NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Thursday, August 10, 2023
To the Stockholders of CorVel Corporation:
You are cordially invited to attend the 2023 Annual Meeting of Stockholders of CorVel Corporation (the “Company,” “we,” “us,” and “our”) to be held on Thursday, August 10, 2023, at 1:00 p.m. Pacific Time (the “Annual Meeting”). The Annual Meeting will be held at our office at 1920 Main Street, Suite 900, Irvine, California 92614. This notice and the attached proxy statement (the “Proxy Statement”) describe the formal business to be transacted at the Annual Meeting or any adjournment or postponement thereof.
We are furnishing proxy materials to our stockholders over the Internet. You may read, print, and download our proxy statement and our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 at https://materials.proxyvote.com/221006. On or about June 30, 2023 we mailed our stockholders a notice of internet availability of proxy materials (the “Notice”), which provides instructions regarding how to access these materials and vote their shares. The Notice also explains how to request a paper copy of these materials. If you requested to receive these proxy materials via email, you should have received an email with voting instructions and links to these materials on the internet.
The accompanying Proxy Statement provides information regarding the following matters we are asking you to consider and vote upon at the Annual Meeting:
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To elect the six directors named in the attached Proxy Statement, each to serve until the 2024 annual meeting of our stockholders or until his or her successor has been duly elected and qualified; |
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2. |
To ratify the appointment of Haskell & White LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2024; |
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3. |
To approve on a non-binding advisory basis the compensation of our named executive officers; and |
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To approve on a non-binding advisory basis the frequency of future stockholder advisory votes to approve the compensation of our named executive officers. |
We may also consider and vote upon any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. As of the date of this Proxy Statement, we are not aware of any business to be presented for consideration at the Annual Meeting other than the matters described in this Proxy Statement.
The Board of Directors of the Company (the “Board”) has set June 16, 2023 as the record date for the Annual Meeting. Only stockholders of record of our Common Stock as of the close of business on that date will be able to attend, vote and submit questions during the Annual Meeting.
The Board has determined that the matters to be considered at the Annual Meeting are in the best interests of the Company and its stockholders. For the reasons set forth in the Proxy Statement, the Board unanimously recommends a vote “FOR ALL” of the director nominees listed in Proposal One, “FOR” Proposals Two and Three, and for every “THREE YEARS” for Proposal Four.
CORVEL CORPORATION
PROXY STATEMENT
FOR THE
2023 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This proxy statement (this “Proxy Statement”) is being furnished to the stockholders of CorVel Corporation, a Delaware corporation (the “Company,” “we,” “us,” and “our”) on behalf of the Board of Directors of the Company (the “Board”) in connection with the solicitation of proxies for use at the 2023 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to be held on Thursday, August 10, 2023, at 1:00 p.m. Pacific Time, and at any adjournment or postponement thereof. The Annual Meeting will be held at our office located at 1920 Main Street, Suite 900, Irvine, California, 92614.
Notice of Internet Availability of Proxy Materials
Pursuant to the Securities and Exchange Commission’s (the “SEC”) “notice and access” rules, which allow companies to furnish their proxy materials over the Internet, have elected to furnish our proxy materials, including this Proxy Statement, our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (our “2023 Annual Report”), primarily via the Internet. Accordingly, on or about June 30, 2023, we mailed to our stockholders a Notice, which provides instructions regarding how to access our proxy materials on the Internet, how to vote upon the proposals to be voted upon at the Annual Meeting, and how to request paper copies of this Proxy Statement and our 2023 Annual Report. Stockholders may request to receive all future proxy materials from us in printed form by mail or electronically by email by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of proxy materials on the Internet to help reduce the environmental impact of our Annual Meeting.
You may read, print and download the proxy materials at https://materials.proxyvote.com/221006.
QUESTIONS AND ANSWERS REGARDING THE ANNUAL MEETING
Please carefully review the following, which is intended to provide general information about the Annual Meeting, including the date and time of the Annual Meeting, the quorum requirement, the proposals to be voted upon, the methods available for voting your shares, and the votes required to adopt the proposals. This information is also intended to provide you with the specific information that is required to be provided under the rules and regulations of the SEC. If you have questions about the information provided, or would like to request additional information about the Annual Meeting or the proposals to be voted upon, refer to the section entitled “Whom should I contact with other questions?” below.
Why did I receive these materials?
The Board is soliciting your proxy to vote at the Annual Meeting or any postponement or adjournment thereof. You should review the proxy materials carefully as they give important information about the proposals that will be voted upon at the Annual Meeting, as well as other important information regarding the Company. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote your shares using one of the other voting methods described in this Proxy Statement.
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you have the right to direct your nominee on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, if you are not the holder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid legal proxy or obtain a control number from your bank, broker, dealer or other nominee. Please contact your nominee directly for additional information. |
What are the voting rights of the holders of our Common Stock?
As of the Record Date, we had 17,200,721 shares of Common Stock outstanding and approximately 755 holders of record according to information provided by our transfer agent. Holders of shares of our Common Stock are each entitled to one vote per share on any matter that is submitted for stockholder approval. As of the Record Date, we had no shares of preferred stock outstanding. Cumulative voting is not permitted with respect to the election of directors.
What constitutes a quorum for the Annual Meeting?
The presence at the Annual Meeting, or by proxy, of the holders of a majority of the outstanding shares of our Common Stock entitled to vote as of the Record Date will constitute a quorum, permitting business to be conducted at the Annual Meeting.
The inspector of election for the Annual Meeting will determine the number of shares of Common Stock represented at the Annual Meeting, the existence of a quorum and the validity and effect of proxies, and will count and tabulate ballots and votes and determine the results thereof. Properly voted proxies received but marked as abstentions, as well as shares for which authority is withheld and broker non-votes, will be included in the calculation of the number of shares considered to be present at the Annual Meeting for purposes of determining a quorum. For additional information regarding broker non-votes, refer to the section entitled “What is the effect of broker non-votes on the proposals?” below.
What are the voting requirements to approve each of the proposals?
The voting requirements to approve each of the proposals to be voted upon at the Annual Meeting, as well as the effects of withheld votes, votes against, abstentions and broker non-votes on each of the proposals, are as follows:
Proposal One: The election of each of our director nominees requires a plurality of the votes cast by the shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote thereon, which means the six director nominees receiving the highest number of votes at the Annual Meeting will be elected, even if those votes do not constitute a majority of the votes cast. Stockholders may vote “FOR ALL,” “WITHHOLD ALL,” or “FOR ALL EXCEPT” with respect to the director nominees nominated for re-election under this Proposal One. A “WITHHOLD” vote with respect to a director nominee will not count as a vote cast for that or any other nominee, and thus will have no effect on the outcome of the vote on this proposal. Broker non-votes will not count as votes cast on this proposal and will have no effect on the outcome of the vote on this proposal.
Proposal Two: The ratification of Haskell & White LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2024 (“fiscal year 2024”) requires the affirmative vote of the holders of our Common Stock representing a majority of the voting power present or represented by proxy and entitled to vote upon the proposal at the Annual Meeting. Stockholders may vote “FOR,” “AGAINST,” or “ABSTAIN” from voting on Proposal Two. Abstentions will have the same effect as a vote “AGAINST” this proposal. Because a bank, broker, dealer or other nominee may generally vote without instructions on this proposal, we do not expect any broker non-votes on this proposal.
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What is the deadline for submitting a stockholder proposal or director nomination for the 2024 Annual Meeting?
Stockholders wishing to make a director nomination, or bring another proposal, before the 2024 Annual Meeting (but not include it in our proxy materials for the meeting) must provide written notice of such proposal to the Secretary at our principal executive offices at 5128 Apache Plume Road, Suite 400, Fort Worth, Texas 76109, Attention: Corporate Secretary. Such proposals must be received not later than the close of business on Friday, May 13, 2024. Pursuant to Rule 14a-4(c)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), if a stockholder proposal is received after Thursday, May 16, 2024, it will be considered untimely and our proxyholders will use their discretionary voting authority to vote the shares they represent as the Board may recommend. Any stockholder proposal or director nomination must comply with the other provisions of the Amended and Restated Bylaws of the Company (the “Bylaws”) and be submitted in writing to the Corporate Secretary at our principal executive offices.
Stockholder proposals pursuant to SEC Rule 14a-8 for inclusion in our proxy statement and form of proxy for our 2024 Annual Meeting must be received at our principal executive offices not later than the close of business on Friday, March 4, 2024.
In addition, stockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must provide notice in compliance with the universal proxy rules that sets forth the information required by Rule 14a-19 of the Exchange Act, not later than Tuesday, June 11, 2024, assuming we do not change the date of the 2024 Annual Meeting by more than 30 days from the anniversary of the Annual Meeting. If we change the date of the meeting by more than 30 days from the anniversary of the Annual Meeting, then notice must be provided by the later of 60 calendar days prior to the date of the 2024 Annual Meeting or the tenth calendar day following the day on which we first make a public announcement of the date of such annual meeting.
Whom should I contact with other questions?
If you have additional questions about this Proxy Statement or the Annual Meeting, or if you would like additional copies of this Proxy Statement, please contact: CorVel Corporation, 5128 Apache Plume Road,
Suite 400, Fort Worth, Texas 76109, Attention: Corporate Secretary, Telephone: (817) 390-1416.
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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE
ELECTION OF DIRECTORS
Board Structure and Membership
We currently have six directors serving on our Board and one vacancy. The Fourth Amended and Restated Certificate of Incorporation of the Company (our “Certificate of Incorporation”) provides that any additional directorships resulting from an increase in the number of directors, or the vacancy that currently exists on the Board, may be filled by a majority of the directors then in office. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified. We may reduce or increase the size of the Board by resolution adopted by the affirmative vote of a majority of the directors.
Our Certificate of Incorporation and Bylaws also provide that directors elected at an annual meeting of stockholders will serve for a one-year term ending on the date of the following annual meeting of stockholders or until his or her successor has been duly elected and qualified. The term may be shorter if such individual resigns, becomes disqualified or disabled, or is otherwise removed.
