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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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Notice of 2020 Annual Meeting and Proxy Statement
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Javier J. Rodriguez
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Director and Chief Executive Officer, DaVita Inc.
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Pamela M. Arway
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Chair, Compensation Committee
Incoming Chair of the Board
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Notice of 2020 Annual Meeting of Stockholders
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To vote upon the election of the eight director nominees identified in the accompanying Proxy Statement to the Board of Directors, each to serve until the Company's 2021 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified;
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To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020;
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To approve, on an advisory basis, the compensation of our named executive officers;
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To approve the DaVita Inc. 2020 Incentive Award Plan;
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To consider and vote upon a stockholder proposal regarding political contributions disclosure, if properly presented at the Annual Meeting; and
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To transact such other business as may properly be brought before the Annual Meeting and any adjournment or postponement thereof by the presiding person of the Annual Meeting.
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Samantha A. Caldwell
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Corporate Secretary
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Table of Contents
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Proxy Statement
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1
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For the election of the eight director nominees identified in this Proxy Statement each to serve until the 2021 Annual Meeting of Stockholders (the "2021 Annual Meeting") or until their respective successors are duly elected and qualified;
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For the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020;
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For the approval, on an advisory basis, of the compensation of our named executive officers ("NEOs");
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For the approval of the DaVita Inc. 2020 Incentive Award Plan (the "2020 Plan");
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Against the stockholder proposal regarding political contributions disclosure, if properly presented at the Annual Meeting; and
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As determined by the proxy holders named in the proxy card in their discretion, with regard to all other matters as may properly be brought before the Annual Meeting and any adjournment or postponement thereof by the presiding person of the Annual Meeting.
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Notice of 2020 Annual Meeting and Proxy Statement
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2
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Proxy Statement
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3
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Proposal
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Voting Options
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Board Recommendation
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Vote Required to Adopt the Proposal
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Effect of Abstentions
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Effect of Broker Non-Votes*
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Proposal 1: Election of the eight director nominees identified in this Proxy Statement to serve until our 2021 Annual Meeting.
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For, Against or Abstain on each nominee
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FOR each nominee
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Majority of votes cast with respect to each such nominee
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No effect
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No effect
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Proposal 2: Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020.
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For, Against or Abstain
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FOR
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Majority of shares represented virtually or by proxy and entitled to vote
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Treated as votes Against
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Brokers have discretion to vote
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Proposal 3: Approval, on an advisory basis, of the compensation of our NEOs.
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For, Against or Abstain
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FOR
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Majority of shares represented virtually or by proxy and entitled to vote
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Treated as votes Against
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No effect
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Proposal 4: Approval of the 2020 Plan.
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For, Against or Abstain
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FOR
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Majority of votes cast on the proposal
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Treated as votes Against
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No effect
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Proposal 5: Stockholder proposal regarding political contributions disclosure.
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For, Against or Abstain
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AGAINST
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Majority of shares represented virtually or by proxy and entitled to vote
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Treated as votes Against
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No effect
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*
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See "Voting Information" for additional information on broker non-votes.
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Notice of 2020 Annual Meeting and Proxy Statement
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4
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Proxy Statement
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5
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Notice of 2020 Annual Meeting and Proxy Statement
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6
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Former President of the Japan, Asia-Pacific, Australia Region, American Express International, Inc.
Director Since: 2009
Independent
Committee Service: Compensation Committee, Chair; Audit Committee; Nominating and Governance Committee
Other Public Company Boards:
— The Hershey
Company (NYSE: HSY)
— Iron Mountain Inc.
(NYSE: IRM)
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Pamela M. Arway, 66, will assume the role of Chair of the Board on June 1, 2020. From 2005 to 2008, Ms. Arway served as the President of the Japan, Asia-Pacific, Australia region for American Express International, Inc., a global payment services and travel company. Ms. Arway joined the American Express Company in 1987, and subsequently served in various capacities, including as Chief Executive Officer ("CEO") of American Express Australia Limited from 2004 to 2005 and as Executive Vice President of Corporate Travel, North America from 2000 to 2004. Prior to her retirement in October 2008, she also served as advisor to the American Express Company’s Chairman and CEO. Since May 2010, Ms. Arway has been a member of the Board of Directors of The Hershey Company, a chocolate and confectionery company. She currently serves as a member of the Compensation and Finance and Risk Management Committees of The Hershey Company's Board. Since March 2014, Ms. Arway has been a member of the Board of Directors of Iron Mountain Incorporated, an enterprise information management services company and currently serves as Chair of its Compensation Committee and as a member of the Nominating and Governance Committee. Since May 2019, Ms. Arway has served on the Board of Directors of the Carlson Companies, a family-owned corporate travel and private capital company, and is a member of its Compensation and Finance Committees. Ms. Arway brings significant leadership experience as a global executive, with extensive management experience in the areas of marketing, international business, finance and government affairs. With her service as a director on the boards of other large public companies, Ms. Arway also brings significant experience in corporate governance and executive compensation related matters.
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Former Executive Chair, DaVita Medical Group
Director Since: 2007
Other Public Company Boards: None
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Charles G. Berg, 62, served as Executive Chair of our integrated healthcare business, DaVita Medical Group ("DMG") from November 2016 until December 2017. In 2019, Mr. Berg joined the Board of Directors of Turn-Key Health, a private company, serving health plans, provider organizations and their members who experience a serious or advanced illness. From 2008 to 2013, Mr. Berg served as Executive Chairman of WellCare Health Plans, Inc. (“WellCare”), a provider of managed care services for government-sponsored healthcare programs. Mr. Berg served as Non-Executive Chairman of the Board of Directors of WellCare from January 2011 until his retirement in May 2013. From January 2007 to April 2009, Mr. Berg was a Senior Advisor to Welsh, Carson, Anderson & Stowe, a private equity firm. From April 1998 to July 2004, Mr. Berg held various executive positions, including Executive Vice President - Medical Delivery, President and Chief Operating Officer ("COO") with Oxford Health Plans, Inc. (“Oxford”), a health benefit plan provider. He was the CEO when Oxford was acquired by UnitedHealth Group. He then became an executive of UnitedHealth Group and was primarily responsible for integrating the Oxford business. Mr. Berg currently serves as a member of the Operating Council & Senior Advisory Board of Consonance Capital Partners, a private equity firm, and the Board of Directors of Justworks, Inc., a private human resources and payment company. Mr. Berg is an experienced business leader with significant experience in the healthcare industry and brings an understanding of the operational, financial and regulatory aspects of our industry and business.
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Former Chief Executive Officer, Citibank, N.A.
Director Since: 2015
Independent
Committee Service: Compliance and Quality Committee, Chair
Other Public Company Boards:
— Citigroup Inc.
(NYSE: C)
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Barbara J. Desoer, 67, served as the CEO and a member of the Board of Directors of Citibank, N.A., a wholly owned subsidiary of Citigroup Inc. and a diversified global financial services company, both positions she held from April 2014 through April 2019. In April 2019, Ms. Desoer joined the Board of Directors of Citigroup Inc. Ms. Desoer previously served as the COO of Citibank, N.A. from October 2013 to April 2014. Prior to Citibank, Ms. Desoer spent 35 years at Bank of America, a diversified global financial services company, most recently as President, Bank of America Home Loans, where she led the integration of Countrywide, the largest mortgage originator and servicer in the United States. In previous Bank of America roles, Ms. Desoer served as a Global Technology & Operations executive, an international market-focused position leading teams in the United Kingdom, Asia and Latin America, and President, Consumer Products. She serves on the Board of Visitors at the University of California at Berkeley. Ms. Desoer also has served on the Board of Directors of various non-profit and privately held corporations. Ms. Desoer is an experienced business leader with extensive management and international experience, and brings a deep understanding of regulated businesses.
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Executive Vice President and Chief Financial Officer, WarnerMedia Inc.
Director Since: 2017
Independent
Committee Service: Audit Committee, Chair; Compensation Committee
Other Public Company Boards: None
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Pascal Desroches, 56, is the Executive Vice President and Chief Financial Officer ("CFO") of WarnerMedia Inc. (“WarnerMedia”). WarnerMedia is one of four distinct business units operating under AT&T Inc., a leading provider of telecommunications, media and technology services globally. Mr. Desroches is responsible for all of WarnerMedia’s financial operations, facilities and technology organizations. Prior to his current role, Mr. Desroches was the Executive Vice President and CFO of Turner Broadcasting System, Inc., a subsidiary of Time Warner Inc. ("Time Warner"), a global media and entertainment company, a position he had held since 2014. Mr. Desroches was also responsible for Turner’s global technology, security and facilities organizations. Prior to joining Turner, from December 2007 to December 2014, Mr. Desroches was the Senior Vice President and Controller of Time Warner, where he was responsible for overseeing internal and external financial reporting, financial planning and analysis, procurement services, shared services program management, and worked on the management team responsible for mergers and acquisitions and other transactions. Prior to joining Time Warner, Mr. Desroches was a Partner in KPMG LLP’s Department of Professional Practice Assurance & Advisory Services in New York from 2000 to 2001. Prior to being admitted into KPMG LLP’s partnership, Mr. Desroches was a professional accounting fellow with the Office of the Chief Accountant of the SEC. Mr. Desroches is a CPA with more than 30 years of experience, and brings significant finance experience to the Board as a current CFO and former Controller of a major media company.
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General Partner, Cressey & Company
Director Since: 2007
Independent
Committee Service: Compensation Committee;
Compliance and Quality Committee
Other Public Company Boards: None
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Paul J. Diaz, 58, currently serves as a General Partner of Cressey & Company, a private equity firm focused exclusively on investing in and building healthcare businesses, a position he has held since September 2017. Mr. Diaz was an Operating Partner at Cressey & Company from March 2016 to September 2017. Since August 2014, Mr. Diaz has served as a Partner at Guidon Partners LP, a private investment partnership. He served as Executive Vice Chairman of Kindred Healthcare, Inc. (“Kindred”), a post-acute provider in the United States, which includes transitional care and rehabilitation hospitals, sub-acute units, and home healthcare and hospice agencies, from March 2015 to March 2016, CEO from January 2004 to March 2015, President from January 2002 to May 2012 and COO from January 2002 to December 2003. Prior to joining Kindred, Mr. Diaz was the Managing Member of Falcon Capital Partners, LLC, a private investment and consulting firm, and from 1996 to July 1998, Mr. Diaz served in various executive capacities, including as Executive Vice President and COO, with Mariner Health Group, Inc., a national provider of long-term care facilities, rehabilitation services and institutional pharmacies. Mr. Diaz serves on the Board of Directors of Performance Health, a private medical supply distribution company, the Board of Trustees of Johns Hopkins Medicine, where he also serves as Chair of Johns Hopkins Healthcare, its affiliated managed care subsidiary, and the Board of Visitors of the Georgetown University Law Center. Mr. Diaz also previously served on the Board of Directors of PharMerica Corporation, and from May 2002 until July 2018, served on the Board of Directors of Kindred. Mr. Diaz is an experienced business leader with significant experience in the healthcare industry and brings a deep understanding of the operational, financial and regulatory aspects of our industry and business.
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Notice of 2020 Annual Meeting and Proxy Statement
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8
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Former General Partner, New Enterprise Associates
Director Since: 2000
Independent
Committee Service: Nominating and Governance Committee
Other Public Company Boards: None
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John M. Nehra, 71, was, from 1989 until his retirement in August 2014, affiliated with New Enterprise Associates (“NEA”), a venture capital firm, including, from 1993 until his retirement, as General Partner of several of its affiliated venture capital limited partnerships. Mr. Nehra also served as Managing General Partner of Catalyst Ventures, a venture capital firm, from 1989 to 2013. Mr. Nehra served on the boards of a number of NEA’s portfolio companies until his retirement in August 2014 and remains a retired Special Partner of NEA. Mr. Nehra is an experienced business leader with approximately 44 years of experience in investment banking, research and capital markets and he brings a deep understanding of our business and industry through his nearly 20 years of service as a member of the Board as well as significant experience in the healthcare industry through his involvement with NEA’s healthcare-related portfolio companies.
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Chief Executive Officer, DaVita Inc.
Director Since: 2019
Other Public Company Boards: None
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Javier J. Rodriguez, 49, has served as our CEO since June 2019. From March 2014 until June 2019, he served as the CEO of DaVita Kidney Care. Since joining the Company in 1998, Mr. Rodriguez has served in a number of different capacities. From February 2012 to March 2014, he served as our President. From April 2006 through February 2012, he served as our Senior Vice President. Before that, from 2000 to 2006 he served as a Vice President of Operations and Payor Contracting. Mr. Rodriguez joined the Company in 1998 as a Director of Value Management. Prior to joining the Company, Mr. Rodriguez worked for Baxter Healthcare Corporation in Finance from 1995 to 1996. He also previously served as Director of Operations for CBS Marketing Inc. in Mexico City. Mr. Rodriguez provides extensive knowledge of our industry, business, regulatory environment and operations as well as significant executive leadership and management experience.
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Advisory Partner, Bain & Company, Inc.
Director Since: 2016
Independent
Committee Service: Compliance and Quality Committee
Other Public Company Boards:
— Bristol-Myers Squibb
Company (NYSE: BMY)
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Phyllis R. Yale, 62, has been an Advisory Partner with Bain & Company, Inc. (“Bain”), a global management consulting firm, since July 2010. Ms. Yale was a Partner with Bain from 1987 to July 2010, and was a leader in building Bain’s healthcare practice. In her role at Bain, Ms. Yale works with healthcare payors, providers, and medical device companies, and frequently advises the world’s leading private equity firms on their investments in the healthcare sector. She has served as a member of the Board of Directors of several public and private companies in the healthcare sector, and currently serves as a member of the Board of Directors of Blue Cross Blue Shield of Massachusetts, a not-for-profit health plan headquartered in Boston and serves on the Board of Directors of Bristol-Myers Squibb Company, a global biopharmaceutical company headquartered in New York City. Ms. Yale previously served as Chair of the Board of Directors of Kindred Healthcare, Inc., a provider of long-term healthcare services in the United States, from January 2010 until July 2018; a Director of National Surgical Hospitals, a privately held specialty hospital operator, which was acquired by Surgery Partners in 2017; and a Director of ValueOptions, Inc., a behavioral health improvement management company specializing in mental and emotional wellbeing and recovery, which merged with Beacon Health Strategies in 2014. Ms. Yale has a deep knowledge base and experience in several segments of the healthcare industry including corporate strategies, marketing and cost and quality management, as well as mergers and acquisitions.
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9
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Corporate Governance
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ü
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Annual election of all directors.
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ü
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Proxy access. Our Bylaws permit qualifying stockholders or groups of qualifying stockholders who have continuously owned at least 3% of the Company’s Common Stock for at least three consecutive years to use management’s proxy materials to nominate a number of director candidates not to exceed the greater of two or 20% of the number of directors then in office, subject to reduction in certain circumstances.
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Robust stockholder engagement, including regular engagement by independent directors. We maintain a practice of routinely meeting with our stockholders in a number of forums to encourage an ongoing, meaningful dialogue on corporate governance, executive compensation and corporate responsibility matters, as well as other items of interest to our stockholders.
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Stockholder right to call special meetings of stockholders at 10% ownership threshold.
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No stockholder rights plan/poison pill.
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Robust code of conduct. DaVita is committed to operating its business with honesty and integrity and maintaining the highest level of ethical conduct.
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Independent non-executive chair. Effective June 1, 2020 the Chair of the Board will be a non-executive, independent female director.
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ü
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Independent Board Committees. Each of the Audit, Compensation and Nominating and Governance Committees is made up solely of independent directors.
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Independent advisors. Each Board Committee has the authority to retain independent advisors.
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Majority vote standard in uncontested elections.
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Majority independent Board. Six of eight director nominees are independent.
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Robust stock ownership guidelines for senior executives and directors that link the interests of management and the Board with those of stockholders.
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Commitment to corporate social responsibility practices.
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Significant risk oversight practices.
