DEF 14A of RadNet, Inc.
Filed Apr 26, 2024 · FY20230001683168-24-002737
TABLE OF CONTENTS
| ● | Director Compensation |
Director Skills and Demographic Information
| Changes to Non-Employee Director Compensation | Increase in Amount | New Amount | | Annual cash compensation retainer | $10,000 | $85,000 | | Compensation Committee Chair annual cash compensation | $5,000 | $15,000 | | Lead Independent Director cash compensation | $20,000 | $30,000 | | Annual equity compensation | $35,000 | $160,000 |
Director Skills and Demographic Information
Equity Compensation Awarded in 2023 On June 7, 2023, each of the non-employee directors received a restricted stock award of 4,066 shares of common stock under our Equity Incentive Plan, with a grant date value of approximately $125,000 based on the grant date $30.74 per-share closing price of RadNet’s common stock. Subject to continued service, vesting of this stock grant will occur at the end of each non-employee director’s current term which coincides with the Annual Meeting. Nonqualified Deferred Compensation Arrangements Non-employee directors are eligible to participate in our Deferred Compensation Plans (as defined below). None of our non-employee directors elected to defer any portion of their 2023 compensation. Director Compensation The table below summarizes the compensation received by our non-employee directors for the fiscal year ended December 31, 2023.
Director Skills and Demographic Information
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Lawrence L. Levitt | 100,000 | 124,989 | – | 224,989 | | Laura P. Jacobs | 97,500 | 124,989 | – | 222,489 | | Gregory E. Spurlock | 82,500 | 124,989 | – | 207,489 | | David L. Swartz | 120,000 | 124,989 | – | 244,989 |
Director Skills and Demographic Information
| (1) Reflects the restricted stock awards described above in “Equity Compensation” awarded in 2023. In accordance with SEC rules, the amounts shown reflect the aggregate grant date fair value of stock awards granted in 2023 computed in accordance with FASB ASC Topic 718, calculated by multiplying the number of shares subject to the award by the closing price of RadNet’s common stock on the grant date. These are not amounts actually paid to or necessarily realized by the grantee. As of December 31, 2023, each of the above non-employee directors held 4,066 shares of unvested restricted stock and no stock options. |
Director Skills and Demographic Information
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | All Other Compensation ($)(1) | Total ($) | | Christine N. Gordon(2) | 379,519 | 163,510 | 21,952 | 564,981 | | Ruth V. Wilson(3) | 13,462 | – | 1,024,011 | 1,037,473 | | A. Gregory Sorensen, M.D.(4) | 600,000 | 1,188,647 | 16,288 | 1,805,935 |
Director Skills and Demographic Information
| (2) Ms. Gordon was an employee (but was not an executive officer) during 2023 and the amounts reported in the table reflect amounts paid to Ms. Gordon for her services as an employee. On January 3, 2023, the Company granted Ms. Gordon 8,772 shares of Company common stock and the closing price of a Company common share as reported on Nasdaq on such date was $18.64. Subject to Ms. Gordon’s continued service, these shares vest in three equal annual installments with one-third vesting on each of March 10th of 2023, 2024, and 2025. Ms. Gordon and RadNet Management, Inc., a Delaware corporation and wholly owned subsidiary of the Company, (“RMI”) are parties to an Amended and Restated Severance Agreement, dated February 24, 2022. Under this agreement, upon any termination of Ms. Gordon’s employment (other than due to her death), Ms. Gordon will receive a lump sum payment (which can be paid partly in Company shares) equal to 200% of her then current annual base salary (which currently is $400,000), with payment occurring within 60 days of termination of employment, and RMI will pay the monthly cost of Ms. Gordon’s group medical insurance under federal/California COBRA (as applicable) for up to two years after termination of employment. These post-employment payments are conditioned on Ms. Gordon providing a general release of all claims. As of December 31, 2023, Ms. Gordon held 4,386 shares of unvested restricted stock and no stock options. |
Director Skills and Demographic Information
| (3) Ms. Wilson decided to not stand for re-election to the Board at the Company’s Annual Meeting of Stockholders held in June 2023 and ceased to serve on the Board as of the conclusion of the 2023 Annual Meeting. Ms. Wilson was an employee (but was not an executive officer) until termination of her employment on February 3, 2023 and the amounts reported in the Fees Earned or Paid in Cash column reflect amounts paid to Ms. Wilson for her services as an employee. Ms. Wilson and RMI were parties to an Amended and Restated Severance Agreement, dated January 26, 2022 (“Wilson Agreement”). Under the Wilson Agreement, Ms. Wilson received an annual base salary of $100,000 for services as a part-time employee commencing as of January 29, 2022. Upon termination of Ms. Wilson’s employment, Ms. Wilson was entitled to receive a lump sum payment (which could be paid partly in Company shares) equal to $1,000,000 (with payment occurring within 15 days after effectiveness of a release of claims) and RMI was also obligated to pay the monthly cost of Ms. Wilson’s group medical insurance under federal COBRA for up to 18 months after January 28, 2022. These post-employment payments were conditioned on Ms. Wilson providing a general release of all claims. The amounts reported in the All Other Compensation column reflect the foregoing post-employment payments provided by the Wilson Agreement. As of the end of her service on the Board, Ms. Wilson held no shares of unvested restricted stock and no stock options. |
Director Skills and Demographic Information
