ITEM 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION

In accordance with the Dodd-Frank Act and related SEC rules, we request that stockholders approve, on an advisory basis, our executive compensation program. We ask that you support the compensation of our named executive officers, or NEOs, as disclosed under the heading “Executive Compensation,” including the “Executive Summary” section, beginning on page 53, and the accompanying tables and related narrative disclosure. This proposal, commonly referred to as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on the NEOs’ compensation as required under Section 14A of the Exchange Act. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the NEOs and the philosophy, policies and practices described in this proxy statement.

Our executives – including our NEOs – are critical to our success. That is why we design our executive compensation program to attract, retain and motivate exceptional and diverse executive talent. We structure our executive compensation program to focus on stockholders’ interests by incentivizing superior, sustainable long-term performance. We believe our executive compensation program strikes an appropriate balance between using responsible, measured pay practices and effectively incentivizing our NEOs to dedicate themselves fully to value creation for our stockholders.

Under our executive compensation program, we align pay and performance by making a significant portion of our NEOs’ compensation contingent on:

 

•

achieving specific and challenging annual and long-term performance goals; and

 

•

increasing stockholder value.

As further described in our “Compensation Discussion and Analysis” section, we incorporate rigorous compensation-related design and governance practices to protect our stockholders’ interests, including the following:

 

•

we have stock ownership guidelines for our executive officers that promote alignment of their interests with those of our stockholders;

 

•

our long-term incentive plan is 100% equity-based;

 

•

85% of our CEO’s target total compensation is at-risk, incentive-based pay (63% of which is based on our long-term performance);

 

•

on average, 76% of our other NEOs’ target total compensation is at-risk, incentive-based pay (55% of which is based on long-term performance);

 

•

we do not pay tax gross-ups associated with benefits payable in connection with a change in control;

 

•

we mitigate risk by limiting incentive payments, using multiple performance measures in our incentive plans and imposing a strong incentive compensation recoupment (clawback) policy; and

 

•

we prohibit hedging, pledging and short sales of our common stock.

We encourage you to read the “Compensation Discussion and Analysis” section beginning on page 53 of this proxy statement, which includes a recap of what we do and what we don’t do on page 57, and the “Executive Compensation Tables” beginning on page 76 of this proxy statement to better understand the details of our NEOs’ compensation for fiscal year 2021 and their opportunities to realize compensation in the future.

Our Compensation Committee and our Board believe that our executive compensation program for our NEOs serves our stockholders’ interests. This vote is advisory and not binding on us, the Board or the Compensation Committee, which is responsible for developing and administering our executive compensation philosophy and program; however, the Compensation Committee will consider the results as part of its ongoing review of our executive compensation program.

 

 

 

18		2021 Proxy Statement

ITEM 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

The Board recommends that stockholders indicate their support for our compensation of our NEOs, and we ask you to vote “FOR” the following resolution at our Annual Meeting:

“RESOLVED, that Premier’s stockholders approve, on an advisory basis, the compensation paid to Premier’s named executive officers, as disclosed in this proxy statement for the 2021 Annual Meeting of Stockholders pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis section, Summary Compensation Table for Fiscal Year 2021 and the other related tables and discussion.”

 

				Board Recommendation
				The Board of Directors unanimously recommends a vote “FOR” the approval of the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC.

In accordance with the Board of Directors’ recommendation, the proxy holders will vote the shares of common stock covered by valid and timely received proxies “FOR” the approval of the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, unless instructed otherwise.

 

 

 

						2021 Proxy Statement		19

 

ITEM 4 – ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION

We seek your input regarding the frequency of future stockholder advisory votes on our executive compensation programs. In particular, we are asking whether the “say-on-pay” advisory vote should occur every year, every two years or every three years. After careful consideration, our board of directors previously decided to hold annual, non-binding, advisory votes on executive compensation. Notwithstanding that decision and the support of most of our stockholders of the say-on-pay frequency proposal for one year in the 2015 vote, the rules of the SEC require us to again submit this Proposal to a vote. Accordingly, we are asking whether the say-on-pay advisory vote should occur every year, every two years or every three years. We understand that stockholders may have different views as to what is the best approach for the Company, and we look forward to hearing from stockholders on this Proposal.

You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to the resolution set forth below.

“RESOLVED, that the option of once every one year, two years, or three years that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder advisory vote to approve the compensation of the named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure shall include the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure).”

The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be deemed the frequency for the advisory vote on executive compensation that has been approved by stockholders. While the board of directors will take into account the outcome of this non-binding, advisory vote when making future decisions regarding the frequency of the say-on-pay advisory vote, the board of directors may decide that it is in the best interests of stockholders and the Company to hold such an advisory vote more or less frequently than the option selected by a plurality of stockholders at the annual meeting. As a reminder, you are NOT voting for or against the board’s recommendation itself. Instead, your vote is a selection of one of the three frequency options if you do not abstain.

 

				Board Recommendation
				The Board of Directors unanimously recommends a vote for the option of “ONE YEAR” as the frequency with which stockholders are provided an advisory vote on executive compensation, as disclosed pursuant to the compensation disclosure rules of the SEC.

In accordance with the Board of Directors’ recommendation, the proxy holders will vote the shares of common stock covered by valid and timely received proxies for “ONE YEAR” as the frequency with which stockholders are provided an advisory vote on executive compensation, as disclosed pursuant to the compensation disclosure rules of the SEC, unless instructed otherwise.

 

 

 

20		2021 Proxy Statement

 

CORPORATE GOVERNANCE AND BOARD STRUCTURE

Corporate Governance

Our corporate governance practices are established, monitored and regularly assessed by our Board of Directors with assistance from the Nominating and Governance Committee. The Board of Directors considers current and proposed legal requirements and governance best practices in connection with its oversight of our corporate governance practices.

Corporate Governance Guidelines

To assist the Board of Directors in the exercise of its duties and responsibilities and to serve the best interests of us and our stockholders, the Board of Directors has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines were revised in April 2021 and set forth, among other things:

 

•

the Board’s role in overseeing the management and conduct of our business, including:

 

•

the job description and specific functions of the Board and its committees;

 

•

annual review and evaluation of the Chief Executive Officer led by the Chair of the Board in collaboration with the Compensation Committee;

 

•

annual senior management evaluation;

 

•

annual review and update, if appropriate, of our succession plan;

 

•

risk management and oversight by the Audit and Compliance Committee; and

 

•

Board self- and peer-assessments, led by the Nominating and Governance Committee, to provide feedback to each director on his or her performance, and the evaluation of the performance of the Board Chair and Lead Independent Director, if any, on a regular basis.

