UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K
 CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 2, 2023

 U.S. PHYSICAL THERAPY, INC.
(Exact name of registrant as specified in its charter)
Nevada
1-11151
76-0364866
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)

1300 West Sam Houston Parkway South,
Suite 300, Houston, Texas
  
77042
(Address of Principal Executive Offices)
  
(Zip Code)

Registrant's telephone number, including area code: (713) 297-7000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐
Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12)

☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common Stock, $.01 par value
 USPH
 New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
Compensatory Arrangements of Executive Officers

Effective March 2, 2023, the Compensation Committee of the Board of Directors (the “Committee” as defined in Section 1.8 of the U. S. Physical Therapy, Inc. (“USPH”) 2003 Stock Incentive Plan (the “2003 Plan”)) approved and adopted the incentive plans for senior management as described below. Members of senior management who are eligible under the incentive plans include Mr. Christopher Reading, Chief Executive Officer (“CEO”), Mr. Carey Hendrickson, Chief Financial Officer (“CFO”), Mr. Eric Williams, Chief Operating Officer - East (“COO East”), Mr. Graham Reeve, Chief Operating Officer – West (“COO West”), and Mr. Rick Binstein, Executive Vice President, General Counsel and Secretary (“EVP”), (hereinafter collectively referred to as “Executives”).

Objective Long- Term Incentive Plan for Senior Management for 2023 (“Objective LTIP”). Under this Objective LTIP, Executives have an opportunity to receive Restricted Stock Awards (“RSAs”) under the 2003 Plan to be granted by the Compensation Committee in the first quarter of 2024 subject to the continuous employment of the Executive by USPH or its affiliates from the Effective Date through the date of the grant of the RSA. All RSAs granted shall be in writing and subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion. The RSAs will vest evenly over 16 quarters, beginning April 1, 2024, and ending January 1, 2028, subject to acceleration of vesting in the Committee’s sole discretion and based on the occurrence of certain events, as more specifically defined in the applicable Restricted Stock Agreement between the Executive and USPH and/or in the Executive's employment agreement with USPH.  The number of RSAs that may be granted is subject to the achievement of Adjusted EBITDA for the year 2023 and may range between 30% to 100% of the maximum number of shares. The maximum number of RSAs that may be granted are as follows: CEO = 10,000 shares; CFO = 5,000 shares; COO East = 5,000 shares; COO West = 5,000 shares and EVP = 5,000 shares.
 
Discretionary Long-Term Incentive Plan for Senior Management for 2023 (“Discretionary LTIP”). In addition to any other awards under the 2003 Plan or any other long term incentive plan or bonus plan, policy, or program of USPH, and not in lieu of any other such award or payment, the Compensation Committee may, in its judgment and at its sole discretion, grant RSAs under the 2003 Plan, based on its evaluation of an Executive's performance and the collective corporate performance for 2023. Any RSAs granted under this program shall be awarded in the first quarter of 2024 subject to the continuous employment of the Executive by USPH or its affiliates from the Effective Date through the date of the grant of the RSA. All RSAs granted shall be in writing and subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion. RSAs granted under this Discretionary LTIP will vest evenly over 16 quarters, beginning April 1, 2024, and ending January 1, 2028, subject to acceleration of vesting based on the occurrence of certain events, as more specifically defined in the applicable Restricted Stock Agreement between the Executive and USPH and/or in the Executive's employment agreement with USPH.  The number of RSAs that may be granted is subject to the evaluation of the Executive’s performance and the collective corporate performance during 2023. The maximum number of RSAs that may be granted are as follows: CEO = up to 10,000 shares; CFO = up to 5,000 shares; COO West = up to 5,000 shares; COO East = up to 5,000 shares, and EVP = up to 5,000 shares.
 