| (4) Dr. Sorensen was appointed to the Board (and also then became a Company executive officer) on August 8, 2023. On June 1, 2020, Dr. Sorensen entered into an employment agreement (with a five year term) with RMI. This employment agreement provides for an annual base salary of $600,000 (which is still his current base salary) and, subject to approval by the Compensation Committee, an annual restricted stock grant (“Restricted Stock Award”), pursuant to the Company’s Equity Incentive Plan, with the number of granted shares determined by dividing Dr. Sorensen’s annual base salary by the grant per share value of such shares. Subject to Dr. Sorensen’s continuous service, each annual Restricted Stock Award incrementally vest by one third (1/3) on each of the first three anniversaries of the applicable Restricted Stock Award grant date. All options, warrants and any other deferred equity compensation then held by Dr. Sorensen which are unvested at the date of the Change in Control will then vest on an accelerated basis. If the Company terminates Dr. Sorensen’s employment without Cause or Dr. Sorensen resigns his employment for Good Reason, then Dr. Sorensen is eligible to receive severance in an aggregate amount equal to his annual base salary. The severance is conditioned upon Dr. Sorensen executing and not revoking a general release of claims and will be paid in substantially equal installments over a twelve month period after termination except that the severance will be made in a single lump sum payment if a Change in Control occurred during the twelve month period preceding Dr. Sorensen’s termination date. On January 3, 2023, the Company granted Dr. Sorensen 31,579 shares of Company common stock and the closing price of a Company common share as reported on Nasdaq on such date was $18.64. Subject to Dr. Sorensen’s continued service, these shares vest in three equal annual installments with one-third vesting on each of March 10th of 2023, 2024, and 2025. On June 1, 2023, the Company granted Dr. Sorensen 20,155 shares of Company common stock and the closing price of a Company common share as reported on Nasdaq on such date was $29.77. Subject to Dr. Sorensen’s continued service, these shares vest in three equal annual installments with one-third vesting on each of June 1st of 2024, 2025, and 2026. As of December 31, 2023, Dr. Sorensen held 62,936 shares of unvested restricted stock and stock options to acquire 62,964 shares. |
Director Skills and Demographic Information
The following definitions are contained in Dr. Sorensen’s employment agreement and are summarized below. Adverse Change in Duties: means an action or series of actions taken by RMI, without Dr. Sorensen’s prior written consent, which results in the below:
Director Skills and Demographic Information
| • | A change in Dr. Sorensen’s reporting structure, titles, job duties or job functions which results in a material diminution of his status, control, authority or level of responsibility; |
Director Skills and Demographic Information
| • | The assignment to Dr. Sorensen of any positions, duties or responsibilities which are materially inconsistent with Dr. Sorensen’s positions, duties and responsibilities or status with RMI; |
Director Skills and Demographic Information
| • | A requirement by RMI that Dr. Sorensen be based or perform his duties anywhere other than (i) where they are currently performed (or within a 25 mile radius of that location), or (ii) at RMI’s corporate office location on the date of the employment agreement; or |
Director Skills and Demographic Information
| • | A reduction by RMI in Dr. Sorensen’s base salary. |
Director Skills and Demographic Information
Change in Control: has the meaning provided to such term in the Company’s Equity Incentive Plan and it is presently defined as the occurrence of any of the following.
Director Skills and Demographic Information
| • | any merger or consolidation in which the Company shall not be the surviving entity (or survives only as a subsidiary of another entity whose stockholders did not own all or substantially all of the common stock in substantially the same proportions as immediately before such transaction); |
Director Skills and Demographic Information
| • | the sale of all or substantially all of the Company’s assets to any other person or entity (other than a wholly-owned subsidiary of the Company); |
Director Skills and Demographic Information
| • | the acquisition of beneficial ownership of a controlling interest (including power to vote) in the outstanding shares by any person or entity (including a “group” as defined by or under Section 13(d)(3) of the Securities Exchange Act of 1934); |
Director Skills and Demographic Information
| • | the dissolution or liquidation of the Company; or |
Director Skills and Demographic Information
| • | a contested election of directors, as a result of which or in connection with which the persons who were directors before such election or their nominees cease to constitute a majority of the Board. |
Director Skills and Demographic Information
Cause:
Director Skills and Demographic Information
| • | Dr. Sorensen’s conviction of (or plea of guilty or nolo contendere to) (A) any felony or (B) any misdemeanor involving fraud or dishonesty in connection with the performance of his duties hereunder or moral turpitude; |
Director Skills and Demographic Information
| • | the willful and continued failure of Dr. Sorensen for a total of 10 days (which need not be consecutive days) to substantially perform his duties with the Company (other than any such failure resulting from illness or Disability) after a written demand for substantial performance from the Company is delivered to Dr. Sorensen, which demand specifically identifies the manner in which it is claimed Dr. Sorensen has not substantially performed his duties, or |
Director Skills and Demographic Information
| • | Dr. Sorensen has willfully engaged in misconduct which has, or can reasonably be expected to have, a direct and material adverse monetary effect on RMI. |
Director Skills and Demographic Information
Disability: shall mean that for a period of at least 120 days during any twelve consecutive month period on account of a mental or physical condition, Dr. Sorensen is unable to perform the essential functions of his job for RMI, with or without reasonable accommodation. The determination of Dr. Sorensen’s Disability shall be made (a) by a medical physician selected or agreed to by RMI or (b) upon mutual agreement of RMI and Dr. Sorensen or his personal representative. Good Reason: means that Dr. Sorensen voluntarily terminates his employment due to either (i) a material default by RMI in the performance of any of its obligations under the employment agreement, or (ii) an Adverse Change in Duties (as defined above), which default or Adverse Change in Duties remains unremedied by RMI for a period of thirty days following its receipt of written notice thereof from Dr. Sorensen (which notice must be provided to the Company within 45 days of the initial existence of the applicable event and which reasonably describes the facts claimed by Dr. Sorensen to constitute the default or Adverse Change in Duties) (the reasons described in items (i) and (ii) of this paragraph being referred to herein as "Good Reason") and such Good Reason termination is consummated by Dr. Sorensen within 30 business days after the expiration of the Company's 30 day remedy period. EXECUTIVE OFFICERS The names of our current executive officers, their ages as of March 31, 2024, and their positions are shown below.