 

•

director nomination and qualification, including:

 

•

methods for director nomination;

 

•

succession planning for directors, Board leaders and Board committee members;

 

•

the Board’s multi-factorial screening process;

 

•

attribute-based guidelines for selection of director nominees, including Premier-specific criteria; skills, subject matter expertise and experience; personal traits and diversity characteristics; and

 

•

the Board Diversity Policy, which requires assessing Board composition or identifying suitable candidates for appointment or re-election to the Board using objective criteria having due regard to the benefits of diversity and the needs of the Board.

 

•

director responsibilities and requirements, including:

 

•

director responsibilities to exercise common sense business judgment, exercise their fiduciary duties to all stockholders and exercise personal accountability through regular attendance and participation and investment of time and energy in our business;

 

•

commitment to support the needs of the Board and fully serve out the established Board term;

 

•

limits on other board service (i.e., no over-boarding);

 

•

director orientation and continuing education;

 

•

director mentorship program;

 

•

notice of changes in principal employment or changes in independence; and

 

•

director compensation and stock ownership.

 

•

Board independence and leadership, including:

 

•

director independence standards and required reviews of each director’s independence;

 

 

 

						2021 Proxy Statement		21

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

•

Board leadership and the annual election of a non-management director as Board Chair;

 

•

the annual election of a Lead Independent Director (if the Board Chair is not independent);

 

•

the annual election of Company officers, including a president, chief executive officer and secretary; and

 

•

duties and role of the Board Chair, Lead Independent Director and Corporate Secretary.

 

•

Board accountability, ethics and integrity, including:

 

•

adherence to the Board’s Conflict of Interest Policy; and

 

•

adherence to our Code of Conduct and the Board Code of Ethics.

 

•

Board structure, including:

 

•

Board size and review of the same;

 

•

Board class structure and term of each class;

 

•

age and term limits; and

 

•

resignation and failure to be re-elected.

 

•

Board committees, including:

 

•

standing committees and committee structure;

 

•

independence requirements and qualifications of committee members;

 

•

assignment and rotation of committee members and Chairs;

 

•

committee Chair job description; and

 

•

committee meeting frequency, length and agenda.

 

•

Board meetings, agenda and information, including:

 

•

regular meeting schedules and attendance expectations;

 

•

Board agenda process;

 

•

Board information flow, materials and presentations;

 

•

regularly held executive sessions outside the presence of management;

 

•

Board access to and retention of independent advisors;

 

•

director access to senior management;

 

•

right to call a special meeting of the Board and related procedures; and

 

•

annual stockholder meeting and attendance.

 

•

Stockholder input and communications, including:

 

•

Board interaction/communications with stockholders, analysts, institutional investors, member owners and the media where appropriate; and

 

•

Board responsiveness to stockholder proposals that receive substantial support.

Under its charter, the Nominating and Governance Committee, in consultation with the Chair of the Board and the Chief Executive Officer, periodically reviews, revises, interprets and confirms compliance with the Corporate Governance Guidelines.

 

 

 

22		2021 Proxy Statement

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

Code of Ethics

We have adopted a Corporate Code of Conduct, as well as a Board Code of Ethics and a Board Conflict of Interest Policy and Disclosure Statement, together our “code of ethics,” that apply, as applicable, to all employees, directors and officers, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. The purpose of the code of ethics is to deter wrongdoing and promote:

 

•

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

 

•

full, fair, accurate, timely and understandable disclosure in reports required to be filed with or submitted by us to the SEC and in other public communications;

 

•

compliance with all applicable rules and regulations that apply to us and our officers and directors;

 

•

the prompt internal reporting of violations of the code of ethics to an appropriate person or persons identified in the code of ethics; and

 

•

accountability for adherence to the code of ethics.

We will disclose any future amendments to, or waivers from, certain provisions of these ethical policies and standards for officers and directors on the “Investors” section of our website at http://investors.premierinc.com promptly following the date of such amendment or waiver. Upon written request to our Corporate Secretary, we will also provide a copy of the code of ethics free of charge.

Corporate Website

We maintain a “Corporate Governance” area within the “Investors” section of our website and an “Ethics and Compliance” area within the “About Premier” section of our website where you can find copies of our principal governance documents and ethics policies. You may also request copies of these documents by contacting our Corporate Secretary at 13034 Ballantyne Corporate Place, Charlotte, North Carolina, 28277, or by calling 1-704-357-0022. Our “Corporate Governance,” “Compliance and Ethics” and “Sustainability” areas of our website are located at http://investors.premierinc.com/corporate-governance/, https://www.premierinc.com/compliance-and-ethics and https://www.premierinc.com/sustainability, respectively, and include the following documents, among others:

 

•

Certificate of Incorporation;

 

•

Bylaws;

 

•

Corporate Governance Guidelines (which now include our Lead Independent Director Policy);

 

•

Whistleblower Policy;

 

•

Insider Trading Policy;

 

•

Code of Conduct;

 

•

Group Purchasing Code of Conduct;

 

•

Board Code of Ethics;

 

•

Board Conflict of Interest Policy and Disclosure Statement;

 

•

Audit and Compliance Committee Charter;

 

•

Nominating and Governance Committee Charter;

 

•

Finance Committee Charter;

 

•

Compensation Committee Charter;

 

•

Member Agreement Review Committee Charter; and

 

•

ESG Sustainability Report.

 

 

 

						2021 Proxy Statement		23

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

We encourage our stockholders to read our governance documents, as we believe they illustrate our commitment to good governance practices and ethical business conduct.

Role of the Board in the Oversight of Risk

Our Board of Directors plays an active role in overseeing management of our risks. We have identified five primary areas of enterprise risk across our operations that are monitored and managed by our Board of Directors, management and internal auditors. These areas include risks associated with strategic, operational, financial, legal and information technology and systems, including cybersecurity. In conjunction with its management of these specific risk areas, our Board of Directors manages reputational risks across all of our operations. Our Board of Directors is primarily responsible for oversight of the strategic, operational and information technology and systems risks that we may encounter. The committees of our Board of Directors assist our full Board in risk oversight by addressing specific matters within the purview of each committee. Our Audit and Compliance Committee focuses on oversight of financial, legal and regulatory compliance, as well as ethical risks. The Audit and Compliance Committee oversees the cyber risk management program, which is designed to monitor, mitigate and respond to cyber risks, threats and incidents and reviews periodic reports from our Chief Information Security Officer, President of Performance Services and Chief Financial Officer, including developments in cyber threat environment and cyber risk mitigation efforts. Our Finance Committee oversees financial risks related to capital allocation and financial forecasting. Our Compensation Committee, as discussed in more detail below, focuses on risks relating to executive compensation plans and arrangements, and our Nominating and Governance Committee focuses on reputational and corporate governance risks relating to our company including the independence of our Board of Directors.