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Notice of 2020 Annual Meeting and Proxy Statement
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Corporate Governance
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Notice of 2020 Annual Meeting and Proxy Statement
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12
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Corporate Governance
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Overview
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• Rotating cycle with anonymous written evaluations each year and live interviews with each director every other year, which includes individual director evaluations
• Process is overseen by the Nominating and Governance Committee
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Evaluation
and
Assessment
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• Directors provide feedback regarding performance and effectiveness
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Review
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• The Board reviews the results, including in executive session
• The Lead Independent Director (for pre-2020 evaluations), or Chair of the Board, as applicable, speaks with each member of the Board for one-on-one discussion, as appropriate
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Incorporation of Feedback
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• Follow-up items are addressed at subsequent Board or committee meetings, as appropriate, and committee actions are reported back to the full Board
• The Nominating and Governance Committee considers the effectiveness of the self-evaluation process
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13
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Notice of 2020 Annual Meeting and Proxy Statement
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14
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Corporate Governance
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•
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Through the DaVita Way of Giving program, $2.1 million of company donations were directed to locally-based charities across the United States. In addition, DaVita donated more than $1.40 million to local nonprofits in our home state of Colorado in 2019, spreading ripples across local communities.
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DaVita was named a distinguished member of the 2019 Bloomberg Gender-Equality Index, a metric that provides companies across the globe an opportunity to disclose and showcase their efforts in gender equality. DaVita is among only ten healthcare companies and one of two companies headquartered in Colorado to receive this honor.
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DaVita was listed on the 2019 Corporate Equality Index, a national benchmarking survey and report on corporate policies and practices related to lesbian, gay, bisexual, transgender and queer (LGBTQ) workplace equality administered by the Human Rights Campaign.
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In honor of Earth Day 2019, approximately 2,800 DaVita teammates, their families and friends volunteered over 9,300 hours through 231 environmental service projects across 7 countries.
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In 2019, more than 540 riders participated in Tour DaVita, DaVita’s annual charity bike ride, which raised over $1.2 million to support Bridge of Life, a non-profit organization founded by DaVita to serve thousands of men, women and children around the world through kidney care, primary care, education and prevention and medically supported camps for kids.
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Through Village Service Days, groups of three or more teammates plan and execute a service project with a local nonprofit. DaVita teammates, friends and family have contributed more than 160,000 volunteer hours through this program since 2014.
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DaVita was recognized by the Dow Jones Sustainability Indices ("DJSI") for its corporate responsibility program and is one of only eight U.S.- based companies in the Health Care Equipment and Services category on this year's DJSI World Index after being analyzed for its performance in regards to environmental, social and governance practices.
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DaVita has diverted approximately 621,500 pounds of electronic waste from landfills since 2015.
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93% of DaVita's centers have adopted reusable sharp containers, diverting more than 1.5 million pounds of plastic from landfills in 2019.
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DaVita’s second headquarter building received LEED Platinum certification in June 2019, achieving a LEED Platinum campus in
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15
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For the sixth year in a row, DaVita’s World Headquarters participated in Denver’s Bike to Work Day. Approximately 230 teammates pedaled their way to work, and DaVita placed No. 1 in Denver for highest participation among the large business category.
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DaVita installed energy saving building management systems in 62 additional locations in 2019, for a total of 1,955 DaVita locations.
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By 2022, DaVita’s agreements to purchase energy from wind and solar farm developments in Texas are expected to create as much clean energy annually as the amount of electricity we use to operate our U.S. centers.
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In 2019, DaVita retrofitted 210 locations with high-efficiency LED lighting, which can save up to 15% of a center's electricity use.
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DaVita has measured, and is verifying, carbon emission equivalency totals for all dates occurring on and after January 1, 2018. These emission totals include Scope 1, 2 and 3 emissions. The data will be used to identify and prioritize carbon reduction opportunities and targets, and inform DaVita’s 2025 Environmental goals.
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Reducing energy use and carbon emissions by 10% per treatment.
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Adding solid waste recycling to at least 45% of kidney care locations.
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Conducting an annual sustainability review with all national vendors and increasing the availability of environmentally preferable products and equipment and reducing packaging.
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Ensuring our new central business offices are certified as at least LEED Silver.
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Reducing paper use by 15% per treatment.
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Reducing water use by 30% per treatment.
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Notice of 2020 Annual Meeting and Proxy Statement
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16
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Corporate Governance
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Key Items Discussed with
Stockholders in
2019 and 2020
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Corporate Governance
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Executive Compensation
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Corporate Responsibility
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Board Leadership and Succession Planning
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Pay-for-Performance
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Social Responsibility Report
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Board Tenure and Refreshment
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CEO Compensation
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Workforce Development and Diversity
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Board Diversity
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Long-Term Incentive Compensation
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Sustainability
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17
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Notice of 2020 Annual Meeting and Proxy Statement
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Corporate Governance
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19
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Notice of 2020 Annual Meeting and Proxy Statement
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Corporate Governance
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Notice of 2020 Annual Meeting and Proxy Statement
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Corporate Governance
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23
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25% of the total pretax equity award value realized by the Board member from the time the Board member becomes subject to the policy to date in excess of $100,000; or
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five times the annual Board cash retainer of $80,000, or $400,000.
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Notice of 2020 Annual Meeting and Proxy Statement
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24
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Corporate Governance
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25
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2019
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2018
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Audit fees1
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$5,593,126
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$5,331,851
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Audit-related fees2
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$833,010
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$1,837,357
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Tax fees3
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$2,339,657
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$1,313,665
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All other fees
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—
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—
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Total
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$8,765,793
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$8,482,873
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1
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Includes aggregate fees for the audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting included in our Form 10-K and the three quarterly reviews of our consolidated financial statements included in our Form 10-Q and other SEC filings. In addition, audit fees include statutory audits in several countries outside of the U.S. where we conduct operations through our international subsidiaries.
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2
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Includes fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported as “Audit Fees.” The audit-related fees in 2019 and 2018 include fees for audits of our employee benefit plans, an audit of a majority-owned entity, audits of DMG’s risk bearing organizations and fees for due diligence services relating to potential acquisitions.
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3
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Includes fees for professional services rendered for tax compliance totaling $2,082,163 and $1,000,292 for 2019 and 2018, respectively, with the remainder primarily for tax technical advice.
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Notice of 2020 Annual Meeting and Proxy Statement
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26
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•
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improved key clinical outcomes in our U.S. dialysis business, including our recognition as an industry leader for the seventh consecutive year in CMS’ Quality Incentive Program and for the last six years under the CMS Five-Star Quality Rating system;
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23.5% é growth in our integrated care patient population (patients enrolled in special needs plans, ESCOs and value-based contracts), while continuing to develop integrated care capabilities and advocate for availability of integrated care on a broader scale, either through new legislation or the mandatory and
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•
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4x home modalities growth in 2019 versus in-center growth, and innovation in the use of home remote monitoring;
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closed on the previously announced sale of DMG, on June 19, 2019, at a price of $4.34 billion, subject to customary purchase price adjustments;
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•
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2.2% é U.S. dialysis revenue growth;
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•
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13.6% é international revenue growth;
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•
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2.5% é U.S. dialysis treatment growth;
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•
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89 é net increase of U.S. dialysis centers and a net increase of 18 international dialysis centers;
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•
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$2.0 billion operating cash flows from continuing operations;
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•
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repurchased over 41 million shares of our common stock for approximately $2.4 billion (including through a modified "Dutch auction" tender) and reduction of our outstanding share count by approximately 24.4% year-over-year;
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•
|
a $174 million or 19.3% reduction in routine maintenance and development capital expenditures from continuing operations, consistent with our capital efficient growth strategies; and
|
•
|
entry into a new $5.5 billion senior secured credit agreement and redemption of our 5.75% senior notes.
|
27
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
28
|
|
•
|
Inclusion of a “Change of Control” definition (as described below) as compared to our prior practice of defining Change of Control in the underlying award agreements;
|
•
|
Implementation of a one-year minimum vesting period that generally applies to all awards granted under the 2020 Plan, with an exception for 5% of shares initially available under the 2020 Plan and the ability of the administrator to waive or accelerate vesting in an award agreement or as otherwise determined by the administrator, as compared to the 2011 Plan, which only included a minimum vesting provision with respect to full value awards;
|
•
|
Implementation of an annual limitation for annual cash and equity retainers payable to non-employee directors of $700,000 per person, in the aggregate;
|
•
|
Removal of provisions relating to the performance-based compensation exception under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), in order to reflect the repeal of such exception pursuant to the Tax Cuts and Jobs Act of 2017, although still maintaining a list of performance goals for use by the administrator; and
|
•
|
Implementation of a uniform prohibition on the payment of dividends or dividend equivalents on unearned awards.
|
29
|
|
|
•
|
One-year minimum vesting provision, with exception for 5% of shares initially available under the 2020 Plan and the ability the 2020 Plan administrator to waive or accelerate vesting in an award agreement or as otherwise determined by the administrator;
|
•
|
Annual director compensation limit;
|
•
|
No discounting of stock options or stock appreciation rights;
|
•
|
No repricing or replacement of underwater stock options or stock appreciation rights without stockholder approval;
|
•
|
No dividend equivalents on stock options or stock appreciation rights;
|
•
|
No dividends or dividend equivalents on unearned full value awards; and
|
•
|
No liberal definition of “Change of Control.”
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
30
|
•
|
Creating a "pay for performance" culture: We have a pay for performance compensation culture that emphasizes long-term incentives as an important element of total compensation. This applies not just to our executive officers, but teammates throughout our organization.
|
•
|
Estimated duration of 2020 Plan: We believe that the incremental shares authorized for issuance under the 2020 Plan together with shares available for issuance under the 2011 Plan will cover annual equity grants and off-cycle grants for specific retention and/or incentive objectives for approximately five years. By comparison, we last requested stockholder approval of an incentive plan nine years ago. Shares authorized for issuance under the 2011 Plan covered a longer period of time because from 2012 through 2017, a component of the annual long-term incentive program consisted of cash-based incentives, reducing the number of shares that were granted as long-term incentive compensation. In order to further align the interests of our teammates with our stockholders, we replaced the cash-based incentive component of our long-term incentive program with stock awards in 2018.
|
•
|
Historical and projected burn rate: We calculate burn rate in accordance with the methodology utilized by Institutional Shareholder Services ("ISS"), on an option equivalent basis. Based on the ISS methodology and our historical stock price volatility, a 2.5x fungible ratio is applied to convert Full Value Awards to option equivalents. Based on this methodology, our
|
31
|
|
|
•
|
Peer group comparison: The 50th and 75th percentile of 3-year average burn rate for the comparator peer group at the time we developed the terms of the proposed 2020 Plan was 2.2% and 2.6%, respectively. While we did not target the specific amount of shares requested for issuance under the 2020 Plan based on any specific peer group comparison, we believe that the number of shares requested will accommodate a normalized burn rate in line with market practice for our peer group.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
32
|
33
|
|
|
•
|
net earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization);
|
•
|
gross or net sales or revenue;
|
•
|
net income (either before or after taxes);
|
•
|
adjusted net income;
|
•
|
operating earnings or profit;
|
•
|
cash flow (including, but not limited to, operating cash flow and free cash flow);
|
•
|
return on assets;
|
•
|
return on capital;
|
•
|
return on stockholders’ equity;
|
•
|
total stockholder return;
|
•
|
return on sales;
|
•
|
gross or net profit or operating margin;
|
•
|
costs;
|
•
|
funds from operations;
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
34
|
•
|
expenses;
|
•
|
working capital;
|
•
|
earnings per share;
|
•
|
adjusted earnings per share;
|
•
|
price per share;
|
•
|
regulatory body approval for commercialization of a product;
|
•
|
implementation or completion of critical projects or strategic initiatives;
|
•
|
market share;
|
•
|
economic value;
|
•
|
non-acquired growth;
|
•
|
new market entries;
|
•
|
acquisition targets;
|
•
|
treatment growth;
|
•
|
patient growth;
|
•
|
center growth;
|
•
|
clinical objectives, outcomes (including mortality rates) and processes;
|
•
|
physician recruitment;
|
•
|
physician retention;
|
•
|
physician relations;
|
•
|
employee turnover;
|
•
|
employee relations;
|
•
|
patient retention and satisfaction;
|
•
|
improvements in reimbursement economics;
|
•
|
commercial payor relationships and contract related targets;
|
•
|
public policy efforts; and
|
•
|
legal proceedings and litigation outcomes.
|
•
|
items related to a change in accounting principles;
|
•
|
items relating to financing activities;
|
•
|
expenses for restructuring or productivity initiatives;
|
•
|
other non-operating items;
|
•
|
items related to acquisitions;
|
•
|
items attributable to the business operations of any entity acquired by us during the performance period;
|
•
|
items related to the disposal of a business or segment of a business;
|
•
|
items related to discontinued operations;
|
•
|
items attributable to any stock dividend, stock split, combination or exchange of shares occurring during the performance period;
|
•
|
any other items of significant income or expense which are determined to be appropriate adjustments;
|
•
|
items relating to unusual, infrequently occurring, or extraordinary corporate transactions, events or developments;
|
•
|
items related to amortization of acquired intangible assets;
|
•
|
items that are outside the scope of our core, on-going business activities;
|
•
|
items related to acquired in-process research and development;
|
•
|
items relating to changes in tax laws;
|
•
|
items relating to major licensing or partnership arrangements;
|
•
|
items relating to asset impairment charges;
|
•
|
items relating to gains or losses for litigation, arbitration and contractual settlements; or
|
•
|
items relating to any other unusual, infrequently occurring, or nonrecurring events or changes in applicable laws, accounting principles or business conditions.
|
35
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
36
|
•
|
provide for the termination of any award in exchange for an amount of cash (if any) and/or other property equal to the amount that would have been attained upon the exercise of such award or realization of the participant’s rights;
|
•
|
provide for the replacement of any award with other rights or property selected by the Administrator in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon exercise of such award or realization of the participant’s rights;
|
•
|
provide that any surviving corporation (or its parent or subsidiary) will assume awards outstanding under the 2020 Plan or will substitute similar awards for those outstanding under the 2020 Plan, with appropriate adjustment of the number and kind of shares, prices, and performance criteria of such awards;
|
•
|
make adjustments (i) in the number and type of shares of Common Stock (or other securities or property) subject to outstanding awards or in the number and type of shares of restricted stock or deferred stock or (ii) to the terms and conditions of (including the grant or
|
•
|
provide that awards may be exercisable, payable or fully vested as to shares of Common Stock covered thereby; or
|
•
|
provide that any outstanding award cannot vest, be exercised or become payable after such event.
|
37
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
38
|
|
Number of shares to be issued upon exercise of outstanding options, warrants and rights(1)(2)
|
Weighted-average exercise price of outstanding options, warrants and rights(3)
|
Number of shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
Total of shares reflected in columns (a) and (c)
|
Plan Category
|
(a)
|
(b)
|
(c)
|
(d)
|
Equity compensation plans approved by stockholders
|
10,606,446
|
$64.10
|
21,958,174
|
32,564,620
|
Equity compensation plans not approved by stockholders
|
__
|
__
|
__
|
__
|
TOTAL
|
10,606,446
|
$64.10
|
21,958,174
|
32,564,620
|
39
|
|
|
|
1.
|
Policies and procedures for making, with corporate funds or assets, contributions and expenditures (direct or indirect) to (a) participate or intervene in any campaign on behalf of (or in opposition to) any candidate for public office, or (b) influence the general public, or any segment thereof, with respect to an election or referendum.
|
2.
|
Monetary and non-monetary contributions and expenditures (direct and indirect) used in the manner described in section 1 above, including:
|
a.
|
The identity of the recipient as well as the amount paid to each; and
|
b.
|
The title(s) of the person(s) in the Company responsible for decision-making.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
40
|
41
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
42
|
Name and address of beneficial owner1
|
|
Number of
shares
beneficially
owned
|
|
|
Percentage of
shares
beneficially
owned
|
|
Warren E. Buffett2
Berkshire Hathaway Inc.
