Fortrea PSAs with new performance criteria established by the MDCC and are representative of Fortrea performance goals from time of Spin until December 31, 2025. These PSAs are reflected as the number of shares deliverable at target performance. The actual number of shares will be determined on December 31, 2025. For more information on the conversion in connection with the Spin, see “Other Long-Term Incentive Compensation.” |
Outstanding Equity Awards at Fiscal Year-End
| (5) Mr. Pike was appointed Chief Executive Officer effective June 30, 2023. Under the terms of Mr. Pike’s employment agreement, his 2023 equity grants were intended to provide an equivalent value of three years of equity grants and no further equity grants are intended to be made during the remaining initial term of his employment agreement, which ends on December 31, 2025. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table summarizes option exercises and stock vested with respect to each of the NEOs during the fiscal year ended December 31, 2024:
Option Exercises and Stock Vested
| Executive | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Thomas Pike | — | — | 165,911 | $4,115,338 | | Jill McConnell(1) | — | — | 48,955 | $1,462,388 | | Mark Morais(2) | — | — | 44,057 | $1,277,683 |
Option Exercises and Stock Vested
| (1) Represents the Labcorp PSAs granted on February 2, 2021 that were converted to RSUs at the time of Spin and vested on March 4, 2024 at $36.70 per share, the closing price of Fortrea common stock on that date; one-third of the Labcorp RSUs granted on February 2, 2021 that vested on February 2, 2024 at $30.54 per share, the closing price of Fortrea common stock on that date; one-third of Labcorp RSUs granted on February 11, 2022 that vested on February 12, 2022 at $32.78 per share, the closing price of Fortrea common stock on that date; one-third of Labcorp RSUs granted on February 7, 2023 and vested on February 7, 2024 at $31.59 per share, the closing price of Fortrea common stock on that date; one-third of Fortrea RSUs granted on June 1, 2023 and vested on June 3, 2024 at $24.85 per share; one-third of Fortrea RSUs granted on August 17, 2023 and vested on August 19, 2024 at $22.39 per share; and 26.81% of the Labcorp performance share award granted on February 11, 2022 that while vested on March 12, 2025 were earned effective December 31, 2024. These performance share awards were valued as of December 31, 2024 at $18.65 per share. |
Option Exercises and Stock Vested
| (2) Represents the Labcorp PSAs granted on February 2, 2021 that were converted to RSUs at the time of Spin and vested on March 4, 2024 at $36.70 per share, the closing price of Fortrea common stock on that date; one-third of the Labcorp RSUs granted on February 2, 2021 that vested on February 2, 2024 at $30.54 per share, the closing price of Fortrea common stock on that date; one-third of Labcorp RSUs granted on December 15, 2021 that vested on December 16, 2024 at $20.13 per share, the closing price of Fortrea common stock on that date; one-third of Labcorp RSUs granted on February 11, 2022 that vested on February 12, 2022 at $32.78 per share, the closing price of Fortrea common stock on that date; one-third of Labcorp RSUs granted on February 7, 2023 and vested on February 7, 2024 at $31.59 per share, the closing price of Fortrea common stock on that date; one-third of Fortrea RSUs granted on June 1, 2023 and vested on June 3, 2024 at $24.85 per share; one-third of Fortrea RSUs granted on August 17, 2023 and vested on August 19, 2024 at $22.39 per share; and 26.81% of the Labcorp performance share award granted on February 11, 2022 that while vested on March 12, 2025 were earned effective December 31, 2024. These performance share awards were valued as of December 31, 2024 at $18.65 per share. |
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation Fortrea adopted the Fortrea NQDC Plan and assumed the obligations and liabilities associated with Company participants in the Labcorp NQDC Plan. The Fortrea NQDC Plan allows participants to defer up to 50% of their base salary and up to 90% of their annual incentive or bonus. The Fortrea NQDC Plan provides for similar investment options as our 401(k) plan. The Fortrea NQDC Plan does not provide any match on employee contributions. The Fortrea NQDC Plan accounts are paid based on the participant’s selection at the time of the deferral, subject to the requirements of Section 409A of the Internal Revenue Code and may be paid in a lump sum, or a series of annual installments. Participants may elect to receive these distributions upon separation from service or upon the occurrence of one or more specified dates. All Fortrea NQDC Plan accounts are considered unfunded general contractual obligations and are subject to the claims of our general, unsecured creditors. Any amounts provided in Executive Contributions Last Fiscal Year shown in the table below are exclusively associated with the Fortrea NQDC Plan, which assumed contributions and balances from the Labcorp NQDC Plan. Amounts provided in the Aggregate Earnings In Last Fiscal Year shown in the table below are associated with investment performance of assets over the course of 2023 in both the Fortrea NQDC Plan as well as the frozen Covance Deferred Compensation Plan.