While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our full Board of Directors remains regularly informed regarding such risks through committee reports and otherwise. In addition, our Board and its committees receive regular reports from our President and Chief Executive Officer, SVP, Chief Administrative Officer, Chief Financial Officer and Treasurer, General Counsel, Chief Ethics and Compliance Officer and other members of senior management regarding areas of significant risk to us, including strategic, operational, financial, legal and regulatory, information technology and systems, cyber and reputational risks. We believe the leadership structure of our Board of Directors supports and promotes effective risk management and oversight.

The Compensation Committee reviews and considers our compensation policies and programs in light of the Board of Directors’ risk assessment and management responsibilities on an annual basis. Our human resources department in consultation with Mercer (US) Inc. (“Mercer”) prepared and presented to the Compensation Committee a risk assessment report that addressed the incentive compensation structure, plans and processes at all levels of our Company. The assessment included, among other things, a review of pay mix (fixed versus variable, cash versus equity and short- versus long-term), performance metrics, target setting, performance measurement practices, pay determination, mitigation practices such as our compensation recoupment policy, and overall governance and administration of pay programs. After reviewing this report and making inquiries of management, the Compensation Committee determined we have no compensation policies and programs that give rise to risks reasonably likely to have a material adverse effect on our Company.

Communications to Directors

Stockholders and other parties interested in communicating directly to the Board of Directors, any committee or any non-employee director may do so by writing to the address listed below:

PREMIER, INC.

BOARD OF DIRECTORS

13034 BALLANTYNE CORPORATE PLACE

CHARLOTTE, NORTH CAROLINA 28277

ATTENTION: [Addressee*]

C/O BELINDA A. MCCORD, CORPORATE SECRETARY

* Including the name of the specific addressee(s) will allow

us to direct the communication to the intended recipient.

 

 

 

24		2021 Proxy Statement

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

All communications received as set forth in this paragraph will be reviewed by the office of our General Counsel for the sole purpose of determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board of Directors or any group or committee of directors, the General Counsel’s office will make sufficient copies of the contents to send to each director who is a member of the group or committee to which the envelope is addressed.

Board Structure and Director Nominations

Recent Board Changes

On August 5, 2021, our Board approved a recommendation of the Nominating and Governance Committee to undertake a fair, orderly and thoughtful process to reduce the size of the Board from 15 to 11 directors to better align with current governance best practices. In order to accomplish this transition, the Board established a Special Nominating Committee (the “Special Committee”) charged with evaluating and making recommendations regarding (i) the directors, not to exceed 11 individuals including our Chief Executive Officer, who will continue to serve on the Board, (ii) the allocation of such continuing directors to each of the three classes of directorship required under our governing documents, (iii) the composition of the standing Board committees and (iv) the effective date of such changes in Board and committee composition. The decision to form the Special Committee was approved by the Board based on the recommendation of the Nominating and Governance Committee, which received input from the then–existing directors, as well as research and advice provided by legal counsel and independent consultants regarding board size, composition and governance policies appropriate to bring the Board in alignment with current best practices. At the time the Special Committee was established, the existing directors agreed to abide by the recommendations of the Special Committee. The Special Committee was comprised of the following independent directors: Terry D. Shaw (as Board Chair), Richard J. Statuto (as Chair of the Nominating and Governance Committee) and Jody R. Davids.

On August 31, 2021, based on the recommendation of the Special Committee, the Board accepted the resignations tendered by of each of Barclay E. Berdan, Stephen R. D’Arcy, David H. Langstaff, William E. Mayer and Scott Reiner from the Board and their respective Board committees, effective immediately. The Board also (i) determined that each continuing director shall remain in his or her current director class as provided above under “Item 1—Election of Directors” and (ii) reappointed its standing committees as set forth below under “Committees of the Board of Directors.”

The Board also approved a decrease in its size from 15 directors to 11 directors. As a result of the director resignations and the change in the Board size, our Board now has one vacancy. The Board directed the Nominating and Governance Committee to recruit an additional female or other diverse director, with appropriate competencies and experiences that support the Company’s strategic plan, to fill the vacancy.

Current Board Structure and Meetings

The Board’s overarching responsibility is to advise and oversee the management and conduct of our business by our Chief Executive Officer and other members of management charged with the health and overall success of Premier’s business. Our Board size may not exceed 18 directors and must consist of a majority of independent directors that satisfy the NASDAQ listing standards discussed below. Our Board is currently comprised of 10 members, nine of whom are independent and one of whom is our President and Chief Executive Officer, Mr. Alkire. The Board is divided into three classes (Class I, Class II and Class III) with staggered terms of three years each. The term of one class expires at each annual meeting of stockholders; thus, directors typically stand for election after three years, unless they are filling an unexpired term. Under our Corporate Governance Guidelines, no director may serve for more than two full three-year consecutive terms except for (i) the Chief Executive Officer; (ii) each director identified as an independent director in our SEC filings; and (iii) a director serving as Chair of the Board, whose term may be extended at the discretion of the Board.

Our Bylaws and Corporate Governance Guidelines provide that the Chair of the Board shall not be one of our officers. We believe that having a non-executive Chair of our Board creates an environment that is more conducive to

 

 

 

						2021 Proxy Statement		25

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability of the Board of Directors to monitor whether management’s actions are in the best interests of us and our stockholders. Our Chief Executive Officer and Board Chair work together to set the Board agenda. Board members are invited to make agenda suggestions, and the Board approves the annual schedule of Board and committee task and agenda items. The Board Chair presides over Board meetings, coordinates the work of the committees of our Board of Directors and performs other duties delegated to the Chair by our Board of Directors. Committee assignments and designation of the committee Chair are made by the Board based upon recommendations of the Board Chair and Nominating and Governance Committee.

Since the Chair of the Board is an independent director, the Board does not currently have a Lead Independent Director. In the event that the Board Chair is not an independent director, our Corporate Governance Guidelines state that the independent directors of the Board shall elect annually a Lead Independent Director upon the recommendation of the Nominating and Governance Committee. The Lead Independent Director would serve as a liaison between the Board Chair and the independent directors and perform other responsibilities as assigned by the Board.

Executive sessions of independent directors, held outside the presence of employee Board members, are scheduled at each in-person Board meeting and may be called at any other Board or committee meeting. The Chair presides over these independent-only executive sessions. Members of our Board of Directors are kept informed of our business through discussions with our Chief Executive Officer and other officers, by reviewing materials provided to them, by visiting our offices and by participating in meetings of the Board of Directors and its committees.

Under our Corporate Governance Guidelines, Board members are expected to prepare for and attend at least 75% of all Board and applicable committee meetings. The Board of Directors met 11 times during fiscal year 2021. In addition, the board held three executive sessions without management present and independent directors met three times during fiscal year 2021. Each incumbent member of the Board of Directors attended 75% or more of the meetings of the Board of Directors and of the committees on which he or she served that were held during the period for which he or she was a director or committee member, respectively. In addition, under our Corporate Governance Guidelines, directors are encouraged to attend each annual meeting of stockholders. Except for Mr. Fine (prior commitment), all current directors who were serving as directors at the time of our 2020 Annual Meeting of Stockholders held on December 4, 2020 virtually attended such annual meeting. We expect all of our directors to virtually attend the Annual Meeting.