Our Board has nominated the six individuals listed below for re-election at the Annual Meeting. If elected at the Annual Meeting, each director nominee would serve for a one-year term ending on the date of our 2024 Annual Meeting or until his or her successor has been duly elected and qualified. The term may be shorter if such individual resigns, becomes disqualified or disabled, or is otherwise removed, and the Board will consist of six persons on the Board. Each nominee is currently serving as a director and has indicated his or her willingness to continue to serve as a director if re-elected. In the event that any such nominee becomes unable or declines to serve at the time of the Annual Meeting, the proxyholders may exercise discretionary authority to vote for a substitute person selected and recommended by our Nomination and Governance Committee and approved by the Board.
Recommended Vote
The election of each of our director nominees requires a plurality of the votes cast by the shares of Common Stock present or represented by proxy at the Annual Meeting and entitled to vote thereon. This means that the nominees receiving the highest number of votes at the Annual Meeting will be elected, even if those votes do not constitute a majority of the votes cast. Stockholders may vote “FOR ALL,” “WITHHOLD ALL,” or “FOR ALL EXCEPT” with respect to the director nominees nominated for re-election under this Proposal One. A “WITHHOLD” vote with respect to a director nominee will not count as a vote cast for that or any other nominee, and thus will have no effect on the outcome of the vote on this proposal.
This proposal is considered a non-routine matter under applicable stock exchange rules. A bank, broker, dealer or other nominee may not vote without instructions on this matter, so there may be broker non-votes in connection with this proposal. Broker non-votes will not count as votes cast on this proposal, and thus will have no effect on the outcome of the vote.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR ALL” OF THE DIRECTOR NOMINEES.
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Information Regarding Director Nominees
The following table lists the persons recommended by our Nomination and Governance Committee, and nominated by the Board, to be re-elected as directors to serve for a period of one year, including relevant information as of March 31, 2023:
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| Name |
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Age |
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Position |
| V. Gordon Clemons |
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79 |
|
Chairman of the Board |
| Steven J. Hamerslag (1) (3) |
|
66 |
|
Director |
| Alan R. Hoops (1) (2) |
|
75 |
|
Director |
| R. Judd Jessup (1) |
|
75 |
|
Director |
| Jean H. Macino (2) |
|
80 |
|
Director |
| Jeffrey J. Michael (2) (3) |
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66 |
|
Director |
| (1) |
Member of the Audit Committee. |
| (2) |
Member of the Compensation Committee. |
| (3) |
Member of the Nomination and Governance Committee. |
V. Gordon Clemons. Mr. Clemons has served as our Chairman of the Board since April 1991. He served as our Chief Executive Officer from January 1988 until August 2007 and as our President from January 1988 until May 2006. He was reappointed as our Chief Executive Officer and President in April 2012 and served in the role of Chief Executive Officer until January 2019 and President until April 2017. Mr. Clemons was President of Caremark, Inc., a home intravenous therapy company, from May 1985 to September 1987, at which time Caremark was purchased by Baxter International, Inc. From 1981 to 1985, Mr. Clemons was President of INTRACORP, a medical management company and subsidiary of CIGNA Corporation. Mr. Clemons has over 41 years of experience in the healthcare and insurance industries. The Board believes Mr. Clemons is qualified to serve as Chairman of the Board given his extensive technology, industry, management and operational experience and his substantial understanding of the Company and its operations resulting from his various positions of leadership, including his position as Chief Executive Officer and President.
Steven J. Hamerslag. Mr. Hamerslag has served as one of our directors since May 1991. Mr. Hamerslag has been Managing Partner of TVC Capital, a venture capital firm, since April 2006, and Managing Director of Titan Investment Partners, a venture capital firm, since November 2002. Mr. Hamerslag served as the President and Chief Executive Officer of J2Global Communications, a publicly held unified communication services company, from June 1999 until January 2001. Mr. Hamerslag served as the Chief Executive Officer of MTI Technology Corporation, a publicly held manufacturer of enterprise storage solutions, from 1987 to 1996. The Board believes Mr. Hamerslag’s valuable business, leadership and executive management experience, particularly in the technology industry, qualifies him to serve as a director.
Alan R. Hoops. Mr. Hoops has served as one of our directors since May 2003. Mr. Hoops has been Executive Chairman of Health Essentials, a physician medical group specializing in hospice care, pharmacy and durable medical equipment services for medically complex and frail-elderly patients, since 2012. Mr. Hoops was Chairman of the Board and Chief Executive Officer of CareMore California Health Plan, a health maintenance organization, from March 2006 to February 2012. Mr. Hoops was Chairman of Benu, Inc., a regional benefits administration/marketing company, from 2000 to March 2006, and Chairman of Enwisen, Inc., a human resources services software company, from 2001 to March 2006. Mr. Hoops was Chief Executive Officer and a Director of Pacificare Health Systems, Inc., a national health consumer services company, from 1993 to 2000. Mr. Hoops has 46 years of experience in the healthcare and managed care industries. The Board believes Mr. Hoops’ experience as the Chief Executive Officer and Director of Pacificare Health Systems, Inc., combined with his strong operational and strategic background and extensive public company experience, qualifies him to serve as a director.
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R. Judd Jessup. Mr. Jessup has served as one of our directors since August 1997. Mr. Jessup was Chief Executive Officer of CombiMatrix Corporation, a molecular diagnostics laboratory, from August 2010 to March 2013. Mr. Jessup was Chief Executive Officer of U.S. LABS, a national laboratory which provides cancer
diagnostic and genetic testing services, from 2002 to 2005. Mr. Jessup was President of the HMO Division of FHP International Corporation, a diversified health care services company, from 1994 to 1996. From 1987 to 1994, Mr. Jessup was President of TakeCare, Inc., a publicly held HMO operating in California, Colorado, Illinois and Ohio, until it was acquired by FHP. Mr. Jessup has 44 years of experience in the healthcare and managed care industries. Mr. Jessup was a director of CombiMatrix Corporation from August 2010 to November 2017, a director of Xifin, Inc., a laboratory billing systems company, from January 2006 to August 2013, a director of Superior Vision Services, a national managed vision care plan, from December 2007 to April 2012, and a director of Accentcare from October 2005 to February 2008. The Board believes Mr. Jessup is qualified to serve as a director because he has significant executive experience with the strategic, financial, and operational requirements of large health care services organizations, including serving as an Audit Committee chair, and brings to the Board senior leadership, health industry, and financial experience.
Jean H. Macino. Ms. Macino has served as one of our directors since February 2008. Ms. Macino has served on the Board of Governors of Chapman University for the past eleven years and currently serves as Chairman of the Governorship Committee of Chapman University. Ms. Macino was Managing Director of the Newport Beach office of Marsh, Inc. from 1995 to 2005, and Managing Director of Marsh and McLennan Companies, an insurance broker and strategic risk advisor, from 1980 to 1995. Ms. Macino has over 41 years of experience in the insurance brokerage industry. The Board believes Ms. Macino’s executive leadership experience, strong sales and marketing expertise in the insurance brokerage industry qualifies her to serve as a director.
Jeffrey J. Michael. Mr. Michael has served as one of our directors since September 1990. Mr. Michael has been President, Chief Executive Officer and a Director of Corstar Holdings, Inc., one of our significant stockholders and a holding company owning equity interests in CorVel since March 1996. The Board believes Mr. Michael’s experience as the President, Chief Executive Officer and Director of Corstar Holdings, Inc., combined with his strong operational and strategic background and extensive public company experience, qualifies him to serve as a director.
Corporate Governance, Board Composition and Board Committees
Independent Directors
Our Common Stock is listed on The Nasdaq Global Select Market (“Nasdaq”). Under Nasdaq listing standards, independent directors must comprise a majority of a listed company’s board of directors. In addition, the listing standards require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and corporate governance and nominating committees be independent. Audit committee members and compensation committee members must also satisfy the independence criteria set forth in Rule 10A-3 and Rule 10C-1, respectively, under the Exchange Act. Further, Nasdaq listing standards provide that a director only qualifies as “independent” if, in the opinion of the listed company’s board of directors, the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director with that listed company.
To be considered independent pursuant to Rule 10A-3 and Nasdaq listing standards, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (a) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries, or (b) be an affiliated person of the listed company or any of its subsidiaries.
To be considered independent pursuant to Rule 10C-1 and Nasdaq listing standards, the board of directors must affirmatively determine that each member of the compensation committee is independent, including a consideration of all factors specifically relevant to determining whether the director has a relationship to the
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company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (a) the source of compensation of such director, including any consulting, advisory, or other compensatory fee paid by the company to such director, and (b) whether such director is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company.
The Board undertook a review of its composition, the composition of its committees, and the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his or her background, employment, and affiliations, including family relationships, the Board has determined that each of Ms. Macino and Messrs. Hamerslag, Hoops, Jessup, and Michael do not have relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and that each of these directors is “independent” as that term is defined under the applicable rules of the SEC and Nasdaq listing standards. Mr. Clemons is not independent under Nasdaq’s listing standards since he is an executive officer of the Company.
In making these determinations, the Board considered the current and prior relationships that each non-employee director has with our Company and all other facts and circumstances the Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director, and the transactions involving them described in the section entitled “Certain Relationships and Related-Person Transactions.” There are no family relationships among any of our directors or executive officers.
Board Leadership Structure and Risk Oversight
The Board does not have a policy regarding the separation of the roles of the Chief Executive Officer and Chairman of the Board as the Board believes it is in the best interest of the Company to make that determination based on the position and direction of the Company and the membership of the Board from time to time. In determining the appropriate structure, the Board considers multiple factors, including our business and strategic needs and the composition of the Board. At this time, the Board has determined that separating the roles of the Chief Executive Officer and the Chairman of the Board is an appropriate structure for our succession planning priorities. This structure allows our Chief Executive Officer to focus on the day-to-day operation and management and the Chairman to focus on leading the Board and overseeing the interests of the Company and stockholders. Over the last 30 years, our Chairman, Mr. Clemons, has been building a knowledge of the Company and its industry making him well-positioned to preside over the Board and provide constructive and informed guidance to management. Our Chief Executive Officer, Michael G. Combs, who started at the Company as a software engineer in 1991, leverages his deep understanding of the business to identify and execute key opportunities for the success of the Company. While our board structure fulfills the needs of the Company at the time, our Board regularly assesses the leadership structure and considers the advantages and disadvantages of separating the roles of the Chairman and Chief Executive Officer, taking into consideration the recommendations of the stockholders, as well as the Company’s needs at the time.