Director Skills and Demographic Information
| • | Compensation Decisions Should Promote the Interests of Stockholders. Compensation should create incentives for management to achieve strong short-term (annual) performance in a manner that supports and ensures our long-term success and profitability. The Compensation Committee believes that performance-based equity incentive awards, stock option and/or restricted stock awards (or restricted stock units (“RSUs”)) create long-term incentives that align the interests of management with the long-term interests of stockholders. |
Director Skills and Demographic Information
Board and Committee Process The Role of the Compensation Committee Our Board of Directors has delegated to the Compensation Committee the authority to approve all compensation and awards to Named Executive Officers. With respect to equity compensation awarded to the Named Executive Officers and others, the Compensation Committee acts as the administrator under the Equity Incentive Plan, and has the authority under that plan to grant equity compensation awards, including restricted stock, RSUs and stock options. Our Compensation Committee meets as often as necessary to perform its duties and responsibilities. The Committee meets with its compensation consultant and, as applicable, executive management, including our Chief Executive Officer. The Compensation Committee meets in executive session each year to: (a) evaluate the performance of the Named Executive Officers, (b) set the annual compensation of the Named Executive Officers, and (c) consider and approve any grants of equity incentive compensation to the Named Executive Officers. The Compensation Committee has ultimate authority, including delegated authority over all aspects of Named Executive Officer compensation, including the base salary for each Named Executive Officer and the overall compensation of the Chief Executive Officer. The Role of Management in the Compensation-Setting Process Management’s role in the compensation-setting process, includes the following:
Director Skills and Demographic Information
| • | making recommendations to the Compensation Committee on salary levels and performance-based equity incentive awards, stock option and restricted stock awards (or RSUs); and |
Director Skills and Demographic Information
| • | allocating the amount of cash bonus, restricted stock (or RSUs) and stock option amounts to be awarded to our Named Executive Officers. |
Director Skills and Demographic Information
| • | Executive compensation benchmarking and framework; |
Director Skills and Demographic Information
| • | Assessment of market trends of non-employee director compensation; |
Director Skills and Demographic Information
| • | Annual incentive plan and equity award design; |
Director Skills and Demographic Information
| • | Advice on merit increases, target bonuses and equity award levels; |
Director Skills and Demographic Information
| • | Assessment of employment and Change in Control agreement provisions; and |
Director Skills and Demographic Information
Pearl Meyer attends certain Compensation Committee meetings in person or by telephone, including executive sessions as requested, and consults with the Compensation Committee Chair. Pearl Meyer also reviewed and commented on this executive compensation disclosure and the Named Executive Officer and director compensation tables contained in this Proxy Statement. As part of the selection and retention process, the Compensation Committee analyzes the independence of Pearl Meyer under SEC and Nasdaq Rules. Pearl Meyer reports directly to the Compensation Committee and performs no other work for RadNet besides rendering compensation consulting services. In accordance with its charter, the Compensation Committee analyzed whether the work of Pearl Meyer as a compensation consultant has raised any conflict of interest, taking into consideration the following factors: (a) the provision of other services to RadNet by Pearl Meyer; (b) the amount of fees from RadNet paid to Pearl Meyer as a percentage of the firm’s total revenue; (c) Pearl Meyer’s policies and procedures that are designed to prevent conflicts of interest; (d) any business or personal relationship of Pearl Meyer or the individual compensation advisors employed by the firm with an executive officer of RadNet; (e) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (f) any stock of RadNet owned by Pearl Meyer or the individual compensation advisors employed by the firm. The Compensation Committee has determined, based on its analysis of the above factors, that the work of Pearl Meyer and the individual compensation advisors employed by Pearl Meyer as compensation consultants to RadNet has not created a conflict of interest. The Role of Peer Companies and Benchmarking The Compensation Committee reviews a peer group of companies (“Peer Group”) recommended by Pearl Meyer in order to assess the competitiveness of our executive officer compensation level and structure. The composition of the Peer Group is reviewed periodically. In December 2022, with input from Pearl Meyer, the Compensation Committee determined to keep the Peer Group for 2023 the same as what was utilized in 2022, as reflected in the following list:
Director Skills and Demographic Information
Elements of Executive Compensation Base Salary We seek to establish a base salary compensation level that appropriately recognizes each Named Executive Officer’s achievements and contributions. Base salary also provides executives with a secure level of income that is not at risk, and our Compensation Committee believes that this gives our Named Executive Officers the ability to focus on the longer term and avoid the urgency that could otherwise encourage a Named Executive Officer to take unnecessary risks. In determining base salaries, our Compensation Committee considers the Named Executive Officer’s qualifications and experience, scope of responsibilities and future potential, the executive’s ability to influence RadNet’s achievements of targeted results and strategic initiatives, the goals and objectives established for the Named Executive Officer, the Named Executive Officer’s past performance, the general pay practices at other companies in our Peer Group, internal pay equity and the tax deductibility of base salary. Discretionary Cash Bonuses In recent years, the Compensation Committee has elected to supplement base salary and equity-based compensation with discretionary cash bonus awards generally paid in the beginning of the fiscal year. These discretionary cash bonuses are awarded with the goal of continuing to retain and incentivize our Named Executive Officers to achieve or exceed the strategic initiatives set for the upcoming year. Equity Based Compensation We believe that equity compensation is the most effective means of aligning the interests of our officers and other key management personnel with gains realized by our stockholders. The Compensation Committee uses equity awards, including performance-based equity incentive awards, restricted stock, RSUs and stock options, as a long-term incentive vehicle because:
Director Skills and Demographic Information