Criteria for Board Members

Our Corporate Governance Guidelines provide multi-factorial criteria applicable to both the composition of the Board as a whole and individual directors. The Board applies the Attribute-Based Guidelines summarized below in recommending to the stockholders the election of directors:

 

•

Premier-Specific Criteria:

 

•

ability to represent on a fiduciary basis all stockholders and not a particular constituency or organization;

 

•

demonstrated willingness to devote sufficient time to Premier, with prior committee service strongly preferred;

 

•

held in high regard, as evidenced by other elected positions of leadership in national organizations;

 

•

knowledge of and demonstrated engagement with our services;

 

•

ability to offer constructive advice to our management from a customer or business perspective on business lines, new products and services and strategic decisions;

 

•

willingness to engage in continuing education around our business and governance role; and

 

•

demonstrated responsiveness to stockholder concerns and interests.

 

•

Skills and Subject Matter Expertise and Experience in One or More of These Fields:

 

•

C-level leadership experience;

 

•

group purchasing, value-based purchasing and supply chain operations;

 

 

 

26		2021 Proxy Statement

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

•

healthcare transformation, healthcare continuum of care and population health management;

 

•

performance improvement, clinical quality improvement, patient safety, outcomes management, risk management and healthcare measurement;

 

•

technology, information technology and knowledge management;

 

•

data sciences/analytics and artificial intelligence;

 

•

outsourcing services;

 

•

finance, audit and major transactions/M&A/private equity/public equity;

 

•

national perspective on healthcare policy and advocacy;

 

•

healthcare insurance and payment systems; or

 

•

academic medical experience.

 

•

Personal Traits:

 

•

a strong strategic planning orientation, including the ability to view our goals and plans strategically;

 

•

ability to effectively oversee risk and innovation, thus safeguarding our mission and stockholder interests;

 

•

knowledge of effective governance policies and practices;

 

•

proven leadership skills as an executive in a successful organization;

 

•

ability to listen, engage, reflect and generally work effectively with other directors and management;

 

•

willingness to ask management and each other tough questions and challenge traditional thinking;

 

•

adeptness at managing change, ambiguity and complexity;

 

•

integrity backed by a record of ethical conduct;

 

•

understanding of the importance and implications of compliance with regulatory requirements;

 

•

interest and ability to serve in a Board leadership position (e.g., Board Chair, Lead Independent Director, committee Chair) in the future; and

 

•

ability to make a priority commitment to support the needs of the Board and to fully serve out the established Board term.

 

•

Candidate’s Diversity Characteristics:

 

•

gender;

 

•

ethnicity;

 

•

age;

 

•

disabled status;

 

•

sexual orientation;

 

•

status as a diverse director under any requirements of NASDAQ; and

 

•

other personal characteristics that would contribute to diverse viewpoints on the Board.

 

 

 

						2021 Proxy Statement		27

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

Board Skills and Experience Matrix

The table below summarizes the key qualifications, skills and attributes that each director and nominee brings to the Board. Each director and nominee possesses numerous other skills and competencies not identified below. A mark indicates a specific area of focus or expertise which the Board considers the person to contribute significantly to the overall Board skill set. Not having a mark does not mean and should not be interpreted to mean that the director or nominee does not possess that qualification or skill. Director and nominee biographies above under “Item 1—Election of Directors” describe each person’s background and relevant experience in more detail.

 

Michael J.  Alkire

Terry D.  Shaw

John T.  Bigalke

Helen M.  Boudreau

Jody R.  Davids

Peter S.  Fine

Marc D.  Miller

Marvin R.  O’Quinn

Richard J.  Statuto

Ellen C.  Wolf

Independence

✓

✓

✓

✓

✓

✓

✓

✓

✓

Knowledge, Skills and Experience

Executive Leadership

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Healthcare Industry

✓

✓

✓

✓

✓

✓

✓

✓

Digital Technology

✓

✓

Operations

✓

✓

✓

✓

✓

✓

Treasury

✓

✓

✓

✓

✓

Capital Allocation

✓

✓

✓

✓

✓

Finance/ Accounting/ Auditing

✓

✓

✓

✓

✓

M&A/ Corporate Development

✓

✓

✓

Corporate Governance

✓

✓

Supply Chain/ Logistics

✓

✓

Risk Assessment and Management

✓

✓

Board Diversity Policy

We recognize and value the benefits that diversity can bring to the Board, and our Corporate Governance Guidelines include a formal Board Diversity Policy. The Board believes that diversity promotes the inclusion of different perspectives and ideas, mitigates against group think and improves oversight, decision-making and governance. Diversity on the Board also demonstrates our commitment to diversity at all levels within our Company. While all appointments to the Board are based on merit, the Board considers the benefits of diversity in identifying persons for Board membership. At all times, we seek to maintain a Board comprised of talented and dedicated directors with a diverse mix of experience, skills and backgrounds collectively reflecting the strategic needs of the business and the nature of the environment in which we operate. When assessing Board composition or identifying suitable candidates for appointment or re-election to the Board, we consider candidates using objective criteria having due regard to the benefits of diversity and the needs of the Board. To further implement this policy, we and the Board encourage executive search firms to propose diverse director lists that include candidates from under-represented groups and a balanced proportion of male and female candidates.

For purposes of our Board Diversity Policy, diversity includes gender, ethnicity, age, persons with disabilities, sexual orientation, status as a diverse director under any NASDAQ requirements and other personal characteristics that would contribute to diverse viewpoints on the Board.

 

 

 

28		2021 Proxy Statement

CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

Board Diversity Matrix

The table below provides certain information regarding the diversity of our Board of Directors as of the Record Date.

 

Board Diversity Matrix (As of October 6, 2021)
Total Number of Directors		10
		Female		Male		Non-Binary		Did Not     Disclose     Gender
Part I: Gender Identity
Directors		3		7		0		0
Part II: Demographic Background
African American or Black		0		1		0		0
Alaskan Native or Native American		0		0		0		0
Asian		0		0		0		0
Hispanic or Latinx		0		0		0		0
Native Hawaiian or Pacific Islander		0		0		0		0
White		3		6		0		0
Two or More Races or Ethnicities		0		0		0		0
LGBTQ+		0
Did Not Disclose Demographic Background		0

In addition, we had no director identify as a military veteran and/or as having a disability.

We are currently seeking to recruit an additional female or other diverse director, with appropriate competencies and experiences that support the Company’s strategic plan, to fill the existing vacancy on our Board.

Changes in Principal Employment or Independence; Vacancies

Under our Corporate Governance Guidelines, our non-management directors must submit a letter of resignation upon resignation or retirement from, or termination of, the director’s principal current employment, or other similarly material changes in professional occupation or association. The Board is free to accept or reject the letter of resignation based on the best interests of the Board and stockholders and shall promptly notify such director of its decision.