Nonqualified Deferred Compensation
| Name | Executive Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance at Last Fiscal Year-End | | Thomas Pike | — | — | — | — | | Jill McConnell | — | — | — | — | | Mark Morais | $15,000 | $30,199 | $0.00 | $164,728 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The tables that follow provide information related to compensation payable to each NEO, assuming termination of such executive’s employment on December 31, 2024, or assuming a change in control with a corresponding qualifying termination occurring on December 31, 2024. Amounts also assume the price of our common stock was $18.65, the closing price on December 31, 2024, the last trading day of 2024.
Potential Payments Upon Termination per Employment Arrangements of Mr. Pike
Potential Payments Upon Termination per Employment Arrangements of Mr. Pike Pursuant to the Pike Employment Agreement, if Mr. Pike’s employment is terminated without “cause” or by Mr. Pike for “good reason” (as such terms as defined in the Pike Employment Agreement), or if Fortrea does not renew the term, Mr. Pike will receive a partial year bonus as well as severance benefits (subject to his execution of a release of claims) equal to (i) two times the sum of his base salary and average annual bonus for the last three years if the applicable termination does not occur within 36 months following a “change in control” (as defined in the Pike Employment Agreement) of Fortrea, or (ii) three times the sum of his base salary and average annual bonus for the last three years, if the applicable termination of employment occurs within 36 months following a change in control of Fortrea. The Pike Employment Agreement contains a cutback provision, which provides that if any payments to Mr. Pike would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, then those payments will be subject to a reduction in order to avoid application of any applicable Section 280G excise tax, but only if the reduction would result in a greater net after-tax amount payable to Mr. Pike. Vesting of the equity grants made to Mr. Pike called for under the Pike Employment Agreement described above as the Sign-On Equity Grant and the Initial Fortrea Equity Grant will be accelerated upon a “separation from service” due to Mr. Pike’s death, disability, or termination without “cause” or for “good reason” within 24 months after a “change in control” (as such terms are defined in the award agreement). The Sign-On Equity Grant and the Initial Fortrea Equity Grant also include certain accelerated vesting provisions in the event of termination of Mr. Pike’s employment for similar reasons as described above outside of a change in control or in the event of his “retirement” as defined in the award agreement.
Potential Payments Upon Termination per Executive Severance Plan
Potential Payments Upon Termination per Executive Severance Plan Ms. McConnell and Mr. Morais are eligible to participate in the Executive Severance Plan adopted by Fortrea in connection with the Spin, which provides participants with financial protection in circumstances involving a qualifying termination (which will generally include an involuntary termination without “cause” or voluntary termination with “good reason” (as such terms are defined in the Executive Severance Plan)). The severance payments for executives employed at or above Executive Vice President under the Executive Severance Plan in the event of a qualifying termination will be equal to the sum of the executive’s annual base salary and annual target bonus for the year of the qualifying termination (or, in the event that the qualifying termination occurs within 24 months following a “change in control” (as defined in the Executive Severance Plan), two times the sum of the executive’s annual base salary and annual target bonus for the year of the qualifying termination).