| • | performance-based equity incentive awards align the interests of executives with those of our stockholders while encouraging objective strategic goals established by the Compensation Committee; |
Director Skills and Demographic Information
| • | restricted stock, RSUs and/or stock options align the interests of executives with those of our stockholders, support a pay-for-performance culture, foster employee stock ownership and focus the management team on increasing value for our stockholders; and |
Director Skills and Demographic Information
We use a mix of performance-based equity awards, restricted stock, RSUs and/or stock options for equity compensation grants to the Named Executive Officers. In determining the maximum number of performance-based equity awards shares of restricted stock, RSUs and stock options to be granted to Named Executive Officers, the Compensation Committee considers the individual’s position, scope of responsibility, ability to affect profits and stockholder value and the individual’s historic and recent performance, the value of the equity awards in relation to other elements of total compensation, internal pay equity and market competitiveness. While there is no formal policy about the timing and frequency of equity compensation awards, the Compensation Committee has historically issued annual equity grants to the named executive officers during the first two weeks of January. The Chief Executive Officer considers similar factors when allocating the number of shares of performance-based equity awards, restricted stock, RSUs and stock options to be granted to the senior executive officers, within the limitations set by the Compensation Committee. Our Equity Incentive Plan was most recently approved by our stockholders at our annual stockholders meeting on June 7, 2023. Unless terminated earlier, the Equity Incentive Plan will terminate on April 26, 2033. The Equity Incentive Plan permits the discretionary award of incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), stock appreciation rights (“SARs”), restricted stock, and RSUs. Directors, officers, employees and consultants of RadNet and certain of our affiliated companies are eligible to receive awards under the Equity Incentive Plan. Certain other key features of the Equity Incentive Plan are summarized as follows:
Director Skills and Demographic Information
| • | Up to a maximum aggregate of 20,100,000 common shares may be issued under the Equity Incentive Plan. As of December 31, 2023, 4,069,349 common shares were available for potential future issuance. |
Director Skills and Demographic Information
| • | The Equity Incentive Plan will generally be administered by a committee comprised solely of independent members of the Board, such as the Compensation Committee (the “Plan Administrator”). The Board or Plan Administrator may designate a Company officer to make awards (within parameters established by the Board) to employees who are not officers subject to the reporting requirements of Section 16 of the Exchange Act or are not Code Section 162(m) Covered Employees. |
Director Skills and Demographic Information
| • | Stock options and stock appreciation rights may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant. |
Director Skills and Demographic Information
| • | Stock options and stock appreciation rights may not be repriced or exchanged without stockholder approval. The maximum exercisable term of stock options and stock appreciation rights may not exceed ten years. |
Director Skills and Demographic Information
Subject to the Named Executive Officer’s continued service, the RSG Shares vest in two equal annual installments with one-half vesting on March 10, 2023 and one-half vesting on March 10, 2024. Subject to the Named Executive Officer’s continued service, the Option shares vest in three equal annual installments with one-third vesting on each of March 10, 2023, March 10, 2024 and March 10, 2025, respectively. Additionally, on January 3, 2023, the Compensation Committee approved the award to each Named Executive Officer of performance-based options (“PSOs”) and performance-based restricted stock units (“PSUs”). The performance vesting conditions are based on attainment of Company Adjusted earnings before Interest, Taxes, Depreciation, and Amortization (“AEBITDA”) goals established (and adjusted as needed) by the Compensation Committee for calendar year 2023. The Compensation Committee has determined that AEBITDA is the financial performance measure that, in the Compensation Committee’s assessment, represents the most important performance measure used by the Company to link compensation actually paid to the Named Executive Officers to Company performance. The maximum number of shares subject to these PSOs have an aggregate grant date value approximately equal to the Black-Scholes option value of approximately 50% of the 2022 base salaries. The target number of shares subject to these PSUs have an aggregate grant date value approximately equal to 25% of the 2022 base salaries. The maximum number of PSUs that can vest is equal to 200% of the target number. The closing price of a common share on the grant date of January 3, 2023 was $18.64. The portion of the PSOs and PSUs that satisfy the EBITDA performance vesting conditions will also be subject to continued service vesting conditions. 50% of those PSUs will incrementally vest on each of March 10th of 2025 and 2026. One-third of those PSOs will incrementally vest on each of March 10th of 2025, 2026 and 2027. The PSOs have a per share exercise price of $18.64. The 2023 target AEBITDA was established at $214,874,252 which was higher than both the approximately $201.9 million AEBITDA target established for the PSOs/PSUs granted in 2022 and the actual 2022 achieved AEBITDA of approximately $192.5 million. The ratio of actual AEBITDA divided by target AEBITDA determines the amount of PSOs/PSUs that become vested as shown in the table below.
Director Skills and Demographic Information
| FY 2023 AEBITDA Achieved vs. Target | Shares Performance Vested As % of Maximum PSO Shares | Shares Performance Vested As % of Target PSU Shares | | Less than or equal to 92.5% | 0% | 0% | | 93.0% | 5% | 10% | | 94.0% | 15% | 30% | | 95.0% | 25% | 50% | | 96.0% | 30% | 60% | | 97.0% | 35% | 70% | | 98.0% | 40% | 80% | | 99.0% | 45% | 90% | | 100.0% | 50% | 100% | | 101.0% | 55% | 110% | | 102.0% | 60% | 120% | | 103.0% | 65% | 130% | | 104.0% | 70% | 140% | | 105.0% | 75% | 150% | | 106.0% | 85% | 170% | | 107.0% | 95% | 190% | | Greater than or equal to 107.5% | 100% | 200% |
Director Skills and Demographic Information
On March 1, 2024, based on 2023 financial data provided by Company management showing that actual AEBITDA was $237,324,127, the Compensation Committee determined that a 110.4% performance level of AEBITDA performance was attained for 2023 and therefore that 100% of the PSOs became performance-based vested and 200% of the PSUs became performance-based vested. No portion of the PSOs/PSUs were forfeited as a result of the performance vesting conditions. The tables below summarize these 2023 performance-based awards and the far right column in each table shows how many shares underlying the 2023 performance-based awards remain outstanding and eligible to become vested if/when the time-based service vesting conditions are attained.