The Board has a policy that if the Chairman of the Board does not qualify as an independent director, the independent directors of the Board will select one of the independent directors to be the “Lead Independent Director.” Since our Chairman of the Board currently does not qualify as an independent director, the Board has designated Mr. Jessup as the Lead Independent Director. The Lead Independent Director has the following duties and responsibilities: (a) acting as Chair of the meetings of the independent directors; (b) working with the Chairman of the Board and the Chief Executive Officer to ensure the Board has adequate resources, especially by way of full, timely and relevant information to support its decision-making requirements; (c) serving as a conduit of information between the independent directors and the Chairman of the Board, the Chief Executive Officer and other members of management; (d) reviewing annually the purpose of the committees of the Board and
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through the Nomination and Governance Committee, recommending to the Board any changes deemed necessary or desirable to the purpose of the committees and whether any committees should be created or discontinued; (e) being available as a resource to consult with other Board members on corporate governance practices and policies; and (f) such other responsibilities and duties as the Board shall designate. The Board believes that this current leadership structure, in which the office of Chairman of the Board is held by one individual and an independent director acts as Lead Independent Director, provides for dynamic Board leadership and enhances our ability to execute our business and strategic plans, while maintaining strong independence for Board decisions and oversight.
The Board oversees an enterprise-wide approach to risk management that is designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. In setting our business strategy, the Board assesses the various risks being mitigated by management and determines what constitutes an appropriate level of risk for us.
While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the Audit Committee focuses on financial risk, including internal controls. Risks related to our compensation programs are reviewed by the Compensation
Committee and legal and regulatory compliance risks are reviewed by the Nomination and Governance Committee. The Board is advised by the committees of significant risks and management’s response through periodic updates. In addition, our Chief Executive Officer reports to the Board annually regarding cybersecurity risk.
We believe that our compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage significant risks; are compatible with effective internal controls and the risk management practices of the Company; and are supported by the oversight and administration of our Compensation Committee with regard to executive compensation programs.
We believe that the Board as a whole should encompass a range of talent, skill, diversity and expertise enabling it to provide sound guidance with respect to our operations and interests. In addition to considering a candidate’s background and accomplishments, our Nomination and Governance Committee reviews candidates in the context of the current composition of the Board and the evolving needs of our business. The Nomination and Governance Committee considers many forms of diversity in identifying director nominees in an effort to nominate directors with a variety of complementary skills and backgrounds so that as a group, the Board will possess the appropriate talent, skills, insight and expertise to oversee our business.
Diversity, Equity and Inclusion
Diversity, equity and inclusion are core to the Company’s values and instrumental in delivering stronger business growth. We believe the more diverse our backgrounds and experiences, the more we can achieve together working side by side. We are committed to recruiting the most qualified people for the job regardless of gender, ethnicity or other protected traits and to complying fully with all domestic, foreign and local laws relating to discrimination in the workplace. Additionally, we believe in providing opportunities for career progression for our people and, as such, we strive to fill our open positions with internal talent whenever possible. Our Company’s greatest strength and resource is the talent of our employees.
To ensure that our leaders and employees model fairness and inclusivity in their behaviors, our leaders have completed diversity, equity and inclusion training and such training is mandated for all employees. We are proud of having a diverse workforce and remain committed to increasing the empowerment of women and minorities across our operations.
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As of March 31, 2023, over a third of our employees identify as racially or ethnically diverse. Additionally, over 80% of our employees identify as women, and over 72% of the Company’s managers identify as women as of March 31, 2023.
Board Structure and Committees
The Board has a standing Audit Committee, Compensation Committee and Nomination and Governance Committee. The Board and its committees set schedules to meet throughout the year, and can also hold special meetings and act by written consent from time to time as appropriate. The independent directors of the Board also hold separate regularly scheduled executive session meetings at least twice a year at which only independent directors are present. The Board has delegated various responsibilities and authority to its committees as generally described below. The committees regularly report on their activities and actions to the full Board. Each member of each committee of the Board qualifies as an independent director in accordance with the Nasdaq standards described above. Each committee of the Board has a written charter approved by the Board. A copy of each charter is posted on our website at https://www.corvel.com/investors under the Governance section. The inclusion of any website address in this Proxy Statement does not include or incorporate by reference the information on that website into this Proxy Statement or our 2023 Annual Report.
Audit Committee
Our Audit Committee reviews and monitors our corporate financial statements and reporting and our internal and external audits. The committee’s purpose is to, among other things, oversee our internal controls and audit functions, the results and scope of the annual audit of our financial statements and other services provided by our independent registered public accounting firm, and our compliance with legal matters that have a significant impact on our financial statements. The committee also consults with our management and our independent registered public accounting firm prior to the presentation of financial statements and, as appropriate, initiates inquiries into aspects of our financial affairs.
Our Audit Committee has established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding accounting or auditing matters. In addition, the committee is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm, including approving services and fee arrangements. In accordance with the Audit Committee’s charter and policies regarding transactions with related persons, all related-person transactions are approved or ratified by the committee. Please see the information set forth in the section entitled “Certain Relationships and Related-Person Transactions” in this Proxy Statement for additional details. The current members of our Audit Committee are Messrs. Hamerslag, Hoops and Jessup. The committee held four meetings by telephonic conference calls during our fiscal year ended March 31, 2023 (“fiscal year 2023”).
Each member of our Audit Committee meets the independence and experience standards set forth under applicable Nasdaq and SEC rules, and each member can read and understand fundamental financial statements. In addition, the Board has determined that Mr. Hamerslag qualifies as an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended.
Compensation Committee
The Compensation Committee of the Board reviews and approves our general compensation policies and all forms of compensation to be provided to our executive officers and directors, including, among other things, annual salaries, bonuses, and stock option and other incentive compensation arrangements. In addition, V. Gordon Clemons, the Chairman of the Board and an executive officer, reviews and approves in coordination with the committee the compensation of Michael G. Combs, our Chief Executive Officer. Further, Mr. Combs reviews and approves in coordination with the committee the compensation of our other executive officers.
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The committee also administers the CorVel Corporation Restated 1991 Employee Stock Purchase Plan (the “ESPP”) and the CorVel Corporation Restated Omnibus Incentive Plan (formerly the Restated 1988 Executive Stock Option Plan) (the “Omnibus Incentive Plan”), including reviewing and granting stock options. Our Compensation Committee also reviews and approves various other issues related to our compensation policies and matters. The committee may form, and delegate any of its responsibilities to, a subcommittee so long as such subcommittee consists solely of at least two independent members of the Compensation Committee. The current members of our Compensation Committee are Messrs. Hoops and Michael and Ms. Macino. The committee held one video teleconference meeting and acted by unanimous written consent on five occasions during fiscal year 2023.
Compensation Risk Assessment. The Compensation Committee, in collaboration with management is responsible to review the rewards that may be derived from our compensation program for all employees, including our executive officers, to assess whether the program encourages excessive or unnecessary risk-taking. We have assessed our compensation program and have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Management assessed the Company’s executive and broad-based compensation and benefits programs to determine if the programs’ provisions and operations create undesired or unintentional risk of a material nature. This risk assessment process included a review of program policies and practices; program analysis to identify risk and risk control related to the programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward, risk control, and the support of the programs and their risks to Company strategy. Although we reviewed all compensation programs, we focused on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. Our egalitarian culture supports the use of base salary, performance-based compensation, and retirement plans that are generally uniform in design and operation throughout the Company and with all levels of employees. In most cases, the compensation policies and practices are centrally designed and administered, and are substantially identical at each business unit. Field sales personnel are paid a base salary and a sales commission, but all of our executive officers are paid under the programs and plans for non-sales employees. Certain internal groups have different or supplemental compensation programs tailored to their specific operations and goals.
Based on the foregoing, we believe that our compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage significant risks; are compatible with effective internal controls and the risk management practices of CorVel; and are supported by the oversight and administration of the compensation committee with regard to executive compensation programs.
Nomination and Governance Committee
The Nomination and Governance Committee of the Board reviews and reports to the Board on a periodic basis with regard to matters of corporate governance, and reviews, assesses and makes recommendations on the effectiveness of our corporate governance policies. In addition, the committee reviews and makes recommendations to the Board regarding the size and composition of the Board and the appropriate qualities and skills required of our directors in the context of the then-current make-up of the Board. This includes an assessment of each candidate’s independence, personal and professional integrity, diversity, financial literacy or other professional or business experience relevant to an understanding of our business, ability to think and act independently and with sound judgment, and ability to serve us and our stockholders’ long-term interests. These factors, and others as considered useful by the committee, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. As a result, the priorities and emphasis of the Nomination and Governance Committee and of the Board may change from time to time to take into account changes in business and other trends, as well as the portfolio of skills and experience of current and prospective directors. Although the committee does not have a formal policy with respect to diversity, it has a well-established process to identify director nominees and, as indicated above, considers diversity when evaluating candidates for director nominees.
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PROPOSAL THREE
NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with applicable SEC rules. The Company’s stockholders have expressed a preference for holding such a vote every three years and the Company anticipates that it will continue to hold a say-on-pay vote every three years for the foreseeable future.
Our goal for our executive compensation program is to attract, motivate and retain a talented, entrepreneurial and creative team of executives who will provide leadership for our success, and thereby increase stockholder value. We believe that our executive compensation program satisfies this goal, has supported and contributed to our recent and long-term success and is strongly aligned with the long-term interests of our stockholders. We urge stockholders to read the sections titled “Executive Compensation” and “Certain Relationships and Related-Person Transactions” elsewhere in this Proxy Statement for additional details about our executive compensation programs, including information about the compensation of our named executive officers in fiscal year 2023.
