UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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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 Pursuant to §240.14a-12

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TELADOC HEALTH, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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TELADOC HEALTH, INC.

 

 

 

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Teladoc Health, Inc.
2 Manhattanville Road, Suite 203
Purchase, New York 10577
(203) 635-2002

www.teladochealth.com

2020 PROXY STATEMENT

The Board of Directors (the “Board”) of Teladoc Health, Inc. (“Teladoc Health” or the “Company”) is furnishing you this proxy statement in connection with the solicitation of proxies for use at the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held via live webcast at www.virtualshareholdermeeting.com/TDOC2020 on Thursday, May 28, 2020 at 2:00 p.m. EDT. At the meeting, stockholders will be asked to consider and vote upon the following matters:

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electing the director-nominees named in the proxy statement;

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approving, on an advisory basis, the compensation of Teladoc Health’s named executive officers;

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ratifying the appointment of Ernst & Young LLP as Teladoc Health’s independent registered public accounting firm for the fiscal year ending December 31, 2020; and

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transacting such other business as may properly come before the meeting or any postponement(s) or adjournment(s) thereof.

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By submitting your proxy (via the Internet, telephone or mail), you authorize Mr. Adam C. Vandervoort, Teladoc Health’s Chief Legal Officer and Secretary, and Ms. Mala Murthy, Teladoc Health’s Chief Financial Officer and Controller, to represent you and vote your shares at the meeting in accordance with your instructions. They also may vote your shares to adjourn the meeting and will be authorized to vote your shares at any postponement(s) or adjournment(s) of the meeting.

Teladoc Health’s 2019 Annual Report, which includes Teladoc Health’s audited financial statements, is being made available to Teladoc Health’s stockholders concurrently herewith. Although the 2019 Annual Report is being made available concurrently with this proxy statement, it does not constitute a part of the proxy solicitation materials and is not incorporated by reference into this proxy statement.

We are first making this proxy statement and accompanying materials available to stockholders on or about April 14, 2020.

We will be hosting the Annual Meeting live via the Internet. A summary of the information you need to attend the meeting online is provided below:

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Any stockholder can attend the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/TDOC2020

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Webcast starts at 2:00 p.m. EDT

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Stockholders need a sixteen-digit control number to join the Annual Meeting

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Stockholders of record at the close of business on April 3, 2020 may vote and submit questions while attending the Annual Meeting on the Internet

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YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY VOTE YOUR SHARES OVER THE INTERNET, BY TELEPHONE OR BY MAIL.

 

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INFORMATION ABOUT THE ANNUAL MEETING

Why am I receiving this proxy statement?

Teladoc Health is soliciting proxies for the Annual Meeting. You are receiving a proxy statement because you owned shares of Teladoc Health common stock at the close of business on April 3, 2020, the record date for the Annual Meeting, which entitles you to vote at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the Annual Meeting. This proxy statement describes the matters on which we would like you to vote and provides information on those matters so that you can make an informed decision.

What is the purpose of the Annual Meeting?

At the Annual Meeting, the stockholders will be asked to consider and vote upon the following matters:

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electing the director-nominees named in this proxy statement;

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approving, on an advisory basis, the compensation of Teladoc Health’s named executive officers;

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3.

ratifying the appointment of Ernst & Young LLP as Teladoc Health’s independent registered public accounting firm for the fiscal year ending December 31, 2020; and

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such other business as may properly come before the meeting or any postponement(s) or adjournment(s) thereof.

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If any other matter properly comes before the stockholders for a vote at the online meeting, however, the proxy holders will vote your shares in accordance with their best judgment.

Why is the Annual Meeting being webcast?

The Annual Meeting is being held on a virtual-only basis in order to reach the broadest number of stockholders possible and to save costs relative to holding a physical meeting.

Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), we are permitted to furnish proxy materials, including this proxy statement and our 2019 Annual Report, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail, you will not receive a printed copy of the proxy materials. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice, which was mailed to our stockholders, will instruct you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. If you vote by Internet or telephone, please do not also mail your proxy card.

Who is entitled to vote?

The record date for the meeting is April 3, 2020. Only stockholders of record at the close of business on that date are entitled to vote at the meeting. The only class of stock entitled to be voted at the meeting is Teladoc Health common stock. Each outstanding share of common stock is entitled to one vote for all matters before the meeting. At the close of business on the record date, there were 74,077,919 shares of Teladoc Health common stock outstanding.

A list of stockholders entitled to vote at the Annual Meeting will be available for examination on the Internet through the virtual web conference during the Annual Meeting.

 

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Am I entitled to vote if my shares are held in “street name”?

If your shares are held by a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares held in “street name.” If your shares are held in street name, the proxy materials are being made available to you by your bank, brokerage firm or other nominee, as the record holder, along with voting instructions. As the beneficial owner, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions. We encourage you to provide specific instructions to your broker by returning your proxy card or by voting electronically via the Internet or by telephone, if permitted by the broker or other nominee that holds your shares. This ensures that your shares will be properly voted at the Annual Meeting.

How are abstentions and broker non-votes treated?

Shares of our common stock represented by proxies that are marked “ABSTAIN,” or which constitute broker non-votes, will be counted as present at the meeting for the purpose of determining a quorum. Under the rules that govern brokers who have record ownership of shares that are held in “street name” for their clients, brokers may vote such shares on behalf of their clients with respect to “routine” matters (such as the ratification of auditors), but not with respect to non-routine matters (such as the election of directors, an advisory vote on executive compensation or a proposal submitted by a stockholder). If the proposals to be acted upon at the Annual Meeting include both routine and non-routine matters, the broker may turn in a proxy card for uninstructed shares that votes on the routine matters, but expressly states that the broker is not voting on non-routine matters. This is called a “broker non-vote” as to non-routine matters.

Abstentions and broker non-votes will have no effect on the results of the vote on the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 2) or the ratification of the appointment of Ernst & Young LLP (Proposal 3).

How can I vote my shares without attending the online meeting?

Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the online meeting. If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the Internet or telephone by following the instructions provided in the Notice, or, if you requested to receive printed proxy materials, you can also vote by mail pursuant to instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the Internet or telephone, or, if you requested to receive printed proxy materials, you can also vote by mail by following the voting instruction card provided to you by your broker, bank, trustee or nominee.

Proxies submitted electronically or by telephone as described above must be received by 11:59 p.m. EDT on May 27, 2020. Proxies submitted by mail should be received before 10:00 a.m. EDT on May 27, 2020.

If you submit a proxy but do not indicate any voting instructions, your shares will be voted:

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“FOR” ratifying the appointment of Ernst & Young LLP as Teladoc Health’s independent registered public accounting firm for the fiscal year ending December 31, 2020 (Proposal 3).

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Can I revoke my proxy and change my vote?

You may change your vote at any time prior to the taking of the vote at the online meeting. If you are the stockholder of record, you may change your vote by:

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granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method);

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(2)

providing a written notice of revocation to Teladoc Health’s corporate secretary at Teladoc Health, Inc., 2 Manhattanville Road, Suite 203, Purchase, New York 10577 prior to your shares being voted; or

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attending the online meeting AND voting.

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Attendance at the online meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided, or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the online meeting and voting.

How many shares must be present to hold the online meeting?

A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of common stock outstanding on the record date will constitute a quorum. Proxies received but marked as abstentions or treated as broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

If a quorum is not present or represented at the meeting, the holders of a majority of the shares entitled to vote at the meeting who are present in person or represented by proxy, or the chairman of the meeting, may adjourn the meeting until a quorum is present or represented. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given.

How can I vote my shares during the online meeting?

The Company will be hosting the Annual Meeting live online. You can attend the Annual Meeting live online at www.virtualshareholdermeeting.com/TDOC2020. The webcast will start at 2:00 p.m. EDT. You may vote and submit questions while attending the meeting online. You will need the sixteen-digit control number included on your Notice or your proxy card (if you received a printed copy of the proxy materials) in order to be able to enter the meeting.

Shares held in your name as the stockholder of record may be voted by you, while the polls remain open, at www.virtualshareholdermeeting.com/TDOC2020 during the meeting. You will need your control number found in the Notice. Shares held beneficially in street name may be voted by you at the meeting only if you obtain a legal proxy from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the online meeting, we recommend that you also submit your proxy or voting instructions as described above so that your vote will be counted if you later decide not to attend the online meeting.

Will my vote be kept confidential?

Yes, your vote will be kept confidential and not disclosed to Teladoc Health unless:

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required by law;

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you expressly request disclosure on your proxy; or

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there is a proxy contest.