A director appointed by the Board to fill a vacancy, including a vacancy created by a resignation, will serve until the next election of the class for which such director has been appointed and until his or her successor is elected and qualified, or until his or her earlier death, resignation, retirement, disqualification or removal.

Service on Multiple Boards or Audit Committees

As outlined in our Corporate Governance Guidelines, the Board recommends that directors serve on no more than four public company boards, including our Board. Directors who also serve as a Named Executive Officer of a publicly traded company should serve on no more than two public company boards, including our Board. Directors are required to notify the Board Chair and the Nominating and Governance Committee Chair when they become a Named Executive Officer of a publicly traded company, when they become aware that a company for which they serve as a director is becoming publicly traded or in advance of accepting an invitation to serve on another public company board or an appointment to serve on the audit or compensation committee of another public company board. The Board shall determine each director’s ability to serve effectively on our Board while simultaneously serving as a Named Executive Officer of another publicly traded company or on other public company boards, and

 

 

 

						2021 Proxy Statement		29

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whether the other public companies are affiliated entities. The Board will also consider the voting policies of proxy advisors and significant institutional investors when evaluating director commitments and appropriate limits.

In accordance with the requirements of the SEC, if an Audit and Compliance Committee member simultaneously serves on the audit committee of more than three public companies, the Board must determine that such simultaneous service will not impair the ability of the director to effectively serve on our Audit and Compliance Committee. The determination will then be disclosed in our proxy statement for the annual meeting of stockholders or as otherwise required by applicable listing standards, rules and regulations.

Director Succession and Nomination Process

The Board delegates to the Nominating and Governance Committee, in consultation with the Board Chair, responsibility for establishing and maintaining an ongoing and transparent succession plan for Premier directors, Board leadership and Board committee members. The succession planning process is multi-factorial, encompassing Premier-specific criteria, subject-matter competencies, personal traits and membership-diversity criteria. The Board seeks to have a composition that includes needed competencies and is also diverse, as described above.

Internal Process for Identifying Candidates

The Nominating and Governance Committee annually reviews, updates and submits to the Board for approval the Board’s job description and Attribute-Based Guidelines. The Nominating and Governance Committee also annually reviews a profile of the current Board members against the Attribute-Based Guidelines, considers expected vacancies, identifies gaps and agrees on the most important competencies and other attributes to seek in evaluating prospective members. The Committee seeks broad input to identify prospective directors, requesting recommendations from the full Board, management and others as they deem appropriate. The Committee may also from time to time use its authority under its charter to retain, at our expense, one or more search firms to identify candidates.

The Nominating and Governance Committee also evaluates the performance of directors who are eligible for election to an additional term before recommending their re-election. Consideration is given to attendance, active participation, substantive contributions, assessments from peers, assessments from management and any feedback received from stockholders.

Proposals for Director Nominees by Stockholders

The Nominating and Governance Committee will consider written proposals from stockholders for director nominees that are timely and properly noticed. In considering candidates submitted by stockholders, the Nominating and Governance Committee will take into consideration the needs of the Board of Directors and the qualifications of the candidate. In accordance with Article I, Section 12 of our Bylaws, to be timely, stockholder notice must be delivered to or mailed and received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 20 days, or delayed by more than 70 days, from such anniversary, proposed nominee(s) and related notice, in order to be timely, must be received no earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. The Nominating and Governance Committee received no nominee recommendations from stockholders for the Annual Meeting. Stockholder nominations for our 2022 annual meeting of stockholders must be received at our principal executive offices on or after August 5, 2022 and not later than September 4, 2022. A stockholder’s notice must be in the form set forth in Article I, Section 12 of our Bylaws and must be addressed to Premier, Inc., 13034 Ballantyne Corporate Place, Charlotte, North Carolina 28277, Attention: Corporate Secretary.

Article I, Section 12 of our Bylaws requires, among other things, that the notice must set forth:

(1) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of

 

 

 

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directors, or is otherwise required, in each case pursuant to Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected;

(2) the name and record address of the stockholder giving notice and the beneficial owner, if any, on whose behalf the nomination is being made;

(3) the class and number of shares of our stock which are owned beneficially and of record by such stockholder and such beneficial owner;

(4) a representation that the stockholder intends to appear in person or by proxy at the meeting to propose such nomination;

(5) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends to (i) deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to elect the nominee and/or (ii) solicit proxies from stockholders in support of such nominee;

(6) any other information relating to such stockholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder;

(7) a description of any agreement, arrangement or understanding with respect to the nomination and/or the voting of shares of any class or series of our stock between or among the stockholder giving the notice, the beneficial owner, if any, on whose behalf the nomination is made, any of their respective affiliates or associates and/or any others acting in concert with any of the foregoing (collectively, “proponent persons”); and

(8) a description of any agreement, arrangement or understanding (including without limitation any contract to purchase or sell, acquisition or grant of any option, right or warrant to purchase or sell, swap or other instrument) the intent or effect of which may be (i) to transfer to or from any proponent person, in whole or in part, any of the economic consequences of ownership of any security of ours; (ii) to increase or decrease the voting power of any proponent person with respect to shares of any class or series of our stock and/or (iii) to provide any proponent person, directly or indirectly, with the opportunity to profit or share in any profit derived from, or to otherwise benefit economically from, any increase or decrease in the value of any security of ours.

A stockholder proposing a nominee for the annual meeting must update and supplement the notice required by Article I, Section 12 of our Bylaws so that the information in the notice is true and correct as of the record date for the annual meeting and as of the date that is 15 days prior to the annual meeting or any adjournment or postponement thereof; such update and supplement shall be delivered in writing to the Corporate Secretary at our principal executive offices not later than five days after the record date for the meeting (in the case of any update and supplement required to be made as of the record date), and not later than 10 days prior to the date for the meeting or any adjournment or postponement thereof (in the case of any update and supplement required to be made as of 15 days prior to the meeting or any adjournment or postponement thereof). We may require any proposed nominee to furnish such other information as may reasonably be required to determine the eligibility of such proposed nominee to serve as a director. Any stockholder that intends to submit a nominee should read the entirety of the requirements in our Bylaws, particularly Article I, Section 12, which can be found under the “Corporate Governance” area within the “Investors” section of our website at http://investors.premierinc.com/corporate-governance/.

Evaluation of Candidates

The Nominating and Governance Committee will consider all candidates identified through the processes described above, and will evaluate each of them, including incumbents, based on the same criteria. The selection process involves rigorous vetting of both independent and non-independent director candidates by the Nominating and Governance Committee, the Chair of the Board and senior management to ensure the best qualified individuals are appointed to the Board. Ultimately, background and reference checks will be conducted, and the Committee will meet to finalize its list of recommended candidates for the Board’s consideration.