We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the stockholders of CorVel Corporation approve, on an advisory basis, the compensation of the named executive officers, as disclosed in CorVel’s Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC.”
This say-on-pay vote is advisory, and therefore, is not binding on us, our compensation committee or the Board. The Board and our compensation committee value the opinions of our stockholders, and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we may review and consider the results of this advisory vote in future compensation deliberations.
Under the rules of the NYSE, brokers are prohibited from giving proxies to vote on executive compensation matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to this Proposal if you want your broker to vote your shares on this Proposal.
Vote Sought
The approval, on an advisory basis, of the holders of a majority of the shares of Common Stock present or represented and entitled to vote at the meeting is being sought to approve the compensation of our named executive officers as disclosed in this Proxy Statement.
Recommendation of the Board
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
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PROPOSAL FOUR
NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON OUR NAMED EXECUTIVE OFFICER COMPENSATION
Under the Dodd-Frank Act, public companies are generally required to include in their proxy solicitations at least once every six years an advisory vote on whether an advisory vote on named executive officer compensation (such as the say-on-pay proposal that is included in this Proxy Statement) should occur every one, two or three years. It is management’s belief, and the recommendation of the Board, that this non-binding advisory vote should occur every three years.
We believe we have effective executive compensation practices, as described in more detail elsewhere in this Proxy Statement. The Board believes that providing our stockholders with an advisory vote on named executive officer compensation every three years will encourage a long-term approach to evaluating our executive compensation policies and practices, consistent with our compensation committee’s long-term philosophy on executive compensation. In contrast, focusing on executive compensation over an annual or biennial period would focus on short-term results rather than long-term value creation, which is inconsistent with our compensation philosophy, and could be detrimental to us, our employees and our financial results.
Moreover, the Board does not believe that a short review cycle will allow for a meaningful evaluation of our performance against our compensation practices, as any adjustment in pay practices would take time to implement and to be reflected in our financial performance and in the price of our Common Stock. As a result, an advisory vote on executive compensation more frequently than every three years would not, in our judgment, allow stockholders to compare executive compensation to our performance.
Lastly, we believe that conducting an advisory vote on executive compensation every three years would allow us adequate time to compile meaningful input from stockholders on our pay practices and respond appropriately. This would be more difficult to do on an annual or biennial basis, and we believe that both we and our stockholders would benefit from having more time for a thoughtful and constructive analysis and review of our compensation policies.
For the above reasons, the Board recommends that stockholders vote to hold an advisory vote on named executive officer compensation every three years.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years, or you may abstain from voting when you vote in response to the resolution set forth below.
“RESOLVED, that the option of once every year, two years, or three years, that receives the highest number of votes cast for this resolution will be determined to be the stockholders’ preferred frequency with which CorVel Corporation is to hold a stockholder advisory vote regarding the executive compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules.”
The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on the compensation of our named executive officers that has been selected by stockholders. However, because the vote on this Proposal is only advisory in nature and is not binding on us or the Board, the Board will review and consider the results of the vote, but may decide that it is in our best interests and the best interests of our stockholders to hold an advisory vote on the compensation of our named executive officers more or less frequently than the option approved by our stockholders.
Under the rules of the NYSE, brokers are prohibited from giving proxies to vote on executive compensation matters unless the beneficial owner of such shares has given voting instructions on the matter. This means that if your broker is the record holder of your shares, you must give voting instructions to your broker with respect to this Proposal if you want your broker to vote your shares on this Proposal.
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AUDIT COMMITTEE REPORT
The information contained in this Audit Committee Report shall not be deemed to be “soliciting material” or to be “filed” or incorporated by reference into any filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act or the Exchange Act.
The Audit Committee carries out its responsibilities pursuant to its written charter, and the members of the fiscal year 2023 Audit Committee have prepared and submitted this Audit Committee report. Each Audit Committee member is considered independent because each member satisfies the independence requirements for board members prescribed by the applicable rules of Nasdaq and Rule 10A-3 of the Exchange Act.
Among other things, the Audit Committee oversees CorVel’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal control over financial reporting. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management CorVel’s audited financial statements in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements; and management’s assessment of CorVel’s internal control over financial reporting.
The Audit Committee also reviewed and discussed with the independent registered public accounting firm, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of CorVel’s accounting principles and such other matters as are required to be discussed with audit committees by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission. In addition, the Audit Committee discussed with the independent registered public accounting firm their independence from management and CorVel, and has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountant the independent accountant’s independence. Throughout the year and prior to the performance of any such services, the Audit Committee also considered the compatibility of potential non-audit services with the independent accountant’s independence.
The Audit Committee discussed with CorVel’s independent registered public accounting firm their overall approach, scope and plans for the audit. At the conclusion of the audit, the Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of CorVel’s internal control over financial reporting and the overall quality of CorVel’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023, for filing with the Securities and Exchange Commission.
The Audit Committee has also recommended the selection of Haskell & White LLP as the independent registered public accounting firm for the fiscal year ending March 31, 2024.
AUDIT COMMITTEE
R. Judd Jessup, Chair
Steven J. Hamerslag
Alan R. Hoops
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth certain information regarding our executive officers as of June 16, 2023:
|
|
|
|
|
| Name |
|
Age |
|
Position |
| V. Gordon Clemons |
|
79 |
|
Chairman of the Board |
| Michael G. Combs |
|
59 |
|
Chief Executive Officer and President |
| Mark E. Bertels |
|
60 |
|
Executive Vice President, Risk Management Services |
| Maxim Shishin |
|
48 |
|
Chief Information Officer |
| Brandon T. O’Brien |
|
43 |
|
Chief Financial Officer |
| Jennifer L. Yoss |
|
45 |
|
Vice President, Accounting |
The following is a brief description of the capacities in which each of our executive officers who is not also a director has served, and other biographical information. The biography of Mr. Clemons appears earlier in this Proxy Statement under the section entitled “Proposal One: Election of Directors.”
Michael G. Combs. Mr. Combs was promoted to Chief Executive Officer in January 2019. Mr. Combs has also held the position of President since April 2017 and previously served as our Chief Information Officer from April 2015 to April 2017. Mr. Combs has been with the Company for 31 years, joining the Company initially as a software engineer in October 1991. His prior positions at the Company include Vice President of MedCheck Development and Deputy Chief Information Officer. Prior to joining CorVel, he was with Science Applications International Corporation, a technology company, as a Software Engineer where he developed software for the Naval Oceans System Center. Mr. Combs holds a Bachelor’s degree in Computer Science from San Diego State University.
Mark E. Bertels. Mr. Bertels was promoted to his current role of Executive Vice President, Risk Management Services in April 2022. In his current role, Mr. Bertels is responsible for claims, network solutions, and case management field operations enterprise-wide. Mark has been with CorVel since 1989. Mark has over 33 years of experience with CorVel in the risk management industry and possesses extensive knowledge of the claims and managed care services provided to claim payors and self-insured employers.
Maxim Shishin. Mr. Shishin was promoted to Chief Information Officer in 2017. He has been with CorVel since 2002, holding the positions of Vice President of Information Systems, Director of Software Engineering, Software Development Manager and Senior Software Engineer. Mr. Shishin has over 21 years of technology and systems experience. His background includes vast experience with enterprise software architecture.
Brandon T. O’Brien. Mr. O’Brien was promoted to Chief Financial Officer in October 2018. He has been with CorVel since 2003, holding the positions of Area Vice President from 2015 to 2018, Vice President of Business Operations from 2010 to 2015, Director of Finance, Enterprise Comp from 2007 to 2010, and Manager of Analytics from 2006 to 2007.
Jennifer L. Yoss. Ms. Yoss was promoted to Vice President of Accounting in October 2018. She has been with CorVel since 2003, holding the positions of Director of Accounting from 2014 to 2017 and Manager in the Accounting department from 2003 to 2014. Ms. Yoss was previously an auditor at Grant Thornton LLP.
Our executive officers are elected by the Board on an annual basis and serve at the discretion of the Board until their successors have been duly elected and qualified or until their earlier resignation or removal.
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Principal Elements of Executive Compensation
Base Salary
In determining executive compensation, we take into account overall expense control. The Board approves initial annual base salary for newly hired executive officers based on comparable survey data as referenced above. Our compensation committee reviews all executive officer base salaries annually in connection with the compensation recommendations made by our chief executive officer, taking into account both updated peer group data in the public domain and individual performance during the previous year. We believe that adjustments should be made to base salary both to reflect market changes and to reward high performance within the confines of overall expense control. The Company provides base salaries for our executive officers on a fixed minimum level of compensation for services rendered during the year, and relies on cash incentive awards to incentivize executive officers to exceed performance objectives.
At our 2020 annual meeting of stockholders, our stockholders expressed strong support for our compensation programs and the compensation of our named executive officers, with approximately 86.2% approval rate for our executive officer Say-on-Pay resolution. In light of this support, the Company’s continued strong performance and the continuing success of our compensation programs, the compensation committee made no significant changes to the overall design of our compensation program during fiscal years 2021, 2022 or 2023. The compensation committee continuously endeavors to ensure that management’s interests are aligned with those of our stockholders and support long-term value creation.
Each of our executive officers, other than our chief executive officer, undergoes an annual performance review with our chief executive officer, and during that review develops an individual performance development plan for the upcoming year. In general, these objectives vary for each named executive officer based on his or her individual responsibilities and the business function of the group that he or she manages, and includes one or more quantitative or qualitative financial or strategic measure, including earnings per share, revenue targets, product development and implementation, customer satisfaction and acceptance, strategic planning and development, operations excellence and efficiency and productivity. In reviewing past performance, the chief executive officer and the executive officer will compare actual performance during the review year to the objectives set at the beginning of the year, taking into account other factors that may not have been anticipated when the objectives were first set. In setting objectives for the upcoming year, the chief executive officer and the executive officer will typically consider not only corporate objectives, but also the executive officer’s short and long-term career objectives. To assist our compensation committee in reviewing executive officer performance in fiscal year 2022 for fiscal year 2023 compensation purposes, in fiscal year 2021 for fiscal year 2022 compensation purposes, and in fiscal year 2020 for fiscal year 2021 compensation purposes, our chief executive officer provided the compensation committee with his analysis of the performance and potential of each executive officer ranked against each other executive officer, and made recommendations based on how well each executive officer executed on his or her individual performance development plan while also taking into account external market survey data, as discussed above. The compensation committee made the final determination of the compensation paid to executive officers.