3555 Farnam St.
Omaha, NE 68131
|
|
38,095,570
|
|
|
31.28
|
%
|
The Vanguard Group3
100 Vanguard Blvd.
Malvern, PA 19355
|
|
10,481,457
|
|
|
8.61
|
%
|
BlackRock, Inc.4
55 East 52nd St.
New York, NY 10055
|
|
7,302,299
|
|
|
6.00
|
%
|
Directors and Officers:
|
|
|
|
|
||
Javier J. Rodriguez5
|
|
138,163
|
|
|
*
|
|
Joel Ackerman6
|
|
13,244
|
|
|
*
|
|
Michael D. Staffieri7
|
|
60,796
|
|
|
*
|
|
Kathleen A. Waters8
|
|
14,867
|
|
|
*
|
|
LeAnne M. Zumwalt9
|
|
7,303
|
|
|
*
|
|
Kent J. Thiry10
|
|
759,296
|
|
|
*
|
|
Pamela M. Arway11
|
|
21,111
|
|
|
*
|
|
Charles G. Berg12
|
|
18,870
|
|
|
*
|
|
Barbara J. Desoer13
|
|
10,379
|
|
|
*
|
|
Pascal Desroches14
|
|
8,636
|
|
|
*
|
|
Paul J. Diaz15
|
|
17,022
|
|
|
*
|
|
Peter T. Grauer16
|
|
70,923
|
|
|
*
|
|
John M. Nehra17
|
|
56,942
|
|
|
*
|
|
Dr. William L. Roper18
|
|
17,234
|
|
|
*
|
|
Phyllis R. Yale19
|
|
8,977
|
|
|
*
|
|
All directors and executive officers as a group (17 persons)20
|
|
1,226,728
|
|
|
1.00
|
%
|
*
|
Amount represents less than 1% of our Common Stock.
|
1
|
Unless otherwise set forth below, the address of each beneficial owner is 2000 16th Street, Denver, Colorado, 80202.
|
2
|
The number of shares beneficially owned as reported for Mr. Buffet and Berkshire Hathaway, Inc. is based solely on information contained in (i) Amendment No. 4 to Schedule 13D filed with the SEC on November 12, 2019 and (ii) the Form 4 filed with the SEC on March 18, 2020, in each case by Berkshire Hathaway Inc., a diversified holding company which Mr. Buffett may be deemed to control. Such filings indicated that, as of November 7, 2019, Mr. Buffett and Berkshire Hathaway Inc. shared voting and dispositive power over 38,565,570 shares of the Company’s Common Stock, which included shares beneficially owned by certain subsidiaries of Berkshire Hathaway Inc. as a result of being a parent holding company or control person and that, on March 16, 2020, the reporting persons disposed of 470,000 shares of the Company’s Common Stock. The percentage of shares beneficially owned as reported for Mr. Buffett and Berkshire Hathaway, Inc. was calculated by the Company as of March 31, 2020, using the total shares outstanding as of that date.
|
43
|
|
|
3
|
Based solely upon information contained in Amendment No. 9 to Schedule 13G filed with the SEC on February 12, 2020, as of December 31, 2019, The Vanguard Group has sole voting power with respect to 143,478 shares, shared voting power with respect to 33,270 shares, sole dispositive power with respect to 10,317,549 shares and shared dispositive power with respect to 163,908 shares. The percentage of shares beneficially owned as reported for The Vanguard Group was calculated by the Company as of March 31, 2020, using the total shares outstanding as of that date.
|
4
|
Based solely upon information contained in Amendment No. 4 to Schedule 13G filed with the SEC on February 5, 2020, as of December 31, 2019, BlackRock, Inc., an investment advisor, has sole voting power with respect to 6,190,043 shares and sole dispositive power with respect to 7,302,299 shares. The percentage of shares beneficially owned as reported for BlackRock, Inc. was calculated by the Company as of March 31, 2020, using the total shares outstanding as of that date.
|
5
|
Includes 4,053 performance stock units, which are scheduled to vest, as of or within 60 days after March 31, 2020, and 6,601 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 46,551 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
6
|
Includes 1,116 performance stock units, which are scheduled to vest, as of or within 60 days after March 31, 2020, and 6,841 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020.
|
7
|
Includes 4,093 restricted stock units which are scheduled to vest, as of or within 60 days after March 31, 2020 and 5,719 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 40,284 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
8
|
Includes 307 performance stock units, which are scheduled to vest, as of or within 60 days after March 31, 2020, and 1,588 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020.
|
9
|
Includes 307 performance stock units, which are scheduled to vest, as of or within 60 days after March 31, 2020, and 1,677 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 11,936 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
10
|
Includes 672,653 shares held in a family trust and 55,084 performance stock units, which are scheduled to vest, as of or within 60 days after March 31, 2020. Also included are 31,559 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 179,041 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
11
|
Includes 1,872 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 4,662 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
12
|
Includes 1,418 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 4,662 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
13
|
Includes 2,267 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020.
|
14
|
Includes 2,213 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020.
|
15
|
Includes 1,872 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 4,662 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
16
|
Includes 2,734 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 6,809 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
17
|
Includes 1,872 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 4,662 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
18
|
Includes 1,872 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
44
|
Security Ownership of Certain Beneficial Owners and Management
|
|
19
|
Includes 1,853 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excludes 4,579 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
20
|
Includes 4,735 restricted stock units and 60,867 performance stock units, which are scheduled to vest, in each case, as of or within 60 days after March 31, 2020. Also includes 72,143 shares issuable upon the exercise of SSARs, which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020, as determined based on the closing price per share of our Common Stock of $76.06 on March 31, 2020. Excluded from this number are 312,510 SSARs which are exercisable (or will become exercisable), as of or within 60 days after March 31, 2020 as the stock price was below the base price on March 31, 2020.
|
45
|
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
46
|
Information About Our Executive Officers
|
|
47
|
|
|
Compensation Discussion
and Analysis
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
48
|
Compensation Discussion and Analysis
|
|
|
NEO
|
TITLE
|
Javier J. Rodriguez
|
Chief Executive Officer*
|
Kent J. Thiry
|
Executive Chairman*
|
Joel Ackerman
|
Chief Financial Officer and Treasurer
|
Michael D. Staffieri
|
Chief Operating Officer, Kidney Care
|
Kathleen A. Waters
|
Chief Legal Officer
|
LeAnne M. Zumwalt
|
Group Vice President, Government Affairs
|
•
|
Payout under the 2019 Short-Term Incentive Program ("STI Program") was above target driven by (a) above guidance results for the year on adjusted operating income, (b) individual performance on various strategic objectives, generally above the 100% level, and (c) partially offset by underperformance on the clinical objective. See "— Elements of Compensation — Short-Term Incentive Program (STI Program) for 2019."
|
•
|
Under our Long-Term Incentive Program ("LTI Program") we had several cycles that ended in 2019, with mixed outcomes based on company performance, with the majority of the opportunities being earned below target. See "—Realized LTI" for further information regarding how we review realized compensation.
|
◦
|
Fifty percent of the Performance Stock Units ("PSUs") granted in 2015 vested in 2019. The 2015 PSUs were earned at 28% of the target share amount for Messrs. Rodriguez and Staffieri and 14% of the target share amount for Mr. Thiry, due to no shares being earned under the relative TSR metric and performance below threshold on most of the other metrics.
|
◦
|
Fifty percent and 36% of the PSUs granted in 2016 to Mr. Rodriguez and Mr Thiry, respectively, vested in 2019. The 2016 PSUs were earned at 38% and 84% of the target share amount for Mr. Rodriguez and Mr. Thiry, respectively. Amounts were earned below target share amounts due to no shares being earned under the relative TSR metric and performance below threshold or target on some of the other metrics.
|
◦
|
All Stock-Settled Appreciation Rights ("SSARs") that vested in 2019 were out-of-the-money at the time of vesting due to the decline in stock price between the date of grant and the date of vesting in 2019.
|
49
|
|
|
◦
|
No payouts were earned under the cash-based long-term incentive ("Cash LTI") granted in 2016 that vested in 2019 for Messrs. Rodriguez and Staffieri and for Ms. Waters due to not meeting the Adjusted Dialysis & Lab Operating Income threshold for the 2018 performance year.
|
◦
|
The Cash LTI granted in 2017 that vested in 2020 was earned at 188% for Messrs. Rodriguez and Staffieri, Ms. Waters and Ms. Zumwalt due to Adjusted Dialysis & Lab Operating Income exceeding the target performance level for the 2019 performance year.
|
•
|
When combining the prior performance-based outcomes vesting in 2019 along with our share price performance through early 2019 at the time of vesting, Mr. Rodriguez, our CEO, has realized 3% of the originally intended grant date fair value of long-term incentives granted in prior years that vested in 2019. Mr. Thiry, our Executive Chairman, has realized 10% of the originally intended grant date fair value of long-term incentives granted in prior years that vested in 2019. See "— Executive Summary — Realized LTI."
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
50
|
Compensation Discussion and Analysis
|
|
|
51
|
|
|
Base Salary
|
|
Short-Term Incentive Program*
|
|
Long-Term Incentive Program ("LTI")
|
||
We believe it is appropriate that some portion of compensation be in a form that is assured. Base salaries can be adjusted based on individual performance, changes to portfolio of responsibilities and comparative market data.
|
|
Performance Measures
• Financial: Adjusted Operating Income from Continuing Operations (70%)
• Clinical: Home Modalities Outperformance vs. Non-Acute Non-Acquired Growth (“NAG”) (15%)
• Strategic Objectives (15%)
|
|
|
|
|
|
|
Performance Stock Units
|
|
Restricted Stock Units
|
||
|
|
|
|
|
||
|
|
• Vests 50% in three years and 50% in four years
• Payout up to 200% of target shares
• Performance criteria
75% Adjusted EPS
25% Relative TSR
|
|
• Vests 50% in three years and 50% in four years
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
52
|
Compensation Discussion and Analysis
|
|
53
|
|
|
•
|
after divesting the DaVita Medical Group ("DMG") business in June 2019 to focus primarily on the kidney care business,
|
•
|
after effectuating the CEO transition following the announced retirement of Mr. Thiry as CEO in April 2019, and
|
•
|
while continuing to navigate the ongoing intricacies of a heavily regulated healthcare sector that will be a headlining topic as part of the upcoming 2020 election cycle.
|
|
Date
|
Price
|
Premium
|
Stock price day before Mr. Rodriguez assumed CEO role
|
May 31, 2019
|
$43.42
|
56%
|
Tender clearing price
|
Aug. 16, 2019
|
$56.50
|
20%
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
54
|
Compensation Discussion and Analysis
|
|
Termination by Company without Cause or by Mr. Rodriguez for Good Reason (a "Qualifying Termination") prior to or not within two years after a Change of Control
|
Pro rata vesting; Mr. Rodriguez will have one year from the date of his termination of employment (the "Termination Date") to exercise the vested SSARs.
|
Qualifying Termination within two years after a Change of Control
|
Vesting in full; Mr. Rodriguez will have one year from the Termination Date to exercise the vested SSARs.
|
Termination by Company for Cause or by Mr. Rodriguez without Good Reason
|
Vesting will cease as of the Termination Date; Mr. Rodriguez will have three months from the Termination Date to exercise any vested SSARs.
|
Termination Upon Death or Disability
|
Pro rata vesting; Mr. Rodriguez, or his estate, will have one year from the Termination Date to exercise the vested SSARs.
|
55
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
56
|
Compensation Discussion and Analysis
|
|
•
|
improved key clinical outcomes in our U.S. dialysis business, including our recognition as an industry leader for the seventh consecutive year in CMS’ Quality Incentive Program and for the last six years under the CMS Five-Star Quality Rating system;
|
•
|
23.5% é growth in our integrated care patient population (patients enrolled in special needs plans, ESCOs and value-based contracts), while continuing to develop integrated care capabilities and advocate for availability of integrated care on a broader scale, either through new legislation or the mandatory and voluntary payment model demonstrations being developed by CMS;
|
•
|
4x home modalities growth in 2019 versus in-center growth, and innovation in the use of home remote monitoring;
|
•
|
closed on the previously announced sale of DMG, on June 19, 2019, at a price of $4.34 billion, subject to customary purchase price adjustments;
|
•
|
2.2% é U.S. dialysis revenue growth;
|
•
|
13.6% é international revenue growth;
|
•
|
2.5% é U.S. dialysis treatment growth;
|
•
|
89 é net increase of U.S. dialysis centers and a net increase of 18 international dialysis centers;
|
•
|
$2.0 billion operating cash flows from continuing operations;
|
•
|
repurchased over 41 million shares of our common stock for approximately $2.4 billion (including through a modified "Dutch auction" tender) and reduction of our outstanding share count by approximately 24.4% year-over-year;
|
•
|
a $174 million or 19.3% reduction in routine maintenance and development capital expenditures from continuing operations, consistent with our capital efficient growth strategies; and
|
•
|
entry into a new $5.5 billion senior secured credit agreement and redemption of our 5.75% senior notes.
|
57
|
|
|
•
|
clinical operating results
|
•
|
financial performance
|
•
|
advances in strategic imperatives
|
•
|
organizational development and succession planning
|
Name
|
Base
Salary1
|
|
Annual Cash
Award
|
|
|
Annual LTI
Award4
|
|
|
Total Direct Compensation
|
|
||||
Javier J. Rodriguez
|
|
$1,066,154
|
|
|
$2,791,441
|
|
2
|
|
$8,748,533
|
|
5
|
|
$12,606,128
|
|
Kent J. Thiry
|
|
$1,138,462
|
|
|
$2,399,466
|
|
2
|
|
$3,485,347
|
|
|
|
$7,023,275
|
|
Joel Ackerman
|
|
$700,000
|
|
|
$1,280,906
|
|
2
|
|
$2,987,447
|
|
6
|
|
$4,968,353
|
|
Michael D. Staffieri
|
|
$700,000
|
|
|
$1,400,000
|
|
3
|
|
$4,000,023
|
|
6
|
|
$6,100,023
|
|
Kathleen A. Waters
|
|
$566,154
|
|
|
$838,375
|
|
2
|
|
$1,493,750
|
|
6
|
|
$2,898,279
|
|
LeAnne M. Zumwalt
|
|
$426,154
|
|
|
$446,555
|
|
2
|
|
$995,799
|
|
6
|
|
$1,868,508
|
|
1
|
The amounts reported here reflect the base salary amounts actually paid during the 2019 fiscal year.
|
2
|
The amounts reported here reflect the payments made to Messrs. Rodriguez, Thiry, and Ackerman and Mss. Waters and Zumwalt under the 2019 STI Program. Ms. Zumwalt's amount excludes a performance-based bonus of $343,333, which was paid based on the achievement of specified pre-determined strategic operational goals. This amount is excluded from this column as it is not considered part of the normal 2019 annual incentive compensation payouts. It represents a portion of amounts withheld from annual bonuses from prior years pending the achievement of the additional strategic operational goals, and as such, reflects compensation for both 2019 and prior year performance.
|
3
|
Mr. Staffieri did not participate in the 2019 STI Program. The amount reported reflects the bonus payment under the annual bonus program applicable to Mr. Staffieri, as described further below in the subsection titled "— Elements of Compensation — Short-Term Incentive Program (STI Program) for 2019."
|
4
|
The amounts reported under the Annual LTI Award column consist of the grant date fair value of all 2019 annual equity awards (RSUs and PSUs). For additional details on the terms of the 2019 equity awards, see "— Executive Compensation — 2019 Summary Compensation Table" and "— Elements of Compensation — Long-Term Incentive Program (LTI Program) for 2019 — Equity Awards," respectively.
|
5
|
The amount reported includes a PSU award in connection with the promotion of Mr. Rodriguez into the role of CEO. This PSU award vests 100% on May 15, 2022, subject to Mr. Rodriguez's continued employment and the achievement of the underlying performance conditions. The grant date fair value of this PSU award was $1,777,788. This amount does not include the Premium-Priced SSAR Award as that amount was not considered 2019 compensation under applicable accounting rules.
|
6
|
The amounts reported exclude one-time SSAR grants in connection with the 2019 management transition in order to align incentives for the senior management team around the evolving strategic imperatives of the new CEO. For Mr. Ackerman and Ms. Waters, the SSARs vest 50% on June 20, 2022 and 50% on June 20, 2023, subject to the NEO’s continued employment through the applicable vesting dates. For Mr. Staffieri and Ms. Zumwalt, the SSARs vest 50% on June 20, 2021 and 50% on June 20, 2023, subject to the NEO's continued employment through the applicable vesting dates. The grant date fair value of these SSARs was as follows: Mr. Ackerman - $1,565,971, Mr.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
58
|
Compensation Discussion and Analysis
|
|
59
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
60
|
Compensation Discussion and Analysis
|
|
61
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
62
|
Compensation Discussion and Analysis
|
|
What We Do
|
|
|
|
ü
|
Align compensation with stockholder interests. The compensation program for our NEOs is designed to align the interests of our executives with the long-term interests of our stockholders.