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Who will count the votes?

Broadridge Financial Solutions, an independent third party, will tabulate and certify the votes. A representative of Broadridge Financial Solutions will serve as the inspector of election.

How does the Board recommend I vote on the proposals?

The Board recommends that you vote:

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“FOR” the election of the director-nominees to the Board (Proposal 1);

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“FOR” the approval of the compensation of Teladoc Health’s named executive officers (Proposal 2); and

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“FOR” ratifying the appointment of Ernst & Young LLP as Teladoc Health’s independent registered public accounting firm for the fiscal year ending December 31, 2020 (Proposal 3).

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What vote is required to approve each proposal and how are votes counted?

Who can help answer my questions regarding the Annual Meeting or the proposals?

You may contact Teladoc Health to assist you with your questions. You may reach Teladoc Health at:​

Teladoc Health, Inc.

Attention: Investor Relations
2 Manhattanville Road, Suite 203
Purchase, New York 10577
(203) 635-2002

 

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CORPORATE GOVERNANCE

Corporate Governance Guidelines and Code of Business Conduct and Ethics

Our Board oversees the management of the Company and its business for the benefit of our stockholders in order to enhance stockholder value over the long term. The Board has adopted Corporate Governance Guidelines to assist it in the exercise of its responsibilities. The Corporate Governance Guidelines are reviewed annually and periodically amended as the Board enhances the Company’s corporate governance practices.

The Board has also adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. The purpose of this code is to promote honest and ethical conduct for conducting the business of the Company consistent with the highest standards of business ethics. Our Code of Business Conduct and Ethics establishes our policies and expectations with respect to a wide range of business conduct, including the preparation and maintenance of our financial and accounting information, our compliance with laws and possible conflicts of interest.

We intend to satisfy the disclosure requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), regarding any amendment to, or waiver from a material provision of our Code of Business Conduct and Ethics involving our principal executive, financial or accounting officer or controller by posting such information on our website. The Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website at ir.teladochealth.com by clicking through “Corporate Governance.”

Board of Directors and Committees

Board Leadership Structure

Our governance framework provides the Board with the flexibility to select the appropriate leadership structure for Teladoc Health. This will be driven by the needs of the Company as well as the particular makeup of the Board at any point in time. As a result, no policy exists requiring the combination or separation of leadership roles, and Teladoc Health’s governing documents do not mandate a particular structure.

Our current leadership structure consists of the Chairman of the Board, a separate Chief Executive Officer and strong, active independent directors. The Chief Executive Officer is responsible for setting the strategic direction of the Company and for the day-to-day leadership and management of the Company, while the Chairman of the Board provides guidance to the Chief Executive Officer, directs the agenda for Board meetings and presides over meetings of the full Board. Another component of our leadership structure is the active role played by our independent directors in overseeing the Company’s business, both at the Board and Committee level.

Consistent with our Corporate Governance Guidelines, 11 of 12 of our current directors are considered independent within the meaning of the rules of the New York Stock Exchange (the “NYSE”), the non-independent member being Jason Gorevic, our Chief Executive Officer. In addition, all members of the Audit, Compensation and Nominating and Corporate Governance Committees satisfy the applicable independence criteria of the SEC and NYSE. The Board has determined that each member of the Audit Committee is financially literate and that at least three members of the Audit Committee, Messrs. Shedlarz and Goldstein and Ms. Jacobson, are “audit committee financial experts” as such term is defined in Item 407 of Regulation S-K promulgated by the SEC.

At least annually, the Nominating and Corporate Governance Committee discusses the structure and composition of the Board and reviews the current leadership structure. This is discussed with the full Board as part of the Board’s annual evaluation to assess its effectiveness and takes into account our current business plans and long-term strategy, as well as the particular makeup of the Board at that time.

The Board held the following meetings during 2019, either in person or by teleconference: six full-Board meetings; five Audit Committee meetings; seven Compensation Committee meetings; four Nominating and Corporate Governance Committee meetings; and four Quality of Care and Patient Safety Committee

 

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meetings. During 2019, each of our directors attended at least 75% of the aggregate of: (i) the total number of meetings of the full Board; and (ii) the total number of meetings held by all committees of the Board on which he or she served. Under Teladoc Health’s Corporate Governance Guidelines, directors are expected to be active and engaged in discharging their duties and to keep themselves informed about Company business and operations. Each director is expected to attend the Annual Meeting. All of our directors that were directors at the time of the 2019 annual meeting of stockholders (the “2019 Annual Meeting”) attended the 2019 Annual Meeting.

Non-employee Board members meet without management present at least quarterly, at regularly scheduled executive sessions. Mr. Snow, Chairman of the Board, presides over meetings of the non-employee and independent directors. The purpose of these sessions is to promote open discussions among the independent directors concerning the business and affairs of the Company as well as matters concerning management, without any member of management present.

Committees of the Board

The Board has four standing committees: Audit; Compensation; Nominating and Corporate Governance; and Quality of Care and Patient Safety. The charters for the Audit, Compensation and Nominating and Corporate Governance Committees are available on our website at ir.teladochealth.com by clicking through “Corporate Governance.”

Audit Committee. The principal functions of the Audit Committee are to: (i) select, approve the compensation of and assess the independence of an independent registered public accounting firm for us; (ii) review and approve management’s plan for engaging Teladoc Health’s independent registered public accounting firm during the year to perform non-audit services and consider what effect these services will have on the independence of Teladoc Health’s independent registered public accounting firm; (iii) review our annual financial statements and other financial reports which require review and/or approval by the Board; (iv) oversee the integrity of our financial statements and our systems of disclosure controls and internal control over financial reporting and our compliance with legal and regulatory requirements; (v) review the scope of audit plans of our independent registered public accounting firm and the results of its audit; (vi) evaluate the performance of our independent registered public accounting firm; (vii) review our earnings releases; (viii) review all related-party transactions for potential conflicts of interest and approve all such transactions; and (ix) review and evaluate Teladoc Health’s risk management plans, including relating specifically to information technology security and data privacy compliance. Mr. Shedlarz is Chairman of the Audit Committee. Messrs. Goldstein, McAndrews and Multani and Ms. Jacobson are also members of the Audit Committee. Following the Annual Meeting, Messrs. Shedlarz and Goldstein and Ms. Jacobson will be members of the Audit Committee.

Compensation Committee. The principal functions of the Compensation Committee are to: (i) review and approve corporate goals and objectives relative to the compensation of our Chief Executive Officer; (ii) evaluate the performance of our Chief Executive Officer in light of such corporate goals and objectives and determine his compensation; (iii) review and approve the compensation of our other senior officers; (iv) review and establish our overall management compensation, philosophy and policy; (v) administer and oversee our 2015 Incentive Award Plan (as amended and restated effective May 25, 2017) (the “Incentive Award Plan”), the Teladoc Health, Inc. 2015 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”) and the Teladoc Health, Inc. 2017 Employment Inducement Incentive Award Plan (as amended on July 11, 2017, the “Inducement Plan”); (vi) evaluate and assess potential and current compensation advisors in accordance with the applicable independence standards set by the NYSE; (vii) retain and approve the compensation of any compensation advisor; (viii) review and approve our policies and procedures for equity-based incentive awards; (ix) review and make recommendations to the Board concerning our director compensation; and (x) ratify the report required by the rules of the SEC to be included in our annual proxy statement. Mr. McKinley is Chairman of the Compensation Committee. Messrs. McAndrews, Multani, Shedlarz and Snow are also members of the Compensation Committee. Following the Annual Meeting, Messrs. McKinley, Shedlarz and Snow will be members of the Compensation Committee.

The Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors (independent or otherwise) to assist in carrying out its

 

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responsibilities and may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time. The Compensation Committee may also delegate to an officer the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity plans.

In 2019, the Compensation Committee engaged Radford, a division of Aon Consulting, Inc. (“Radford”), to assess and make recommendations with respect to the amount and types of compensation to provide our executives and directors. Radford reported directly to the Compensation Committee; however, our Chief Executive Officer consulted with Radford with respect to its assessments of the compensation of executive officers other than the Chief Executive Officer. The Compensation Committee reviewed compensation assessments provided by Radford comparing our compensation to that of a group of peer companies within our industry and met with Radford to discuss compensation of our executive officers, including the Chief Executive Officer, and to receive input and advice. The Compensation Committee has considered the adviser independence factors required under SEC rules as they relate to Radford and believes Radford’s work in 2019 did not raise a conflict of interest. For additional information regarding the role of our Chief Executive Officer and Radford in determining our executive and director compensation in 2019, please refer to the section titled “Compensation Discussion and Analysis — Determination of Compensation.”