Decisions to adjust base salaries for fiscal year 2024 were made by the Compensation Committee on February 1, 2023, decisions to adjust base salaries for fiscal year 2023 were made by the Compensation Committee on February 3, 2022, decisions to adjust fiscal year 2022 were made by the compensation committee on February 4, 2021, decisions to adjust base salaries for fiscal year 2021 were made by the Compensation Committee on February 4, 2020, and all such adjustments took effect on each executive officer’s respective compensation adjustment anniversary date. Notwithstanding volatility in the stock market, the Company experienced increased revenues and earnings per share since fiscal year 2021 ultimately leading to the decision to increase executive compensation.
As part of his continued commitment to ongoing expense control, Mr. Clemons declined salary increases for fiscal years 2021 through 2023 other than increases to cover the normal increases in cost of Company-provided
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health and welfare benefits. In response to the COVID-19 pandemic, Mr. Clemons voluntarily reduced his base salary to an amount just covering the cost of Company-provided health and welfare benefits. Mr. Combs’ base salary increased between 2.5% and 4.5% during each of the 2021, 2022 and 2023 fiscal years. Mr. Shishin’s base salary increased between 3.5% and 6.2% during each of the 2021, 2022 and 2023 fiscal years. Mr. O’Brien’s base salary increased between 3.1% to 5.0% during the 2021, 2022 and 2023 fiscal years. Ms. Yoss’ base salary increased between 5.5% and 6.0% during the 2021, 2022 and 2023 fiscal years.
Annual Cash Incentive Awards Plan
To reinforce the attainment of our goals, we believe that a substantial portion of the annual compensation of each executive officer should be in the form of variable cash incentive pay. In parallel with its review of base salaries for executive officers, the compensation committee considers the design and structure of the executive officer annual incentive awards plan. We use annual performance-based cash incentive awards to motivate our executives to meet or exceed our Company-wide short-term performance objectives. Cash incentive amounts for each executive officer are determined by the compensation committee based on the recommendation of our chief executive officer. Although we have a March 31 fiscal year end, we have calendar year budgets and annual cash incentive plans which are based on the calendar year. Cash incentive awards to the Chief Executive Officer and the other named executive officers are shown in the “Non Equity Incentive Plan Compensation” column of the Summary Compensation Table above. Annual cash incentive plan awards are designed to reward personal contributions to our success and are earned under a structured formula. Each executive has some portion of his or her annual bonus measured against individual management by objective goals, or MBOs, established for that person, which, depending on the executive officer, include revenue growth, national sales and regional vice president management, implementation, planning and strategy for software development and information technology infrastructure, and adherence to company-wide internal financial reporting and controls. The maximum amount that any executive may earn based on the MBO element is variable, with full achievement of MBOs resulting in an expected 70% payout and increasing up to a 100% payout for achievement exceeding established MBOs. For executive officers with operations responsibilities, this element comprises a lesser percentage of the annual incentive award for the individual, and for executive officers with corporate staff responsibilities, it comprises a greater percentage of the annual incentive award. We expect that the MBOs for our executive officers will be difficult to achieve. Based on Mr. Clemons’ own request, there were no MBOs established for him when he served as our chief executive officer.
The calendar year 2020 MBOs for Mr. Combs included increasing revenue from CERIS group health and bill review services, helping develop the executive management and field operations team, continuing to refine the strategic and operations management of internal management, and ongoing involvement in marketplace sales efforts. Mr. Combs’ bonus opportunity was targeted at 75% of his base salary with the ability to achieve up to 100%, and was 75% dependent on achieving overall financial performance and 25% dependent on his contribution toward achieving his calendar year 2020 MBOs. Mr. Combs attained 60.3% of his calendar year 2020 bonus opportunity and hence, received a bonus of 72.1% of his base salary in an amount equal to $403,000 in fiscal year 2021, the payment of which was deferred and was paid in the first quarter of fiscal year 2022.
The calendar year 2021 MBOs for Mr. Combs included increasing revenue from CERIS group health and bill review services, executive management and field operation team development, continue refinement of the strategic and operations management of internal management, and ongoing involvement in marketplace sales efforts. Mr. Comb’s bonus opportunity was targeted at 75% of his base salary with the ability to achieve up to 100%, and was 75% dependent on achieving overall financial performance and 25% dependent on his contributions toward achieving his calendar year 2021 MBOs. Mr. Combs attained 71.0% of his calendar year 2021 bonus opportunity and hence, received a bonus of 92.6% of his base salary in an amount equal to $529,864 in fiscal year 2022.
The calendar year 2022 MBOs for Mr. Combs included expansion of CERIS sales team, products and services to diversify CERIS customer base, develop leadership and bench-strength of executive team and continue
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involvement in the marketplace through sales visits and other market-facing activities. Mr. Comb’s bonus opportunity was targeted at 75% of his base salary with the ability to achieve up to 100%, and was 75% dependent on achieving overall financial performance and 25% dependent on his contributions towards achieving his calendar year 2022 MBOs. Mr. Combs attained 48% of his calendar year 2022 bonus opportunity and hence, received a bonus of 47.8% of his salary in an amount equal to $284,755 in fiscal year 2023.
The calendar year 2023 MBOs for Mr. Combs will include increasing sales for new and existing CERIS and carrier customers, expanding the CERIS DRG service offering, and improving margins within the claims administration business. Mr. Comb’s bonus opportunity will be targeted at 75% of his base salary with the ability to achieve up to 100%, which will be 75% dependent on achieving overall financial performance and 25% dependent on his contributions towards achieving his calendar year 2023 MBOs.
The calendar year 2022 MBOs for Mr. Bertels included right sizing the operations teams while implementing processes and procedures to maintain quality and consistent results. Mr. Bertel’s bonus opportunity was targeted at 50% of his base salary with the ability to achieve up to 75%, which was 65% dependent on achieving overall financial performance and 10% dependent on his contributions towards achieving his calendar year 2022 MBOs. Mr. Bertels attained 58% of his calendar year 2022 bonus opportunity and hence, received a bonus of 43.8% of his salary in an amount equal to $103,749 in fiscal year 2023. Mr. Bertels was promoted to Executive Vice President, Risk Management Services on April 1, 2022. Because Mr. Bertels was not a named executive officer for fiscal years 2021 and 2022, his compensation for those fiscal years is not shown.
The calendar year 2023 MBOs for Mr. Bertels will include achieving key financial, production and quality metrics across claims administration, bill review and case management service lines, improving client retention, and capturing missed opportunity revenue. Mr. Bertel’s bonus opportunity will be targeted at 50% of his base salary with the ability to achieve up to 75%, which will be 65% dependent on achieving overall financial performance and 10% dependent on his contributions towards achieving his calendar year 2023 MBOs.
The calendar year 2020 MBOs for Mr. Shishin included strategic IT projects within network solutions, enterprise compensation, case management and machine learning. Mr. Shishin’s bonus opportunity was targeted at 40% of his base salary up to a maximum of 50% of his base salary, with 30% of his bonus opportunity dependent on overall financial performance and 70% dependent on his contribution toward achieving his calendar year 2020 MBOs. Mr. Shishin attained 79.0% of his calendar year 2020 bonus opportunity and, hence, received a bonus of 39.8% of his base salary in an amount equal to $98,855 in fiscal year 2021, the payment of which was deferred and was paid in the first quarter of fiscal year 2022.
The calendar year 2021 MBOs for Mr. Shishin included strategic IT projects within network solutions, enterprise compensation, case management, machine learning and output of development. Mr. Shishin’s bonus opportunity was targeted at 50% of his base salary up to a maximum of 60% of his base salary, with 30% of his bonus opportunity dependent on overall financial performance and 67% dependent on his contribution towards achieving his calendar year 2021 MBOs. Mr. Shishin attained 19.3% of his calendar year 2021 bonus opportunity and, hence, received 56.4% of his base salary in an amount equal to $145,130 in fiscal year 2022.
The calendar year 2022 MBOs for Mr. Shishin included enhancements to network solutions, enterprise compensation, case management, cloud migration and increase in network solutions development. Mr. Shishin’s bonus opportunity was targeted at 50% of his base salary with the ability to achieve up to 60%, with 33% of his bonus opportunity dependent on achieving overall financial performance and 67% dependent on his contributions towards achieving his calendar year 2022 MBOs. Mr. Shishin attained 62% of his calendar year 2022 bonus opportunity and hence, received a bonus of 37.4% of his salary in an amount equal to $101,593 in fiscal year 2023.
The calendar year 2023 MBOs for Mr. Shishin will include enhancing network solutions and enterprise compensation, optimizing CERIS DRG program, and deploying text messaging for specific business use. Mr. Shishin’s bonus opportunity will be targeted at 50% of his base salary with the ability to achieve up to 60%,
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with 20% of his bonus opportunity dependent on achieving overall financial performance and 40% dependent on his contributions towards achieving his calendar year 2023 MBOs.
The calendar year 2020 MBOs for Mr. O’Brien included developing financial performance measures that support the Company’s strategic direction, identifying and addressing revenue leakage and opportunities, strategic capital allocation and planning, and enhancing CERIS product and revenue. Mr. O’Brien’s bonus opportunity was targeted at 40% of his base salary up to a maximum of 50% of his base salary, with 30% of his bonus opportunity dependent on overall financial performance and 70% dependent on his contribution toward achieving his calendar year 2020 MBOs. Mr. O’Brien attained 64.8% of his calendar year 2020 bonus opportunity and, hence, received a bonus of 35.2% of his base salary in an amount equal to $84,824 in fiscal year 2021, the payment of which was deferred and was paid in the first quarter of fiscal year 2022.