Director Skills and Demographic Information
| Name | Grant Date | Threshold PSUs (#) | Target PSUs (#) | Maximum PSUs (#) | Performance Period | Actual Date Performance Achievement was Determined | Number of Performance Vested PSUs (#) | | Howard Berger | 1/3/23 | 2,012 | 20,118 | 40,236 | 1/1/23 to 12/31/23 | 3/1/24 | 40,236 | | Mark Stolper(1) | 1/3/23 | 771 | 7,711 | 15,422 | 1/1/23 to 12/31/23 | 3/1/24 | 15,422 | | Norman Hames | 1/3/23 | 872 | 8,717 | 17,434 | 1/1/23 to 12/31/23 | 3/1/24 | 17,434 | | Stephen Forthuber | 1/3/23 | 872 | 8,717 | 17,434 | 1/1/23 to 12/31/23 | 3/1/24 | 17,434 | | Mital Patel | 1/3/23 | 771 | 7,711 | 15,422 | 1/1/23 to 12/31/23 | 3/1/24 | 15,422 | | Total | | 5,298 | 52,974 | 105,948 | | | 105,948 |
Director Skills and Demographic Information
Stockholder Advisory Votes on Executive Compensation In June 2022, over 95% of the stockholder votes (excluding abstained and broker non-votes) were cast “FOR” the stockholder advisory vote regarding our Named Executive Officers’ compensation. In June 2023, approximately 88% of the stockholder votes (excluding abstained and broker non-votes) were cast “FOR” the stockholder advisory vote regarding our Named Executive Officers’ compensation. The Compensation Committee carefully considered these results and a variety of other information, including the most recent competitive market assessment of pay, in determining compensation structure and amounts for each of 2023 and 2024, respectively. Fiscal Year 2024 Compensation Determinations In November 2023, Pearl Meyer provided the Compensation Committee with a compensation benchmarking report on the Company’s Peer Group along with a recommended new Peer Group for fiscal year 2024 after review of U.S. publicly traded companies with annual revenue, EBITDA, Net Income, market capitalization, and enterprise value approximately one-third to twice RadNet’s annual revenue whose primary operations are in the healthcare facility and services industry. The Compensation Committee approved the proposed new Peer Group which consists of the following companies:
Director Skills and Demographic Information
The increases in base salary are reflective of the continuing superior Company performance especially evident in the fiscal year 2023 financial results. In the case of the Chief Executive Officer, the increase in base salary was in part to compensate him for the many years in which he received no equity compensation and in which his total compensation was below the median of chief executive officers in our peer group. On January 9, 2024, in order to retain and further motivate the Named Executive Officers and align their interests with Company stockholder interests, the Compensation Committee determined to provide the Named Executive Officers with the cash bonuses which were paid in January 2024 in the amount of $4,000,000, $575,000, $650,000, $650,000, and $575,000 for Messrs. Berger, Stolper, Hames, Forthuber and Patel, respectively. The bonuses paid to the Named Executive Officers (other than the Chief Executive Officer) were equal to 100% of 2023 base salaries. Dr. Berger’s cash bonus amount was paid by BRMG. In addition, the Compensation Committee determined to eliminate the portion of long-term incentives previously granted in stock options, PSOs and PSUs after a careful review of which equity vehicle would best motivate executives to achieve the strategic plan and encourage a rapid and effective response given the Company’s opportunities for growth. The Compensation Committee determined to provide the Named Executive Officers with grants of stock units (for those Named Executive Officers deferring receipt of the underlying shares) or restricted shares (for those Named Executive Officers who are not deferring receipt of the underlying shares) (either “RSG Shares”) with a grant date value approximately equal to 100% of the 2023 base salaries for the Named Executive Officers (other than for the Chief Executive Officer). These amounts compare to the 2023 equity award values for the Named Executive Officers (other than for the Chief Executive Officer) of 175% of salary as outlined above. Moreover, the grant date values of the 2024 equity compensation awards to each Named Executive Officer is materially lower than the grant date values of their 2023 equity compensation awards. The table below reflects the 2024 awards.
Director Skills and Demographic Information
Taxes, Risks and other Considerations Tax Deductibility of Compensation Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a publicly held company can deduct in any tax year on compensation paid to “covered employees.” The Compensation Committee considers tax deductibility as one of many factors in determining executive compensation, including the impact of these tax law changes. However, the Compensation Committee believes that in certain circumstances factors other than tax deductibility take precedence when determining the forms and levels of executive compensation most appropriate and in our best interest and the best interest of our stockholders. Thus, executive compensation arrangements may not be tax deductible or, if initially intended to be tax deductible, may not actually receive this treatment. Risk Considerations in Our Compensation Programs Our Compensation Committee reviews the concept of risk as it relates to our compensation program and does not believe our compensation program encourages excessive or inappropriate risk taking. The Compensation Committee believes our compensation programs strike a balance between providing secure compensation (base salaries) as well as appropriate short- and long-term incentives, such that our executive officers are not encouraged to take unnecessary or excessive risks. Stock Ownership We structure our pay to consist of primarily fixed compensation with base salary in cash, bonuses and non-cash long-term incentive programs. Although we do not have requirements or guidelines specifying amounts of ownership of RadNet common stock for our Named Executive Officers, we do promote and encourage the aligning of their interests with those of our stockholders by providing them with significant equity awards. Recoupment of Erroneously Awarded Compensation Policy In November 2023, our Board of Directors adopted a Policy on Recovery of Erroneously Awarded Compensation or “Clawback Policy” that is intended to deter both financial/accounting irregularities with respect to RadNet’s financial statements and also misconduct by senior executives. The Clawback Policy is intended to comply with the listing rules of the Nasdaq Stock Market LLC and SEC Exchange Act Rule 10D-1. The Clawback Policy is generally administered by the Compensation Committee although the Board of Directors may administer the policy or designate another committee to serve in such role, and may also act in conjunction with the Audit Committee. The policy applies to RadNet’s officers and other designated key employees (collectively, “Senior Executives”). Under the Clawback Policy, if RadNet is required to restate any financial statements (other than due to a change in accounting policy), then the Compensation Committee (or other designated committee) can take certain actions to recoup performance-based compensation from the Senior Executives that exceeded the amount that would have been paid under the restated financial results, including the cancellation of equity compensation awards. Performance-based compensation that was paid, vested or earned in the three most recent completed fiscal years prior to (a) the date the Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an accounting restatement or (b) the date a court, regulator or other legally authorized body directs the Company to prepare an accounting restatement, in each case regardless of if or when the restated financial statements are