Potential Payments Upon Termination per Executive Severance Plan
| Name | Benefit | Early or Normal Retirement(1) | Involuntary Not for Cause or Good Reason Termination | For Cause | Change-In- Control | Disability(2) | Death(3) | | Thomas Pike | Severance – Base Salary | — | $2,200,000 | — | $3,300,000 | — | — | | | Severance – Fortrea Bonus Plan | — | $4,125,000 | — | $5,500,000 | $1,650,000 | $1,650,000 | | | Non-Qualified Stock Options | — | — | — | — | — | — | | | Restricted Stock Units(4) | — | $3,094,324 | — | $6,188,648 | $6,188,648 | $6,188,648 | | | Performance Share Awards(4) | — | — | — | | — | — | | | Health & Welfare Plans(5)(6) | — | — | — | — | $700,000 | $1,500,000 | | | Total | — | $9,419,324 | — | $14,988,648 | $8,538,648 | $9,338,648 | | Jill McConnell | Severance – Base Salary | — | $500,000 | — | $1,000,000 | — | — | | | Severance – Fortrea Bonus Plan | — | $425,000 | — | $850,000 | — | — | | | Non-Qualified Stock Options | — | — | — | — | — | — | | | Restricted Stock Units(4) | — | $556,379 | — | $1,163,853 | $1,163,853 | $1,163,853 | | | Performance Share Awards(4) | — | $230,843 | — | $420,502 | $420,502 | $420,502 | | | Health & Welfare Plans(5)(6) | — | $41,246 | — | $41,246 | $400,000 | $1,000,000 | | | Total | — | $1,753,469 | — | $3,475,601 | $1,984,355 | $2,584,355 | | Mark Morais | Severance – Base Salary | — | $500,000 | — | $1,000,000 | — | — | | | Severance – Fortrea Bonus Plan | — | $425,000 | — | $850,000 | — | — | | | Non-Qualified Stock Options | — | — | — | | — | — | | | Restricted Stock Units(4) | — | $560,771 | — | $1,178,867 | $1,178,867 | $1,178,867 | | | Performance Share Awards(4) | — | $248,095 | — | $453,680 | $453,680 | $453,680 | | | Health & Welfare Plans(5)(6) | — | $21,835 | — | $21,835 | $400,000 | $1,000,000 | | | Total | — | $1,755,701 | — | $3,504,381 | $2,032,546 | $2,632,546 |
Potential Payments Upon Termination per Executive Severance Plan
| (1) None of the NEOs are retirement eligible. |
Potential Payments Upon Termination per Executive Severance Plan
| (2) Under Disability, amounts represent the value to be paid to respective executive under Fortrea’s short and long-term disability plans. Fortrea’s short-term disability allows for 100% of the executive’s salary to be paid for 6 months. Fortrea’s supplemental long-term disability program, which the NEOs are eligible for, allows for a payment of up to $25,000 per month, with the maximum benefit to be determined by the length of eligibility and age. For the sake of this calculation, a term of one year has been used to determine the amount paid to the executive. |
Potential Payments Upon Termination per Executive Severance Plan
| (3) Under Death, amount represents the death benefit under Fortrea’s company-sponsored life insurance plan - 2x an executive’s annual base pay with a maximum of $1.5 million. |
Potential Payments Upon Termination per Executive Severance Plan
| (4) Amounts represented by RSUs include 2022 PSAs that converted to RSUs at time of Spin |
Potential Payments Upon Termination per Executive Severance Plan
| (5) Under Involuntary Not for Cause or Good Reason as well as Change-in-Control, Health & Welfare represent one year of reimbursement of executive for COBRA coverage for medical, dental and vision, an additional Medical Stipend which was determined to be $19,123 for Ms. McConnell and $9,417 for Mr. Morais. Ms. McConnell and Mr. Morais are also eligible for outplacement services with such reimbursement capped at $3,000. Per his employment agreement, Mr. Pike is not eligible for these benefits in the event of these two termination scenarios. |
Potential Payments Upon Termination per Executive Severance Plan
| (6) Any executive perquisites are cancelled effective date of separation. However, executives are eligible for reimbursement of eligible expenses up to effective date of termination. |
CEO Pay Ratio