|
ü
|
At-risk compensation. Our executive compensation program emphasizes variable (or at-risk) compensation in the form of performance-based cash and equity awards. For 2019, approximately 91% of the target total direct compensation for our CEO and, on average, approximately 83% of the target total direct compensation for NEOs other than the CEO was at-risk compensation.
|
ü
|
Multi-year vesting and performance periods. Generally, our long-term equity incentive awards have multi-year vesting and performance periods to reinforce a culture in which the Company’s long-term success takes precedence over volatile short-term results.
|
ü
|
Annual say-on-pay vote. We conduct an annual advisory “say-on-pay” vote to approve the compensation of our NEOs. At our 2019 annual meeting of stockholders, approximately 91% of the votes cast on the say-on-pay proposal were voted in favor of the 2018 compensation of our NEOs, and since 2013, on average approximately 93% of the votes cast were voted in favor of the compensation of our NEOs.
|
ü
|
Stockholder engagement. We continue to be committed to ongoing engagement with our stockholders on executive compensation, sustainability and corporate governance matters.
|
ü
|
Independent compensation consultant retained by the Compensation Committee. Our Compensation Committee uses an independent compensation consultant that reports directly to the Compensation Committee and provides no other services to the Company.
|
ü
|
Annual comparator peer group review. Our Compensation Committee, with the assistance of its independent compensation consultant, evaluates our executive compensation program against a comparator peer group, which is reviewed annually for adjustments.
|
ü
|
“Double-trigger” change of control provisions in equity award agreements. Our equity award agreements provide for double-trigger acceleration of vesting for equity awards in the event of a change of control of the Company.
|
ü
|
Limits on severance payments. Under our employment and severance arrangements with executive officers, severance payments are limited to not more than 3x base salary and bonus.
|
ü
|
Clawback policy. We have a clawback policy that permits recovery of cash incentive and equity-based compensation from executive officers in connection with certain restatements of the Company’s financial statements or significant misconduct.
|
ü
|
Stock ownership requirements. We apply meaningful stock ownership requirements to further align the interests of our executive officers with the long-term interests of our stockholders (6x base salary for our CEO and 3x base salary for all of our other executive officers).
|
ü
|
Annual risk assessment. Based on our annual risk assessment, we have concluded that our compensation program does not present any risk that is reasonably likely to have a material adverse effect on the Company.
|
What We Do Not Do
|
|
|
|
û
|
No repricing or replacing of underwater stock appreciation rights or stock options. Our equity incentive plan prohibits repricing or replacing underwater stock options or stock appreciation rights without prior stockholder approval.
|
û
|
No hedging of Company securities and restricted pledging of Company securities. Our Insider Trading Policy prohibits our directors and all employees (including our officers) from entering into any hedging transactions relating to our securities. The policy also prohibits our directors, executive officers and teammates that are VP level and above from pledging Company securities as collateral for a loan.
|
û
|
No change-of-control tax gross-ups in employment agreements. None of our employees is eligible for excise tax gross-up payments in connection with a change of control of the Company.
|
û
|
No defined benefit pension benefits. We do not have a defined benefit pension plan for any employee that provides for payments or other benefits in connection with retirement.
|
û
|
No dividends on unearned or unvested stock awards. We do not pay dividends or dividend equivalents on unearned performance-based stock awards or unvested time-based stock awards.
|
63
|
|
|
|
Name
|
|
2018 Base Salary
|
|
|
2019 Base Salary
|
|
|
Percentage Change in Base Salary in 2019
|
|
||
Javier J. Rodriguez
|
|
|
$900,000
|
|
|
|
$1,200,000
|
|
|
33
|
%
|
Kent J. Thiry
|
|
|
$1,300,000
|
|
|
|
$1,000,000
|
|
|
(23
|
%)
|
Joel Ackerman
|
|
|
$700,000
|
|
|
|
$700,000
|
|
|
0
|
%
|
Michael D. Staffieri
|
|
|
$700,000
|
|
|
|
$700,000
|
|
|
0
|
%
|
Kathleen A. Waters
|
|
|
$540,000
|
|
|
|
$580,000
|
|
|
7
|
%
|
LeAnne M. Zumwalt
|
|
|
$400,000
|
|
|
|
$440,000
|
|
|
10
|
%
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
64
|
Compensation Discussion and Analysis
|
|
Name
|
|
2019 Base
Salary |
|
|
2019 Target Incentive Opportunity
|
|
|
2019 Target Incentive Opportunity as a Percentage of Salary
|
|
||
Javier J. Rodriguez
|
|
|
$1,080,384
|
|
|
|
$1,620,575
|
|
|
150
|
%
|
Kent J. Thiry
|
|
|
$1,124,110
|
|
|
|
$1,393,014
|
|
|
124
|
%
|
Joel Ackerman
|
|
|
$700,000
|
|
|
|
$750,000
|
|
|
107
|
%
|
Kathleen A. Waters
|
|
|
$580,000
|
|
|
|
$500,000
|
|
|
86
|
%
|
LeAnne M. Zumwalt
|
|
|
$440,000
|
|
|
|
$268,000
|
|
|
61
|
%
|
65
|
|
|
2019 STI Program Performance Metrics
|
Performance Metrics Weightings
|
Criteria Range
|
Performance Based Eligibility Range (%)
|
Actual Performance
|
Eligible Payout Achieved (%)
|
Financial: Adjusted Operating Income from Continuing Operations
|
70.0%
|
$1,540 million to $1,640 million ($1,575 million target)
|
0%; 50% - 200%
|
$1,770 million
|
200.0%
|
Clinical: Home Modalities Outperformance vs. Non-Acute Non-Acquired Growth ("NAG")
|
15.0%
|
3% - 9% (6% target)
|
0%; 50% - 200%
|
3.9%
|
65.0%
|
Strategic Objectives
|
15.0%
|
Varies by NEO
|
0% - 200%
|
Varies by NEO
|
Varies by NEO
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
66
|
Compensation Discussion and Analysis
|
|
67
|
|
|
|
|
Eligible Payout Achieved
|
||||
2019 STI Program Performance Metrics
|
Performance Metrics Weightings
|
Javier J. Rodriguez
|
Kent J. Thiry
|
Joel Ackerman
|
Kathleen A. Waters
|
LeAnne M. Zumwalt
|
Financial: Adjusted Operating Income from Continuing Operations
|
70.0%
|
200.0%
|
200.0%
|
200.0%
|
200.0%
|
200.0%
|
Clinical: Home Modalities Outperformance vs. Non-Acute Non-Acquired Growth ("NAG")
|
15.0%
|
65.0%
|
65.0%
|
65.0%
|
65.0%
|
65.0%
|
Strategic Objectives
|
15.0%
|
150.0%
|
150.0%
|
140.3%
|
119.5%
|
112.5%
|
|
|
|
|
|
|
|
Total Weighted Eligible Payout Achieved
|
|
172.3%
|
172.3%
|
170.8%
|
167.7%
|
166.6%
|
Target Incentive Opportunity
|
|
$1,620,575
|
$1,393,014
|
$750,000
|
$500,000
|
$268,000
|
Total Eligible and Actual STI Program Award
|
|
$2,791,441
|
$2,399,466
|
$1,280,906
|
$838,375
|
$446,555
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
68
|
Compensation Discussion and Analysis
|
|
69
|
|
|
2019 PSU Performance Metrics
|
Performance Metrics Weightings
|
Criteria Range
|
Percent of Target PSUs
|
Vesting
|
2021 Adjusted Earnings per Share
|
37.5%
|
$4.63 - $5.62
(Target: $4.90) |
50% - 200%
|
100% May 15, 2022
|
2022 Adjusted Earnings per Share
|
37.5%
|
$4.86 - $6.29
(Target: $5.24) |
50% - 200%
|
100% May 15, 2023
|
Relative TSR*
|
25.0%
|
See below*
|
0% - 200%
|
50% May 15, 2022, 50% May 15, 2023
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
70
|
Compensation Discussion and Analysis
|
|
Name
|
Target Amount
|
Performance Achieved
|
Payout Amount
|
Javier J. Rodriguez
|
$2,100,000
|
188.3%
|
$3,953,727
|
Michael D. Staffieri
|
$2,275,000
|
188.3%
|
$4,283,204
|
Kathleen A. Waters
|
$550,000
|
188.3%
|
$1,035,500
|
LeAnne M. Zumwalt
|
$550,000
|
188.3%
|
$1,035,500
|
2019 Long-term Incentive Awards
|
|
Shares Subject to PSUs (#)
|
|
Shares Subject to RSUs (#)
|
||
Javier J. Rodriguez
|
|
69,693
|
|
|
69,694
|
|
Kent J. Thiry
|
|
34,846
|
|
|
34,847
|
|
Joel Ackerman
|
|
29,868
|
|
|
29,869
|
|
Michael D. Staffieri
|
|
—
|
|
|
79,650
|
|
Kathleen A. Waters
|
|
14,934
|
|
|
14,935
|
|
LeAnne M. Zumwalt
|
|
9,956
|
|
|
9,956
|
|
71
|
|
|
CEO Promotion PSU Performance Criteria
|
Shares Subject to PSUs
(at Target)
|
Criteria Range and Associated Vesting
|
|
Home Dialysis Penetration (Q4 2021)*
|
19,913
|
|
Vesting tied to internal goals, with vesting ranging from 50% - 200%
|
Public Policy Strategic Objectives
|
9,956
|
Vesting tied to internal goals, with vesting ranging from 0% - 200%
|
|
Internal Organizational Development Goals
|
9,956
|
|
Vesting tied to internal goals, with vesting ranging from 0% - 200%
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
72
|
Compensation Discussion and Analysis
|
|
2019 Management Transition SSAR Grants
|
Shares Subject to SSARs (#)
|
|
Joel Ackerman
|
110,000
|
|
Michael D. Staffieri
|
200,000
|
|
Kathleen A. Waters
|
80,000
|
|
LeAnne M. Zumwalt
|
40,000
|
|
73
|
|
|
|
|
|
Performance Based
Eligibility Range
|
|
Eligible
Payout Achieved
|
||||
2016 PSU Performance Metrics
|
Weight
|
Criteria Range
|
(%)
|
(Shares)
|
Actual
Performance
|
(%)
|
(Shares)
|
||
2017 Kidney Care Star Metric
|
12.5%
|
5% to 15% better than rest of industry
|
50% - 100%
|
955 – 1,910
|
Below low end of range
|
0.0
|
%
|
—
|
|
2018 Kidney Care Star Metric
|
12.5%
|
5% to 15% better than rest of industry
|
50% - 100%
|
955 – 1,910
|
Below low end of range
|
0.0
|
%
|
—
|
|
Village Health Hospital Admission Rate
|
25.0%
|
Range tied to internal goal
|
50% - 200%
|
1,910 - 7,640
|
Between target and high end of range
|
150.8
|
%
|
5,761
|
|
Relative TSR (2019 vesting)
|
25.0%
|
25th – 90th percentile
|
50% - 200%
|
1,910 – 7,640
|
Below low end of range
|
0.0
|
%
|
—
|
|
Relative TSR (2020 vesting)
|
25.0%
|
25th – 90th percentile
|
50% - 200%
|
1,910 – 7,640
|
Below low end of range
|
0.0
|
%
|
—
|
|
Total Earned PSUs
|
37.7
|
%
|
5,761
|
|
|
|
|
Performance Based
Eligibility Range
|
|
Eligible
Payout Achieved
|
||||
2017 PSU Performance Metrics
|
Weight
|
Criteria Range
|
(%)
|
(Shares)
|
Actual
Performance
|
(%)
|
(Shares)
|
||
2020 Adjusted Earnings per Share
|
75.0%
|
$4.02 - $4.88
|
50% - 200%
|
5,994 – 23,974
|
In Progress1
|
1
|
1
|
||
Relative TSR (2020 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 3,996
|
(20.7%)
|
58.7
|
%
|
1,172
|
|
Relative TSR (2021 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 3,994
|
In Progress1
|
1
|
1
|
||
Total Earned PSUs 2
|
58.7
|
%
|
1,172
|
|
1
|
In progress as of March 31, 2020.
|
2
|
Total actual PSUs were measured based on metrics for which performance periods ended on or before March 31, 2020.
|
|
|
|
Performance Based
Eligibility Range
|
|
Eligible
Payout Achieved
|
||||
2016 PSU Performance Metrics
|
Weight
|
Criteria Range
|
(%)
|
(Shares)
|
Actual
Performance
|
(%)
|
(Shares)
|
||
2019 Adjusted Earnings per Share
|
28.6%
|
$4.66 – $6.03
|
50% - 200%
|
10,405 – 41,620
|
$5.75
|
177.3
|
%
|
36,886
|
|
2018 International Adjusted Operating Income1
|
14.3%
|
($10) million - $20 million
|
50% - 200%
|
5,203 – 20,810
|
($3.8) million
|
81.0
|
%
|
8,428
|
|
2017 Kidney Care Star Metric
|
7.1%
|
5% to 15% better than rest of industry
|
50% - 100%
|
2,583 – 5,166
|
Below low end of range
|
0.0
|
%
|
—
|
|
2018 Kidney Care Star Metric
|
7.1%
|
5% to 15% better than rest of industry
|
50% - 100%
|
2,583 – 5,165
|
Below low end of range
|
0.0
|
%
|
—
|
|
Village Health Hospital Admission Rate
|
14.3%
|
Range tied to internal goal
|
50% - 200%
|
5,203 - 20,810
|
Between target and high end of range
|
150.8
|
%
|
15,691
|
|
Relative TSR (2019 vesting)
|
14.3%
|
25th – 90th percentile
|
50% - 200%
|
5,203 – 20,810
|
Below low end of range
|
0.0
|
%
|
—
|
|
Relative TSR (2020 vesting)
|
14.3%
|
25th – 90th percentile
|
50% - 200%
|
5,203 – 20,810
|
Below low end of range
|
0.0
|
%
|
—
|
|
Total Earned PSUs
|
83.8
|
%
|
61,005
|
|
1
|
Excludes non-dialysis operations, long-term incentive compensation expense, impairment charges, and operations in all countries in which the Company did not have operations as of January 1, 2016.
|
|
|
|
Performance Based
Eligibility Range
|
|
Eligible
Payout Achieved
|
||||
2017 PSU Performance Metrics
|
Weight
|
Criteria Range
|
(%)
|
(Shares)
|
Actual
Performance
|
(%)
|
(Shares)
|
||
2020 Adjusted Earnings per Share
|
75.0%
|
$4.02 - $4.88
|
50% - 200%
|
31,393 – 125,572
|
In Progress1
|
1
|
1
|
||
Relative TSR (2020 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 20,928
|
(20.7%)
|
58.7
|
%
|
6,139
|
|
Relative TSR (2021 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 20,928
|
In Progress1
|
1
|
1
|
||
Total Earned PSUs 2
|
58.7
|
%
|
6,139
|
|
1
|
In progress as of March 31, 2020.
|
2
|
Total actual PSUs were measured based on metrics for which performance periods ended on or before March 31, 2020.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
74
|
Compensation Discussion and Analysis
|
|
|
|
|
Performance Based
Eligibility Range
|
|
Eligible
Payout Achieved
|
||||
2017 PSU Performance Metrics
|
Weight
|
Criteria Range
|
(%)
|
(Shares)
|
Actual
Performance
|
(%)
|
(Shares)
|
||
2020 Adjusted Earnings per Share
|
75.0%
|
$4.02 - $4.88
|
50% - 200%
|
5,708 – 22,832
|
In Progress1
|
1
|
1
|
||
Relative TSR (2020 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 3,806
|
(20.7%)
|
58.7
|
%
|
1,116
|
|
Relative TSR (2021 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 3,804
|
In Progress1
|
1
|
1
|
||
Total Earned PSUs 2
|
58.7
|
%
|
1,116
|
|
1
|
In progress as of March 31, 2020.
|
2
|
Total actual PSUs were measured based on metrics for which performance periods ended on or before March 31, 2020.
|
1
|
In progress as of March 31, 2020.
|
2
|
Total actual PSUs were measured based on metrics for which performance periods ended on or before March 31, 2020.