Objective Cash/RSA Bonus Plan for Senior Management for 2023 ("Objective Cash/RSA Bonus Plan”). Under this Objective Cash/RSA Bonus Plan, Executives have an opportunity to receive either a "Cash Bonus" Award or RSAs having a value at the time of the Award of up to 75% of the CEO, COO West, COO East, CFO and EVP annual base salary for 2023 as Performance Awards under the 2003 Plan. The Compensation Committee will, in its sole discretion, determine the amount and type of award to be made in the first quarter of 2024. No Executive will be entitled to any type of award or have a legally binding right to an award until the Compensation Committee, in its sole discretion, determines an award will be made, the amount and the type of award to be made. No Executive will be entitled to elect between the Cash Bonus and RSA. Before any Cash Bonus is made or an RSA is awarded under this Objective Cash/RSA Bonus Plan, the Compensation Committee shall certify in writing that the performance goals have been obtained. Any Cash Bonus award made hereunder shall be paid in a lump-sum amount, and any RSA granted, in each case no later than March 14, 2024. The Executive must be continuously employed by USPH or its affiliates from the Effective Date through December 31, 2023 to receive the Cash Bonus or an RSA.
 
Discretionary Cash/RSA Bonus Plan for Senior Management for 2023 ("Discretionary Bonus Plan"). In addition to awards under any other plan or program at USPH for which such Executives are eligible and not in lieu thereof, each Participant in this Discretionary Bonus Plan has the potential to be awarded of up to 50% of the Participant's annual base salary for 2023 (“Subjective Bonus”) subject to the achievement of individual goals established by the Compensation Committee. The Subjective Bonus shall be made as either a Cash Bonus Award or RSAs, as determined in the sole discretion of the Compensation Committee. The Compensation Committee shall have the sole discretion to determine the amount and type of award (whether a Cash Bonus Award or an RSA) will be made. No Participant shall be entitled to a Subjective Bonus and shall have no legally binding right to a Subjective Bonus until the Compensation Committee determines the amount and type of award to be made.  No Participant will be entitled to elect any type of award to be made.
 
The foregoing descriptions are qualified in its entirety by reference to the full text of each of the Objective LTIP, Discretionary LTIP, Objective Cash/RSA Bonus Plan, and Discretionary Bonus Plan, which are filed as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS

Exhibits
  
Description of Exhibits
     
 
U. S. Physical Therapy, Inc. Objective Long-Term Incentive Plan for Senior Management for 2023, effective March 2, 2023.
 
U. S. Physical Therapy, Inc. Discretionary Long-Term Incentive Plan for Senior Management for 2023, effective March 2, 2023.
 
U. S. Physical Therapy, Inc. Objective Cash/RSA Bonus Plan for Senior Management for 2023, effective March 2, 2023.
 
U. S. Physical Therapy, Inc. Discretionary Cash/RSA Bonus Plan for Senior Management for 2023, effective March 2, 2023.

* Filed herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
U.S. PHYSICAL THERAPY, INC.
   
Dated: March 8, 2023
By:
/s/ CAREY HENDRICKSON
   
Carey Hendrickson
   
Chief Financial Officer
   
(duly authorized officer and principal financial and accounting officer)


Exhibit 99.1

U.S. PHYSICAL THERAPY, INC. (“USPH”)
OBJECTIVE LONG-TERM INCENTIVE PLAN FOR SENIOR MANAGEMENT
FOR 2023 (“Objective LTIP”)

Purpose: To incentivize and retain Executives eligible for this Objective LTIP, to achieve certain corporate earnings criteria and reward Executives when such criteria are achieved, and to align the  long-term interests of Executives and shareholders of USPH by compensating the Executives in shares of USPH stock that vest over time, thereby increasing the Executives' equity interest in USPH.
 
Effective Date: The effective date of this Objective LTIP and the establishment of performance goals and formula for the amount payable hereunder is March 2, 2023.
 
Eligibility: The Executives of USPH eligible for this Objective LTIP are the Chief Executive Officer ("CEO"), the Chief Financial Officer ("CFO"), the General Counsel ("EVP"), the Chief Operating Officer West ("COO West") and the Chief Operating Officer East ("COO East"). Terms not defined herein shall have the meaning of such term as defined in the U.S. Physical Therapy, Inc. 2003 Stock Incentive Plan (as amended) (the "2003 Plan").
 