CEO Pay Ratio For 2024, as required by Item 402(u) of Regulation S-K, the Company identified a new median employee using our global employee population, excluding our CEO, as of December 1, 2024, which included all global full-time, part-time, temporary, and seasonal employees who were employed on that date. We used base salary as our consistently applied compensation measure across the employee population. The following jurisdictions constituting 4.99% of the Company’s total employees were excluded under the 5% de minimis rule: Philippines (204), Russia (112), Malaysia (24), Turkey (98), Columbia (41), Ukraine (166), Guatemala (17), Costa Rica (43), South Africa (41), and Thailand (36). From the remaining employees, we leveraged a valid statistical sampling approach to produce a sample of employees who were paid within a 5% range of the estimated median base salary and selected an employee from within that group as our median employee. We determined the median employee’s annual total compensation using the methodology for the Company’s Summary Compensation Table, as set forth in Item 402(c)(2)(x) of Regulation S-K and compared it to the total compensation of our CEO, in order to arrive at the pay ratio disclosed below. The Company’s CEO compensation for 2024, as reported in the Summary Compensation Table, was $1,713,906. The compensation of our median employee for 2024 was $61,175. Based upon the total CEO compensation and median employee compensation for 2024, our CEO to median employee pay ratio was 28:1. This ratio is a reasonable estimate calculated using a methodology consistent with SEC rules, as described above. As the SEC rules for identifying the median employee allow companies to adopt a variety of methodologies, and to use reasonable estimates and assumptions that reflect their compensation practices, pay ratios reported by other companies may not be comparable to the Company’s pay ratio reported above. Pay versus Performance The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the MDCC views the link between our performance and our NEOs’ pay. The MDCC did not consider the pay versus performance disclosure below in making its pay decisions. For a complete discussion of how the Company views its executive compensation structure, including alignment with Company performance and how pay was determined, see the Compensation Discussion and Analysis beginning on page 26. In accordance with SEC rules, the following table sets forth information concerning compensation actually paid (“CAP”), Total Shareholder Return (“TSR”), Net Income, and Adjusted EBITDA. These disclosures and the calculating of CAP is required by the SEC’s rules. Neither CAP nor the amount reported in the Summary Compensation Table (“SCT”) reflect the amount of compensation actually paid, earned or received during the applicable year. Per SEC rules, CAP was calculated by adjusting SCT Total values for the applicable year as described in the footnotes to the following table.
CEO Pay Ratio
| | | | | | VALUE OF INITIAL $100 INVESTMENT BASED ON ® (4) | | | | | FISCAL YEAR (1) | SCT TOTAL PAY FOR CEO (2) | CAP TO CEO (3) | AVERAGE SCT TOTAL PAYT FOR OTHER NEOS (2) | AVG. CAP TO OTHER NEOS (3) | COMPANY TSR | PEER GROUP TSR | NET INCOME (LOSS) ($ Millions) (5) | ADJUSTED EBITDA ($ Millions) (6) | | 2024 | $1,713,906 | $(14,710,510) | $1,339,389 | $(481,635) | $49.54 | $106.91 | $(329) | $203 | | 2023 | $26,320,395 | $34,238,046 | $3,154,484 | $3,349,885 | $102.62 | $103.98 | $(25) | $246 |
CEO Pay Ratio
| (1) For 2023 and 2024, the CEO was Thomas Pike and the other NEOs were Jill McConnell and Mark Morais. |
CEO Pay Ratio
| (2) These amounts reflect (i) the total compensation reported in the SCT for the applicable year in the case of our CEO; and (ii) the average of the total compensation reported in the SCT for the applicable year for our Other NEOs. See the footnotes to the SCT for further detail regarding the amounts in this column. |
CEO Pay Ratio