Nominating and Corporate Governance Committee. The principal functions of the Nominating and Corporate Governance Committee are to: (i) develop and recommend to the Board criteria for Board and committee membership; (ii) establish procedures for identifying and evaluating director candidates, including nominees recommended by stockholders; (iii) identify individuals qualified to become Teladoc Health directors; (iv) recommend to the Board nominees for election as directors and to each of the Board’s committees; (v) oversee the annual evaluation of the Board and its committees; (vi) review and discuss with the Board corporate succession plans for our Chief Executive Officer and for other key officers; and (vi) oversee the development and administration of our Corporate Governance Guidelines. Mr. Goldstein is Chairman of the Nominating and Corporate Governance Committee. Dr. Frist, Mr. Snow and Mr. Paulus are also members of the Nominating and Corporate Governance Committee.

Quality of Care and Patient Safety Committee. The Quality of Care and Patient Safety Committee is governed by a written charter adopted in April 2016. The Quality of Care and Patient Safety Committee assists the Board in fulfilling its oversight responsibilities relating to the review of our policies and procedures relating to the delivery of quality medical care to our members. The Quality of Care and Patient Safety Committee maintains communication between the Board and the senior officers with management responsibility for medical care and reviews matters concerning or relating to the quality of medical care delivered to our members, efforts to advance the quality of medical care provided and patient safety. Dr. Frist is Chairman of the Quality of Care and Patient Safety Committee. Dr. Smith, Messrs. Goldstein and Paulus and Ms. Darling are also members of the Quality of Care and Patient Safety Committee.

Board Role in Risk Oversight

The Board administers its risk oversight function directly and through the Audit Committee. The Board and the Audit Committee regularly discuss with management, and the Company’s independent auditors, our major risk exposures, their potential financial impact on Teladoc Health and the steps we take to manage these risks.

In general, management is responsible for the day-to-day management of the risks Teladoc Health faces, while the Board, acting as a whole and through the Audit Committee, has responsibility for the oversight of risk management. In its risk oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. Senior management attends the regular meetings of the Board and is available to address questions and concerns raised by the Board on risk management-related and other matters. This combination provides us with the focus, scope, expertise and continuous attention necessary for effective risk management.

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls, cybersecurity and compliance with

 

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legal and regulatory requirements. In addition, the Audit Committee discusses policies with respect to risk assessment and risk management with management and the independent auditors.

The Audit Committee assists the Board with oversight of risk management by reviewing the Company’s financial statements and meeting with the Company’s independent auditors at regularly scheduled meetings of the Audit Committee, to review their reports on the adequacy and effectiveness of our internal control systems and discusses with management the Company’s major financial risks and exposures and the steps management has taken to monitor and control such risks and exposures.

In addition, our Compensation Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs, and retains outside compensation and legal experts for that purpose. In establishing and reviewing our compensation philosophy and programs, we consider whether such programs encourage unnecessary or excessive risk taking. We believe that our executive compensation program does not encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals. As a result, we do not believe that our compensation programs create risks that are reasonably likely to have a material adverse effect on us.

Our Nominating and Corporate Governance Committee also assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with the organization, membership and structure of the Board, succession planning for our directors and corporate governance. Our Quality of Care and Patient Safety Committee does so with respect to the management of risks associated with the quality of medical care delivered to our members, efforts to advance the quality of medical care provided and patient safety.

In order to better anticipate, identify, prioritize and manage the risks Teladoc Health faces, we have implemented an enterprise risk management (“ERM”) program. Our ERM program was developed under the oversight of our Board and management, and is designed to identify potential risks, ensure that those risks are managed with the appropriate risk appetite and provide reasonable means by which to measure achievement of Teladoc Health’s objectives. As part of our overall ERM program we established an ERM committee comprising certain members of management. The role of the ERM committee is to design, implement, execute and monitor our ERM practices, including review and approval of risk assessments and action plans for improvement activities, and facilitate periodic reporting to our Board and its committees. We believe our ERM program will lead to enhanced corporate governance, improve our ability to respond to changing business demands and promote an open, positive and risk-aware culture at Teladoc Health.

Identifying and Evaluating Director-Nominees

The Board is responsible for selecting its own members. It delegates the selection and nomination process to its Nominating and Corporate Governance Committee, with the expectation that other members of the Board, and management, will be requested to take part in the process as appropriate.

Generally, the Nominating and Corporate Governance Committee identifies candidates for director-nominees in consultation with management, through the use of search firms or other advisors, through the recommendations submitted by stockholders or current directors or through such other methods as the Nominating and Corporate Governance Committee deems to be helpful to identify candidates. Ms. Jacobson was appointed to the Board in early 2020; she was identified for the Nominating and Corporate Governance Committee by one of the Company’s existing directors.

Once candidates have been identified, the Nominating and Corporate Governance Committee confirms that the candidates meet all of the minimum qualifications for director-nominees established by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the Nominating and Corporate Governance Committee deems to be appropriate in the evaluation process. The Nominating and Corporate Governance Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board. Based on the

 

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results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for the Board’s approval as director-nominees for election to the Board.

When assessing director candidates, the Nominating and Corporate Governance Committee will consider such nominee’s qualifications, skills and attributes, including depth and breadth of professional experience and independence. Such nominee must, at a minimum, have demonstrated exceptional ability and judgment and, to the extent it can be ascertained, be of the highest personal and professional integrity. The Nominating and Governance Committee does not have a formal policy with respect to diversity. However, the Board seeks to have a Board that reflects an appropriate balance of knowledge, experience, skills, expertise and diversity, as applicable to our industry. The Board assesses its achievement of diversity through the review of Board composition as part of the Board’s annual self-assessment process.

In 2019, after discussions with many of our stockholders, we decided to amend our Bylaws to implement proxy access, which we believe strengthens our governance framework. Pursuant to our amended Bylaws, a stockholder or a group of up to 25 stockholders owning 3% or more of the shares of the Company’s capital stock continuously for at least three years may nominate, and include in the Company’s proxy materials for an annual meeting of stockholders, director candidates constituting up to 20% of the Board, but not less than two, elected by the holders of the Company’s capital stock, provided that the stockholder (or group) and each nominee satisfies the requirements specified in our Bylaws.

Stockholders may submit recommendations for director candidates to the Nominating and Corporate Governance Committee by sending the individual’s name and qualifications to our corporate secretary at Teladoc Health, Inc., 2 Manhattanville Road, Suite 203, Purchase, New York 10577, who will forward all recommendations to the Committee. The Nominating and Corporate Governance Committee will evaluate any candidate recommended by stockholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of candidates proposed by directors or management. The Nominating and Corporate Governance Committee has full discretion in considering all nominations to the Board. Alternatively, stockholders who would like to nominate a candidate for director (in lieu of making a recommendation to the Nominating and Corporate Governance Committee) must comply with the requirements described in this proxy statement and our Bylaws. See “Additional Information — Procedures for Submitting Stockholder Proposals.”

Communications with Directors

You may communicate directly with any member or committee of the Board by writing to: Teladoc Health Board of Directors, c/o Corporate Secretary, 2 Manhattanville Road, Suite 203, Purchase, New York 10577. Please specify to whom your letter should be directed. Our corporate secretary will review all such correspondence and regularly forward to the Board a summary of all such correspondence and copies of all correspondence that, in his opinion, deals with the functions of the Board or its committees or that he otherwise determines requires the attention of any member, group or committee of the Board. Board members may, at any time, review a log of all correspondence received by Teladoc Health that is addressed to Board members and request copies of any such correspondence.

Interested parties who wish to communicate with non-management Teladoc Health directors, or with the presiding director of the Board’s executive sessions, may do so by writing to Teladoc Health Board of Directors, c/o Corporate Secretary, Attn: Non-management Directors or the Presiding Director for executive sessions, as applicable, 2 Manhattanville Road, Suite 203, Purchase, New York 10577. All such mail received will first be opened and screened for security purposes.

 

10

 

 

of the members of a peer group of similar companies selected by the Compensation Committee in consultation with Radford, its independent compensation consultant.

Under the policy, all non-employee directors receive a mix of cash and equity compensation. Cash compensation consists of annual retainers earned for serving on our Board, with additional retainers earned for serving as members of the committees of our Board or as chairpersons of the Board or its committees. Cash retainers are prorated for partial years of service.