|
|
|
|
Performance Based
Eligibility Range
|
|
Eligible
Payout Achieved
|
||||
2017 PSU Performance Metrics
|
Weight
|
Criteria Range
|
(%)
|
(Shares)
|
Actual
Performance
|
(%)
|
(Shares)
|
||
2020 Adjusted Earnings per Share
|
75.0%
|
$4.02 - $4.88
|
50% - 200%
|
1,570 – 6,280
|
In Progress1
|
1
|
1
|
||
Relative TSR (2020 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 1,046
|
(20.7%)
|
58.7
|
%
|
307
|
|
Relative TSR (2021 vesting)
|
12.5%
|
100% + 2 x (Company TSR - S&P 500 Total Return)
|
0% - 200%
|
0 – 1,046
|
In Progress1
|
1
|
1
|
||
Total Earned PSUs 2
|
58.7
|
%
|
307
|
|
1
|
In progress as of March 31, 2020.
|
2
|
Total actual PSUs were measured based on metrics for which performance periods ended on or before March 31, 2020.
|
75
|
|
|
•
|
The most significant change we made to our 2020 executive compensation program was with respect to our CEO. As described above, after consideration of feedback from the Company's stockholders, and consistent with a desire to create a long-term incentive plan consistent with the evolving strategic imperatives of the Company, on November 4, 2019, the Board granted the Premium-Priced SSAR Award to Mr. Rodriguez, a one-time award of 2,500,000 Premium-Priced SSARs, subject to stockholder approval of an amendment to the 2011 Plan to lift the plan provision that limits to 2,250,000 the number of shares of Common Stock that may be subject to awards made to any one person during any consecutive twelve-month period. Stockholder approval was obtained at a special meeting called for January 23, 2020, with approximately 88% of the shares present in person or by proxy and entitled to vote on the proposal voting in favor. Because the Premium-Priced SSAR Award is in lieu of any other long-term incentive awards to Mr. Rodriguez for the next five years, the Company does not intend to grant any additional equity awards to Mr. Rodriguez for five years following the Board Approval Date. The Board chose to grant the Premium-Priced SSAR Award to Mr. Rodriguez in advance of the regular 2020 annual grant cycle because it did not want to wait to incentivize Mr. Rodriguez under this new and powerful framework. See "— Executive Summary-CEO Premium-Priced SSAR Award" and "— Elements of Compensation — Long-Term Incentive Program for 2019 — Determining LTI Program Award Amounts — CEO Premium-Priced SSAR Award."
|
•
|
Other than our CEO, after thoughtful review and deliberation, and having considered last year's level of say-on-pay support of approximately 91% and the program designs of our comparator peer group, the Compensation Committee elected to retain the same general structure for the short-term incentive programs and the long-term incentive programs in 2020 as in 2019, with some refinements to each. The following summarizes the general structure of our 2020 executive compensation program:
|
◦
|
Participants: Executive officers other than Mr. Winstel (our CAO) and Mr. Thiry (who stepped down as CEO and assumed the role of Executive Chairman on June 1, 2019) participate in the Company’s standard short-term and long-term incentive programs. Mr. Thiry will participate on a pro-rated basis in 2020 in the short-term incentive program, and will not participate in the long-term incentive program, per the terms of the Executive Chairman Agreement, described further below in the " — 2019 Management Transition" section, pursuant to which his role as Executive Chairman continues until June 1, 2020. Furthermore, Mr. Rodriguez will not participate in the 2020 long-term incentive program in light of the Premium-Priced SSAR Award.
|
◦
|
The 2020 STI Program will continue to be 70% based on financial criteria, 15% based on a clinical criterion and 15% based on individual strategic objectives. However, the 2020 STI Program utilizes two financial criteria, adjusted operating income and free cash flow. The free cash flow metric was added after considering feedback from stockholders during our ongoing stockholder engagement process. In addition, the clinical criterion continues to be home modalities outperformance versus non-acute NAG, consistent with the Company's capital efficient growth strategies and in line with the President's 2019 Executive Order related to kidney care.
|
◦
|
The components of the 2020 long-term incentive award for our executive officers will vary by participant. All executive officer participants will generally have 50% of their long-term incentives as PSUs. Based on feedback from our stockholders, we felt it was important for SSARs to be a component of the 2020 executive compensation program, given its direct link to sustained stockholder value creation and incentivizing operating and financial growth. The specific allocation by executive officer depends on factors such as the officer’s role in growth initiatives and capital allocation and as well as his or her existing portfolio of equity vehicles.
|
◦
|
We continued to allocate 75% of the PSUs to Adjusted EPS criteria, and 25% to Relative TSR criteria, but based on feedback from stockholders, we switched the benchmark for relative TSR
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
76
|
Compensation Discussion and Analysis
|
|
•
|
Target payouts (100%) under the 2020 STI Program and 2020 LTI Program are designed to be achievable only with strong and consistent performance by our executives under anticipated market conditions at the time the criteria were approved. In particular:
|
◦
|
STI Program (annual incentive)—The table below summarizes the general structure of the 2020 STI Program. Our Free Cash Flow criteria range includes the low end of our most recently issued Free Cash Flow guidance as the threshold for 50% payment and requires us to exceed the high end of guidance for 200% payment. Our clinical metrics are generally tied to important clinical initiatives, and for 2020, we decided to maintain the same metric and criteria range as in 2019, given the importance to our long-term strategy to further enable the appropriate modality for our patients, as determined by the patient's physician.
|
2020 STI Program Performance Metrics
|
Performance Metrics Weightings
|
Performance Based Eligibility Range (%)1
|
Financial: Adjusted Operating Income
|
50.0%
|
50% - 200%
|
Financial: Free Cash Flow
|
20.0%
|
50% - 200%
|
Clinical: Home Modalities Outperformance vs. Non-Acute NAG2
|
15.0%
|
50% - 200%
|
Strategic Objectives3
|
15.0%
|
0% - 200%
|
1
|
Target tied to percentage of salary, with the opportunity to earn up to 200% of target, with the potential for a modifier identified in advance, namely a specific objective involving the legislation related to full capitation or regulated demonstration for ESRD.
|
2
|
Modality selections and decisions related to a patient's care are always made by the attending nephrologist and patient, and provided pursuant to a physician's order.
|
3
|
Strategic objectives are customized for each executive officer and designed to be aligned with our short-term and long-term strategic and operating initiatives.
|
◦
|
PSUs—The table below summarizes the structure of the PSUs that were granted in March 2020. In setting the adjusted earnings per share targets presented in the table below, we applied a 4% to 16% compound annual growth rate to the midpoint of the most recently issued earnings per share guidance for 2020 prior to the setting of these targets, with vesting of the target number of PSUs (or 100%) at an 8% compound annual growth rate. Costs associated with opposing potential ballot initiatives will be excluded from adjusted earnings per share results in 2022 and 2023 to determine the percentage of target PSUs that vest.
|
2020 PSU Performance Metrics
|
Performance Metrics Weightings
|
Criteria Range
|
Percent of Target PSUs
|
Vesting
|
2022 Adjusted Earnings per Share
|
37.5%
|
$6.49 - $8.07 (Target: $7.00)
|
50% - 200%
|
100% March 15, 2023
|
2023 Adjusted Earnings per Share
|
37.5%
|
$6.75 - $9.37 (Target: $7.56)
|
50% - 200%
|
100% March 15, 2024
|
Relative TSR* v. S&P Health Care Services Select Industry Index
|
25.0%
|
See below*
|
0% - 200%
|
50% March 15, 2023, 50% March 15, 2024
|
77
|
|
|
•
|
For 2019, Mr. Thiry was eligible for an annual bonus with a target opportunity determined as follows: (a) for the period from January 1, 2019 through May 31, 2019, Mr. Thiry’s target annual bonus opportunity was equal to 150% of his base salary earned during such period (which is consistent with his target annual incentive opportunity as CEO) and (b) for the period from June 1, 2019 through December 31, 2019, Mr. Thiry’s target annual bonus opportunity was equal to 100% of his base salary earned during such period.
|
•
|
For 2020, Mr. Thiry is eligible for an annual bonus with a target opportunity equal to 100% of his annual base salary, which amount will be prorated based on the portion of 2020 during which he is employed by the Company.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
78
|
Compensation Discussion and Analysis
|
|
79
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
80
|
Compensation Discussion and Analysis
|
|
|
•
|
overall revenue growth, market share increases, and improvements in controlling treatment costs;
|
•
|
capital efficiency of growth and long-term impact of capital allocation decisions;
|
•
|
legal and regulatory compliance, including healthcare regulatory compliance;
|
•
|
improved positioning of the Company for continued growth and appropriate diversification;
|
•
|
improved organizational capabilities;
|
•
|
patient growth and geographic expansion;
|
•
|
improved clinical outcomes and other measures of quality of care;
|
•
|
appropriate management and mitigation of enterprise risk;
|
•
|
selection and implementation of improved financial, operating and clinical information systems;
|
•
|
management performance in attracting and retaining high-performing employees throughout our organization and succession planning;
|
•
|
public policy advocacy efforts;
|
•
|
good corporate citizenship;
|
•
|
leadership and teammate engagement; and
|
•
|
advancement of strategic business initiatives supporting our mission to be the provider, partner and employer of choice.
|
81
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
82
|
Compensation Discussion and Analysis
|
|
Company1
|
Market
Capitalization
(in millions)2
|
Net Income
for Last 4
Quarters
(in millions)2
|
Revenue for
Last 4
Quarters
(in millions) 2
|
||||||
Abbott Laboratories
|
|
$122,209
|
|
|
$926
|
|
|
$29,575
|
|
Aetna
|
|
$66,457
|
|
|
$3,503
|
|
|
$60,421
|
|
Anthem
|
|
$70,639
|
|
|
$4,343
|
|
|
$90,588
|
|
Baxter International
|
|
$40,417
|
|
|
$912
|
|
|
$11,000
|
|
Centene Corp.
|
|
$29,462
|
|
|
$1,075
|
|
|
$52,079
|
|
Community Health Systems, Inc.
|
|
$371
|
|
|
($2,259
|
)
|
|
$13,975
|
|
Encompass Health
|
|
$7,724
|
|
|
$302
|
|
|
$4,107
|
|
Envision Healthcare
|
|
$5,532
|
|
|
($1,763
|
)
|
|
$8,144
|
|
HCA Healthcare, Inc.
|
|
$46,838
|
|
|
$2,864
|
|
|
$45,210
|
|
Laboratory Corporation of America Holdings
|
|
$17,428
|
|
|
$1,294
|
|
|
$11,166
|
|
LifePoint Health
|
|
$2,494
|
|
|
$44
|
|
|
$6,239
|
|
MEDNAX
|
|
$4,366
|
|
|
$345
|
|
|
$3,598
|
|
Molina Healthcare, Inc.
|
|
$9,004
|
|
|
($50
|
)
|
|
$19,509
|
|
Quest Diagnostics Incorporated
|
|
$14,513
|
|
|
$811
|
|
|
$7,670
|
|
Tenet Healthcare, Inc.
|
|
$2,925
|
|
|
($471
|
)
|
|
$18,769
|
|
Thermo Fisher Scientific
|
|
$96,662
|
|
|
$2,393
|
|
|
$23,094
|
|
Universal Health Services, Inc.
|
|
$11,761
|
|
|
$811
|
|
|
$10,552
|
|
WellCare Health Plans
|
|
$13,819
|
|
|
$486
|
|
|
$18,033
|
|
Summary Statistics:
|
|
|
|
|
|
||||
75th Percentile
|
|
$43,627
|
|
|
$1,185
|
|
|
$26,334
|
|
50th Percentile
|
|
$13,819
|
|
|
$811
|
|
|
$13,975
|
|
25th Percentile
|
|
$4,949
|
|
|
$122
|
|
|
$7,907
|
|
DaVita
|
|
$12,031
|
|
|
$535
|
|
|
$11,282
|
|
DaVita Percentage Rank
|
42
|
%
|
42
|
%
|
41
|
%
|
1
|
The Company’s peer group was compiled by Compensia and approved by the Compensation Committee.
|
2
|
Financial data generally publicly available as of October 12, 2018.
|
83
|
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
84
|
Compensation Discussion and Analysis
|
|
|
85
|
|
|
Compensation Committee Report
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
86
|
Risk Considerations in Our Compensation Program
|
|
•
|
a balance between cash and equity compensation;
|
•
|
a balance between short-term and long-term performance focus;
|
•
|
short-term incentive opportunities are capped and are not linked to any one specific goal;
|
•
|
severance payments are limited to 3x base salary and target bonus;
|
•
|
equity awards have meaningful vesting requirements and, in some cases, holding requirements;
|
•
|
a clawback policy that permits the Board to recover annual bonuses and longer-term incentive and equity-based compensation from executive officers and members of the Board;
|
•
|
stock ownership guidelines;
|
•
|
significant independent Compensation Committee oversight; and
|
•
|
appropriate prohibitions against hedging and pledging transactions involving equity securities of the Company by executives and members of the Board.
|
87
|
|
|
Executive Compensation
|
|
|
Year
|
|
Salary
($) |
|
Bonus1
($) |
|
Stock
Awards2,3 ($) |
|
Option
Awards4,7 ($) |
|
Non-Equity
Incentive Plan Compensation8 ($) |
|
All Other
Compensation9 ($) |
|
Total
($) |
|||||||||||||||
Javier J. Rodriguez
Chief Executive Officer |
2019
|
|
$
|
1,066,154
|
|
|
$
|
—
|
|
|
$
|
8,748,533
|
|
|
$
|
—
|
|
|
$
|
6,745,168
|
|
|
$
|
293,605
|
|
|
$
|
16,853,460
|
|
|
2018
|
|
$
|
900,000
|
|
|
$
|
—
|
|
|
$
|
3,497,922
|
|
|
$
|
1,428,751
|
|
|
$
|
1,947,978
|
|
|
$
|
131,947
|
|
|
$
|
7,906,598
|
|
||
2017
|
|
$
|
900,000
|
|
|
$
|
—
|
|
|
$
|
1,047,499
|
|
|
$
|
1,186,505
|
|
|
$
|
5,133,777
|
|
|
$
|
97,626
|
|
|
$
|
8,365,407
|
|
||
Kent J. Thiry
Executive Chairman
|
2019
|
|
$
|
1,138,462
|
|
|
$
|
—
|
|
|
$
|
3,485,347
|
|
|
$
|
—
|
|
|
$
|
2,399,466
|
|
|
$
|
608,570
|
|
|
$
|
7,631,845
|
|
|
2018
|
|
$
|
1,300,000
|
|
|
$
|
—
|
|
|
$
|
20,895,892
|
|
|
$
|
5,710,778
|
|
6
|
|
$
|
3,303,371
|
|
|
$
|
807,460
|
|
|
$
|
32,017,501
|
|
|
2017
|
|
$
|
1,300,000
|
|
|
$
|
—
|
|
|
$
|
5,486,824
|
|
|
$
|
6,215,011
|
|
|
$
|
1,750,000
|
|
|
$
|
572,923
|
|
|
$
|
15,324,758
|
|
||
Joel Ackerman
Chief Financial Officer and Treasurer
|
2019
|
|
$
|
700,000
|
|
|
$
|
—
|
|
|
$
|
2,987,447
|
|
|
$
|
1,565,971
|
|
5
|
$
|
1,280,906
|
|
|
$
|
3,840
|
|
|
$
|
6,538,164
|
|
|
2018
|
|
$
|
700,000
|
|
|
$
|
—
|
|
|
$
|
3,724,396
|
|
|
$
|
911,966
|
|
|
$
|
1,279,902
|
|
|
$
|
4,018
|
|
|
$
|
6,620,282
|
|
||
2017
|
|
$
|
576,154
|
|
|
$
|
200,000
|
|
|
$
|
997,621
|
|
|
$
|
2,127,654
|
|
|
$
|
750,000
|
|
|
$
|
160
|
|
|
$
|
4,651,589
|
|
||
Michael D. Staffieri Chief Operating Officer
|
2019
|
|
$
|
700,000
|
|
|
$
|
1,400,000
|
|
|
$
|
4,000,023
|
|
|
$
|
2,802,840
|
|
5
|
|
$
|
4,283,204
|
|
|
$
|
108,113
|
|
|
$
|
13,294,180
|
|
Kathleen A. Waters
Chief Legal Officer |
2019
|
|
$
|
566,154
|
|
|
$
|
—
|
|
|
$
|
1,493,750
|
|
|
$
|
1,138,888
|
|
5
|
$
|
1,873,875
|
|
|
$
|
3,840
|
|
|
$
|
5,076,507
|
|
|
2018
|
|
$
|
540,000
|
|
|
$
|
—
|
|
|
$
|
3,527,445
|
|
|
$
|
547,186
|
|
|
$
|
646,045
|
|
|
$
|
3,840
|
|
|
$
|
5,264,516
|
|
||
2017
|
|
$
|
540,000
|
|
|
$
|
—
|
|
|
$
|
274,361
|
|
|
$
|
310,758
|
|
|
$
|
615,000
|
|
|
$
|
23,585
|
|
|
$
|
1,763,704
|
|
||
LeAnne M. Zumwalt
Group Vice President, Government Affairs |
2019
|
|
$
|
426,154
|
|
|
$
|
—
|
|
|
$
|
995,799
|
|
|
$
|
560,568
|
|
5
|
|
$
|
1,825,388
|
|
|
$
|
3,792
|
|
|
$
|
3,811,701
|
|
2018
|
|
$
|
400,000
|
|
|
$
|
280,000
|
|
|
$
|
497,705
|
|
|
$
|
607,988
|
|
|
$
|
—
|
|
|
$
|
3,792
|
|
|
$
|
1,789,485
|
|
||
2017
|
|
$
|
400,000
|
|
|
$
|
—
|
|
|
$
|
274,361
|
|
|
$
|
310,758
|
|
|
$
|
150,000
|
|
|
$
|
192
|
|
|
$
|
1,135,311
|
|
1
|
The amounts reported in this column for 2019 represent an annual performance bonus for Mr. Staffieri, a non-STI program participant. The amounts earned under our 2019 short-term incentive program (the “2019 STI Program”) under the 2011 Plan are included in the “Non-Equity Incentive Plan Compensation” column.