Vesting and Other Terms and Provisions: Under this Objective LTIP, Executives have an opportunity to receive Restricted Stock Awards ("RSAs") under the U. S. Physical Therapy, Inc. 2003 Stock Incentive Plan (as amended) (the "2003 Plan"), to be granted by the Compensation Committee of the Board of Directors of USPH (as the term "Committee” is defined in Section 1.8 of the 2003 Plan) in the first quarter of 2024. The Executive must be employed by USPH or its affiliates from the Effective Date through the date of the grant to receive a RSA. All RSAs shall be granted subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in  transfer  and substantial  risk of forfeiture)  as determined  by the Compensation  Committee in its sole discretion. RSAs that are granted under this Objective LTIP will vest evenly over 16 quarters, beginning April 1, 2024 and ending January 1, 2028, subject to acceleration of vesting in the Committee's sole discretion and based on the occurrence of certain events, as more specifically defined in the applicable Restricted Stock Agreement between the Executive and USPH and/or in the Executive's employment agreement with USPH.
 
Administration: The Compensation Committee has authority to administer this Objective LTIP, grant awards and decide all questions of interpretation. The Compensation Committee shall set out the vesting and other terms of an RSA in writing. The Compensation Committee's determinations and interpretations under this Objective LTIP
 
Objective Goals And Amounts That May Be Awarded: The maximum amount of RSAs that may be granted under this this Objective LTIP based on achievement of the performance goals relating  to 2023 are as follows: CEO = 10,000 shares; CFO = 5,000  shares; COO East = 5,000 shares; COO West = 5,000 shares and EVP = 5,000 shares
 
Award Grant Date:  Any RSAs granted under this program shall be granted under the 2003 Plan in the first quarter of 2024 after the Compensation Committee determines the amount, if any, of the RSAs to be granted to each Participant. In addition, RSAs shall be granted only if the participant remains employed by USPH (or its affiliates) continuously from the Effective Date through the date of the grant of the RSA. All RSAs shall be granted in writing and subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion. RSAs that are granted under this Objective LTIP will vest evenly over 16 quarters, beginning April 1, 2024 and ending January 1, 2028, subject to acceleration of vesting based on the occurrence of certain events, as more specifically defined in the applicable Restricted Stock Agreement between the Executive and USPH and/or in the Executive's employment agreement with USPH.

Performance Goals
2023
Adjusted EBITDA
    
Objective
Amount of Maximum Shares
CEO, COOs, CFO, EVP
  
$
74,597,377
      
30.0
%
$
75,345,215
      
34.0
%
$
75,721,194
      
38.0
%
$
76,100,351
      
42.0
%
$
76,481,054
      
46.0
%
$
76,863,458
      
50.0
%
$
77,247,776
      
56.0
%
$
77,634,015
      
62.0
%
$
78,022,166
      
68.0
%
$
78,804,357
      
84.0
%
$
79,198,378
      
92.0
%
$79,594,370 AND OVER
      
100.0
%
 
Adjusted EBITDA is defined as net income attributable to USPH shareholders before interest income, interest expense, taxes, depreciation, and amortization, changes in revaluation of put-right liability, equity-based awards compensation expense, and other extraordinary or unusual items, and related portion for non-controlling interests.
Exhibit 99.2
U.S. PHYSICAL THERAPY, INC. (“USPH”)
DISCRETIONARY LONG-TERM INCENTIVE PLAN FOR SENIOR MANAGEMENT
FOR 2023 (“Discretionary LTIP”)

Purpose: To incentivize Executives eligible for this Discretionary LTIP to achieve certain strategic, operational, business growth & development and other criteria and reward Executives when such criteria are achieved, and to align the long-term interests of Executives and shareholders of USPH by compensating the Executives in shares of USPH stock that vest over time, thereby increasing the Executives' equity interest in USPH.
 
Effective Date: This Discretionary LTIP is established effective March 2, 2023.
 