Equity compensation under the program consists of an initial equity award upon a non-employee director’s election or appointment to the Board and an annual equity award on the date of our annual meeting of stockholders to continuing non-employee directors who have served on the Board for at least six months. Initial equity awards issued prior to March 1, 2019 were in the form of stock options (“Initial Options”), and initial equity awards issued on or after March 1, 2019 are in the form of RSUs (“Initial RSUs”). Initial Options and Initial RSUs vest in three substantially equal annual installments following the date of grant. Annual equity awards issued prior to March 1, 2019 were in the form of stock options (“Annual Options”), and annual equity awards issued on or after March 1, 2019 are in the form of RSUs (“Annual RSUs”). Annual Options and Annual RSUs vest and, if applicable, become exercisable on the earlier of the first anniversary of the grant date or the day immediately prior to the date of the next annual meeting of stockholders occurring after the date of grant. All outstanding unvested Initial Options, Initial RSUs, Annual RSUs and Annual Options also vest upon a change in control. Each option granted under the non-employee director compensation policy has an exercise price equal to the fair market value of a share of our common stock on the date of grant.

The Board has reserved discretion under the policy to pay all or a portion of the foregoing equity awards in any combination of awards available for grant under Teladoc Health’s 2015 Incentive Award Plan. The Board elected not to exercise this discretion with respect to director compensation paid for 2019.

Following the annual non-employee director compensation policy reviews undertaken by the Board, and based upon the recommendation of the Compensation Committee after consultation with Radford, the Board elected to revise the policy in February 2019, effective March 1, 2019, and in December 2019, effective January 1, 2020. When making these revisions, the Board considered Radford’s analysis of compensation paid to directors of a peer group of companies that was consistent with the peer group used for purposes of determining executive compensation. Consistent with the program’s overall goal of maintaining a competitive total director compensation package that allows us to attract and retain high-caliber non-employee directors, the changes generally position Teladoc Health’s director compensation at the 50th percentile of the peer group and are reflective of Teladoc Health’s continued growth and shifts in market practice, including a move away from stock options and toward RSUs as the predominate vehicle for equity compensation. The table below summarizes compensation provided under the policy during 2019 and to be paid under the policy as amended effective January 1, 2020.

 

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The value of Initial Options and Annual Options is determined using the Black-Scholes options pricing model that we used most recently (relative to the date of the award) in preparing the consolidated financial statements for the quarterly reports we file with the SEC. The value of Initial RSUs and Annual RSUs is determined using the closing price of the Company’s common stock on the NYSE on the date of the award.

Deferred Compensation Plan for Non-Employees Directors

We maintain a Deferred Compensation Plan that permits our non-employee directors to defer payment of all or a portion of the awards of restricted stock or RSUs granted to them for their service as a director. A participant’s election to defer receipt of these awards must generally be made prior to the year to which the stock award relates (or, for a newly nominated director, within 30 days following the date of the commencement of the director’s service as a director). Deferred awards are credited to an account in an equal amount of deferred stock units with dividend equivalent rights. Dividend equivalent rights entitle a participant, as of a dividend payment date, to have credited to the participant’s deferred compensation account under the plan a number of additional deferred stock units equal to the amount of any ordinary cash dividend paid by Teladoc Health on the number of shares of common stock equivalent to the number of deferred stock units in the participant’s deferred compensation account as of the record date for the dividend, divided by the fair market value of one share of common stock on the dividend payment date. Deferred stock units (including any additional deferred stock units resulting from dividend equivalent rights) are subject to the same vesting or other forfeiture conditions that would have otherwise applied to the deferred awards. With respect to each deferred stock unit granted under the Deferred Compensation Plan, Teladoc Health will issue to the participant one share of the Company’s common stock (or, at the election of the Compensation Committee, an equivalent cash amount based on the fair market value of a share of common stock on the date immediately preceding the payment date) on the first to occur of  (i) within 90 days following the date that is 30 days, five years or ten years after the participant’s separation from service, as elected by the participant in the applicable deferral election, (ii) immediately prior to, on, or within 30 days following a change in control or (iii) upon the participant’s death. If the participant is a “specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), the payment will instead be made on the later to occur of the scheduled distribution date and the first day of the seventh month following the date of the participant’s separation from service (within the meaning of Section 409A of the Code) or, if earlier, the date of the participant’s death.

 

13

 

 

 

 

16

 

 

17

 

 

18

 

 

19

 

 

20

 

 

21

 

 

22

 

 

 

(7)

Includes 52,093 shares issuable upon the exercise of stock options and 3,012 RSUs. Excludes 1,965 RSUs deferred pursuant to the Deferred Compensation Plan.

​

(8)

Includes 24,647 shares issuable upon the exercise of stock options. Excludes 4,977 RSUs deferred pursuant to the Deferred Compensation Plan.

​

(9)

Includes 40,591 shares issuable upon the exercise of stock options and 3,012 RSUs. Excludes 1,965 RSUs deferred pursuant to the Deferred Compensation Plan.

​

(10)

Includes 2,710 shares issuable upon the exercise of stock options and 3,012 RSUs.

​

(11)

Includes 42,212 shares issuable upon the exercise of stock options and 3,012 RSUs.

​

*

Represents less than 1% of the outstanding common stock.

​

(1)

Based on 74,077,919 shares outstanding on April 3, 2020.

​

(2)

BlackRock, Inc. filed an amended Schedule 13G with the SEC on February 10, 2020 to report beneficial ownership of 7,163,117 shares of Teladoc Health common stock. BlackRock, Inc. reports that it has sole power to dispose of 7,163,117 shares and to vote 6,988,941 shares. BlackRock, Inc.’s address 55 East 52nd Street, New York, NY 10055. Information regarding beneficial ownership of Teladoc Health common stock by BlackRock, Inc. is included herein in reliance on the aforementioned Schedule 13G.

​

(3)

The Vanguard Group filed an amended Schedule 13G with the SEC on February 12, 2020 to report beneficial ownership of 6,668,053 shares of Teladoc Health common stock. The Vanguard Group reports that it has shared power to dispose of 156,041 shares and has shared power to vote with respect to 12,979 shares, and sole power to dispose of 6,512,012 shares and has sole power to vote with respect to 151,555 shares. The Vanguard Group’s address is 100 Vanguard Blvd., Malvern, PA 19355. Information regarding beneficial ownership of Teladoc Health common stock by the Vanguard Group is included herein in reliance on the aforementioned Schedule 13G.

​

(4)

Baillie Gifford & Co. filed a Schedule 13G with the SEC on January 22, 2020 to report beneficial ownership of 5,732,223 shares of Teladoc Health common stock. Baillie Gifford & Co. reports that it has sole power to dispose of 5,732,223 shares and to vote 5,151,172 shares. Baillie Gifford & Co.’s address is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, UK. Information regarding beneficial ownership of Teladoc Health common stock by Baillie Gifford & Co. is included herein in reliance on the aforementioned Schedule 13G.

​

(5)

JPMorgan Chase & Co. filed an amended Schedule 13G with the SEC on January 21, 2020 to report beneficial ownership of 5,003,006 shares of Teladoc Health common stock. JPMorgan Chase & Co. reports that it has the sole power to dispose of 4,955,849 shares and to vote 4,370,007 shares. JPMorgan Chase & Co. reports that it has the shared power to dispose of 43,374 shares. JPMorgan Chase & Co.’s address is 270 Park Avenue, New York, NY 10017. Information regarding beneficial ownership of

​

 

25

 

Teladoc Health common stock by JPMorgan Chase & Co. is included herein in reliance on the aforementioned Schedule 13G.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires directors and certain officers of Teladoc Health and persons who own more than 10% of Teladoc Health common stock to file with the SEC initial reports of beneficial ownership (Form 3) and reports of subsequent changes in their beneficial ownership (Form 4 or Form 5) of Teladoc Health’s common stock. Such directors, officers and greater-than-10% stockholders are required to furnish Teladoc Health with copies of the Section 16(a) reports they file. The SEC has established specific due dates for these reports, and Teladoc Health is required to disclose in this proxy statement any late filings or failures to file.

Based solely upon a review of the copies of the Section 16(a) reports (and any amendments thereto) furnished to Teladoc Health and written representations from certain reporting persons that no additional reports were required, Teladoc Health believes that its directors, reporting officers and greater-than-10% stockholders complied with all these filing requirements for the fiscal year ended December 31, 2019, except for: (i) a Form 4 filed on July 22, 2019 reporting shares sold by Mr. Lewis Levy on July 15, 2019 in order to satisfy withholding obligations at vesting of RSUs; and (ii) a Form 4 filed on July 19, 2019 reporting shares sold by Mr. Peter McClennen on July 15, 2019 in order to satisfy withholding obligations at vesting of RSUs. Such Form 4s were filed late due to an administrative oversight.