|
2
|
The amounts reported in this column reflect RSU and PSU awards and represent the aggregate grant date fair value of all such awards granted to the executive during the year as estimated by the Company in accordance with FASB ASC Topic 718. In accordance with SEC rules, the amounts included in the Stock Awards column for the PSU awards granted during 2019 are calculated based on the probable outcome of the performance conditions for such awards on the grant date. If the probable outcome of the performance conditions as of grant date had been maximum performance, then the grant date fair value of such PSUs would have been as follows: Mr. Rodriguez — $6,941,423; Mr. Thiry — $3,470,663; Mr. Ackerman — $2,974,852; Ms. Waters — $1,487,428; and Ms. Zumwalt — $991,617. For Mr. Rodriguez the amounts reported also include a PSU award granted during 2019 related to his promotion to CEO. For this award, if the probable outcome of the performance conditions as of grant date had been maximum performance, then the grant date fair value of the PSU would have been $3,555,576. See Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating these amounts pursuant to FASB ASC Topic 718.
|
3
|
For Mr. Thiry his 2018 amounts also include the incremental fair value associated with (i) the modification of his outstanding equity awards as a result of the implementation of the Rule of 65 Retirement Policy and (ii) the modification of his outstanding PSU award granted in 2016 to reallocate the performance criteria related to a DMG performance metric, contingent on completion of the sale of DMG, given that upon close the performance of this criterion would not be measurable. Mr. Thiry was the only NEO with outstanding PSUs that had a performance criterion linked to a DMG related metric. The Rule of 65 Retirement Policy is effective for all executive officers, however, under FASB ASC Topic 718 a modification charge only applied to Mr. Thiry. These modification charges do not represent newly granted awards.
|
4
|
The amounts reported in this column represent the aggregate grant date fair value of SSAR awards granted to the NEOs during the year as estimated by the Company in accordance with FASB ASC Topic 718. See Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating these amounts pursuant to FASB ASC Topic 718.
|
5
|
This amount represents the aggregate grant date fair value of SSAR awards granted at the time of the 2019 management transition in order to align incentives for the senior management team around the evolving strategic imperatives of the Company and the new CEO.
|
6
|
This amount reflects the incremental fair value associated with the modification of Mr. Thiry's outstanding equity awards as a result of the implementation of the Rule of 65 Retirement Policy. See Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating these amounts pursuant to
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
88
|
Executive Compensation
|
|
7
|
On November 4, 2019, the independent members of the Board approved the Premium-Priced SSAR Award to Mr. Rodriguez, which award was subject to stockholder approval of a related amendment to the 2011 Plan. Stockholders approved such amendment to the 2011 Plan on January 23, 2020, authorizing the grant to our CEO. Since stockholder approval occurred in 2020, this award had both a grant date and service inception date in 2020 under FASB ASC Topic 718, and thus is not included in the above table for 2019.
|
8
|
The amounts reported in this column represent amounts earned for performance periods ending in 2019, 2018, and 2017, respectively. The awards are reported for the year with respect to which they were earned, regardless of when the award was granted or paid. For 2019, these amounts represent payouts with respect to the 2019 STI Program, the 2017 performance cash long-term incentive program ("2017 Cash LTI Program") and, in the case of Ms. Zumwalt, a bonus of $343,333 paid based on the achievement of specified strategic operational goals. Please see the section titled "Compensation Discussion and Analysis — Elements of Compensation — Short-Term Incentive Program (STI Program) for 2019” in this Proxy Statement for a discussion of the 2019 STI Program and Ms. Zumwalt’s bonus and the section titled "Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentive Program (LTI Program)" in this Proxy Statement for a discussion of the 2017 Cash LTI Program.
|
Name
|
|
2019 STI Program
|
|
Deferred Bonus
|
|
2017 Cash LTI Program
|
|
Total Non-Equity
Incentive Plan
Compensation
|
||||||||
Javier J. Rodriguez
|
|
$
|
2,791,441
|
|
|
$
|
—
|
|
|
$
|
3,953,727
|
|
|
$
|
6,745,168
|
|
Kent J. Thiry
|
|
$
|
2,399,466
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,399,466
|
|
Joel Ackerman
|
|
$
|
1,280,906
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,280,906
|
|
Michael D. Staffieri
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,283,204
|
|
|
$
|
4,283,204
|
|
Kathleen A. Waters
|
|
$
|
838,375
|
|
|
$
|
—
|
|
|
$
|
1,035,500
|
|
|
$
|
1,873,875
|
|
LeAnne M. Zumwalt
|
|
$
|
446,555
|
|
|
$
|
343,333
|
|
|
$
|
1,035,500
|
|
|
$
|
1,825,388
|
|
9
|
The amounts reported in this column are set forth by category below. Other than the use of a fractionally-owned or chartered corporate aircraft, the amounts disclosed are the actual or share of actual costs to the Company of providing these benefits. Because a fractionally-owned or chartered corporate aircraft is used primarily for business purposes, we do not include in the incremental cost allocated to each NEO the fixed costs that do not change based on usage. The incremental cost to us of personal use of a fractionally-owned or chartered corporate aircraft is calculated based on the variable operating costs related to the operation of the aircraft, including fuel costs and landing fees, trip-related repairs and maintenance, catering and other miscellaneous variable costs. The value of the personal use of a fractionally-owned or chartered corporate aircraft by our NEOs is included in their personal income in accordance with applicable tax regulations.
|
Name
|
|
Year
|
|
Perquisites*
($)
|
|
Life
Insurance
Premiums
($)
|
|
Company Contribution
to Defined Contribution Plan ($) |
|
Total All Other
Compensation
($)
|
||||||||
Javier J. Rodriguez
|
|
2019
|
|
$
|
290,058
|
|
|
$
|
432
|
|
|
$
|
3,115
|
|
|
$
|
293,605
|
|
Kent J. Thiry
|
|
2019
|
|
$
|
604,346
|
|
|
$
|
624
|
|
|
$
|
3,600
|
|
|
$
|
608,570
|
|
Joel Ackerman
|
|
2019
|
|
$
|
—
|
|
|
$
|
240
|
|
|
$
|
3,600
|
|
|
$
|
3,840
|
|
Michael D. Staffieri
|
|
2019
|
|
$
|
104,546
|
|
|
$
|
336
|
|
|
$
|
3,231
|
|
|
$
|
108,113
|
|
Kathleen A. Waters
|
|
2019
|
|
$
|
—
|
|
|
$
|
240
|
|
|
$
|
3,600
|
|
|
$
|
3,840
|
|
LeAnne M. Zumwalt
|
|
2019
|
|
$
|
—
|
|
|
$
|
192
|
|
|
$
|
3,600
|
|
|
$
|
3,792
|
|
*
|
Amounts for Messrs. Thiry, Rodriguez and Staffieri include, as applicable, certain personal meals and entertainment expenses, car service expenses and personal use of fractionally-owned or chartered corporate aircraft. Amounts for Messrs. Thiry and Rodriguez also include legal expenses paid by the Company on their behalf. For purposes of calculating the incremental costs to the Company of Messrs. Rodriguez, Thiry and Staffieri's personal use of Company aircraft, the total cost of the flight is allocated to personal use based upon the relative ratio of personal mileage to total mileage. Costs for fuel, ground costs, catering costs, landing fees, domestic passenger fees and federal excise tax charges are also included, if applicable. The incremental costs allocated to Messrs. Rodriguez, Thiry and Staffieri for personal aircraft usage in 2019 were $270,877, $559,723 and $104,308, respectively.
|
89
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards
|
|
|
|||||||||||||||||||||||||||||||
Name
|
Grant
Date
|
Board Approval Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
All Other Stock Awards:
Number of Shares of Stock or Units (#)
|
|
All Other Options Awards: Number of Securities Underlying Options (#)
|
|
Exercise or Base Price of Option Awards ($/Sh)
|
|
Grant Date Fair Value of Stock and Option Awards ($)6
|
||||||||||||||||||
Javier J. Rodriguez
|
—
|
|
|
1
|
$
|
—
|
|
|
$
|
1,620,575
|
|
|
$
|
4,861,725
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
26,136
|
|
|
69,693
|
|
|
139,386
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
3,470,712
|
|
|||||
5/15/2019
|
|
|
4
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
69,694
|
|
|
—
|
|
|
—
|
|
|
$
|
3,500,033
|
|
|||||
5/30/2019
|
|
5/15/2019
|
3
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
9,957
|
|
|
39,825
|
|
|
79,650
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,777,788
|
|
|||||
Kent J. Thiry
|
—
|
|
|
1
|
$
|
—
|
|
|
$
|
1,393,014
|
|
|
$
|
4,179,042
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
13,068
|
|
|
34,846
|
|
|
69,692
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,735,331
|
|
|||||
5/15/2019
|
|
|
4
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
34,847
|
|
|
—
|
|
|
—
|
|
|
$
|
1,750,016
|
|
|||||
Joel Ackerman
|
—
|
|
|
1
|
$
|
—
|
|
|
$
|
750,000
|
|
|
$
|
2,250,000
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
11,201
|
|
|
29,868
|
|
|
59,736
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,487,426
|
|
|||||
5/15/2019
|
|
|
4
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
29,869
|
|
|
—
|
|
|
—
|
|
|
$
|
1,500,021
|
|
|||||
6/20/2019
|
|
|
5
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
110,000
|
|
|
|
$52.41
|
|
|
$
|
1,565,971
|
|
||||
Michael D. Staffieri
|
5/15/2019
|
|
|
4
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
79,650
|
|
|
—
|
|
|
—
|
|
|
$
|
4,000,023
|
|
||||
6/20/2019
|
|
|
5
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
200,000
|
|
|
|
$52.41
|
|
|
$
|
2,802,840
|
|
||||
Kathleen A. Waters
|
—
|
|
|
1
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
1,500,000
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
5,601
|
|
|
14,934
|
|
|
29,868
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
743,714
|
|
|||||
5/15/2019
|
|
|
4
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
14,935
|
|
|
—
|
|
|
—
|
|
|
$
|
750,036
|
|
|||||
6/20/2019
|
|
|
5
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
80,000
|
|
|
|
$52.41
|
|
|
$
|
1,138,888
|
|
||||
LeAnne M Zumwalt
|
—
|
|
|
1
|
$
|
—
|
|
|
$
|
268,000
|
|
|
$
|
804,000
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
3,734
|
|
|
9,956
|
|
|
19,912
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
495,809
|
|
|||||
5/15/2019
|
|
|
4
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
9,956
|
|
|
—
|
|
|
—
|
|
|
$
|
499,990
|
|
|||||
6/20/2019
|
|
|
5
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
40,000
|
|
|
|
$52.41
|
|
|
$
|
560,568
|
|
1
|
Represents applicable amounts for our 2019 STI Program under the 2011 Plan. The amount in the “Maximum” column represents the maximum amount the NEO was eligible to earn under the 2019 STI Program if all performance criteria were achieved at their highest payout level, including a modifier associated with the achievement of certain pre-established objectives. The amount in the “Target” column represents the payout amounts the NEO was eligible to earn under the 2019 STI Program if all performance criteria were achieved at their target payout level.
|
2
|
This number represents PSUs awarded under the 2011 Plan. The PSU awards vest 50% on May 15, 2022 and 50% on May 15, 2023, subject to the NEO’s continued employment and the achievement of the underlying performance conditions. For a description of the PSUs, see the subsection titled “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentive Program (LTI Program) for 2019 — Equity Awards — Performance Stock Units” in this Proxy Statement.
|
3
|
This number represents a PSU awarded under the 2011 Plan and was granted in connection with the promotion of Mr. Rodriguez into the role of CEO. The PSU award vests 100% on May 15, 2022, subject to Mr. Rodriguez's continued employment and the achievement of the underlying performance conditions. The Board approved the number of PSUs on May 15, 2019 and subsequently approved the performance criteria on May 30, 2019, on which date it is deemed granted. For a description of this PSU award, see the subsection titled “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentive Program (LTI Program) for 2019 — Equity Awards — CEO Promotion PSUs” in this Proxy Statement.
|
4
|
This number represents RSUs granted under the 2011 Plan. For Messrs. Rodriguez, Ackerman, and Staffieri, and Messes Waters and Zumwalt, the RSUs vest 50% on May 15, 2022 and 50% on May 15, 2023, subject to the NEO's continued employment. For Mr. Thiry, the RSUs vest 100% on June 1, 2020, subject to Mr. Thiry's continued employment. For a description of the RSUs, see the subsection titled “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentive Program (LTI Program) for 2019 — Equity Awards — Restricted Stock Units” in this Proxy Statement.
|
5
|
This number represents SSARs awarded under the 2011 Plan. For Mr. Ackerman and Ms. Waters, the SSARs vest 50% on June 20, 2022 and 50% on June 20, 2023, subject to the NEO’s continued employment. For Mr. Staffieri and Ms. Zumwalt, the SSARs vest 50% on June 20, 2021 and 50% on June 20, 2023, subject to the NEO's continued employment. For a description of the SSARs, see the subsection titled
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
90
|
Executive Compensation
|
|
6
|
The amounts for SSARs, RSUs and PSUs are the aggregate grant date fair values of each award determined pursuant to FASB ASC Topic 718 and, in the case of PSUs, are based upon the probable outcome of the applicable performance conditions on the grant date. All SSARs granted have a five-year term. See Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FASB ASC Topic 718.