The calendar year 2021 MBOs for Mr. O’Brien included developing financial performance measures that support the Company’s strategic direction through CogencyIQ, strategic capital allocation and planning, Symbeo product and revenue enhancement and invoicing initiatives. Mr. O’Brien’s bonus opportunity was targeted at 40% of his base salary up to a maximum of 50% of his base salary, with 50% of his bonus opportunity dependent on overall financial performance and 50% dependent on his contribution toward achieving his calendar year 2021 MBOs. Mr. O’Brien attained 23.9% of the calendar year 2021 opportunity and, hence, received a bonus of 40.5% of his base salary in an amount equal to $100,647 in fiscal year 2022.
The calendar year 2022 MBOs for Mr. O’Brien included macro and micro-level insight into the organization’s financial health, industry pricing expertise and invoicing/profit growth initiatives. Mr. O’Brien’s bonus opportunity was targeted at 40% of his base salary with the ability to achieve up to 50%, with 50% of his bonus opportunity dependent on achieving overall financial performance and 50% dependent on his contributions towards achieving his calendar year 2022 MBOs. Mr. O’Brien attained 66% of his calendar year 2022 opportunity and, hence, received a bonus of 33.2% of his salary in an amount equal to $85,709 in fiscal year 2023.
The calendar year 2023 MBOs for Mr. O’Brien will include increasing insight into the organization’s financial health, automating financial processes, leveraging CogencyIQ service offerings, and identifying and addressing revenue leakage opportunities. Mr. O’Brien’s bonus opportunity will be targeted at 40% of his base salary with the ability to achieve up to 50%, with 50% of his bonus opportunity dependent on achieving overall financial performance and 50% dependent on his contributions towards achieving his calendar year 2023 MBOs.
The calendar year 2020 MBOs for Ms. Yoss included invoicing initiatives to identify and address revenue leakage and opportunities, enterprise human resource and payroll enhancements, and Company executive management personal development. Ms. Yoss’ bonus opportunity was targeted at 25% of her base salary up to a maximum of 35% of her base salary, with 5% of her bonus opportunity dependent on overall financial performance and 95% dependent on her contribution toward achieving her calendar year 2020 MBOs. Ms. Yoss attained 70.0% of her calendar year 2020 bonus opportunity and, hence, received a bonus of 24.6% of her base salary in an amount equal to $39,358 in fiscal year 2021.
The calendar year 2021 MBOs for Ms. Yoss included invoicing initiatives to identify and address revenue leakage opportunities, enterprise accounting with human resources enhancement and Company key personnel development. Ms. Yoss’ bonus opportunity was targeted at 30% of her base salary up to a maximum of 40% of her base salary, with 50% of her bonus opportunity dependent on overall financial performance and 50% dependent on her contribution toward achieving her calendar year 2021 MBOs. Ms. Yoss attained 18.9% of the calendar year bonus opportunity and, hence, received a bonus of 33.1% of her base salary in the amount of $58,070 in fiscal year 2022.
The calendar year 2022 MBOs for Ms. Yoss included invoicing profit growth initiatives to identify and address revenue leakage, enterprise accounting and HR process enhancements, and company key personnel development.
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Ms. Yoss’ bonus opportunity was targeted at 30% of her base salary with the ability to achieve up to 40%, with 50% of her bonus opportunity dependent on achieving overall financial performance and 50% dependent on her contributions towards achieving her calendar year 2022 MBOs. Ms. Yoss attained 65% of the calendar year bonus opportunity and, hence, received a bonus of 25.9% of her salary in the amount of $48,071 in fiscal year 2023.
The calendar year 2023 MBOs for Ms. Yoss will include identifying and addressing revenue leakage opportunities, enhancing the enterprise accounting and human resources systems, and developing key personnel. Ms. Yoss’ bonus opportunity will be targeted at 30% of her base salary with the ability to achieve up to 40%, with 50% of her bonus opportunity dependent on achieving overall financial performance and 50% dependent on her contributions towards achieving her calendar year 2023 MBOs.
Long-Term Equity-Based Incentive Awards
The goal of our long-term, equity-based incentive awards is to serve as a long-term staff retention vehicle by aligning the interests of our executive officers with our stockholders and providing each executive officer with a significant incentive to manage from the perspective of an owner with an equity stake in the business. The Compensation Committee, in conjunction with recommendations from our chief executive officer, administers our equity-based incentive plans for executive officers and determines the size of long-term, equity-based incentives according to each executive’s position, and sets a level it considers appropriate to create a meaningful opportunity for stock ownership. In addition, the compensation committee takes into account an individual’s recent performance, his or her potential for future responsibility and promotion, and the number of unvested stock option shares held by each individual at the time of any new grant. However, there is no set formula for determining the size of a stock option award. Our chief executive officer historically has made recommendations to the Board and compensation committee regarding the amount of stock options and other compensation to grant to our other named executives based upon his assessment of their performance and relevant survey data, and may continue to do so in the future. The Board and compensation committee takes such recommendations into account when it approves stock option grants. Our executive officers, however, do not make any determinations as to when stock options are granted. We do not require a minimum stock ownership by our executive officers, but the Compensation Committee considers an executive officer’s existing stock holdings relative to performance in determining the size of awards.
Under our Omnibus Incentive Plan, we have the ability to grant different forms of equity compensation, including stock options, stock appreciation rights, restricted stock and restricted stock units, performance awards and other stock-based awards. We have chosen to use stock options exclusively for purposes of providing long-term incentives because we believe they best align with our objectives of providing incentives that are commensurate with total stockholder return and employee retention. Stock options provide actual economic value to the executive officer if he or she remains employed by us during the vesting period, and then only if the market price of our shares appreciates over the option term. The fair value amounts shown for stock options in the Summary Compensation Table are calculated in accordance with ASC 718 and ASU 2016-09, Compensation-Stock Compensation, and represent the aggregate grant date fair value of option awards granted during the year for awards that are not based on performance conditions. Upon determination of probable outcome of the performance conditions, we record compensation expense for performance-based stock option awards based on the estimated fair value of the options on the grant date using the Black-Scholes option-pricing model. Consequently, stock options motivate executive officers by providing substantial upside compensation even though the entire amount of potential compensation is at risk. In the future, we may choose to grant different forms of equity compensation particularly if the use of such different forms of compensation become more prevalent at companies with which we compete or from which we intend to recruit personnel. Other factors that may lead us to provide different forms of equity compensation include, but are not limited to, the executives’ perceived value of one form of equity compensation over another, the potential effect of stockholder dilution, and the financial statement cost of one form of equity compensation over the other.
32
Under our ESPP, we also provide eligible employees who work more than 25 hours per week with the ability to purchase shares of Common Stock, through payroll deduction, at a pre-determined discount to the closing price at the end of a six-month purchase period. For fiscal years 2023, 2022 and 2021, the Board set the maximum permitted payroll deduction for the purposes of the ESPP at 20% of salary, and set the pre-determined discount at 5% of the closing price at the end of the purchase period.
Stock options provided to executive officers are typically granted pursuant to action by unanimous written consent of the Compensation Committee executed by the compensation committee members in person on the same day as each regularly scheduled quarterly meeting of the Board in conjunction with ongoing review of each executive officer’s individual performance, unless the executive officer is a new hire or other individual performance considerations are brought to the attention of our Compensation Committee during the course of the year. Such meetings are usually scheduled well in advance of the meeting, without regard to earnings or other major announcements by us. We intend to continue this practice of approving stock-based awards concurrently with regularly scheduled meetings, unless earlier approval is required for new hires, new performance considerations or retention purposes, regardless of whether or not the Board or Compensation Committee knows material non-public information on such date. We have not timed, nor do we intend to time, our release of material non-public information for the purpose of affecting the value of executive compensation. The grant date of our stock options is the date the Board or compensation committee meets to approve such stock option grants, which also is the date our Compensation Committee executes its action by unanimous written consent regarding such approval. In accordance with our Omnibus Incentive Plan, the exercise price of all options is set at the closing price of our common stock as reported by the Nasdaq Global Select Market on the day of grant.
Material terms of options granted to our named executive officers in fiscal years 2023, 2022 and 2021 typically included: (a) exercise price equal to the closing market value as quoted by Nasdaq on the date of grant; (b) vesting of 25% one year from the grant date and then continued vesting in a series of 36 equal monthly installments over the remaining balance of the four-year period, contingent on the executive officer’s continued service; (c) a term no longer than five years from the date of grant; and (d) to the extent not already exercisable,
the options become exercisable in full on an accelerated basis upon (i) a sale of assets, (ii) a merger in which we do not survive or (iii) a reverse merger in which we survive but ownership of 50% or more of the voting power of our stock is transferred, unless the option is assumed or replaced with a comparable option by the successor corporation. Although stock options granted to our executive officers typically contain time-vesting provisions, on one occasion in each of the fiscal years 2023, 2022 and 2021, our compensation committee awarded stock options with performance vesting provisions to Messrs. Combs, Bertels, O’Brien, Shishin and Ms. Yoss, all of which will vest based on the achievement of certain performance criteria, approved by our Board and compensation committee, relating to earnings growth.
We do not publicly disclose the specific performance target levels and related criteria because they constitute highly confidential commercial or financial information. We believe that such target levels and related criteria are not material and that disclosing them would provide competitors with insights into our operational strategy and would therefore cause us substantial competitive harm. We believe the performance targets approved by our Board and Compensation Committee are fairly difficult to achieve. We decided to grant the performance-based stock options as part of our decision to pursue a compensation strategy of aligning equity compensation with our earnings and revenue performance. On June 6, 2018, our Compensation Committee, in exercising its discretionary authority pursuant to the terms of all of our outstanding performance stock options, including those held by our officers, amended such stock options granted since 2015 to adjust upward all of the target earnings per share amounts. Our Compensation Committee made such adjustments because it deemed them equitable to recognize the anticipated impact of the changes in tax laws under the Tax Cuts and Jobs Act that was signed into law on December 22, 2017. Subsequently, on August 21, 2020, our Compensation Committee, in exercising its discretionary authority pursuant to the terms of all of our outstanding performance stock options granted in 2018 and 2019, including those granted to our officers, amended such stock options to adjust downward the target earnings per share amounts for calendar year 2020. Our Compensation Committee made such adjustments because it deemed them equitable to recognize
33
CERTAIN RELATIONSHIPS AND RELATED-PERSON TRANSACTIONS
Under Item 404 of Regulation S-K, a related-person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, since the beginning of our last fiscal year, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
Pursuant to its written charter, our Audit Committee is responsible for reviewing and approving all related person transactions and potential conflict of interest situations involving any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons.