 

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EXECUTIVE OFFICERS

Except for Mr. Gorevic, who serves as (and is nominated to continue as) a Teladoc Health director, set forth below is biographical information about each of our executive officers. For biographical information on Mr. Gorevic, see page 18 of this proxy statement.

Michelle Bucaria, 49
Chief Human Resources Officer

Ms. Bucaria became our Chief Human Resources Officer in February 2018. She is responsible for Teladoc Health’s global employee development and growth strategy. Aligning with the organization’s values and long-term vision, Ms. Bucaria oversees all human resources functions, including talent acquisition, benefits and compensation, performance measurement, and the associated compliance needs. Prior to joining Teladoc Health, Ms. Bucaria spent 25 years at J.P. Morgan Chase, serving in a variety of executive human resources and recruiting roles in the investment bank and asset management business areas. Ms. Bucaria holds a B.S. in business administration from Boston College’s Carroll School of Management.

Gabriel R. Cappucci, 57
Senior Vice President, Chief Accounting Officer and Controller

Mr. Cappucci became the Company’s Senior Vice President, Chief Accounting Officer and Controller in May 2015. Prior to joining the Company, Mr. Cappucci had a nearly 20-year career at Medco Health Solutions, Inc. where he held a variety of finance roles, including SVP & Controller, Chief Accounting Officer. Most recently, he was Chief Financial Officer of Enclara Pharmacia, a privately held company providing hospice pharmacy services. He is a graduate of Boston College’s Carroll School of Management. Mr. Cappucci is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.

Lewis Levy, 61
Chief Medical Officer

Dr. Lewis Levy became our Chief Medical Officer in July 2017. Dr. Levy is responsible for leading the Company’s global medical affairs and quality initiatives, as well as overseeing the expansion of Teladoc Health’s physician network. Dr. Levy previously served as chief medical officer at Best Doctors, where he significantly contributed to the company’s medical standards and reputation for quality care in highly complex, specialized clinical cases. Dr. Levy has more than 30 years of clinical experience as an internist at Harvard Vanguard Medical Associates in Boston, and has had an extensive teaching career at Harvard Medical School and the Brigham and Women’s Hospital. Dr. Levy holds a B.S. from Cornell University, Phi Beta Kappa, and holds a medical degree from the University of Rochester School of Medicine and Dentistry. He completed his residency in Internal Medicine at the Graduate Hospital of the University of Pennsylvania.

Mala Murthy, 56
Chief Financial Officer

Ms. Murthy became our Chief Financial Officer in June 2019. Ms. Murthy leads Teladoc Health’s global finance organization, including accounting, financial planning & analysis and investor relations. With a focus on assuring shareholder value, Ms. Murthy is a seasoned leader with a proven track record of driving balanced top-and-bottom-line growth. Prior to joining Teladoc Health she held several senior executive positions at American Express, most recently as chief financial officer of the Global Commercial Services segment. There she led strategic investment decisions and P+L stewardship for the segment. She also previously served in various leadership positions with PepsiCo, leading high growth business units. Ms. Murthy holds a bachelor’s degree in computer science and engineering from Jadavpur University in India, an MBA from the India Institute of Management and a master’s degree in public and private management from Yale School of Management.

 

27

 

David Sides, 49
Chief Operating Officer

Mr. Sides became our Chief Operating Officer in July 2019. Mr. Sides leads the global commercial, technology and operations teams at Teladoc Health. With his extensive background in health technology and product innovation, he is well-equipped to support the growth, scale and diversification of the company in the United States and around the globe. Mr. Sides brings a breadth of global commercial and operations experience to Teladoc Health. Most recently he served as chief executive officer of Streamline Health, leading the company through transformation to profitable growth. Prior to that, he was CEO of iMDSoft, a provider of clinical information systems and electronic medical records for critical, perioperative and acute care organizations. His experience also includes nearly two decades with Cerner Corporation, where he led Cerner’s professional services in 24 countries and was accountable for every implementation and all consulting work done by Cerner. Mr. Sides holds a B.A. in biophysics from the University of California, Berkeley and an MBA and MHA from the University of Missouri, Columbia. He is a Fellow in the American College of Healthcare Executives.

Andrew Turitz, 47
Senior Vice President of Business Development

Mr. Turitz became our Senior Vice President of Business Development in January 2015. He is responsible for identifying, evaluating and executing growth opportunities for Teladoc Health through partnerships, acquisitions, joint ventures and other third-party relationships. From 2012 through 2015, Mr. Turitz served as Managing Director of Healthagen, a division of Aetna’s health and technology services unit, after serving as Managing Director of Blue Cross Blue Shield Ventures. Mr. Turitz has nearly 15 years of experience in healthcare transactions, including the management of all phases of acquisitions, investments and partnerships — from analysis, diligence and transaction structuring to product integration, go-to-market strategies and operational implementation. Mr. Turitz has advised on mergers and acquisitions transactions for Fortune 500 companies, and led investments in and served on the board of directors for venture-backed companies. He is also an entrepreneur that has launched or joined numerous early-stage businesses. Mr. Turitz holds a B.A. from Stanford University and a M.B.A. from the Kellogg School of Management at Northwestern University.

Adam C. Vandervoort, 45
Chief Legal Officer and Secretary

Mr. Vandervoort joined Teladoc Health in February 2015. For more than five years prior to that, he was Corporate Vice President, General Counsel and Secretary of Independence Holding Company, a publicly traded insurance holding company. Mr. Vandervoort is licensed to practice law in the states of California, Connecticut and New York. He holds a J.D. from the University of Pennsylvania Law School and A.M. and A.B. degrees from the University of Chicago.

Stephanie Verstraete, 51
Chief Marketing Officer

Ms. Verstraete became our Chief Marketing Officer in January 2016. Prior to joining Teladoc Health, Ms. Verstraete served as Chief Marketing Officer of Truveris, a healthcare technology company focused cloud-based data analytics solutions, beginning in 2014. From 2011 to 2014, Ms. Verstraete served as Chief Marketing Officer of Room Key Inc. Ms. Verstraete is responsible for the market positioning of Teladoc Health’s brand and growing the product portfolio. Prior to joining Teladoc Health, Ms. Verstraete also held marketing leadership roles at high-profile brands including Match.com, Expedia, Kraft and Frito Lay. Ms. Verstraete holds an International M.B.A. from York University and an Honors Bachelor of Economics from Queens University in Canada.

 

28

 

COMPENSATION DISCUSSION AND ANALYSIS

Named Executive Officers and Overview

In this Compensation Discussion and Analysis, we address our philosophy, programs and processes related to the compensation paid or awarded for 2019 to our named executive officers, including the elements of our compensation program for named executive officers, material compensation decisions made under that program during 2019 and the material factors considered in making those decisions. Our named executive officers for 2019 are:

•

Mr. Jason Gorevic, Chief Executive Officer;

​

•

Ms. Mala Murthy, Chief Financial Officer;

​

•

Mr. Gabriel Cappucci, Senior Vice President, Chief Accounting Officer and Controller;

​

•

Mr. David Sides, Chief Operating Officer;

​

•

Mr. Adam Vandervoort, Chief Legal Officer;

​

•

Ms. Stephany Verstraete, Chief Marketing Officer; and

​

•

Mr. Peter McClennen, Former President and President — North American Hospitals and Group Health.

​

These executive officers are referred to collectively in this Compensation Discussion and Analysis as our “named executive officers.” Mr. Cappucci coordinated Teladoc Health’s finance activity from January 1, 2019 through June 23, 2019. Effective June 24, 2019, Ms. Murthy became Teladoc Health’s Chief Financial Officer. Mr. McClennen ceased being an executive officer effective July 30, 2019 and resigned his employment with us effective January 3, 2020.

The primary objectives of our executive compensation program are to retain key executives, attract new talent and link compensation to achievement of business objectives. We believe our 2019 named executive officer compensation demonstrates Teladoc Health’s commitment to aligning executive pay with corporate performance. This Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, the overall objectives of our executive compensation program and each element of compensation provided. In addition, it explains how and why the Compensation Committee arrived at the specific compensation policies and decisions involving our named executive officers in respect of 2019.

Compensation Philosophy and Objectives

A key objective of our compensation program is to allow us to retain and, as needed, attract qualified executives. We believe that our ability to keep our senior executive team intact is tied to our compensation programs. Additionally, for us to be appropriately positioned to attract new talent as needed, we must be prepared to be, and be perceived as, an employer that offers competitive compensation.