 

 

 

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Director Independence

Review of Director Independence and Standards for Independence

On August 5, 2021, the Board of Directors undertook its review of the independence of its directors and director nominees as independent directors based on our Corporate Governance Guidelines. Independent directors must meet the standards of independence established by NASDAQ. The Board reviews annually the independence of each director, taking into consideration the recommendations of the Nominating and Governance Committee. Directors have an affirmative obligation to inform the Board of any material changes in their circumstances or relationships that may impact their designation by the Board as independent.

The Board of Directors assessed whether any director had a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of such director. In addition, the Board assessed whether any of the following relationships existed between us and the director or the director’s family members (i.e., spouse, parents, children and siblings or anyone residing in the director’s home) that would prohibit a finding of independence under NASDAQ rules:

 

•

at any time during the past three years was the director employed by us;

 

•

has the director or a family member of the director accepted any compensation from us in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence, other than the following: (i) compensation for Board or Board committee service; (ii) compensation paid to a family member who is our employee (other than an executive officer) or (iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation;

 

•

does the director have a family member who is, or at any time during the past three years was, employed by us as an executive officer;

 

•

is the director or his or her family member a partner in, or a controlling stockholder or an executive officer of, any organization to which we made, or from which we received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following: (i) payments arising solely from investments in our securities or (ii) payments under non-discretionary charitable contribution matching programs;

 

•

is the director or his or her family member employed as an executive officer of another entity where at any time during the past three years any of our executive officers served on the compensation committee of such other entity; or

 

•

is the director or his or her family member a current partner of our outside auditor, or was a partner or employee of our outside auditor who worked on our audit at any time during any of the past three years.

In addition to the analysis above, the Board considered the following in connection with its independence assessment of directors that have been historically classified as “member-directors”:

 

•

the fact that the directors historically classified as “member-directors” have met and do meet the NASDAQ independence definition;

 

•

the loss of our status as a “controlled company” under NASDAQ rules in July 2019;

 

•

the shift of the composition of the Board to a majority of non-member-directors in July 2020;

 

•

in connection with our August 2020 Restructuring, the termination of the Voting Trust for our Class B common stock, previously held solely by member owners;

 

•

member owners no longer have the same type of control position with respect to us that might previously have been viewed in the past by the Board as interfering with the exercise of independent judgment by the member-directors;

 

•

to our knowledge, no member owner holds a controlling interest in our common stock and no member owner or group of member owners has filed with the SEC a Schedule 13D with respect to the common stock; and

 

•

the advice of outside legal counsel regarding the Board’s ability to conclude that a member-director’s employment by a member owner should not, in and of itself, conclusively disqualify such director from classification as independent under NASDAQ rules.

 

 

 

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In connection with this determination, on an annual basis, each director and executive officer is required to complete a questionnaire which requires disclosure of any transactions with us in which the director or executive officer, or any member of his or her immediate family, has a direct or indirect material interest. There were no such transactions indicated for fiscal year 2021.

Determination of Director Independence

Based on its review at the August 5, 2021 meeting, the Board of Directors affirmatively determined that each of John T. Bigalke, Helen M. Boudreau, Jody R. Davids, Peter S. Fine, Marc D. Miller, Marvin R. O’Quinn, Terry D. Shaw, Richard J. Statuto and Ellen C. Wolf is an independent director in accordance with NASDAQ rules and our Corporate Governance Guidelines. Mr. Alkire, who is our President and Chief Executive Officer, was not deemed to be independent.

Each of our independent directors satisfies the definition of “independent director” contained in Rule 5605 of the NASDAQ listing standards. As a result of the review and determination above, the Board determined that:

 

•

each member of the Audit and Compliance Committee is an independent director under our Corporate Governance Guidelines and otherwise meets the qualifications for membership on such committee imposed by NASDAQ and other applicable laws and regulations; and

 

•

each member of the Audit and Compliance Committee has accounting or related financial management expertise and is financially literate, and otherwise meets the audit committee membership requirements imposed by NASDAQ, our Corporate Governance Guidelines and other applicable laws and regulations; and that each of Ms. Wolf and Mr. Bigalke qualifies as an “audit committee financial expert” within the meaning of SEC regulations.

In addition, there are no arrangements or understandings known to us between any of the directors nominated for election to the Board of Directors and any other person pursuant to which a director was or is to be elected as a director or nominee, other than any arrangements or understandings with our directors or officers acting solely in their capacities as such. None of our directors, nominees or executive officers is a party to any material proceedings adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.

Committees of the Board of Directors

Committee Memberships and Meetings

The Board reviews and determines the membership of our Board committees at least annually, with input from the Nominating and Governance Committee. Our Board of Directors has the following five standing committees, each of which is governed by a charter and reports its actions and recommendations to the Board of Directors: Audit and Compliance Committee, Compensation Committee, Nominating and Governance Committee, Finance Committee and Member Agreement Review Committee.

 

 

 

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The following table shows the number of meetings held in fiscal year 2021 and the current membership of each of the five Board committees.

 

Directors:		Audit and Compliance Committee(1)		Compensation Committee		Nominating and Governance Committee		Finance Committee		Member Agreement Review Committee
Michael J. Alkire										●
John T. Bigalke		●						●
Helen M. Boudreau				●						C
Jody R. Davids		●				●
Peter S. Fine		●						C
Marc D. Miller				C				●
Marvin R. O’Quinn				●				●
Terry D. Shaw						●
Richard J. Statuto				●		C
Ellen C. Wolf		C								●
Number of Meetings		9		9		4		5		3

C Chair        ● Member

 

(1)

The Audit and Compliance Committee also oversees a Disclosure Committee that includes, among others, our General Counsel, Corporate Controller and Chief Ethics and Compliance Officer. The Audit and Compliance Committee also oversaw the Conflict Advisory Committee (“CAC”) prior to that committee’s termination on August 5, 2021. The CAC met 4 times in Fiscal 2021.

Board Committee Charters

As discussed in more detail in the descriptions of each of our Board committees below, each of our Board committees operates under a written charter adopted by the Board. The charters set forth the purpose, objectives and responsibilities of the respective committee and discuss matters such as committee membership requirements, number of meetings and the setting of meeting agendas. The charters are assessed periodically by the Nominating and Governance Committee and the respective committee and are updated by the Board as needed. The Board committee charters are available under the “Corporate Governance” area within the “Investors” section of our website at http://investors.premierinc.com/corporate-governance/. You may also request copies by contacting our Corporate Secretary at 13034 Ballantyne Corporate Place, Charlotte, North Carolina, 28277, or by calling 1-704-357-0022.