| (3) Amounts reported in these columns represent CAP; adjustments were made to the amounts reported in the SCT for the applicable year. A reconciliation of the adjustments for our CEO and for the average of the Other NEOs is set forth in the following tables, which describe the adjustments, each of which is prescribed by the SEC rule to calculate the CAP amounts from SCT amounts. |
CEO Pay Ratio
| YEAR | SCT TOTAL PAY FOR CEO | MINUS STOCK AWARD VALUE & OPTION AWARD VALUE REPORTED IN SCT FOR THE COVERED YEAR | PLUS YEAR END FAIR VALUE OF EQUITY AWARDS GRANTED DURING THE COVERED YEAR THAT REMAIN OUTSTANDING AND UNVESTED AS OF LAST DAY OF THE COVERED YEAR | PLUS YEAR OVER YEAR CHANGE IN FAIR VALUE AS OF THE LAST DAY OF THE COVERED YEAR OF OUTSTANDING AND UNVESTED EQUITY AWARDS GRANTED IN PRIOR YEARS | PLUS YEAR OVER YEAR CHANGE IN FAIR VALUE AS OF THE VESTING DATE OF EQUITY AWARDS GRANTED IN PRIOR YEARS THAT VESTED DURING THE COVERED YEAR | MINUS FAIR VALUE AT THE END OF THE PRIOR YEAR OF EQUITY AWARDS THAT FAILED TO MEET VESTING CONDITIONS IN THE COVERED YEAR | PLUS VALUE OF DIVIDENDS OR OTHER EARNINGS PAID ON STOCK OR OPTION AWARDS NOT OTHERWISE REFLECTED IN FAIR VALUE OR TOTRAL COMPENSATION FOR THE COVERED YEAR | MINUS CHANGE IN PENSION VALUE REPORTED IN SCT FOR COVERED YEAR | PLUS PENSION ADJUSTMENT | CEO CAP | | 2024 | $1,713,906 | $594,000 | $0 | $(11,498,710) | $(4,331,706) | $0 | $0 | $0 | $0 | $(14,710,510) | | 2023 | $26,320,395 | $24,128,640 | $32,021,869 | $0 | $0 | $0 | $24,422 | $0 | $0 | $34,238,046 |
CEO Pay Ratio
| YEAR | SCT AVERAGE FOR OTHER NEOS | MINUS STOCK AWARD VALUE & OPTION AWARD VALUE REPORTED IN SCT FOR THE COVERED YEAR | PLUS YEAR END FAIR VALUE OF EQUITY AWARDS GRANTED DURING THE COVERED YEAR THAT REMAIN OUTSTANDING AND UNVESTED AS OF LAST DAY OF THE COVERED YEAR | PLUS YEAR OVER YEAR CHANGE IN FAIR VALUE AS OF THE LAST DAY OF THE COVERED YEAR OF OUTSTANDING AND UNVESTED EQUITY AWARDS GRANTED IN PRIOR YEARS | PLUS YEAR OVER YEAR CHANGE IN FAIR VALUE AS OF THE VESTING DATE OF EQUITY AWARDS GRANTED IN PRIOR YEARS THAT VESTED DURING THE COVERED YEAR | MINUS FAIR VALUE AT THE END OF THE PRIOR YEAR OF EQUITY AWARDS THAT FAILED TO MEET VESTING CONDITIONS IN THE COVERED YEAR | PLUS VALUE OF DIVIDENDS OR OTHER EARNINGS PAID ON STOCK OR OPTION AWARDS NOT OTHERWISE REFLECTED IN FAIR VALUE OR TOTRAL COMPENSATION FOR THE COVERED YEAR | MINUS CHANGE IN PENSION VALUE REPORTED IN SCT FOR COVERED YEAR | PLUS PENSION ADJUSTMENT | AVERAGE OTHER NEO CAP | | 2024 | $1,339,389 | $812,671 | $247,672 | $(1,028,236) | $(220,789) | $0 | $0 | $0 | $0 | $(481,635) | | 2023 | $3,154,484 | $2,420,555 | $2,670,583 | $(52,524) | $(9,173) | $0 | $7,070 | $0 | $0 | $3,349,885 |
CEO Pay Ratio
2025 Proxy Statement • FORTREA
CEO Pay Ratio
| The fair value of options was determined by using the Black-Scholes option pricing method. The fair value of the PSAs was determined by using a Monte Carlo simulation pricing model and the probable outcome of the performance vesting conditions as of each measurement date and Company actual performance payouts for each completed performance period for the respective fiscal year. The fair value of the restricted stock was determined using the stock price on the appropriate measurement date. |
CEO Pay Ratio
| (4) The comparison assumes $100 was invested in the Company and in the S&P 1500 Healthcare Index, respectively, for the period starting July 1, 2023, the effective date of the registration of FTRE Common Stock, through the end of 2024. Historical stock performance is not necessarily indicative of future stock performance. All dollar values assume reinvestment of all dividends, where applicable. The primary Peer Group TSR set forth above utilizes the S&P 1500 Healthcare Index. The Nasdaq Healthcare Index was utilized previously. If $100 was invested in the Nasdaq Healthcare Index for the period starting July 1, 2023, the effective date of the registration of FTRE Common Stock, through the end of 2024, the TSR would be $102.96. For 2024, the Company has elected to present the S&P 1500 Healthcare Index for its peer group comparison. The Company believes that the holdings of this index more accurately reflect its peer companies. Since the Nasdaq Healthcare Index was presented in the prior year, it has also been presented in the current year for comparison purposes. |