Description of Discretionary Awards Criteria: In addition to any other awards under the U.S. Physical Therapy, Inc. 2003 Stock Incentive Plan (as amended) (the "2003 Plan") or any other long term incentive plan or bonus plan, policy or program of USPH, and not in lieu of any other such award or payment, the Compensation Committee of the Board of Directors of USPH (as the term "Committee" is defined in Section 1.8 of the 2003 Plan) may, in its judgment and at its sole discretion, grant Restricted Stock Awards ("RSAs") under the 2003 Plan, based on its evaluation of an Executive's performance and the collective corporate performance for 2023. The factors to be considered include:

CEO


 1.
Company Leadership

2.
Cost Aligned with Revenue and Volume Growth

3.
Continued development of COO's (or direct reports)

4.
Maintain effective Compliance Culture

5.
Acquisition, Tuck in and De Novo Development

6.
Buffer net rate impact with rate strategies and initiatives

CFO
 

 1.
Rate negotiations through strategic negotiations along with purging of sub-optimal contracts

2.
Effective and accurate Board and Shareholder communication, guidance, modeling, projections and planning

3.
Improve efficiencies in Finance/AP and IT areas through technology improvements and staffing adjustments

4.
Maintain effective capital structure to allow for continued growth

5.
Enact cost improvement opportunities across the company and within the corporate services area

6.
Successful Audit implementation

 

 1.
Align cost and revenue growth for Physical Therapy

2.
Create development plan for top 30 partnerships to ensure organic as well as acquired growth

3.
Work on IIP opportunities for sales and expansion and cost efficiency in light of broad economic environment

4.
Leadership development, succession and effective relationship integration to allow for seamless transitions to accommodate growth and succession-related changes

5.
Maintain effective compliance culture

6.
Effective acquisition-related due diligence and integrated coordination and execution

EVP General Counsel
 

 1.
Coordinate with CEO and other executives to facilitate growth through development

2.
Assist in any compliance matters as needed to maintain an effective compliance culture and assist in any communications internally as needed with CCO (“Chief Compliance Officer”) and executive team

3.
Maintain legal department in a manner which successfully supports our partners as well as our corporate and infrastructure needs

4.
Assist CEO and other executives in evaluating new opportunities for growth whether acquired or home grown

Participants: Executives who will have an opportunity to be granted RSAs under this Discretionary LTIP shall be the Chief Executive Officer ("CEO"), the Chief Financial Officer ("CFO"), the Chief Operating Officer West ("COO West"), the Chief Operating Officer East ("COO East") and Executive Vice President, General Counsel (EVP). The following shall be the maximum amount of shares that may be awarded under this program to each specified participant: CEO= up to 10,000 shares; CFO= up to 5,000 shares; COO West= up to 5,000 shares; COO East= up to 5,000 shares, and EVP= up to 5,000 shares
 
Administration: The Compensation Committee shall administer this Discretionary LTIP. The Compensation Committee shall have the exclusive authority to interpret and construe the terms of this Discretionary LTIP and make all determinations under this plan, and its decisions shall be final and binding in all persons. The Compensation Committee shall set out the vesting and other terms of an RSA in writing.

Award Grant Date:  Any RSAs granted under this program shall be granted under the 2003 Plan in the first quarter of 2024 after the Compensation Committee determines the amount, if any, of the RSAs to be granted to each participant. In addition, RSAs shall be granted only if the participant remains employed by USPH (or its affiliates) continuously from the Effective Date through the date of the grant of the RSA. All RSAs shall be granted in writing and subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion. RSAs that are granted under this Objective LTIP will vest evenly over 16 quarters, beginning April 1, 2024 and ending January 1, 2028, subject to acceleration of vesting based on the occurrence of certain events, as more specifically defined in the applicable Restricted Stock Agreement between the Executive and USPH and/or in the Executive's employment agreement with USPH.
 
Certain Tax Considerations: Any awards actually granted under this program shall be subject to Code Section 83(b).
  Exhibit 99.3

U.S. PHYSICAL THERAPY, INC. (“USPH”)
OBJECTIVE CASH/RSA BONUS PLAN FOR SENIOR MANAGEMENT
FOR 2023 (“OBJECTIVE BONUS PLAN”)

 Purpose: To incentivize and retain Executives eligible for this Objective Bonus Plan to achieve certain corporate earnings criteria and reward Executive Officers of USPH when such criteria are achieved, and to align the long-term interests of Executives and shareholders of USPH.
 
Effective Date: The effective date of this Objective Bonus Plan and the establishment of performance goals and formula for the amount payable hereunder is March 2, 2023.