Compensation of each named executive officer is intended to be based on the performance of Teladoc Health overall and the executive personally. The Compensation Committee has responsibility for establishing and reviewing the compensation of Teladoc Health’s Chief Executive Officer (“CEO”) and for each of the executive officers who reports to him.

In establishing executive officer compensation, the following are among the Compensation Committee’s objectives:

•

attract and retain individuals of superior ability and managerial talent;

​

•

ensure compensation is aligned with Teladoc Health’s corporate strategies and business objectives and the long-term interests of Teladoc Health’s stockholders;

​

•

enhance incentives to increase Teladoc Health’s stock price and maximize stockholder value by providing a portion of total compensation in Teladoc Health equity and equity-related instruments; and

​

 

29

 

•

promote teamwork while also recognizing the individual role each executive officer plays in Teladoc Health’s success.

​

To achieve our compensation objectives, we provide executives with a compensation package consisting primarily of the following fixed and variable elements:

Determination of Compensation

Role of the Compensation Committee and Executive Officers

Our executive compensation program is administered by the Compensation Committee, which performs its work in consultation with the Board. The compensation of the named executive officers is approved annually by the Compensation Committee, in consultation with the Board. Our CEO typically provides annual recommendations to the Compensation Committee and discusses with the Compensation Committee the compensation and performance of our executive officers, other than himself. Our CEO bases his recommendations upon his review — formed both subjectively and objectively against individually developed goals — of the performance of the executive officers, the overall performance of Teladoc Health against its applicable corporate goals (as described further below in the section titled “— Elements of Compensation — Cash Bonuses”) and his assessment of the officer’s contributions to such performance, internal pay equity considerations, his assessment of the competitiveness of the market for each officer’s services and an annual self-evaluation performed by each named executive officer. The Compensation Committee evaluates any recommended compensation adjustments or awards to executive officers and ultimately determines executive compensation. In order to determine the CEO’s compensation, the Compensation Committee reviews the performance of the CEO and meets in executive session without him to evaluate the CEO’s performance.

Compensation Consultant

To support the Compensation Committee in fulfilling its duties, the Compensation Committee has retained a third-party compensation consultant to assist with its design and evaluation of compensation for our executive officers and directors. Pursuant to its charter, the Compensation Committee has the sole authority to retain, and replace as needed, compensation consultants to provide independent advice to the Compensation Committee, as well as the sole authority to approve the consultants’ fees and other terms and conditions of retention. During 2019, the Compensation Committee retained Radford to provide executive and director compensation consulting services and provide recommendations for compensation. The Compensation Committee receives advice, data and recommendations from Radford pertaining to the appropriate amount, mix and vesting and other terms for Teladoc Health’s executive compensation programs, as well as peer group and market information that the Compensation Committee uses when determining whether Teladoc Health’s executive compensation is competitive in the market in which we compete for talent. In addition to the work Radford performs for the Compensation Committee in connection with the Compensation Committee’s annual review of our executive and director compensation practices, Radford periodically receives requests for information from the Compensation Committee, from our CEO or from our Chief Human Resources Officer pertaining to individual promotions, incentive compensation, potential personnel recruitment and other such situations in which market compensation insight may benefit Teladoc Health.

 

30

 

During 2019, Radford’s fees for services to Teladoc Health and Teladoc Health’s affiliates unrelated to executive and director compensation did not exceed $120,000. The Compensation Committee has considered the adviser independence factors required under SEC rules as they relate to Radford and does not believe Radford’s work in 2019 raised a conflict of interest.

Peer Group and Market Data

With the assistance of Radford, the Compensation Committee consults market data to better inform its determination of the key elements of our compensation program in order to develop a compensation program that the Compensation Committee believes enables us to compete effectively for new employees and retain existing employees. In general, this market data consists of compensation information from both broad-based compensation surveys and company-specific peer group analyses. When reviewing and determining the 2019 compensation for our named executive officers, the Compensation Committee, based on recommendations of Radford and the additional factors described below, used the following peer group:

The Compensation Committee selected the companies in the peer group because it believes that these companies compete with us for executive talent and are similar to us in revenue growth rate, market capitalization, industry and size. The Compensation Committee also determined that the companies in the peer group generally have executive officer positions that are comparable to Teladoc Health’s in terms of breadth, complexity and scope of responsibilities. The Compensation Committee reviews the peer group annually and removes companies that it no longer believes are comparable and, to the extent applicable, adds new comparable companies that have disclosed public information that the Compensation Committee can use to form comparisons, including compensation paid by companies in our peer group to executives in positions comparable to those held by our executive officers.

The Compensation Committee generally targets compensation for our executive officers, both total cash and equity-based compensation, at the 50th percentile relative to our peer group, but does not benchmark any specific compensation measures and retains discretion to make adjustments for a particular executive officer’s individual contribution, professional experience and potential growth. We believe our compensation levels and mix are appropriate given our rapid growth and allow Teladoc Health to compete effectively for talent while aligning executive officer incentives tightly with those of our stockholders.

Because publicly filed compensation data is generally limited to those of a company’s principal executive officer, principal financial officer and three most highly paid executive officers (other than the principal executive officer and the principal financial officer), the Compensation Committee also utilizes broader market compensation data from Radford, including third-party compensation surveys, in determining executive compensation. The Compensation Committee is not provided with compensation data specific to any individual constituent company in the surveys, other than any overlap between the survey constituent companies and the peer group described above.

While we compete for executive talent to some degree with companies that have revenues significantly in excess of those represented in the surveys and peer group, we believe that the companies represented in the surveys and peer group similarly compete with such larger companies and hence are an appropriate comparison for our market.

In September 2019, with input and advice from Radford, the Compensation Committee updated the peer group used for 2020 compensation purposes. Hortonworks, Inc. merged into Cloudera, Inc. in

 

31

 

January 2019, and was therefore removed from the peer group for purposes of 2020 compensation. Athenahealth, Inc. was removed from the peer group for 2020 compensation purposes due to its acquisition in February 2019. Radford recommended adding three new companies — HMS, HubSpot and Inovalon —  all of which were selected because these companies compete with us for executive talent and are similar to us in revenue growth rate, market capitalization, industry and size. The Compensation Committee approved these recommendations, resulting in the following peer group for 2020 compensation purposes:

We provide a base salary as a fixed source of compensation for the named executive officers, allowing them a degree of certainty relative to the portion of their variable compensation, which consists of performance bonuses based on achievement of short-term goals and equity awards with values that are generally tied to the price of our common stock. The Compensation Committee recognizes the importance of base salaries as an element of compensation that helps to attract and retain highly qualified executive talent.

Initial base salaries of our executive officers are established through arm’s-length negotiation at the time the individual executive officer is hired, taking into account his or her qualifications, experience, comparable market data and prior salary level. Thereafter, the Compensation Committee generally reviews, and adjusts as necessary, base salaries for each of our executive officers, at a minimum annually. The Compensation Committee generally targets the 50th percentile for executive officer cash compensation relative to Teladoc Health’s peer group, while retaining discretion to make adjustments as it deems appropriate to create compensation levels necessary to retain our existing named executive officers and to hire new executive officers when and as required.

Additionally, in setting base salary levels, the Compensation Committee considers a range of factors, including:

•

the individual’s anticipated responsibilities and experience, and cash compensation for similarly situated executives at our peer group companies;

​

•

the Compensation Committee members’ collective experience and knowledge in compensating similarly situated individuals at other companies;

​

•

the value of the executive officer’s existing equity awards; and

​

•

a general sense of internal pay equity among Teladoc Health’s executive officers.

​

Annually (customarily during its February meeting) the Compensation Committee reviews the base salaries of our executive officers against data received from Radford and may, based upon and following receipt of the advice of Radford, the recommendations of the CEO and of our Chief Human Resources Officer (other than with respect to their own respective base salaries) and in consultation with the Board, adopt certain market-based adjustments to take effect for the remainder of that year. Based upon these considerations, the Compensation Committee determined at its February 2019 meeting to increase the annual base salaries of the named executive officers for 2019, effective March 1, 2019, and the Compensation

 

32

 

Committee determined at its February 2020 meeting to increase the annual base salaries of the named executive officers for 2020 as set forth below, effective March 1, 2020. The table below sets forth the annual base salaries during 2019 and 2020 for each named executive officer.

(1)

Ms. Murthy was hired June 24, 2019.

​

(2)

Mr. Sides was hired July 30, 2019.