filed is generally subject to recoupment. A Senior Executive that is determined to have committed “Misconduct” (as defined under the Clawback Policy) is subject to additional measures including recoupment or cancellation or reimbursement of incentive compensation, adjustment of future compensation, and/or disciplinary actions including termination of employment. COMPENSATION COMMITTEE REPORT* The Compensation Committee has reviewed and discussed with RadNet’s management the “Compensation Discussion and Analysis” included above and unanimously recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Submitted by the Compensation Committee: Lawrence L. Levitt, Chair Laura P. Jacobs Gregory E. Spurlock David L. Swartz _______________ * The material in this report is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act whether made before or after the date of this Proxy Statement and irrespective of any general incorporation language therein. Compensation Committee Interlocks and Insider Participation The members of our Compensation Committee are Lawrence L. Levitt, Laura P. Jacobs, Gregory E. Spurlock, and David L. Swartz. None of our executive officers serve or have served on the board of directors or compensation committee of another company that also has an executive officer that serves on our board of directors or our Compensation Committee. EXECUTIVE COMPENSATION TABLES Summary Compensation Table The following table, footnotes and related narrative summarizes the total compensation paid to or earned by each of our Named Executive Officers for fiscal years 2023, 2022, and 2021:
Director Skills and Demographic Information
| Name and Principal Position | Year | Salary($) | Bonus($) | Stock Awards ($) (1) | Option Awards ($) (1) | All Other Compensation ($)(2) | Total($) | | Howard G. Berger, M.D. | 2023 | 1,500,000 | 2,000,000 | 1,375,000 | 1,750,000 | 75,183 | 6,700,183 | | President and Chief Executive Officer | 2022 | 1,500,000 | 4,000,000 | – | – | 55,517 | 5,555,517 | | (principal executive officer)(3) | 2021 | 1,200,000 | 3,308,654 | – | – | 58,568 | 4,567,222 | | Mark D. Stolper | 2023 | 575,000 | 287,500 | 431,250 | 575,000 | 31,954 | 1,900,704 | | Executive Vice President and Chief Financial Officer | 2022 | 575,000 | 525,000 | 681,250 | 825,000 | 31,213 | 2,637,463 | | (principal financial officer) | 2021 | 525,000 | 393,750 | 460,882 | – | 28,466 | 1,408,098 | | Stephen M. Forthuber | 2023 | 650,000 | 325,000 | 487,500 | 650,000 | 48,065 | 2,160,565 | | President and Chief Operating | 2022 | 650,000 | 600,000 | 775,000 | 937,500 | 47,258 | 3,009,758 | | Officer - Eastern Operations | 2021 | 600,000 | 450,000 | 526,721 | – | 37,265 | 1,613,986 | | Norman R. Hames | 2023 | 650,000 | 325,000 | 487,500 | 650,000 | 30,460 | 2,142,960 | | President and Chief Operating | 2022 | 650,000 | 600,000 | 775,000 | 937,500 | 26,776 | 2,989,277 | | Officer - Western Operations | 2021 | 600,000 | 450,000 | 526,721 | – | 16,375 | 1,593,096 | | Mital Patel | 2023 | 575,000 | 287,500 | 431,250 | 575,000 | 49,385 | 1,918,135 | | Executive Vice President of Financial Planning and Analysis and | 2022 | 575,000 | 525,000 | 681,250 | 825,000 | 50,799 | 2,657,049 | | Chief Administrative Officer | 2021 | 524,038 | 375,000 | 1,153,939 | – | 38,895 | 2,091,873 |
Director Skills and Demographic Information
| (6) For awards granted in 2023, see footnotes (1) through (3) to the above Grants of Plan-Based Awards Table. All options have a maximum ten-year term from their date of grant. The time-based vesting of unvested outstanding awards fully accelerates earlier than the above scheduled vesting upon: (a) termination of the Named Executive Officer’s service due to his death or Disability or (b) termination of the Named Executive Officer’s service either by RadNet without Cause or by the Named Executive Officer for Good Reason or (c) a change in control of RadNet. The figures reflected in the above table for the PSUs granted in 2023 reflect the maximum possible number of PSUs that could become performance vested. |
Pay Versus Performance
Pay Versus Performance
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers(3) | Average Compensation Actually Paid to Non-PEO Named Executive Officers(4) | Total Shareholder Return(5) | Peer Group Total Shareholder Return(6) | Net Income (millions)(7) | Adjusted EBITDA (millions)(8) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $6,700,183 | $10,101,435 | $2,030,591 | $3,585,219 | $171.28 | $143.18 | $3.04 | $232.30 | | 2022 | $5,555,517 | $5,555,517 | $2,823,387 | $1,962,193 | $92.76 | $140.29 | $10.65 | $191.28 | | 2021 | $4,567,222 | $4,567,222 | $1,676,763 | $2,073,838 | $148.33 | $143.09 | $24.73 | $211.94 | | 2020 | $2,835,761 | $2,835,761 | $1,050,250 | $1,015,548 | $96.40 | $113.45 | ($14.84) | $114.95 |
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| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Dr. Berger (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to the above Summary Compensation Table. |
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| (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Dr. Berger, as computed in accordance with Item 402(v) of Regulation S-K. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Dr. Berger’s total compensation for 2023 to determine the compensation actually paid: |
Pay Versus Performance
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards | Equity Award Adjustments(a) | Reported Change in the Actuarial Present Value of Pension Benefits(b) | Pension Benefit Adjustments(c) | Compensation Actually Paid to PEO | | 2023 | $6,700,183 | ($3,125,000) | $6,526,252 | – | – | $10,101,435 |
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| (a) The amounts deducted or added in calculating Dr. Berger’s equity award adjustments are as follows: |
Pay Versus Performance
| Year | Year End Fair Value of Equity Awards Granted in the Current Year | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $5,590,692 | – | $935,560 | – | – | – | $6,526,252 |
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| (b) The amounts included in this column are the amounts reported in “Change in Pension and Nonqualified Deferred Compensation” column of the Summary Compensation Table for 2023. These values are $0.00 since Dr. Berger did not have any values reported in these columns in the Summary Compensation Table. |
Pay Versus Performance
| (c) The total pension benefit adjustments for 2023 include the aggregate of two components: (i) the actuarially determined service cost for services rendered by the chief executive officer during the applicable year (the “service cost”); and (ii) the entire cost of benefits granted in a plan amendment (or initiation) during the applicable year that are attributed by the benefit formula to services rendered in periods prior to the plan amendment or initiation (the “prior service cost”) calculated in accordance with U.S. GAAP. This value is $0.00 since Dr. Berger did not participate in such pension programs in Fiscal Year 2023. |
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| (3) The dollar amounts reported in column (d) and (e) represent the average of the amounts reported for the Named Executive Officers as a group (excluding Dr. Berger) in the “Total” column of the Summary Compensation Table in 2023. The names of each of the Named Executive Officers (excluding Dr. Berger) included for purposes of calculating the average amounts in each applicable year are Mark Stolper, Stephen Forthuber, Norman Hames, and Mital Patel. |
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| (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the Named Executive Officers as a group (excluding Dr. Berger), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not necessarily reflect the actual average amount of compensation earned by or paid to the Named Executive Officers as a group (excluding Dr. Berger) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the Named Executive Officers as a group (excluding Dr. Berger) for each year to determine the compensation actually paid, using the same methodology described above in Note 2: |