Our Audit Committee also has adopted written policies and procedures for related person transactions that require the Audit Committee to review any proposed transaction with related persons to determine if it rises to the level of a related person transaction covered by Item 404 of Regulation S-K and, if it does, then such related person transaction must be approved or ratified by the disinterested members of the Audit Committee. Our management must disclose to the Audit Committee all material information regarding actual and proposed related person transactions known to them that involve our directors, nominees for director, executive officers, persons known to be 5% or greater beneficial owners of our stock, and any member of the immediate family of any of the foregoing persons. A related person will not be deemed to have a material interest in a transaction if the interest arises only: (a) from the person’s position as a director of another corporation or organization that is a party to the transaction; or (b) from the direct or indirect ownership by such person and all other related persons, in the aggregate, of less than a 10% equity interest in another person or entity (other than a partnership) which is a party to the transaction; or (c) from a combination of both (a) and (b); or (d) from the person’s position as a limited partner in a partnership in which the person and all other related persons, have an interest of less than 10%, and the person is not a general partner of and does not hold another position in the partnership.
Other than as described above and as described in the section entitled “Executive Compensation—Compensation Discussion and Analysis,” since April 1, 2022, there was not, and there is not currently proposed, any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest. Each related-person transaction is reviewed and approved or ratified by our Audit Committee.
Our Audit Committee has determined that the following categories of transactions shall be deemed preapproved by the Audit Committee, notwithstanding the fact that they are related person transactions:
| |
• |
|
compensation to executive officers determined by our Compensation Committee; |
| |
• |
|
compensation to directors determined by our Compensation Committee or the Board; and |
| |
• |
|
transactions in which all security holders receive proportional benefits. |
52
Pay vs Performance Disclosure - USD ($)
|
12 Months Ended |
Mar. 31, 2023 |
Mar. 31, 2022 |
Mar. 31, 2021 |
| Pay vs Performance Disclosure [Table] |
|
|
|
| Pay vs Performance [Table Text Block] |
Pay Versus Performance Table The following table provides information regarding “compensation actually paid” for our Chief Executive Officer and President, who is our principal executive officer (“ ”), and our other NEOs for each of our fiscal years ended March 31, 2023, 2022, and 2021 and our financial performance for each such fiscal year:
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|
Value of Initial $100
Investment Based on: |
|
|
|
|
|
|
|
| Fiscal
Year |
|
Summary Compensation Table Total for PEO (1)
($) |
|
|
Compensation Actually Paid to PEO (1)(2)
($) |
|
|
Average Summary Compensation Table Total for Non-PEO NEOs (1)
($) |
|
|
Average Compensation Actually Paid to Non-PEO NEOs (1)(2)
($) |
|
|
Total
Stockholder
Return
($) |
|
|
Peer Group Total Stockholder Return (3)
($) |
|
|
Net
Income
(in
millions)
($) |
|
|
Earnings
per
Share
($) |
|
2023 |
|
|
2,090,066 |
|
|
|
3,389,141 |
|
|
|
413,594 |
|
|
|
2,313,754 |
|
|
|
349 |
|
|
|
116 |
|
|
|
66,365 |
|
|
|
3.77 |
|
2022 |
|
|
1,420,744 |
|
|
|
4,464,818 |
|
|
|
482,747 |
|
|
|
5,014,662 |
|
|
|
309 |
|
|
|
124 |
|
|
|
66,410 |
|
|
|
3.66 |
|
2021 |
|
|
1,510,130 |
|
|
|
3,728,177 |
|
|
|
467,858 |
|
|
|
3,419,311 |
|
|
|
188 |
|
|
|
149 |
|
|
|
46,356 |
|
|
|
2.55 |
|
| (1) |
Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our other NEOs for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year: |
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|
|
|
|
|
|
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|
|
2023 |
|
Michael G. Combs |
|
V. Gordon Clemons, Mark E. Bertels, Maxim Shishin, Brandon T. O’Brien, Jennifer L. Yoss |
2022 |
|
Michael G. Combs |
|
V. Gordon Clemons, Diane J. Blaha, Maxim Shishin, Brandon T. O’Brien, Jennifer L. Yoss |
2021 |
|
Michael G. Combs |
|
V. Gordon Clemons, Diane J. Blaha, Maxim Shishin, Brandon T. O’Brien, Jennifer L. Yoss |
| (2) |
The table below provides the adjustments to the Summary Compensation Table total compensation made to arrive at the compensation actually paid to the PEO and the average compensation actually paid to the non-PEO NEOs: |
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|
|
|
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|
|
Deduction for Change in the Actuarial Present
Values (as reported in the “Change in Pension
Value and Nonqualified Deferred Compensation
Earnings” column of the Summary
Compensation Table) |
|
|
— |
|
|
|
— |
|
|
|
— |
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|
|
— |
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|
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— |
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|
— |
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| |
|
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|
Increase for Service Cost for Benefit Plans |
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|
— |
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|
— |
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— |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Prior Service Cost for Benefit Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Deduction for Amounts Reported in the “Stock
Awards” Column in the Summary Compensation
Table |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Deduction for Amounts Reported in the “Option Awards” Column in the Summary Compensation Table |
|
|
1,176,522 |
|
|
|
148,254 |
|
|
|
309,939 |
|
|
|
150,374 |
|
|
|
543,248 |
|
|
|
174,865 |
|
| |
|
|
|
|
|
|
Increase for Fair Value of Awards Granted during Covered Fiscal Year that Remain Outstanding and Unvested as of Covered Fiscal Year End (a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
77,425 |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Vesting Date Fair Value of Awards Granted during Covered Fiscal Year that Vested during the Fiscal Year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase (deduction) for Awards Granted during Prior Fiscal Years that were Outstanding and Unvested as of Covered Fiscal Year End (b) |
|
|
2,387,906 |
|
|
|
1,917,315 |
|
|
|
1,780,517 |
|
|
|
2,759,634 |
|
|
|
1,802,464 |
|
|
|
2,286,279 |
|
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| |
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| |
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| |
|
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|
|
Increase (deduction) for Change in Vesting Date Fair Value of Awards Granted during Prior Fiscal Years that Vested during Covered Fiscal Year Compared to Fair Value of Awards as of Prior Fiscal Year End (c) |
|
|
90,528 |
|
|
|
138,017 |
|
|
|
1,573,496 |
|
|
|
1,922,655 |
|
|
|
912,931 |
|
|
|
878,058 |
|
| |
|
|
|
|
|
|
Deduction for Fair Value of Awards Granted during Prior Fiscal Year that were Forfeited during Covered Fiscal Year, Determined as of Prior Fiscal Year End |
|
|
(2,836 |
) |
|
|
(6,918 |
) |
|
|
— |
|
|
|
— |
|
|
|
(31,525 |
) |
|
|
(38,019 |
) |
| |
|
|
|
|
|
|
Increase for Dividends or Other Earnings Paid during Covered Fiscal Year Prior to Vesting Date |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
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— |
|
|
|
— |
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|
|
— |
|
| |
|
|
|
|
|
|
Increase based on Incremental Fair Value of Awards Modified during Covered Fiscal Year |
|
|
— |
|
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|
— |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,299,075 |
|
|
$ |
1,900,160 |
|
|
$ |
3,044,074 |
|
|
$ |
4,531,915 |
|
|
$ |
2,218,047 |
|
|
$ |
2,951,453 |
|
| |
(a) |
The fair value amounts are calculated in accordance with ASC Topic 718 Compensation—Stock Compensation (“ ”), determined as of the covered fiscal year end. |
| |
(b) |
The fair value amounts are determined based on the change in fair value from the prior fiscal year end to the covered fiscal year end calculated in accordance with ASC 718. |
| |
(c) |
The fair value amounts are determined based on the change in fair value from the prior fiscal year end to the vesting date calculated in accordance with ASC 718. |
| (3) |
The peer group used for this purpose is the Nasdaq Healthcare Services Index. |
|
|
|
| Company Selected Measure Name |
EarningsperShare
|
|
|
| Named Executive Officers, Footnote [Text Block] |
| (1) |
Amounts represent compensation actually paid to our PEO and the average compensation actually paid to our other NEOs for the relevant fiscal year, as determined under SEC rules (and described below), which includes the individuals indicated in the table below for each fiscal year: |
|
|
|
|
|
|
|
|
|
|
2023 |
|
Michael G. Combs |
|
V. Gordon Clemons, Mark E. Bertels, Maxim Shishin, Brandon T. O’Brien, Jennifer L. Yoss |
2022 |
|
Michael G. Combs |
|
V. Gordon Clemons, Diane J. Blaha, Maxim Shishin, Brandon T. O’Brien, Jennifer L. Yoss |
2021 |
|
Michael G. Combs |
|
V. Gordon Clemons, Diane J. Blaha, Maxim Shishin, Brandon T. O’Brien, Jennifer L. Yoss |
|
|
|
| Peer Group Issuers, Footnote [Text Block] |
The peer group used for this purpose is the Nasdaq Healthcare Services Index.