CEO Pay Ratio
| (5) “Net income” is equivalent to “Net earnings” as reported in the Company’s financial statements in its Annual Report on Form 10-K for fiscal year ended December 31, 2024 filed with the SEC. Figures provided for 2023 net income have been restated to reflect amended and restated disclosures due to a restatement identified in connection with the preparation of our financial statements for the quarter ended March 31, 2024, which identified errors impacting previously reported financial information, including to periods prior to the Spin (the “restatement”). |
CEO Pay Ratio
| (6) SEC rules require us to designate a “company-selected measure” that in our assessment represents the most important financial performance measure (other than total stockholder return, stock price, or net income) used by the Company to link the CAP of our NEOs, for the most recently completed fiscal year, to our performance. We selected Adjusted EBITDA as this measure for 2023 and 2024, as reflected in the table above. Adjusted EBITDA is a non-GAAP measure. See the reconciliation of Adjusted EBITDA on Appendix A attached to this proxy statement. We may determine a different financial performance measure to be the most important financial performance measure in future years. Figures provided for 2023 reflect amended and restated disclosures due to the restatement. |
Relationship Between Compensation Actually Paid (“CAP”) and Financial Performance Measures
Relationship Between Compensation Actually Paid (“CAP”) and Financial Performance Measures The following, in accordance with the SEC rules, describes the relationship between TSR, Net Income and Adjusted EBITDA to compensation actually paid for fiscal year 2024. The cumulative TSR performance as of December 31, 2024 based on a $100 investment in Fortrea, the S&P1500 Healthcare Index and the Nasdaq Healthcare Index on July 1, 2023 is $49.54, $ 106.91 and $ 102.05 , respectively. Fortrea had a net loss of $ 328.5 million and Adjusted EBITDA of $ 202.5 million for the fiscal year ending December 31, 2024. The CAP of our CEO, and the average CAP of our other NEOs, was $(14,710,510) and $(481,635), respectively. For 2024, Fortrea’s PSAs included as part of Fortrea’s 2024 Long-Term Incentive Plan, are based on Revenue and Adjusted EBITDA Margin, as well as a relative TSR modifier. The metrics included in both the FBP and PSAs have or will have a direct impact on the CAP to the NEOs. While Net Income is not directly included as a performance measure, Net New Business, Revenue and Adjusted EBITDA all contain components that would be reflected in Net Income performance, thus establishing an indirect relationship with Net Income. For additional details regarding how Adjusted EBITDA and relative TSR were utilized under our fiscal year 2024 compensation program to link pay with performance, please refer to the discussion on the 2024 Fortrea Bonus Plan (Non-Equity Short-Term Incentive Compensation ) on pages 32-33 and the 2024 Fortrea Long-Term Incentive Compensation on pages 33-35. PROPOSAL 3:
2024 Director Compensation Table
2024 Director Compensation Table The following table sets forth summary compensation information for our directors for the fiscal year ended December 31, 2024:
2024 Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Restricted Stock units ($)(6)(7) | Total ($) | | Peter Neupert | $110,000 | $210,000 | $320,000 | | Edward Pesicka | $90,000 | $210,000 | $300,000 | | Dr. Amrit Ray | $90,000 | $210,000 | $300,000 | | Erin L. Russell(1) | $0 | $0 | $0 | | Machelle Sanders(2) | $67,500 | $210,000 | $277,500 | | David Smith | $115,000 | $210,000 | $325,000 | | R. Andrew Eckert(3) | $150,000 | $210,000 | $360,000 | | Betty Larson(4) | $22,500 | $0 | $22,500 | | Thomas Pike(5) | $0 | $0 | $0 |