Pay Versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO Named Executive Officers | Average Reported Value of Equity Awards | Average Equity Award Adjustments(a) | Average Reported Change in the Actuarial Present Value of Pension Benefits(b) | Average Pension Benefit Adjustments(b) | Average Compensation Actually Paid to Non-PEO Named Executive Officers | | 2023 | $2,030,591 | ($1,071,875) | $2,626,503 | – | – | $3,585,219 |
Pay Versus Performance
| (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
Pay Versus Performance
| Year | Average Year End Fair Value of Equity Awards Granted in the Current Year | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2023 | $2,032,116 | $309,243 | $286,517 | ($1,373) | – | – | $2,626,503 |
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| (b) The amounts included in these columns are $0.00 since none of the Named Executive Officers participated in a pension benefit program in Fiscal Year 2023. |
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| (5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
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| (6) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the S&P 500 – Healthcare Sector index. |
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| (7) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
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| (8) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, as adjusted to exclude losses or gains on the disposal of equipment, other Financial Performance Measures income or loss, loss on debt extinguishment, bargain purchase gains, loss on de-consolidation of joint ventures and non-cash equity compensation. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s Named Executive Officers, for the most recently completed fiscal year, to Company performance. |
Pay Versus Performance
Financial Performance Measures As described in greater detail in the Compensation Discussion and Analysis section. the Company’s executive compensation program reflects a pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short- term incentive awards are selected based on an objective of incentivizing our Named Executive Officers to increase the value of our enterprise for our shareholders. The most important financial performance measures used by the Company to link executive compensation actually paid to the Company’s Named Executive Officers, for the most recently completed fiscal year, to the Company’s performance are as follows:
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| 1. | Adjusted EBITDA |
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| 2. | Total Shareholder Return (via equity grants); and |
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| 3. | Strategic Objectives (via discretionary bonus). |
Pay Versus Performance
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the Compensation Discussion and Analysis section, the Company’s executive compensation program reflects a pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and TSR Compensation Actually Paid and Net Income Compensation Actually Paid and Adjusted EBITDA EQUITY COMPENSATION PLAN INFORMATION We have one active equity compensation plan, our Equity Incentive Plan. The Equity Incentive Plan provides for the grant of stock options (incentive and non-qualified), stock awards (including RSUs), stock appreciation rights and cash awards. As of December 31, 2023, we have reserved an aggregate 20,100,000 shares of common stock for issuance under our Equity Incentive Plan, subject to adjustment for stock dividends, reorganizations, or other changes in our capital structure and 4,069,349 common shares remained available for potential future issuance. Shares underlying any portion of an award that is cancelled, terminates, expires, or lapses for any reason are generally returned to the available pool under the Equity Incentive Plan. Shares attributable to (a) shares of common stock upon the exercise of incentive stock options that are subsequently forfeited or repurchased, or (b) awards transferred under any award transfer program, shall not again be available for grant under the Equity Incentive Plan. In connection with our acquisition of DeepHealth Inc. on June 1, 2020, we assumed the DeepHealth, Inc. 2017 Stock Incentive Plan and its then-outstanding stock options held to acquire DeepHealth, Inc. stock. After giving effect to subsequent exercises, at December 31, 2023 these assumed stock options were exercisable for up to 72,219 shares of RadNet common stock. No additional awards will be granted under the DeepHealth Inc. 2017 Stock Incentive Plan. The following table sets forth the number of shares of common stock subject to outstanding options, RSUs, warrants and other convertible securities into share rights, the weighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants as of December 31, 2023.
Pay Versus Performance
| Plan Category | (A) Number of Shares to Be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#)(1)(2) | (B) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights ($) | (C) Number of Shares Remaining Available For Future Issuance Under Equity Incentive Plans (Excluding Shares Reflected in Column (A)) | | Equity incentive plans approved by stockholders | 1,206,360 | $14.75 | 3,774,400 | | Equity incentive plans not approved by stockholders | – | – | – | | TOTAL | 1,206,360 | $14.75 | 3,774,400 |
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_______________
Pay Versus Performance
| (1) Includes 294,949 shares subject to outstanding RSUs under the NDC Plan. The weighted average exercise price in column (B) does not take these RSUs into account. |
Pay Versus Performance
| (2) Does not include options outstanding under the DeepHealth, Inc. 2017 Stock Incentive Plan as no further awards will be made under that plan. On an aggregate basis, the number of securities to be issued upon the exercise of outstanding options originally held pursuant to the DeepHealth, Inc. 2017 Stock Incentive plan was 72,219 on December 31, 2023, and the weighted average exercise price was $0.00. |
Pay Versus Performance
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table presents information concerning the beneficial ownership of the shares of our common stock as of March 31, 2024, by:
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| ● | each person we know to be the beneficial owner of 5% or more of our outstanding shares of common stock; |
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| ● | each of our Named Executive Officers; |
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| ● | each of our directors; and |
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| ● | all of our current executive officers and directors as a group. |
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Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o RadNet, Inc., 1510 Cotner Ave., Los Angeles, CA 90025. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws. Percentage ownership is based on 73,890,704 shares of common stock outstanding on March 31, 2024. In accordance with Securities and Exchange Commission (the “SEC”) rules, when computing the number of shares of common stock beneficially owned and the percentage ownership of a person, we include shares of common stock subject to options held by that person that are exercisable or will become exercisable within 60 days of March 31, 2024, but we do not include those shares of common stock underlying options when computing the percentage ownership of any other person.