|
91
|
|
|
|
|
Option Awards15
|
|
Stock Awards
|
||||||||||||||||||||||||
Name
|
Grant
Date |
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Option Exercise Price ($)
|
Option Expiration Date
|
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
Market Value of Shares or Units of Stock That Have Not Vested1 ($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights that Have Not Vested (#)
|
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)1 |
||||||||||||||||||
Javier J. Rodriguez
|
6/2/2015
|
46,551
|
|
|
—
|
|
|
|
$83.82
|
|
|
6/2/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5/13/2016
|
62,045
|
|
2
|
62,046
|
|
2
|
|
$75.42
|
|
|
5/13/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
79,909
|
|
3
|
|
$65.48
|
|
|
6/6/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
88,213
|
|
2
|
|
$66.29
|
|
|
5/15/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
12/24/2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
2,881
|
|
5
|
|
$216,161
|
|
|
1,910
|
|
6
|
|
$143,307
|
|
||||
6/6/2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
27,969
|
|
7
|
|
$2,098,514
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
17,643
|
|
8
|
|
$1,323,754
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
61,748
|
|
9
|
|
$4,632,952
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
69,694
|
|
8
|
|
$5,229,141
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
139,386
|
|
14
|
|
$10,458,132
|
|
|||||
5/30/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
9,957
|
|
10
|
|
$747,074
|
|
|||||
Kent J. Thiry
|
6/2/2015
|
179,041
|
|
|
—
|
|
|
|
$83.82
|
|
|
6/2/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5/13/2016
|
145,522
|
|
2
|
145,522
|
|
2
|
|
$75.42
|
|
|
5/13/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
418,570
|
|
3
|
|
$65.48
|
|
|
6/6/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
12/27/2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
12,059
|
|
5
|
|
$904,787
|
|
|
5,203
|
|
6
|
|
$390,381
|
|
||||
6/6/2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
146,500
|
|
7
|
|
$10,991,895
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
90,090
|
|
8
|
|
$6,759,453
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
157,658
|
|
9
|
|
$11,829,080
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
34,847
|
|
11
|
|
$2,614,570
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
69,692
|
|
14
|
|
$5,228,991
|
|
|||||
Joel Ackerman
|
2/21/2017
|
—
|
|
|
145,159
|
|
2
|
|
$68.89
|
|
|
2/21/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5/15/2018
|
—
|
|
|
56,306
|
|
2
|
|
$66.29
|
|
|
5/15/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/20/2019
|
—
|
|
|
110,000
|
|
2
|
|
$52.41
|
|
|
6/20/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
26,637
|
|
7
|
|
$1,998,574
|
|
|||||
3/28/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
11,300
|
|
13
|
|
$847,839
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
11,261
|
|
8
|
|
$844,913
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
39,416
|
|
9
|
|
$2,957,382
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
29,869
|
|
8
|
|
$2,241,071
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
59,736
|
|
14
|
|
$4,481,992
|
|
|||||
Michael D. Staffieri
|
6/2/2015
|
40,284
|
|
|
—
|
|
|
|
$83.82
|
|
|
6/2/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5/13/2016
|
33,238
|
|
2
|
33,239
|
|
2
|
|
$75.42
|
|
|
5/13/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
74,201
|
|
3
|
|
$65.48
|
|
|
6/6/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
243,994
|
|
2
|
|
$66.29
|
|
|
5/15/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/20/2019
|
—
|
|
|
200,000
|
|
4
|
|
$52.41
|
|
|
6/20/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
12/24/2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
4,093
|
|
12
|
|
$307,098
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
79,650
|
|
8
|
|
$5,976,140
|
|
|
—
|
|
|
—
|
|
|||||
Kathleen A. Waters
|
5/6/2016
|
28,164
|
|
|
—
|
|
|
|
$75.70
|
|
|
5/6/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
6/6/2017
|
—
|
|
|
20,929
|
|
3
|
|
$65.48
|
|
|
6/6/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
33,784
|
|
2
|
|
$66.29
|
|
|
5/15/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/20/2019
|
—
|
|
|
80,000
|
|
2
|
|
$52.41
|
|
|
6/20/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
7,326
|
|
7
|
|
$549,670
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
6,757
|
|
8
|
|
$506,978
|
|
|
—
|
|
|
—
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
92
|
Executive Compensation
|
|
3/28/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
16,574
|
|
13
|
|
$1,243,547
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
23,650
|
|
9
|
|
$1,774,460
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
14,935
|
|
8
|
|
$1,120,573
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
29,868
|
|
14
|
|
$2,240,996
|
|
|||||
LeAnne M. Zumwalt
|
6/2/2015
|
11,936
|
|
|
—
|
|
|
|
$83.82
|
|
|
6/2/2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
5/13/2016
|
13,229
|
|
2
|
13,230
|
|
2
|
|
$75.42
|
|
|
5/13/2021
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
20,929
|
|
3
|
|
$65.48
|
|
|
6/6/2022
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2018
|
—
|
|
|
37,538
|
|
2
|
|
$66.29
|
|
|
5/15/2023
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/20/2019
|
—
|
|
|
40,000
|
|
4
|
|
$52.41
|
|
|
6/20/2024
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
6/6/2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
7,326
|
|
7
|
|
$549,670
|
|
|||||
5/15/2018
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
7,508
|
|
8
|
|
$563,325
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
9,956
|
|
8
|
|
$746,999
|
|
|
—
|
|
|
—
|
|
|||||
5/15/2019
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
19,912
|
|
14
|
|
$1,493,997
|
|
1
|
The market value of shares or units of stock that have not vested reflects the $75.03 per share closing price of our Common Stock on December 31, 2019, the last trading day of the year, as reported by the NYSE.
|
2
|
These SSARs vest 50% on the third and fourth anniversaries of the grant date.
|
3
|
These SSARs vest 50% each on May 15, 2020 and May 15, 2021.
|
4
|
These SSARs vest 50% on the second and fourth anniversaries of the grant date.
|
5
|
These PSUs vest 100% on May 15, 2020.
|
6
|
These PSUs vest 100% on May 15, 2020, subject to achievement of the performance conditions for the PSUs. The amounts listed here are the threshold number of shares awarded.
|
7
|
These PSUs vest 12.5% on May 15, 2020 and 87.5% on May 15, 2021, subject to achievement of the performance conditions for the PSUs. The amounts listed here reflect the shares that may be earned upon achievement of the maximum adjusted earnings per share performance criteria and the shares that may be earned at target on the relative TSR performance criteria.
|
8
|
These RSUs vest 50% each on the third and fourth anniversaries of the grant date.
|
9
|
These PSUs vest 50% each on the third and fourth anniversaries of the grant date, subject to achievement of the performance conditions for the PSUs. The amounts listed here reflect the shares that may be earned upon achievement of the maximum adjusted earnings per share performance criteria and the shares that may be earned at target on the relative TSR performance criteria.
|
10
|
These PSUs vest 100% on May 15, 2022, subject to achievement of the performance conditions for the PSUs. The amounts listed here are the threshold number of shares awarded.
|
11
|
These RSUs vest 100% on June 1, 2020.
|
12
|
These RSUs vest 100% on May 15, 2020.
|
13
|
These PSUs vest 100% on December 19, 2020 which is the 18-month anniversary of the closing of the DMG transaction, subject to continued employment through the applicable vesting date.
|
14
|
These PSUs vest 50% each on the third and fourth anniversaries of the grant date, subject to achievement of the performance conditions for the PSUs. The amounts listed here reflect the shares that may be earned upon achievement of the maximum performance criteria.
|
15
|
On November 4, 2019, the independent members of the Board approved the Premium-Priced SSAR Award, consisting of 2,500,000 premium-priced stock-settled stock appreciation rights to Mr. Rodriguez with a base price equal to $67.80 and vesting 50% on each of the three and four-year anniversaries of the Board Approval Date. The Premium-Priced SSAR Award was subject to stockholder approval of a related amendment to the 2011 Plan. Stockholders approved such amendment to the 2011 Plan on January 23, 2020, permitting the grant to our CEO. Since stockholder approval occurred in 2020, this award was not considered outstanding as of December 31, 2019.
|
93
|
|
|
|
Option Awards
|
|
Stock Awards
|
||||||||
Name
|
Number of Shares Acquired on Exercise (#)
|
Value Realized on Exercise ($)
|
|
Number of Shares Acquired on Vesting (#)
|
Value Realized on Vesting ($)1
|
||||||
Javier J. Rodriguez
|
—
|
|
$
|
—
|
|
|
4,030
|
|
$
|
194,567
|
|
Kent J. Thiry
|
—
|
|
$
|
—
|
|
|
14,270
|
|
$
|
703,206
|
|
Joel Ackerman
|
—
|
|
$
|
—
|
|
|
11,301
|
|
$
|
579,402
|
|
Michael D. Staffieri
|
—
|
|
$
|
—
|
|
|
4,425
|
|
$
|
219,966
|
|
Kathleen A. Waters
|
—
|
|
$
|
—
|
|
|
20,095
|
|
$
|
1,053,228
|
|
LeAnne M. Zumwalt
|
—
|
|
$
|
—
|
|
|
1,492
|
|
$
|
64,783
|
|
1
|
Value realized on vesting is determined by multiplying the number of shares underlying RSUs by the closing price for our Common Stock on the date of vesting, as reported by the NYSE.
|
Name
|
Executive
Contributions
in Last FY
($)1,2
|
|
Registrant
Contributions
in Last FY
($)
|
|
Aggregate Earnings in
Last FY
($)3
|
|
Aggregate Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)
|
|||||||||
Javier J. Rodriguez
|
|
|
|
|
|
|
|
|
|
|||||||||
Voluntary Deferral Plan
|
—
|
|
|
—
|
|
|
|
$188,911
|
|
|
—
|
|
|
|
$908,933
|
|
||
Kent J. Thiry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Deferred Compensation Plan
|
—
|
|
|
—
|
|
|
|
$305,920
|
|
|
—
|
|
|
|
$6,205,355
|
|
||
Voluntary Deferral Plan
|
—
|
|
|
—
|
|
|
|
$230,881
|
|
|
|
($1,127,859
|
)
|
|
|
$11,717,824
|
|
|
Joel Ackerman4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Michael D. Staffieri4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
None
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Kathleen A. Waters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred Compensation Plan
|
|
$109,077
|
|
|
—
|
|
|
|
$8,007
|
|
|
—
|
|
|
|
$117,084
|
|
|
LeAnne M. Zumwalt
|
|
|
|
|
|
|
|
|
|
|||||||||
Deferred Compensation Plan
|
|
$113,000
|
|
|
—
|
|
|
|
$48,434
|
|
|
—
|
|
|
|
$398,299
|
|
|
Voluntary Deferral Plan
|
—
|
|
|
—
|
|
|
|
$5,650
|
|
|
|
($2,113
|
)
|
|
|
$28,897
|
|
1
|
This amount is reported in the “Salary” column in the 2019 Summary Compensation Table.
|
2
|
Mr. Thiry deferred $1,162,500 in 2018 and $1,758,350 in 2017 into the Deferred Compensation Plan. Ms. Zumwalt deferred $85,577 in 2018 and $100,000 in 2017 into the Deferred Compensation Plan.
|
3
|
None of the earnings in this column are included in the 2019 Summary Compensation Table because they are not preferential or above market.
|
4
|
Mr. Ackerman and Mr. Staffieri did not participate in any of the Company’s nonqualified deferred compensation plans in 2019 or in any prior years.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
94
|
Executive Compensation
|
|
95
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
96
|
Executive Compensation
|
|
|
|
Payment of Base Salary (or multiple thereof) for a specified period following termination
|
Bonus1
|
|
Continued Health Benefits for a Specified Period Following Termination
|
Office and Secretarial Assistance
|
Total Value
|
|||||||||||||
Javier Rodriguez
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Death
|
|
$
|
—
|
|
|
$
|
—
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Disability
|
|
$
|
—
|
|
|
$
|
—
|
|
2
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Involuntary Termination Without Cause
|
|
$
|
6,269,910
|
|
3
|
$
|
2,791,441
|
|
4
|
$
|
49,990
|
|
5
|
$
|
195,613
|
|
6
|
$
|
9,306,954
|
|
Resignation for Good Reason
|
|
$
|
6,269,910
|
|
3
|
$
|
2,791,441
|
|
4
|
$
|
49,990
|
|
5
|
$
|
195,613
|
|
6
|
$
|
9,306,954
|
|
Involuntary Termination Without Cause Following a Change in Control
|
|
$
|
9,404,865
|
|
3
|
$
|
2,791,441
|
|
4
|
$
|
76,875
|
|
7
|
$
|
297,103
|
|
8
|
$
|
12,570,284
|
|
Kent J. Thiry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Death
|
|
$
|
—
|
|
|
$
|
—
|
|
9
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Disability
|
|
$
|
—
|
|
|
$
|
—
|
|
9
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Early Termination of Executive Chairman Agreement (by Mr. Thiry without Good Reason)
|
|
$
|
11,180,057
|
|
10
|
$
|
2,399,466
|
|
11
|
$
|
54,643
|
|
12
|
$
|
303,262
|
|
13
|
$
|
13,937,428
|
|
Early Termination of Executive Chairman Agreement (by the Company without Cause or by Mr. Thiry with Good Reason)
|
|
$
|
11,180,057
|
|
10
|
$
|
2,399,466
|
|
11
|
$
|
54,643
|
|
12
|
$
|
303,262
|
|
13
|
$
|
13,937,428
|
|
Joel Ackerman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Involuntary Termination Without Material Cause
|
|
$
|
700,000
|
|
14
|
$
|
1,279,902
|
|
15
|
$
|
37,133
|
|
16
|
$
|
—
|
|
|
$
|
2,017,035
|
|
Resignation for Good Cause
|
|
$
|
700,000
|
|
14
|
$
|
1,279,902
|
|
15
|
$
|
37,133
|
|
16
|
$
|
—
|
|
|
$
|
2,017,035
|
|
Resignation Following a Good Cause Event or by the Company Without Material Cause after a Change of Control
|
|
$
|
1,400,000
|
|
17
|
$
|
1,279,902
|
|
18
|
$
|
37,133
|
|
16
|
$
|
—
|
|
|
$
|
2,717,035
|
|
Michael D. Staffieri
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Involuntary Termination Without Material Cause
|
|
$
|
700,000
|
|
14
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
700,000
|
|
Resignation for Good Cause
|
|
$
|
700,000
|
|
14
|
$
|
1,200,000
|
|
20
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,900,000
|
|
Resignation in connection with a Change of Control
|
|
$
|
1,400,000
|
|
19
|
$
|
1,200,000
|
|
20
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,600,000
|
|
Kathleen A. Waters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Involuntary Termination Without Material Cause
|
|
$
|
580,000
|
|
14
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
580,000
|
|
Resignation for Good Cause
|
|
$
|
580,000
|
|
14
|
$
|
646,045
|
|
20
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,226,045
|
|
LeAnne M. Zumwalt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Involuntary Termination Without Material Cause
|
|
$
|
440,000
|
|
14
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
440,000
|
|
1
|
Does not include any amounts payable to Mr. Rodriguez, Mr. Thiry, Ms. Waters or Ms. Zumwalt pursuant to our Deferred Compensation Plan or Voluntary Deferral Plan which amounts are included in the 2019 Nonqualified Deferred Compensation Table. Such amounts are currently vested, but payment thereof may be accelerated in the event of death, disability or termination of employment.
|
2
|
Mr. Rodriguez (or his estate) will be entitled to receive the amount of any bonus earned and payable but not yet paid for the fiscal year prior to the year in which the termination occurs. As of December 31, 2019, Mr. Rodriguez had fully earned and received his bonus for 2018, the fiscal year prior to the year of assumed termination.
|
3
|
Mr. Rodriguez will be entitled to receive a lump-sum payment equal to the product of (x) two ("Severance Multiple"), and (y) the sum of his base salary in effect as of the date of termination and the Prior Bonus. “Prior Bonus” means the average of the annual incentive bonus
|
97
|
|
|
4
|
Mr. Rodriguez will be entitled to receive the amount of any bonus earned and payable but not yet paid for the fiscal year prior to the year in which the termination occurs. Mr. Rodriguez will also be entitled to receive a prorated annual incentive bonus (based on the actual bonus earned under the objective standards set forth under the 2011 Plan for the fiscal year in which the termination occurs) through and including the date of termination. On December 31, 2019, Mr. Rodriguez had fully earned his annual incentive bonus for 2019, so he would have received the full amount of his annual incentive bonus as reported in the 2019 Summary Compensation Table upon termination.
|
5
|
Mr. Rodriguez will continue to receive his health benefits for the two-year period following termination. The amount reported in the table above is the estimated actual cost of COBRA insurance premiums for Mr. Rodriguez for the two-year period following termination.
|
6
|
Mr. Rodriguez will be entitled to the use of an office and services of an administrative assistant for two years or until he obtains other full-time employment. The amounts above reflect the estimated costs to us of providing the office and continued salary for an administrative assistant's services for two years.
|
7
|
Mr. Rodriguez will continue to receive his health benefits for the three-year period following termination within two years after a change in control. The amount reported in the table above is the estimated actual cost of COBRA insurance premiums for Mr. Rodriguez for the three-year period following termination.