​

(3)

Mr. McClennen ceased being an executive officer effective July 30, 2019 and resigned his employment with us effective January 3, 2020.

​

Cash Bonuses

To maintain a competitive compensation program, in addition to base salaries, Teladoc Health also provides compensation in the form of cash bonuses, which are generally targeted (like salaries) at the 50th percentile relative to Teladoc Health’s peer companies, though the Compensation Committee retains discretion to make adjustments as it deems appropriate, including to provide competitive compensation levels or encourage and reward key employee performance. The named executive officers are eligible to receive a target cash bonus equal to a percentage of their base salary based on, among other factors, achievement of corporate financial goals and operational objectives and subject to the discretion of the Compensation Committee. The Compensation Committee believes that the use of performance-based cash bonuses helps motivate our employees, including the named executive officers, to achieve our short-term financial and operational objectives, while making progress towards our longer-term growth and other goals.

The cash bonus program is formula-based and set by the Compensation Committee at the beginning of each year. Each participant’s award is determined by performance against a blend of corporate and individual goals. The Compensation Committee retains discretion to adjust the parameters of the cash bonus program based on such factors as it determines relevant for a given year. No such adjustments were made for 2019.

In 2019, each of our named executive officers was provided with a target cash bonus amount determined as a percentage of such named executive officer’s base salary (“Bonus Target”) and based on individual and corporate performance and job level. For Mr. Gorevic, the Bonus Target was 100% of his base salary, based 100% on corporate performance. For Ms. Murthy and Mr. Sides, the Bonus Target was 75%, based 70% on corporate performance and 30% on individual performance. For Mr. McClennen, the Bonus Target was 100%, based 70% on corporate performance and 30% on individual performance. For each of Mr. Vandervoort and Ms. Verstraete, the Bonus Target was 45%, based 70% on corporate performance and 30% on individual performance. For Mr. Cappucci, the Bonus Target was 25%, based 100% on corporate performance and subject to adjustment based on individual performance. Mr. Cappucci participated in the non-executive cash bonus program in 2019, which was based on the same measures of corporate performance as the other named executive officers and described below.

For 2019, the corporate performance component was measured for Teladoc Health on a standalone basis (not including the effects of any significant acquisition) against financial targets, weighted as follows: 60% annual revenue; 20% adjusted EBITDA; and 20% cash flow from operations. Adjusted EBITDA for this purpose means earnings before interest, taxes, depreciation and amortization, as adjusted by the

 

33

 

Compensation Committee to exclude significant non-cash stock compensation expenses and the effects of certain extraordinary or non-recurring events. The portion of the annual bonus based on corporate performance may range from a threshold of 50% to a maximum of no more than 200% of the target bonus. In February 2020, the Compensation Committee determined that corporate performance goals for 2019 had been achieved at 130% of target.

The individual component of each applicable named executive officer’s award is not based on achievement of any pre-established performance goals. Rather, after the year is complete, the Compensation Committee reviews each named executive officer’s individual performance for 2019 and determines subjectively, after considering the recommendations made by the CEO (other than with respect to his own performance), what the Compensation Committee believes to be the appropriate payment level for the individual component of each named executive’s award.

In February 2020, the Compensation Committee reviewed our performance against our 2019 corporate objectives and each individual named executive officer’s performance and determined to pay our named executive officers the following bonuses for 2019 performance:

(1)

Ms. Murthy’s annual bonus reflects a prorated amount with respect to 2019 based on her start date of June 24, 2019.

​

(2)

In determining Mr. Cappucci’s 2019 cash bonus, the Compensation Committee recognized his significant contributions coordinating the Company’s finance activity in 2019.

​

(3)

Mr. Sides’ annual bonus for 2019 was prorated at 75% per his offer of employment.

​

(4)

Mr. McClennen ceased serving as an employee on January 3, 2020. Pursuant to a separation and release of claims agreement and an executive severance agreement that he entered into with us, each as described below, Mr. McClennen was eligible to receive the same 2019 annual bonus as if he remained actively employed through the date that 2019 bonuses are paid by us.

​

Equity Awards

We believe that providing long-term incentives in the form of equity awards encourages the named executive officers to take a long-term outlook and provides them with an incentive to manage Teladoc Health from the perspective of an owner with an equity stake in the business. By providing opportunities for the named executive officers to benefit from future successes in Teladoc Health through the appreciation of the value of their equity awards, the Compensation Committee believes that equity awards align the named executive officers’ interests and contributions with the long-term interests of Teladoc Health’s stockholders. In addition, the Compensation Committee believes that offering meaningful equity ownership in Teladoc Health is helpful in retaining the named executive officers and other key employees. The Compensation Committee generally targets the 50th percentile relative to our peer companies in determining initial equity grants upon hire and then annually thereafter, but retains discretion to make adjustments as it deems appropriate, including to provide competitive compensation levels, align the interests of named executive officers with those of stockholders or encourage retention.

At the time of hire, executive officers are generally granted a mix of stock options and RSUs, both subject to our standard vesting schedule as described below, the size and precise terms of which are

 

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determined at the time of hire of the individual executive officer, taking into account the anticipated role, his or her qualifications, experience, comparable market data and prior compensation level.

During 2019, the Compensation Committee made grants of equity-based awards to each of our named executive officers based, in part, on their performance evaluations and in consultation with Radford. During 2019, the Compensation Committee did not have any formal policy for determining the number or type of equity-based awards to grant to named executive officers. Based upon the Compensation Committee’s review of competitive market data, and taking into account the advice and information received from Radford and the CEO (except with respect to his own awards), the Compensation Committee determined to award to Messrs. Gorevic, McClennen and Vandervoort and Ms. Verstraete (i) RSUs that vest based on continued service and (ii) RSUs that vest based on performance measures tied to adjusted EBITDA, operating cash flow and revenue (“PSUs”). Ms. Murthy and Mr. Sides were each hired in 2019 and received a combination of stock options and RSUs at their respective times of hire. Mr. Cappucci received 100% of his equity award in the form of RSUs.

The vesting for RSUs and earned PSUs generally occurs over a three-year period, with 33% of the award vesting in equal annual installments over such three-year period, while the vesting for stock options generally occurs over a four-year period, with 25% of the award vesting in equal annual installments over such four-year period, subject, in each case, to an executive officer’s continued provision of services to Teladoc Health through each applicable vesting date. The Compensation Committee believes that annual grants of equity in the form of RSUs, which have value regardless of appreciation in Teladoc Health’s common stock, PSUs, which tie our executives to key performance metrics, and stock options, which have value only if Teladoc Health’s common stock appreciates after the date of grant, serve to align the interests of executive officers to Teladoc Health’s stockholders. Our stock options may be intended to qualify as incentive stock options to the extent permissible under applicable provisions of the Code.

For 2019, the Compensation Committee determined that the annual equity grants to Messrs. Gorevic, McClennen and Vandervoort and Ms. Verstraete would be comprised 50% of time-vested RSUs and 50% of PSUs (based on the target number of shares of Teladoc Health’s common stock that could be earned). The Compensation Committee chose this allocation of equity for the long-term awards for these named executive officers because the RSU awards that vest based on continuous employment and the passage of time promote the retention of executives, while the PSUs align our executives’ interests with those of our stockholders by tying the ultimate payout to performance metrics that these named executive officers have the potential to meaningfully influence. Mr. Cappucci received 100% of his equity award as RSUs, which is consistent with our similarly situated employees. Ms. Murthy and Mr. Sides were each hired in 2019 and received a combination of stock options and RSUs at their respective times of hire. As newly hired executives, the Compensation Committee chose not to allocate PSUs to Ms. Murthy and Mr. Sides based on their relatively limited ability to impact the performance measures as designated for the one-year performance period beginning January 1, 2019.

The grants of PSUs made in 2019 provide a target number of shares of Teladoc Health’s common stock that would be earned at the end of a one year performance period (i) as to 60% of the target number of shares if our revenue for 2019 as reported in our financial statements in accordance with GAAP achieved its target (which we refer to as the “Revenue PSUs”), (ii) 20% of the target number of shares if our adjusted EBITDA for 2019 achieved its target (which we refer to as the “EBITDA PSUs”) and (iii) 20% of the target number of shares if our operating cash flow achieved its target (which we refer to as “Operating Cash Flow PSUs”). No PSUs would be earned for performance below the threshold 50% level, and no more than 200% of the target number of PSUs could be earned for performance above the maximum level. One-third of any earned PSUs vest immediately on the performance determination date and the remaining two-thirds vest in equal annual installments over the two-year period following the performance determination date.