Eligibility: The Executives of USPH eligible for this Objective Bonus Plan are the Chief Executive Officer ("CEO"), the Chief Financial Officer ("CFO"),  the Chief Operating Officer West ("COO West"), the Chief Operating Officer East ("COO East") and the Executive Vice President, General Counsel ("EVP")
 
Description. Conditions and Payment Date: Under this Objective Bonus Plan, Executives have an opportunity to receive either a "Cash Bonus" Award or to be granted a Restricted Stock Award ("RSA") having a value at the time of the Award of up to 75% of the annual base salary for 2023 (“Base”) for the CEO, COO West, COO East, CFO and EVP as Performance Awards under the 2003 Plan. The Compensation Committee of the Board of Directors of USPH (the "Compensation Committee") will, in its sole discretion, determine the amount and type of award to be made in the first quarter of 2024. No Executive will be entitled to any type of award or have a legally binding right to an award until the Compensation Committee, in its sole discretion, determines an award will be made, the amount and the type of award to be made. No Executive will be entitled to elect between the Cash Bonus and RSA. Before any Cash Bonus is made or an RSA is awarded under this Objective Bonus Plan, the Compensation Committee shall certify in writing that the performance goals have been obtained. Any Cash Bonus award made hereunder shall be paid in a lump-sum amount, and any RSA granted, in each case no later than March 14, 2024. The Executive must be continuously employed by USPH or its affiliates from the Effective Date through December 31, 2023 to receive the Cash Bonus or an RSA.
 
Administration:  The Compensation Committee has authority to administer this Objective Bonus Plan, grant awards, determine whether any such awards shall be made as a Cash Bonus Award or as an RSA, and decide all questions of interpretation. The Compensation Committee shall set out the vesting and other terms of an RSA in writing. The Compensation Committee’s determinations and interpretations under this Objective Bonus Plan shall be final and binding on all persons.
 
Objective Bonus Calculation:

2023 Adjusted
EBITDA
    
Potential Bonus Value
(percentage of base salary)
$
74,597,377
     15.0%
$
75,345,215
     17.0%
$
75,721,317
     19.0%
$
76,100,551
    
21.0%
$
76,481,054
    
23.0%
$
76,863,458
    
25.0%
$
77,247,776
    
28.0%
$
77,634,015
    
31.0%
$
78,022,166
    
34.0%
$
78,412,296
    
38.0%
$
78,804,357
    
42.0%
$
79,198,378
    
46.0%
$
79,594,370
    
50.0%
$
79,992,343
    
54.0%
$
80.372,304
    
58.0%
$
80,794,265
    
62.0%
$
81,198,236
    
66.0%
$
81,604,227
    
70.0%
$
82,012,249
    
75.0%
 
Adjusted EBITDA is defined as net income attributable to USPH shareholders before interest income, interest expense, taxes, depreciation, and amortization, changes in revaluation of put-right liability, equity-based awards compensation expense, and other extraordinary or unusual items, and related portion for non-controlling interests.
 
No Trust or Fund: There shall be no separate trust or fund for this Objective Bonus Plan. Any amount payable hereunder shall be an unfunded obligation of USPH and shall be payable out of the general assets of USPH and no amount payable shall be assignable by the participant.
 
All RSAs shall be granted subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion.
Exhibit 99.4

U.S. PHYSICAL THERAPY, INC. (“USPH”)
DISCRETIONARY CASH/RSA BONUS PLAN FOR SENIOR MANAGEMENT
FOR 2023 (“DISCRETIONARY BONUS PLAN”)

Purpose:  The purpose of this Discretionary Bonus Plan is to retain and incentivize the Executive Officers of USPH by providing an annual bonus opportunity to the Executives to reward them when certain individual and corporate subjective performance measures are achieved.
 