|
8
|
Mr. Rodriguez will be entitled to the use of an office and services of an administrative assistant for three years or until he obtains other full-time employment following termination within two years following after a change in control. The amounts above reflect the estimated costs to us of providing the office and continued salary for an administrative assistant's services for three years.
|
9
|
Mr. Thiry (or his estate) will be entitled to receive the amount of any bonus earned and payable but not yet paid for the fiscal year prior to the year in which the termination occurs. As of December 31, 2019, Mr. Thiry had fully earned and received his bonus for 2018, the fiscal year prior to the year of assumed termination.
|
10
|
Mr. Thiry will be entitled to receive a lump-sum payment equal to the product of (x) three, and (y) the sum of his base salary in effect as of the date of termination and the Prior Bonus. “Prior Bonus” means the average of the annual incentive bonus earned under the 2011 Plan (including any bonus earned and payable but not yet paid) for the last two full fiscal years before May 31, 2019. The amount reported in the table above reflects the product of (x) three, and (y) the sum of Mr. Thiry’s base salary as of May 31, 2019, which was $1,200,000, and the average of Mr. Thiry’s 2018 annual incentive bonus in the amount of $3,303,371 and Mr. Thiry’s 2017 annual incentive bonus in the amount of $1,750,000. This benefit is also payable to Mr. Thiry upon the expiration of the Executive Chairman Agreement on June 1, 2020. As noted in the CD&A, in structuring the severance terms under the Executive Chairman Agreement, the Compensation Committee considered, among other items, the fact that Mr. Thiry was entitled to severance under the terms of his existing employment agreement due to his change in position. Accordingly, the severance terms under the Executive Chairman Agreement were intended to replicate the severance benefits under his existing employment agreement that would be payable to Mr. Thiry due to the change in his role from CEO to Executive Chairman, but excluded the pro-rata 2020 STI Program payment contemplated by the employment agreement for a termination due to a change in role. As an additional retentive incentive to induce Mr. Thiry to remain employed with the Company through the expiration of the Executive Chairman Agreement, the Executive Chairman Agreement provides for the vesting of the 2019 equity awards and the pro-rata payment of the 2020 STI Program bonus if he remained through the expiration of the Executive Chairman Agreement.
|
11
|
Mr. Thiry will be entitled to receive the amount of any bonus earned and payable but not yet paid for the fiscal year prior to the year in which
|
12
|
Mr. Thiry will continue to receive his health benefits for the three-year period following termination. The amount reported in the table above is the estimated actual cost of COBRA insurance premiums for Mr. Thiry for the three-year period following termination.
|
13
|
Mr. Thiry will be entitled to the use of an office and services of an administrative assistant for three years or until he obtains other full-time employment. The amounts above reflect the estimated costs to us of providing the office and continued salary costs for an administrative assistant's services for three years.
|
14
|
The executive will be entitled to receive the executive's salary for the one-year period following termination, contingent upon execution of a release and noncompetition agreement and pursuant to the terms of the DaVita Inc. Severance Plan for Directors and Above (the “Severance Plan”), provided that in the case of Mr. Ackerman, Mr. Staffieri and Ms. Waters, they are also entitled to receive the same level of benefits as provided in the Severance Plan upon a termination for "good cause" under the terms of their employment agreements. As of December 31, 2019, the base salaries for the NEOs participating in the Severance Plan were as follows: Mr. Ackerman — $700,000; Ms. Waters — $580,000; and Ms. Zumwalt — $440,000. Such payment obligation will be reduced dollar-for-dollar by the amount of any compensation received by the executive from another employer during the severance payment period, and the executive is obligated to use reasonable efforts to find employment during such period.
|
15
|
If Mr. Ackerman is terminated, he will be entitled to receive a lump sum payment equal to the bonus paid in the year prior to the termination, pro-rated for the number of months served in the year his employment is terminated. The Company interprets this severance provision to mean the severance is based on the bonus paid “for” the year prior to the year for which a bonus was most recently earned. This severance amount is reported as the bonus paid to Mr. Ackerman for 2018.
|
16
|
Mr. Ackerman will continue to receive his health benefits for the 18-month period following his termination without material cause or resignation for good cause. The amount reported in the table above is the estimated actual cost of COBRA insurance premiums for Mr. Ackerman for the 18-month period following termination.
|
17
|
Mr. Ackerman will be entitled to receive a lump sum payment equal to two times the sum of his base salary in effect as of the date of termination upon his resignation for good cause or by the Company without material cause following a change in control. The amount reported in the table above reflects two times Mr. Ackerman’s base salary as of December 31, 2019, which was $700,000.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
98
|
Executive Compensation
|
|
18
|
Mr. Ackerman will be entitled to receive a lump sum payment equal to the bonus paid in the year prior to the termination following his resignation for good cause or by the Company without material cause following a change in control. This severance amount is reported as the bonus paid to Mr. Ackerman for 2018, which was $1,279,902.
|
19
|
Mr. Staffieri will be entitled to receive a lump sum payment equal to two times the sum of his base salary in effect as of the date of termination upon his resignation for good cause after a change in control. The amount reported in the table above reflects two times Mr. Staffieri’s base salary as of December 31, 2019, which was $700,000.
|
20
|
If Mr. Staffieri or Ms. Waters is terminated after April in a given year, the executive will be entitled to receive a lump sum payment equal to the bonus paid in the year prior to the termination, pro-rated for the number of months served in the year the executive's employment is terminated. The Company interprets this severance provision to mean the severance is based on the bonus paid “for” the year prior to the year for which a bonus was most recently earned. This severance amount is reported as the bonus paid to the executive for 2018.
|
99
|
|
|
Name
|
Value of SSARs1
|
Value of Stock Awards2
|
||||
Javier J. Rodriguez
|
$
|
1,534,113
|
|
$
|
17,272,656
|
|
Kent J. Thiry
|
See footnote 3
|
|
See footnote 3
|
|
||
Joel Ackerman
|
$
|
3,871,591
|
|
$
|
7,420,392
|
|
Michael D. Staffieri
|
$
|
7,365,127
|
|
$
|
6,283,237
|
|
Kathleen A. Waters
|
$
|
2,304,744
|
|
$
|
4,641,506
|
|
LeAnne M. Zumwalt
|
See footnote 3
|
|
See footnote 3
|
|
1
|
Values are based on the aggregate difference between the respective base prices and the closing sale price of our Common Stock on December 31, 2019, which was $75.03 per share, as reported by the NYSE.
|
2
|
Values are based on the aggregate number of shares underlying PSUs and RSUs multiplied by the closing sale price of our Common Stock on December 31, 2019, which was $75.03 per share, as reported by the NYSE. For PSUs, performance through December 31, 2019 was used to determine the shares that would vest upon a Change of Control. Per the award agreements, all PSU performance metrics in which the performance period has not completed, convert to a relative TSR performance metric upon a Change of Control.
|
3
|
Mr. Thiry and Ms. Zumwalt satisfied the requirements for Rule of 65 Retirement Policy treatment as of December 31, 2019, and as such, in the event of their termination from the Company, they would receive the benefits set forth below under the section "Rule of 65 Retirement Policy" for their outstanding awards other than Mr. Thiry's 2019 equity grants. In the event Mr. Thiry's employment is terminated prior to the expiration of the Executive Chairman Agreement by the Company without Cause or due to Mr. Thiry's resignation of Good Reason, death or disability prior to the Expiration Date, the 2019 RSUs will vest in full upon such termination and the 2019 PSUs would remain eligible to vest (subject to satisfaction of the applicable performance goals) to the same extent as if Mr. Thiry had remained employed through the vesting date. The estimated value of such accelerated vesting of the 2019 equity awards is $7,253,300, with the achievement of the PSU performance conditions assumed at the target performance level.
|
Name
|
Value of SSARs1
|
Value of Stock Awards2
|
||||
Javier J. Rodriguez
|
$
|
—
|
|
$
|
—
|
|
Kent J. Thiry
|
$
|
3,997,344
|
|
$
|
28,341,307
|
|
Joel Ackerman
|
$
|
—
|
|
$
|
—
|
|
Michael D. Staffieri
|
$
|
—
|
|
$
|
—
|
|
Kathleen A. Waters
|
$
|
—
|
|
$
|
—
|
|
LeAnne M. Zumwalt
|
$
|
1,432,754
|
|
$
|
3,122,899
|
|
1
|
Values are based on the aggregate difference between the respective base prices and the closing sale price of our Common Stock on December 31, 2019, which was $75.03 per share, as reported by the NYSE.
|
2
|
Values are based on the aggregate number of shares underlying PSUs and RSUs multiplied by the closing sale price of our Common Stock on December 31, 2019, which was $75.03 per share, as reported by the NYSE. For PSUs, the expected payout as of December 31, 2019 was used to determine the shares.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
100
|
Executive Compensation
|
|
Name
|
Value of SSARs1
|
Value of Stock Awards2
|
||||
Javier J. Rodriguez
|
$
|
770,982
|
|
$
|
17,417,464
|
|
Kent J. Thiry
|
$
|
—
|
|
$
|
18,747,971
|
|
Joel Ackerman
|
$
|
2,980,314
|
|
$
|
7,016,881
|
|
Michael D. Staffieri
|
$
|
6,656,508
|
|
$
|
5,976,140
|
|
Kathleen A. Waters
|
$
|
2,104,872
|
|
$
|
3,762,004
|
|
LeAnne M. Zumwalt
|
$
|
1,232,882
|
|
$
|
2,057,323
|
|
1
|
Values are based on the aggregate difference between the respective base prices and the closing sale price of our Common Stock on December 31, 2019 for the relevant awards, which was $75.03 per share, as reported by the NYSE.
|
2
|
Values are based on the aggregate number of shares underlying PSUs (at target) and RSUs for the relevant awards, multiplied by the closing sale price of our Common Stock on December 31, 2019, which was $75.03 per share, as reported by the NYSE.
|
101
|
|
|
Pay Ratio Disclosure
|
|
•
|
The median of the annual total compensation of all of our teammates, other than Mr. Rodriguez, was $61,536.
|
•
|
Mr. Rodriguez’s annual total compensation was $17,629,901. This amount differs from the amount reported in the Total column of the 2019 Summary Compensation Table due to the annualization of Mr. Rodriguez's compensation to reflect his June 1, 2019 promotion to the position of Chief Executive Officer and the inclusion of the value of non-discriminatory benefits, each as discussed further below.
|
•
|
Based on this information, the ratio of the annual total compensation of Mr. Rodriguez to the median of the annual total compensation of all teammates is estimated to be 286 to 1.
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
102
|
Total U.S. Teammates
|
56,751
|
|
Total non-U.S. Teammates
|
5,176
|
(excluding 2,484 teammates)
|
Total Workforce for Median Calculation
|
61,927
|
|
103
|
|
|
Compensation of Directors
|
|
Name
|
Fees Earned
($)1
|
Stock Awards
($)2
|
SSAR Awards
($)3
|
All Other Compensation
($)4
|
Total
($)
|
||||||||||
Pamela M. Arway
|
|
$214,500
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$380,765
|
|
Charles G. Berg
|
|
$105,000
|
|
|
$166,265
|
|
|
$—
|
|
|
$5,071,726
|
|
|
$5,342,991
|
|
Barbara J. Desoer
|
|
$221,500
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$387,765
|
|
Pascal Desroches
|
|
$215,000
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$381,265
|
|
Paul J. Diaz
|
|
$120,000
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$286,265
|
|
Peter T. Grauer
|
|
$155,000
|
|
|
$242,778
|
|
|
$—
|
|
|
$—
|
|
|
$397,778
|
|
John M. Nehra
|
|
$128,750
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$295,015
|
|
Dr. William L. Roper
|
|
$148,750
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$315,015
|
|
Phyllis R. Yale
|
|
$114,000
|
|
|
$166,265
|
|
|
$—
|
|
|
$—
|
|
|
$280,265
|
|
1
|
Consists of the amounts described below under the subsection “— Annual Retainers,” “— Meeting Fees,” and “— Expense Reimbursement and Per Diem Compensation.” With respect to Mr. Grauer, includes the $37,500 cash retainer for service as Lead Independent Director. With respect to Ms. Arway and Ms. Desoer, includes the $50,000 cash retainer for service as chair of the Compensation Committee and Compliance and Quality Committee, respectively. With respect to Mr. Desroches, includes the $50,000 cash retainer for service as chair of the Audit Committee. With respect to Mr. Nehra and Dr. Roper, includes pro-rated portions of the $25,000 cash retainer for service as chair of the Public Policy Committee and Clinical Performance Committee, respectively, in the amounts of $18,750 and $18,750, respectively. The Public Policy Committee and Clinical Performance Committee were dissolved in 2019 and their respective duties and responsibilities reassigned to either the full Board or another existing committee, as discussed in "Corporate Governance — Committees of the Board" section above. With respect to Ms. Arway and Ms. Desoer, includes $18,000 and $30,000, respectively, in per diem compensation paid pursuant to the Company’s Non-Employee Director Compensation Policy for additional time spent in 2019 on Board matters.
|
2
|
The amounts reported in this column reflect the aggregate grant date fair value of all direct stock issuance awards ("DSI") granted to our non-employee directors during 2019 as estimated by the Company in accordance with FASB ASC Topic 718. This includes one of the four quarterly grants under the DSI component of the equity retainer under the prior compensation policy for non-employee directors effective at the beginning of 2019 and granted on March 31, 2019 and three out of the four quarterly grants under the new non-employee director compensation policy granted on May 15, 2019; August 15, 2019; and November 15, 2019. With respect to Mr. Grauer, this amount also includes one of the four quarterly grants under the DSI component of the equity retainer for the Lead Independent Director under the prior compensation policy for non-employee directors effective at the beginning of 2019 and granted on March 31, 2019 and three out of the four quarterly grants for the Lead Independent Director under the new non-employee director compensation policy granted on May 15, 2019; August 15, 2019 and November 15, 2019. See Note 18 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating the grant date fair value pursuant to FASB ASC Topic 718.
|
3
|
As of December 31, 2019, each active non-employee director had the following number of SSARs outstanding: Ms. Arway, 24,020; Mr. Berg, 20,443; Ms. Desoer, 23,174; Mr. Desroches, 16,989; Mr. Diaz, 24,020; Mr. Grauer, 35,083; Mr. Nehra, 24,020; Dr. Roper, 24,020; and Ms. Yale, 18,922.
|
4
|
The amount reported here for Mr. Berg includes $71,726 related to personal use of fractionally-owned or chartered corporate aircraft for a fixed number of hours, as approved by our Board of Directors. This amount is calculated for Mr. Berg in the same manner as for our executives. See Footnote 9 to the 2019 Summary Compensation Table under the heading, "Executive Compensation—2019 Summary Compensation Table" for additional detail on the calculation of this amount. The amount also includes $5.0 million paid to Mr. Berg upon the closing of the DMG transaction in June 2019 for an aggregate purchase price of $4.34 billion, subject to certain specified adjustments, in recognition of his instrumental role and significant contributions in closing a transaction that the Board believes brought significant value to the Company and its stockholders. For additional information, see "— DMG Transaction Payment to Mr. Berg."
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
104
|
Compensation of Directors
|
|
105
|
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
106
|
Compensation of Directors
|
|
107
|
|
|
Compensation Committee Interlocks and
Insider Participation
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
108
|
Certain Relationships and Related
Transactions
|
|
•
|
the size of the transaction and the amount payable to a related person;
|
•
|
the nature of the interest of the related person in the transaction;
|
•
|
whether the transaction may involve a conflict of interest; and
|
•
|
whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unaffiliated third parties.
|
109
|
|
|
Audit Committee Report
|
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
110
|
Stockholder Proposals for 2021 Annual Meeting
|
|
111
|
|
|
Other Matters
|
|
|
Samantha A. Caldwell
|
Corporate Secretary
|
|
Notice of 2020 Annual Meeting and Proxy Statement
|
112
|
(i)
|
A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall include appropriately authorized instruction by the Holder or other person then entitled to exercise the Option or such portion of the Option;
|
(ii)
|
Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations, the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other applicable law. The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;
|
(iii)
|
In the event that the Option shall be exercised pursuant to Section 10.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option, as determined in the sole discretion of the Administrator; and
|
(iv)
|
Full payment of the exercise or base price and applicable withholding taxes to the stock plan administrator of the Company for the Shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Sections 10.1 and 10.2.
|