Pay Versus Performance
| Name of Beneficial Owner | Shares Beneficially Owned | Percent of Shares Beneficially Owned | | 5% or Greater Stockholders | | | | BlackRock, Inc. | 8,894,317(1) | 12.04% | | Sandy Nyholm Kaminsky, trustee of the HFB Heirs’ Trust II | 5,376,253(2) | 7.28% | | The Vanguard Group | 4,254,717(3) | 5.76% | | Directors, Nominees and Named Executive Officers | | | | Howard G. Berger, M.D. | 119,550(4) | * | | Stephen M. Forthuber | 768,824(5) | 1.04% | | Christine N. Gordon | 11,379(6) | * | | Norman R. Hames | 469,912(7) | * | | Laura P. Jacobs | 21,717(8) | * | | Lawrence L. Levitt | 190,066(9) | * | | Mital Patel | 373,620(10) | * | | A. Gregory Sorensen, M.D. | 1,333,597(11) | 1.80% | | Gregory E. Spurlock | 14,334(12) | * | | Mark D. Stolper | 277,685(13) | * | | David L. Swartz | 258,495(14) | * | | All directors and executive officers as a group (14 persons) | 3,829,179(15) | 5.12% |
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| * Represents less than 1%. |
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| (1) According to a Schedule 13G/A filed with the SEC on January 23, 2024, BlackRock, Inc. maintains sole voting power over 8,782,211 shares of our common stock and sole dispositive power over 8,894,317 shares of our common stock. The address set forth in the Schedule 13G/A filing is 50 Hudson Yards, New York, NY 10001. |
Pay Versus Performance
| (2) According to a Schedule 13G/A filed with the SEC on October 6, 2017, Sandy Nyholm Kaminsky, as trustee of the HFB Heirs’ Trust II, maintains sole voting power and sole dispositive power over 5,376,253 shares of our common stock. The address set forth in the Schedule 13G filing is 400 S. Emerson Street, Denver, Colorado 80209. On June 29, 2015, HFB Enterprises, LLC, of which Dr. Berger was a co-manager, distributed 5,133,114 shares of RadNet’s common stock to HFB Heirs’ Trust II (formerly HFB Heirs’ Trust), an irrevocable trust for Dr. Berger’s children and the sole member of HFB Enterprises, LLC. Dr. Berger does not have any control over HFB Heirs’ Trust II or beneficial ownership of any of shares of RadNet common stock held by the HFB Heirs’ Trust II. | | (3) According to a Schedule 13G/A filed with the SEC on February 13, 2024, The Vanguard Group maintains shared voting power over 110,970 shares of our common stock, sole dispositive power over 4,088,529 shares of our common stock and shared dispositive power over 166,188 shares of our common stock. The address set forth in the 13G/A filing is 100 Vanguard Blvd., Malvern, PA 19355. | | (4) Beneficial ownership includes (a) 69,314 shares subject to options exercisable within 60 days of March 31, 2024 and (b) 10,000 shares of common stock held by Dr. Berger’s spouse. | | (5) Beneficial ownership includes: (a) 28,134 shares of unvested time-based restricted stock, and (b) 205,263 shares subject to options exercisable within 60 days of March 31, 2024. | | (6) Beneficial ownership includes 3,329 shares of unvested time-based restricted stock. | | (7) Beneficial ownership includes: (a) 1,380 shares of unvested time-based restricted stock, (b) 153,803 shares subject to options exercisable within 60 days of March 31, 2024, and (c) 20,190 shares of common stock held by Mr. Hames’s spouse. | | (8) Beneficial ownership includes 4,066 shares of unvested time-based restricted stock. The securities reported are held through the Jacobs Family Trust, of which Ms. Jacobs is a co-trustee. | | (9) Beneficial ownership includes 4,066 shares of unvested time-based restricted stock. | | (10) Beneficial ownership includes (a) 11,857 shares of unvested time-based restricted stock, and (b) 130,974 shares subject to options exercisable within 60 days of March 31, 2024. Mr. Patel has pledged 182,545 shares of common stock in connection with a loan agreement. | | (11) Beneficial ownership includes (a) 60,094 shares of unvested time-based restricted stock, and (b) 62,964 shares subject to options exercisable within 60 days of March 31, 2024, and (b) 16,248 shares held in a family trust of which Dr. Sorensen is a beneficiary. | | (12) Beneficial ownership includes 4,066 shares of unvested time-based restricted stock. | | (13) Beneficial ownership includes 172,287 shares subject to options exercisable within 60 days of March 31, 2024. Beneficial ownership does not include 144,824 shares issuable upon settlement of vested restricted stock units and 24,891 shares issuable upon settlement of unvested time-based restricted stock units, which can be settled, at the Company’s election, in cash or shares. | | (14) Beneficial ownership includes: (a) 4,066 shares of unvested time-based restricted stock, and (b) 37,019 shares of common stock held by Mr. Swartz’s spouse. | | (15) Beneficial ownership includes (a) 791,735 shares subject to options exercisable within 60 days of March 31, 2024, and (b) 60,964 shares of unvested time-based restricted stock. |
Pay Versus Performance
DELINQUENT SECTION 16(a) REPORTS Section 16(a) of the Exchange Act requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. Based solely on copies of these reports provided to us and written representations that no other reports were required, we believe that these persons timely met all of the applicable Section 16(a) filing requirements during the fiscal year ended December 31, 2023, with the exception of one late report on Form 4 from Mital Patel which covered one gift transaction. REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS* The Audit Committee of the Board of Directors is comprised entirely of independent directors who meet the independence requirements of NASDAQ and the SEC. The Audit Committee operates pursuant to a charter that is available on our website at www.radnet.com under Investor Relations – Corporate Governance. The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. Management is responsible for the preparation, presentation and integrity of the financial statements, including establishing accounting and financial reporting principles and designing systems of internal control over financial reporting. Our independent registered public accounting firm, Ernst & Young LLP (“Ernst & Young”), is responsible for expressing an opinion as to the conformity of our consolidated financial statements with generally accepted accounting principles. The Audit Committee reviewed and discussed with management and Ernst & Young the audited consolidated financial statements in our annual report on Form 10-K for the year ended December 31, 2023. The Audit Committee also discussed with Ernst & Young matters required to be discussed by the Public Company Accounting Oversight Board and the SEC. The Audit Committee has received the written disclosures and the letter from Ernst & Young required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young its independence. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements discussed above be included in RadNet’s annual report on Form 10-K for the year ended December 31, 2023 for filing with the SEC. The Audit Committee has also reappointed Ernst & Young to serve as independent auditors for the fiscal year ending December 31, 2024, and requested that this appointment be submitted to our stockholders for ratification at their Annual Meeting. Submitted by the Audit Committee:
Pay Versus Performance
| David L. Swartz, Chair Lawrence L. Levitt Laura P. Jacobs |
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* The material in this report is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act whether made before or after the date of this Proxy Statement and irrespective of any general incorporation language therein.