In February 2020, the Compensation Committee determined that 130% of each award of Revenue PSUs, EBITDA PSUs and Operating Cash Flow PSUs was earned.

The equity-based awards granted to our named executive officers may be subject to accelerated vesting in certain circumstances, as described below in the section titled “— Employment, Severance and Change in Control Arrangements.”

 

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The table below sets forth the stock options, RSUs and target number of PSUs granted to our named executive officers during 2019 and the number of PSUs that were determined to have been earned. The size of the equity awards granted to these named executive officers was determined based on the Compensation Committee’s analysis of the factors described above. The stock options were granted with a per-share exercise price equal to the fair market value of a share of Teladoc Health’s common stock and our typical vesting schedule described above.

(1)

One-third of any earned PSUs vest immediately on the performance determination date and the remaining two-thirds vest in equal annual installments over the two-year period following the performance determination date. The amount shown for Mr. McClennen represents the portion of earned PSUs he retained in accordance with the terms of his separation and release of claims agreement.

​

Retirement, Health, Welfare and Additional Benefits

Our named executive officers are eligible to participate in our employee benefit plans and programs, including medical and dental benefits, flexible spending accounts and short- and long-term disability and life insurance, to the same extent as our other full time employees, subject to the terms and eligibility requirements of those plans. We also sponsor a 401(k) defined contribution plan in which our named executive officers may participate, subject to limits imposed by the Code, to the same extent as our other full-time employees. Currently, we match 100% of contributions made by participants in the 401(k) plan up to 4% of eligible annual compensation. All matching contributions are fully vested when made. Additionally, pursuant to an offer letter agreement that we entered into with Mr. Sides in connection with the commencement of his employment, we agreed to reimburse Mr. Sides for customary expenses (including income taxes incurred as a result of this benefit) incurred in connection with relocating his principal residence closer to his work location, up to a maximum of  $150,000.

Employment Agreements

We consider maintenance of a strong management team essential to our success. To that end, Teladoc Health recognizes that the uncertainty that may exist among management with respect to their “at-will” employment with us could result in the departure or distraction of management personnel to our detriment. Accordingly, our Board and the Compensation Committee have determined that severance arrangements are appropriate to encourage the continued attention and dedication of certain members of our management team and to allow them to focus on the value to stockholders of strategic alternatives without concern for the impact on their continued employment. Each of our named executive officers, with the exception of Mr. Cappucci, has entered into an employment agreement or an executive severance agreement that entitles the named executive officer to severance payments and benefits in the event of certain terminations of employment or upon a change in control of Teladoc Health. These agreements are described below under “— Potential Payments upon Termination or Change in Control.”

Tax Implications

Section 162(m) of the Code (“Section 162(m)”) generally limits the tax deductibility of compensation paid by a public corporation to its chief executive officer and certain other highly compensated

 

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executive officers to $1 million in the year the compensation becomes taxable to the executive. While the Compensation Committee has not adopted a formal policy regarding tax deductibility of compensation paid to our named executive officers, the Compensation Committee will consider tax deductibility under Section 162(m) as a factor in compensation structure to the extent applicable. We may from time to time pay compensation or grant equity awards to our executive officers, however, that may not be deductible when, for example, we believe that such compensation is appropriate and in the best interests of our stockholders, after taking into consideration changing business conditions and/or the executive officer’s performance.

Stockholder Outreach and “Say-on-Pay” Advisory Vote

We submitted a non-binding proposal to our stockholders at the 2019 Annual Meeting. This proposal consisted of a non-binding advisory vote to approve the compensation of the named executive officers as disclosed in the proxy statement for the 2019 Annual Meeting. Approximately 95% of the votes cast (excluding abstentions and broker non-votes) were cast in favor of the non-binding advisory vote to approve the compensation of the named executive officers at the 2019 Annual Meeting. The Compensation Committee believes this indicates that our stockholders strongly support the philosophy, strategy and objectives of our executive compensation programs. After considering this result and following our annual review of our executive compensation philosophy, the Compensation Committee decided to retain our overall approach to executive compensation. The Compensation Committee intends to continue to monitor stockholder concerns, including the results of the annual non-binding advisory votes to approve the compensation of the named executive officers, in making future decisions affecting the compensation of the named executive officers.

Stock Ownership Guidelines

Teladoc Health encourages its executive officers and directors to purchase shares of Teladoc Health’s common stock and to maintain a minimum ownership level during his or her tenure to foster alignment with our investing stockholders. To reinforce this objective, we have adopted minimum stock ownership guidelines for certain of our executive officers and all of our non-management directors. Pursuant to those guidelines, our Chief Executive Officer, our Chief Operating Officer and certain other executive officers must hold a number of shares of Teladoc Health’s common stock equal to three, two and one times such executive officer’s base salary, respectively, and our non-management directors must hold a number of shares of Teladoc Health’s common stock equal to three times the annual cash retainer paid to such non-management directors for board service. Our executive officers and non-management directors subject to the ownership guidelines must be in compliance with this policy by the later of February 23, 2022 or five years after they become an executive officer or non-management director of Teladoc Health, as applicable.

Insider Trading Policy

We maintain an Insider Trading Compliance Policy that applies to all securities issued by Teladoc Health. Company officers, directors and employees are prohibited from engaging in hedging transactions, including purchasing Teladoc Health stock on margin or engaging in transactions in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of Teladoc Health’s equity securities.

Clawback Policy

The Compensation Committee has adopted a compensation clawback policy that applies to each of our current and former executive officers. Under the policy, recoupment of certain cash incentive compensation or equity compensation would be generally required in the event the Company restates its financial statements due to its material noncompliance with any financial reporting requirement under applicable securities laws. In the event of such restatement, the clawback policy provides for the recoupment of excess cash and equity incentive compensation received by the executive officer during the three years prior to the restatement that was granted, earned or vested based wholly or in part upon the attainment of any erroneous financial data. The policy gives the Compensation Committee discretion to determine whether a clawback of compensation should be initiated in any given case, as well as the discretion to make other determinations, including the amount of compensation to be clawed back when such amount is not clear from

 

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the information in the restatement and the form of reimbursement to the Company. In order to comply with applicable law, the clawback policy will be updated or modified as the Compensation Committee determines is necessary to comply with final clawback rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with management. Based on such review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee

Mr. Thomas McKinley (Chairman)
Mr. Brian McAndrews
Mr. Arneek Multani
Mr. David Shedlarz
Mr. David B. Snow

 

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(1)

Represents the aggregate grant date fair value of awards granted during the year referenced, computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. For additional information about these awards, please see Note 13 to Teladoc Health’s audited consolidated financial statements included in Teladoc Health’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on February 26, 2020. The maximum possible value of the 2019 PSUs, based on the closing price per share of Teladoc Health’s common stock on the date they were granted ($67.55), was as follows: $6,799,988 for Mr. Gorevic; $3,000,031 for Mr. McClennen; $1,400,041 for Mr. Vandervoort; and $1,500,015 for Ms. Verstraete. For additional information regarding the stock-based awards granted to the named executive officers in 2019, refer to the “2019 Grants of Plan-Based Awards” table.

​

(2)

Amounts listed were earned under our annual cash incentive program.

​

(3)

Represents company matching contributions to the named executive officer’s 401(k) plan account.

​

(4)

Represents $77,754 in reimbursements of expenses incurred in connection with Mr. Sides relocating his principal residence closer to his work location and $66,529 in a tax gross-up related to such reimbursement expenses. These relocation reimbursements and the tax gross-up were provided for in the offer letter agreement entered into with Mr. Sides, dated July 12, 2019. Mr. Sides first became eligible for the 401(k) plan on January 1, 2020, based on his July 30, 2019 date of hire. Consequently, no company matching contributions were made with respect to Mr. Sides.

​

 

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(4)

The award is earned based on our attainment of revenue, adjusted EBITDA and operating cash flow targets and, to the extent earned, vests as to one-third of any earned PSUs immediately on the date that the Compensation Committee determines the performance conditions have been satisfied and as to the remaining two-thirds in equal annual installments over the two-year period following the performance determination date, as described above in the section titled “Compensation Discussion & Analysis —  Elements of Compensation — Equity Awards,” and subject to the holder’s continued employment with us through the applicable vesting date and potential accelerated vesting as described in the section titled “Potential Payments upon Termination or Change in Control.”

​

(5)

The award vests in three equal annual installments on each of the first three anniversaries of the grant date, subject to the holder’s continued employment with us through the applicable vesting date and potential accelerated vesting as described in the section titled “Potential Payments upon Termination or Change in Control.”

​

 

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