Audit and Compliance Committee

Our Audit and Compliance Committee is intended to meet the requirements of a separately designated standing audit committee as defined under Section 3(a)(58)(A) of the Exchange Act. The Audit and Compliance Committee must consist of at least three members of the Board, with each member satisfying the independence requirements for directors and audit committee members under NASDAQ rules and Rule 10A-3 of the Exchange Act. Each member of the Audit and Compliance Committee must be financially literate, and at least one member of the Audit and Compliance Committee must have past employment experience in finance or accounting, requisite professional certification in accounting or other comparable experience or background demonstrating financial management experience, as each such qualification is interpreted by the Board in its business judgment. In addition, to the extent practicable, at least one member of the Audit and Compliance Committee shall be an “audit committee financial expert” as such term is defined by the SEC.

The specific responsibilities of the Audit and Compliance Committee set forth under its charter are, among others, to:

 

•

review and discuss with management and the independent auditors the annual audited and quarterly financial statements and other related disclosure prior to filing our annual report on Form 10-K and quarterly reports on Form 10-Q, including our disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations;

 

 

 

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•

review any significant issues regarding, or proposed changes to, our auditing and accounting principles and practices identified by the independent auditors, the internal auditors or management;

 

•

review financial and business risk exposures and the steps management has undertaken to monitor and control such exposures, including our procedures and any related policies with respect to risk assessment and risk management;

 

•

have responsibility for the appointment, compensation, retention, termination (when appropriate) and oversight of the work of the independent auditors and the internal auditors;

 

•

pre-approve all audit and permitted non-audit related services (including the fees and terms thereof) to be performed for us by our independent auditors, subject to the de minimis exception set forth in Section 10A(i)(1)(B) of the Exchange Act;

 

•

at least annually, review a report by our independent auditors regarding their internal quality control procedures, material issues raised by certain reviews, inquiries or investigations relating to independent audits within the last five years and relationships between the independent auditors and us;

 

•

consider at least annually the independence of the independent auditors, discussing with the independent auditors, if necessary, relationships identified in the auditors’ report, review the experience and qualifications of the lead partner each year and determine that all partner rotation requirements are executed;

 

•

discuss with management and the independent auditors, as appropriate, our earnings press releases and corporate policies with respect to the type and presentation of information to be included in earnings releases (paying particular attention to any use of “pro forma” or “adjusted” non-GAAP (as defined below) financial information) and our financial information and earnings guidance provided to investors, analysts and rating agencies;

 

•

receive reports from the independent auditors and management regarding, and review the adequacy and effectiveness of, our internal controls, including any significant deficiencies or material weaknesses in internal controls and significant changes in such controls reported to the committee by the independent auditors, the internal auditor or management, and any special audit steps adopted in light of material deficiencies; receive reports from management regarding, and review the adequacy and effectiveness of, our disclosure controls and procedures, including our policies and procedures to assess, monitor and manage business risk and other legal and ethical compliance programs;

 

•

receive and review reports from the independent auditors on: (i) our critical accounting policies and practices; (ii) material alternative treatments of financial information within generally accepted accounting principles (“GAAP”) that have been discussed with our management, including the ramifications of the use of such alternative treatments and the disclosures or treatments preferred by the independent auditors, and (iii) other material written communications between the independent auditors and management;

 

•

establish procedures in coordination with our Chief Ethics & Compliance Officer, for the receipt, retention and treatment of complaints received by our directors, officers and employees regarding illicit or illegal business practices and conduct and establish a process for investigation and proper resolution of any issues so raised;

 

•

review and approve, in accordance with our Code of Conduct, all “related party transactions” requiring disclosure under SEC Regulation S-K, Item 404;

 

•

review with our General Counsel and independent auditors (i) legal matters that may have a material impact on our financial statements; (ii) any fraud involving our management or other employees who have a significant role in our internal controls; (iii) compliance policies and (iv) material reports or inquiries received from regulators or governmental agencies that raise material issues regarding our financial statements and accounting or compliance policies; and

 

•

advise the Board with respect to our policies and procedures for compliance with applicable laws and regulations, and in collaboration with our Chief Ethics & Compliance Officer, provide general oversight of our corporate ethics and compliance policies.

As noted above, the Audit and Compliance Committee also oversees our cyber risk management program, which is designed to monitor, mitigate and respond to cyber risks, threats and incidents and reviews periodic reports from our Chief Information Security Officer, President of Performance Services and Chief Financial Officer, including developments in cyber threat environment and cyber risk mitigation efforts.

 

 

 

 

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The Audit and Compliance Committee has established a whistleblower policy to (i) facilitate reporting in good faith any complaint of inappropriate conduct and participation in the investigation of such complaint, (ii) encourage proper individual conduct, (iii) alert the Audit and Compliance Committee of potential issues before such inappropriate conduct has serious adverse consequences and (iv) instill protections for bringing such inappropriate conduct to our Company’s attention.

For additional information on the Audit and Compliance Committee’s role and its oversight of the independent auditors during fiscal year 2021, see “Report of the Audit and Compliance Committee.”

In connection with its duties, the Audit and Compliance Committee reviews and evaluates, at least annually, the performance of the committee and its members, may obtain the advice and assistance of outside advisors, including consultants and legal and accounting advisors, and performs all acts reasonably necessary to fulfill its responsibilities and achieve its objectives.

On August 5, 2021, the Board, based on the recommendation of the Audit and Compliance Committee and in order to reduce the complexity of the Board committee structure and enhance efficiency of Board meetings, terminated the Conflict Advisory Committee. Prior to its termination, the non-management members of the Conflict Advisory Committee were also members of the Audit and Compliance Committee. The Board originally established the Conflict Advisory Committee as an advisory committee of the Audit and Compliance Committee, with the primary responsibilities being the evaluation of potential conflicts of interest between us and our officers and directors and making recommendations to the Audit and Compliance Committee regarding what action, if any, should be taken with respect to such matters. In light of the fact that the potential for conflicts of interest has been significantly reduced because (i) we are no longer a “controlled company” under NASDAQ rules and the majority our Board now includes directors who are not affiliated with members and (ii) as a result of our August 2020 Restructuring, the members were eliminated as limited partners of Premier LP and as Class B stockholders, and the Voting Trust for the Class B common shares was terminated, the Board and the Audit and Compliance Committee determined that a stand-alone Conflict Advisory Committee was no longer necessary. The responsibilities of the Conflict Advisory Committee were merged into the Audit and Compliance Committee.

Compensation Committee

We have a separately standing Compensation Committee which has a charter requiring no fewer than three members, each of whom satisfies the independence requirement for directors under NASDAQ rules and qualifies as a “non-employee director” within the meaning of SEC Rule 16b-3 under the Exchange Act.

The Compensation Committee’s purpose and objectives are to discharge the Board’s responsibilities related to the compensation of our and our subsidiaries’ executive officers. The committee has overall responsibility for approving and evaluating all of our and our subsidiaries’ compensation plans, policies and programs as applicable to the executive officers.