|
|
|
| PEO Total Compensation Amount |
$ 2,090,066
|
$ 1,420,744
|
$ 1,510,130
|
| PEO Actually Paid Compensation Amount |
$ 3,389,141
|
4,464,818
|
3,728,177
|
| Adjustment To PEO Compensation, Footnote [Text Block] |
| (2) |
The table below provides the adjustments to the Summary Compensation Table total compensation made to arrive at the compensation actually paid to the PEO and the average compensation actually paid to the non-PEO NEOs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deduction for Change in the Actuarial Present
Values (as reported in the “Change in Pension
Value and Nonqualified Deferred Compensation
Earnings” column of the Summary
Compensation Table) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Service Cost for Benefit Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Prior Service Cost for Benefit Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Deduction for Amounts Reported in the “Stock
Awards” Column in the Summary Compensation
Table |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Deduction for Amounts Reported in the “Option Awards” Column in the Summary Compensation Table |
|
|
1,176,522 |
|
|
|
148,254 |
|
|
|
309,939 |
|
|
|
150,374 |
|
|
|
543,248 |
|
|
|
174,865 |
|
| |
|
|
|
|
|
|
Increase for Fair Value of Awards Granted during Covered Fiscal Year that Remain Outstanding and Unvested as of Covered Fiscal Year End (a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
77,425 |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Vesting Date Fair Value of Awards Granted during Covered Fiscal Year that Vested during the Fiscal Year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase (deduction) for Awards Granted during Prior Fiscal Years that were Outstanding and Unvested as of Covered Fiscal Year End (b) |
|
|
2,387,906 |
|
|
|
1,917,315 |
|
|
|
1,780,517 |
|
|
|
2,759,634 |
|
|
|
1,802,464 |
|
|
|
2,286,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Increase (deduction) for Change in Vesting Date Fair Value of Awards Granted during Prior Fiscal Years that Vested during Covered Fiscal Year Compared to Fair Value of Awards as of Prior Fiscal Year End (c) |
|
|
90,528 |
|
|
|
138,017 |
|
|
|
1,573,496 |
|
|
|
1,922,655 |
|
|
|
912,931 |
|
|
|
878,058 |
|
| |
|
|
|
|
|
|
Deduction for Fair Value of Awards Granted during Prior Fiscal Year that were Forfeited during Covered Fiscal Year, Determined as of Prior Fiscal Year End |
|
|
(2,836 |
) |
|
|
(6,918 |
) |
|
|
— |
|
|
|
— |
|
|
|
(31,525 |
) |
|
|
(38,019 |
) |
| |
|
|
|
|
|
|
Increase for Dividends or Other Earnings Paid during Covered Fiscal Year Prior to Vesting Date |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase based on Incremental Fair Value of Awards Modified during Covered Fiscal Year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,299,075 |
|
|
$ |
1,900,160 |
|
|
$ |
3,044,074 |
|
|
$ |
4,531,915 |
|
|
$ |
2,218,047 |
|
|
$ |
2,951,453 |
|
| |
(a) |
The fair value amounts are calculated in accordance with ASC Topic 718 Compensation—Stock Compensation (“ ”), determined as of the covered fiscal year end. |
| |
(b) |
The fair value amounts are determined based on the change in fair value from the prior fiscal year end to the covered fiscal year end calculated in accordance with ASC 718. |
| |
(c) |
The fair value amounts are determined based on the change in fair value from the prior fiscal year end to the vesting date calculated in accordance with ASC 718. |
|
|
|
| Non-PEO NEO Average Total Compensation Amount |
$ 413,594
|
482,747
|
467,858
|
| Non-PEO NEO Average Compensation Actually Paid Amount |
$ 2,313,754
|
5,014,662
|
3,419,311
|
| Adjustment to Non-PEO NEO Compensation Footnote [Text Block] |
| (2) |
The table below provides the adjustments to the Summary Compensation Table total compensation made to arrive at the compensation actually paid to the PEO and the average compensation actually paid to the non-PEO NEOs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deduction for Change in the Actuarial Present
Values (as reported in the “Change in Pension
Value and Nonqualified Deferred Compensation
Earnings” column of the Summary
Compensation Table) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Service Cost for Benefit Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Prior Service Cost for Benefit Plans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Deduction for Amounts Reported in the “Stock
Awards” Column in the Summary Compensation
Table |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Deduction for Amounts Reported in the “Option Awards” Column in the Summary Compensation Table |
|
|
1,176,522 |
|
|
|
148,254 |
|
|
|
309,939 |
|
|
|
150,374 |
|
|
|
543,248 |
|
|
|
174,865 |
|
| |
|
|
|
|
|
|
Increase for Fair Value of Awards Granted during Covered Fiscal Year that Remain Outstanding and Unvested as of Covered Fiscal Year End (a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
77,425 |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase for Vesting Date Fair Value of Awards Granted during Covered Fiscal Year that Vested during the Fiscal Year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase (deduction) for Awards Granted during Prior Fiscal Years that were Outstanding and Unvested as of Covered Fiscal Year End (b) |
|
|
2,387,906 |
|
|
|
1,917,315 |
|
|
|
1,780,517 |
|
|
|
2,759,634 |
|
|
|
1,802,464 |
|
|
|
2,286,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Increase (deduction) for Change in Vesting Date Fair Value of Awards Granted during Prior Fiscal Years that Vested during Covered Fiscal Year Compared to Fair Value of Awards as of Prior Fiscal Year End (c) |
|
|
90,528 |
|
|
|
138,017 |
|
|
|
1,573,496 |
|
|
|
1,922,655 |
|
|
|
912,931 |
|
|
|
878,058 |
|
| |
|
|
|
|
|
|
Deduction for Fair Value of Awards Granted during Prior Fiscal Year that were Forfeited during Covered Fiscal Year, Determined as of Prior Fiscal Year End |
|
|
(2,836 |
) |
|
|
(6,918 |
) |
|
|
— |
|
|
|
— |
|
|
|
(31,525 |
) |
|
|
(38,019 |
) |
| |
|
|
|
|
|
|
Increase for Dividends or Other Earnings Paid during Covered Fiscal Year Prior to Vesting Date |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
|
|
|
|
Increase based on Incremental Fair Value of Awards Modified during Covered Fiscal Year |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,299,075 |
|
|
$ |
1,900,160 |
|
|
$ |
3,044,074 |
|
|
$ |
4,531,915 |
|
|
$ |
2,218,047 |
|
|
$ |
2,951,453 |
|
| |
(a) |
The fair value amounts are calculated in accordance with ASC Topic 718 Compensation—Stock Compensation (“ ”), determined as of the covered fiscal year end. |
| |
(b) |
The fair value amounts are determined based on the change in fair value from the prior fiscal year end to the covered fiscal year end calculated in accordance with ASC 718. |
| |
(c) |
The fair value amounts are determined based on the change in fair value from the prior fiscal year end to the vesting date calculated in accordance with ASC 718. |
|
|
|
| Compensation Actually Paid vs. Total Shareholder Return [Text Block] |
Compensation Actually Paid Compared to Total Stockholder Return
|
|
|
| Compensation Actually Paid vs. Net Income [Text Block] |
Compensation Actually Paid Compared to Net Income
|
|
|
| Compensation Actually Paid vs. Company Selected Measure [Text Block] |
Compensation Actually Paid Compared to Earnings Per Share 
|
|
|
| Total Shareholder Return Vs Peer Group [Text Block] |
Cumulative Total Stockholder Return Compared to Peer Group Total Stockholder Return
|
|
|
| Tabular List [Table Text Block] |
Finan ci al Performanc e Measur es As described in greater detail in the section entitled “ Compensation Discussion and Analysis ,” our executive compensation program reflects a variable compensation philosophy. The metrics that we use for both our annual cash incentive awards and long-term, equity-based incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measures used by the Company to link “compensation actually paid” to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance are as follows:
| |
• |
|
income before income taxes. |
|
|
|
| Total Shareholder Return Amount |
$ 349
|
309
|
188
|
| Peer Group Total Shareholder Return Amount |
116
|
124
|
149
|
| Net Income (Loss) |
$ 66,365,000,000
|
$ 66,410,000,000
|
$ 46,356,000,000
|
| Company Selected Measure Amount |
3.77
|
3.66
|
2.55
|
| PEO Name |
Michael G. Combs
|
|
|
| Measure [Axis]: 1 |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Measure Name |
earnings per share
|
|
|
| Measure [Axis]: 2 |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Measure Name |
revenues
|
|
|
| Measure [Axis]: 3 |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Measure Name |
income before income taxes.
|
|
|
| PEO [Member] | Option Awards [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
$ 1,176,522
|
$ 309,939
|
$ 543,248
|
| PEO [Member] | Awards Granted during Covered Fiscal Year that Remain Outstanding and Unvested as of Covered Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
|
|
77,425
|
| PEO [Member] | Awards Granted during Prior Fiscal Years that were Outstanding and Unvested as of Covered Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
2,387,906
|
1,780,517
|
1,802,464
|
| PEO [Member] | Change in Vesting Date Fair Value of Awards Granted during Prior Fiscal Years that Vested during Covered Fiscal Year Compared to Fair Value of Awards as of Prior Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
90,528
|
1,573,496
|
912,931
|
| PEO [Member] | Fair Value of Awards Granted during Prior Fiscal Year that were Forfeited during Covered Fiscal Year, Determined as of Prior Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
(2,836)
|
|
(31,525)
|
| PEO [Member] | Total Adjustments [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
1,299,075
|
3,044,074
|
2,218,047
|
| Non-PEO NEO [Member] | Option Awards [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
148,254
|
150,374
|
174,865
|
| Non-PEO NEO [Member] | Awards Granted during Prior Fiscal Years that were Outstanding and Unvested as of Covered Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
1,917,315
|
2,759,634
|
2,286,279
|
| Non-PEO NEO [Member] | Change in Vesting Date Fair Value of Awards Granted during Prior Fiscal Years that Vested during Covered Fiscal Year Compared to Fair Value of Awards as of Prior Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
138,017
|
1,922,655
|
878,058
|
| Non-PEO NEO [Member] | Fair Value of Awards Granted during Prior Fiscal Year that were Forfeited during Covered Fiscal Year, Determined as of Prior Fiscal Year End [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
(6,918)
|
|
(38,019)
|
| Non-PEO NEO [Member] | Total Adjustments [Member] |
|
|
|
| Pay vs Performance Disclosure [Table] |
|
|
|
| Adjustment to Compensation Amount |
$ 1,900,160
|
$ 4,531,915
|
$ 2,951,453
|