Participants: Executives of USPH who shall be "Participants" in this Discretionary Bonus Plan are the Chief Executive Officer ("CEO"), Chief Financial Officer ("CFO"), Chief Operating Officer West ("COO West"), Chief Operating Officer East ("COO East") and Executive Vice President, General Counsel (EVP). In addition to awards under any other plan or program at USPH for which such Executives are eligible and not in lieu thereof, each Participant in this Discretionary Bonus Plan has the potential to be awarded a "Subjective Bonus" of up to 50% of the Participant's annual base salary for 2023 ("Base") pursuant to the subjective criteria as set forth below. The Subjective Bonus shall be made as either a "Cash Bonus" Award or a Restricted Stock Award ("RSA"), as determined in the sole discretion of the Compensation Committee of the Board of Directors of USPH (the "Compensation Committee"). The Compensation Committee shall have the sole discretion to determine the amount and type of award (whether a Cash Bonus Award or an RSA) will be made. No Participant shall be entitled to a Subjective Bonus and shall have no legally binding right to a Subjective Bonus until the Compensation Committee determines the amount and type of award to be made.  No Participant will be entitled to elect any type of award to be made.
 
Effective Date: This Discretionary Bonus Plan is established effective March 2, 2023.
 
Administration: The Compensation Committee shall administer this Discretionary Bonus Plan and shall have the sole authority to interpret and construe all of the terms of this Discretionary Bonus Plan, establish the criteria for awards, determine the amounts payable under this plan, and determine whether such awards under this plan shall be made as a Cash Bonus Award or as an RSA. The amount, if any, of the Subjective Bonus payable to each participant in this Discretionary Bonus Plan shall be determined by the Compensation Committee in its sole discretion based upon subjective criteria described below. All decisions of the Compensation Committee shall be final and binding on all persons.
 
Award and Payment Date: The Compensation Committee shall make award determinations in the first quarter of 2024. After the Compensation Committee has determined that goals have been met and has calculated the awards to be made hereunder, the Cash Bonus Award shall be paid, and the RSA shall be granted to the applicable Participant in the first quarter of 2024 but no later than March 14, 2024. A Subjective Bonus shall be payable only if the Participant remains continuously employed from the Effective Date through the date of the determination of the amount payable by the Compensation Committee.
 
Subjective Bonus Calculation: The Subjective Bonus criteria that have been established by the Compensation Committee and shall be used in the Compensation Committee's sole discretion to grant an award of a Subjective Bonus having a value as of the date of the award of up to 50% of Base for CEO, COO West, COO East, CFO and EVP are as follows:

CEO


 1.
Company  Leadership

2.
Cost Aligned with Revenue and Volume Growth

3.
Continued development of COO's (or direct reports)

4.
Maintain effective Compliance Culture

5.
Acquisition, Tuck in and De Novo Development

6.
Buffer net rate impact with rate strategies and initiatives

CFO


 1.
Rate negotiations through strategic negotiations along with purging of sub-optimal contracts

2.
Effective and accurate Board and Shareholder communication, guidance, modeling, projections and planning

3.
Improve efficiencies in Finance/AP and IT areas through technology improvements and staffing adjustments

4.
Maintain effective capital structure to allow for continued growth

5.
Enact cost improvement opportunities across the company and within the corp services area

6.
Successful Audit implementation

COO’s


 1.
Align cost and revenue growth for Physical Therapy

2.
Create development plan for top 30 partnerships to ensure organic as well as acquired growth

3.
Work on IIP opportunities for sales and expansion and cost efficiency in light of broad economic environment

4.
Leadership development, succession and effective relationship integration to allow for seamless transitions to accommodate growth and succession-related changes

5.
Maintain effective compliance culture

6.
Effective acquisition-related due diligence and integrated coordination and execution

EVP General Counsel


 1.
Coordinate with CEO and other executives to facilitate growth through development

2.
Assist in any compliance matters as needed to maintain an effective compliance culture and assist in any communications internally as needed with CCO and executive team

3.
Maintain legal department in a manner which successfully supports our partners as well as our corporate and infrastructure needs

4.
Assist CEO and other executives in evaluating new opportunities for growth whether acquired or home grown

No Trust or Fund: There shall be no separate trust or fund for this Objective Bonus Plan. Any amount payable hereunder shall be an unfunded obligation of USPH and shall be payable out of the general assets of USPH and no amount payable shall be assignable by the participants:

All RSAs shall be granted subject to the terms of the 2003 Plan and the specific terms and conditions (including without limitation, restrictions in transfer and substantial risk of forfeiture) as determined by the Compensation Committee in its sole discretion.