2024 Director Compensation Table
| (1) As Ms. Russell was appointed to the Board effective March 7, 2025, she did not receive any compensation as a director for 2025. |
2024 Director Compensation Table
| (2) Ms. Sanders was appointed to the Board on May 14, 2024 and received a prorated annual cash retainer. |
2024 Director Compensation Table
| (3) Mr. Eckert served on the Board as Lead Independent Director and Chair of the MDCC for all of 2024. |
2024 Director Compensation Table
| (4) Ms. Larson served on the Board for a part of 2024 and received a prorated annual cash retainer. |
2024 Director Compensation Table
| (5) Mr. Pike does not receive cash or equity compensation for his service as a member of the Board of Directors. See “Executive Compensation” for discussion of Mr. Pike’s compensation as Chief Executive Officer. |
2024 Director Compensation Table
| (6) All RSUs granted to any directors have been valued based on the fair value of the RSUs using the market value as of the data of grant. A discussion of the assumptions used in calculating these values can be found in Note 15 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. |
2024 Director Compensation Table
| (7) The aggregate number of RSUs outstanding for each director appears in “Security Ownership of Certain Beneficial Owners and Management.” |
2024 Director Compensation Table
Security Ownership of Certain Beneficial Owners and Management Common Stock The following table sets forth certain information with respect to holdings of our Common Stock by (i) stockholders who beneficially owned more than 5% of the outstanding shares of our Common Stock, and (ii) each of our directors (which includes all nominees), each of our named executive officers and all directors and executive officers as a group as of April 17, 2025, unless otherwise indicated. The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which a person or an entity has sole or shared voting power or investment power. Applicable percentage ownership is based on 90,540,317 shares of Common Stock outstanding and entitled to vote as of April 17, 2025. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options, warrants or other rights held by such person that are currently exercisable or will become exercisable within 60 days of April 17, 2025 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed below is 8 Moore Drive, Durham, North Carolina 27709. We believe, based on information provided to us, that each of the stockholders listed below has sole voting and investment power with respect to the shares beneficially owned by the stockholder unless noted otherwise, subject to community property laws where applicable.
2024 Director Compensation Table
| Name of Beneficial Owner | Common Stock Beneficially Owned | Percentage | | 5% or Greater Stockholders | | | | BlackRock, Inc.(1) | 11,495,947 | 12.70% | | The Vanguard Group(2) | 9,945,449 | 10.98% | | FMR LLC(3) | 9,296,766 | 10.27% | | Sessa Capital (Master), L.P.(4) | 6,375,000 | 7.04% | | BlackRock Portfolio Management LLC(5) | 6,126,333 | 6.77% | | Beck, Mack & Oliver LLC(6) | 5,878,601 | 6.49% | | Starboard Value LP(7) | 4,864,000 | 5.37% | | Named Executive Officers | | | | Thomas Pike(8) | 159,868 | * | | Jill McConnell(9) | 51,474 | * | | Mark Morais(10) | 49,679 | * | | Non-Employee Directors | | | | Peter Neupert(11) | 35,632 | * | | Edward Pesicka(12) | 13,636 | * | | Dr. Amrit Ray(13) | 13,636 | * | | Erin L. Russell(14) | 0 | * | | Machelle Sanders(15) | 7,282 | * | | David Smith(16) | 11,729 | * | | All executive officers and directors as a group (9 persons)(17) | 342,936 | * |
2024 Director Compensation Table
| * Less than one percent. |
(as amended and restated)
| 6.2. | Limitation on Non-Employee Director Compensation. |