The specific responsibilities of the Compensation Committee are, among others, to:

 

•

at least annually, review and approve the annual base salaries and annual incentive opportunities of the executive officers; and periodically and as and when appropriate, review and approve the following items as they affect the executive officers: (i) all other incentive awards and opportunities, including both cash-based and equity-based awards and opportunities; (ii) any employment agreements and severance arrangements; (iii) any change in control agreements and change in control provisions affecting any elements of compensation and benefits; and (iv) any special or supplemental compensation and benefits for the executive officers and individuals who formerly served as executive officers, including supplemental retirement benefits and perquisites provided to them during and after employment;

 

•

make recommendations to the Board with respect to the structure of overall incentive and equity-based plans and adopt, amend or terminate plans consistent with the approved structure;

 

•

take all permitted actions to administer and interpret our equity compensation plans and other long-term compensation plans and programs covering executive officers;

 

•

review, approve and oversee all equity award granting practices, and the stock ownership guidelines for senior management and directors and monitor compliance with such guidelines;

 

 

 

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•

review and recommend to the Board the compensation of the non-management directors no less frequently than every three years;

 

•

review and discuss with management the Compensation Discussion and Analysis and related disclosures as may be required by the rules and regulations of the SEC;

 

•

determine annually whether any conflicts of interest exist on the part of any executive compensation consultants retained by the Committee, and if so, ensure disclosure of such conflicts, including the nature of the conflict and how it was addressed, in our proxy statement;

 

•

evaluate the outcome of the advisory vote of the stockholders regarding “say-on-pay” and make recommendations or take appropriate actions in response to such advisory vote;

 

•

oversee the evaluations of our senior management;

 

•

in conjunction with the Board, oversee the management development and succession planning process (including succession planning for emergencies) for the Chief Executive Officer and the Chief Executive Officer’s direct reports;

 

•

monitor our compliance with the requirements under the Sarbanes-Oxley Act of 2002 relating to loans to directors and officers, and with all other applicable laws affecting employee compensation and benefits;

 

•

review and assess risks arising from our compensation policies and practices; and

 

•

delegate authority to one or more subcommittees as it deems appropriate to carry out its responsibilities.

In connection with its duties, the Compensation Committee reviews and evaluates, at least annually, the performance of the Committee and its members, may obtain the advice and assistance of outside advisors, including consultants and legal and accounting advisors, and performs all acts reasonably necessary to fulfill its responsibilities and achieve its objectives. The Compensation Committee has the sole authority to set the compensation for, and to terminate the services of, its advisors. As discussed in further detail below under “Compensation Committee Report—Executive Compensation—Role of the Compensation Consultant,” the Compensation Committee directly engaged Mercer, a wholly-owned subsidiary of Marsh & McLennan Companies, Inc. (“MMC”), to provide advice and recommendations to the Compensation Committee on the amount and form of executive officer and Board of Director compensation. The Compensation Committee has reviewed the services that Mercer provides to the Compensation Committee and otherwise to us and our management, as well as the services that each individual employee of Mercer provides to us. Based on this review, the Compensation Committee has determined Mercer has no conflict of interest in providing advisory services to us.

Nominating and Governance Committee

We have a separately standing Nominating and Governance Committee. The Nominating and Governance Committee must be comprised of three or more directors as determined by the Board, in accordance with all applicable rules, regulations and stock exchange requirements. Each member of the Nominating and Governance Committee must satisfy the independence requirements for directors under the NASDAQ rules.

The purpose of the Nominating and Governance Committee is to (i) assist the Board by identifying and nominating individuals qualified to become directors, consistent with criteria approved by the Board; (ii) take a leadership role in shaping the corporate governance of the Company; (iii) oversee the evaluation of the Board and management and (iv) recommend to the Board director nominees for each of the Board’s committees. The Nominating and Governance Committee has authority to retain and terminate search firms used to identify director candidates and to approve any such search firm’s fees and other retention terms.

The specific responsibilities of the Nominating and Governance Committee are, among others, to:

 

•

recommend the criteria and qualifications for membership on the Board;

 

•

identify, consider, recommend, recruit and select, or recommend that the Board select, candidates to fill open positions on the Board, including nominees recommended by stockholders;

 

 

 

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CORPORATE GOVERNANCE AND BOARD STRUCTURE

 

•

develop and periodically evaluate policies with regard to the consideration of director candidates recommended by stockholders;

 

•

establish a process for identifying and evaluating nominees for director;

 

•

conduct appropriate inquiries into the backgrounds and qualifications of possible candidates;

 

•

recommend director nominees for approval by the stockholders;

 

•

recommend director nominees for each of the Board’s committees;

 

•

review and recommend proposed changes to our Certificate of Incorporation and Bylaws;

 

•

oversee the Board committee charters and policies;

 

•

periodically review, revise, interpret and confirm compliance with the Corporate Governance Guidelines;

 

•

establish and maintain an ongoing succession planning process for directors, Board leaders and Board committee members;

 

•

recommend ways to enhance services to, and improve communications and relations with, stockholders;

 

•

oversee periodic self-evaluations by the Board of its performance;

 

•

evaluate the size, needs and effectiveness of the Board;

 

•

recommend improvements to our corporate governance;

 

•

oversee the Board orientation process for new directors and the development by the Chief Executive Officer of programs for continuing education for all directors;

 

•

monitor the functions of the various committees of the Board and conduct periodic reviews of their contributions;

 

•

conduct director self- and peer-assessments on a regular basis/interval and regularly review each independent director’s continuation on the Board through this process;

 

•

establish criteria for an annual performance evaluation of the Committee by the Board; and

 

•

participate in evaluating the performance of the Chief Executive Officer.

In connection with its duties, the Nominating and Governance Committee reviews and evaluates, at least annually, the performance of the Committee and its members, may obtain the advice and assistance of outside advisors, including consultants and legal and accounting advisors, and performs all acts reasonably necessary to fulfill its responsibilities and achieve its objectives.

Finance Committee

We have a separately standing Finance Committee. The Finance Committee must be comprised of at least three directors. The purpose of the Finance Committee is to assist the Board in its oversight of our financial condition, strategies and capital structure.

The specific responsibilities of the Finance Committee are, among others, to:

 

•

provide oversight of our financial affairs, including: (i) reviewing the financial condition of us and our subsidiaries and (ii) reviewing, advising and making recommendations to the Board regarding proposed operating budgets for us and our subsidiaries;

 

•

review our financial policies as they relate to the Committee’s responsibilities;

 

•

review and recommend annual limits for expenditures and borrowings;

 

•

review, recommend and monitor significant mergers, acquisitions, divestitures, joint ventures, minority investments and other debt and equity investments;

 

•

review and recommend to the Board management’s recommendations to the Committee for significant capital expenditures, including for real estate, facilities and information technology;

 

 

 

38		2021 Proxy Statement