✔
| ✓ | Prohibit officers and directors from pledging Company stock or holding Company stock in a margin account |
✔
| ✓ | Utilize double trigger severance agreements upon a change in control |
✔
| ✓ | Include clawback provisions in our key compensation programs |
✔
| ✓ | Conduct an annualrisk assessment of our compensation program |
✔
| ✓ | Separate Chief Executive Officer and Chairman of the Board |
✘
| X | No supplemental executive retirement plans |
✘
| X | No stock option repricing or exchanges without stockholder approval |
✘
| X | No single trigger vesting of equity or cash severance payments upon a change in control |
✘
| X | No excessive perquisites |
✘
| X | No tax gross-ups related to change in control or otherwise |
Role of Compensation Consultant
Following the say-on-pay vote at our Annual Meeting of Stockholders in May 2017, our Compensation Committee interviewed various compensation consultants and retained Pay Governance to evaluate the Company’s executive compensation program and advise it regarding potential changes for 2018. Pay Governance supported
Since 2018, the Compensation Committee
in its review of pay programs and practices in light of the 2017 say-on-pay vote and within the context of continuing and improving the alignment of executive pay with stockholders. The Compensation Committee used this information to make compensation decisions for 2018 and to implement certain changes. The Compensation Committeehas retained Pay Governance to advise it with respect to the Company’s executive compensation
program in each year since 2018.Ourprogram. The Compensation Committee has considered the relationships that Pay Governance has had with the Company, the members of the Compensation Committee and our executive officers, and has taken into account the factors required by NASDAQ to be considered when assessing a consultant’s independence. For 2020,2021, after considering such relationships and factors, the Compensation Committee determined that the work of Pay Governance did not raise any conflicts of interest. Outside of their direct engagement by the Compensation Committee as independent compensation consultants to the Compensation Committee with respect to executive compensation matters, Pay Governance did not provide other services to the Company in 2020.
2021.
In
October 2019,late 2020, for purposes of reviewing
20192020 compensation and setting
20202021 compensation for our executive officers, Pay Governance assisted the Compensation Committee in establishing a peer group of publicly-traded healthcare companies generally similarly sized and with similar service offerings to us
(the “2020 (the “2021 Peer Group”). The
20202021 Peer Group consisted of the following companies:
• | | | AMN Healthcare Services, Inc. | | | • | | | The Ensign Group, Inc. |
• | | | Amedisys, Inc. | | | • | | | Healthcare Services Group, Inc. |
• | | | Brookdale Senior Living Inc. | | | • | | | LHC Group, Inc. |
• Civitas Solutions, | | | Chemed Corporation | | | • | | | Magellan Health, Inc.(1) |
• | | | DaVita Inc. | | | • | | | MEDNAX, Inc. |
• | | | Encompass Health Corporation |
| | • The Ensign Group, Inc. |
• Laboratory Corporation of America Holdings |
| | • LHC Group, Inc.
| • Magellan Health, Inc.
| • MEDNAX, Inc.
| • Quest Diagnostics Incorporated
| • Select Medical Holdings Corporation
| • Universal Health Services, Inc.
| |
(1)
| Ceased to be a publicly traded company during 2019. 2022. |
The 20202021 Peer Group was established using similar criteria for selection of the prior year’s peer group selected by our Compensation Committee, specifically: industry, market capitalization, revenue and revenue growth, and adjusting for mergers and acquisition activity among peers. In late 2020,2021, for purposes of reviewing 20202021 compensation and setting 20212022 compensation for our executive officers, Pay Governance assisted the Compensation Committee in establishing a peer group for 20212022 (the 29
“2021 “2022 Peer Group”). The 20212022 Peer Group consisted of all of the companies in the 20202021 Peer Group with the addition of AMN Healthcare Services, Inc., Chemed Corporation and Healthcare Services Group, Inc. and the elimination of Civitas Solutions, Inc., Laboratory Corporation of America Holdings, Quest Diagnostics Incorporated and Universal Health Services, Inc.Group.
TABLE OF CONTENTS Components of Executive Compensation The components of our compensation program for executive officers include base salary, performance-based cash and equity incentive compensation, and time-based equity awards. The following table summarizes the elements of our compensation program for our Named Executive Officers and provides information about each element: Compensation | | | Compensation | | | Metrics Used | | | Rationale for Compensation | | | | | Base Compensation | | | Base Salary | | | N/A | | | • Attract, retain, and motivate key executive talent
• Provide income security
• Recognizes different levels of responsibility | | | | | | | | | | | Short-Term Incentives | | | Annual Cash Payment | | | Adjusted EBITDA Adjusted EPS Revenue | | | • Motivate and reward annual performance results
• Encourages focus on growth of Company | | | | | | | | | | | Long-Term Incentives | | | Time-Vesting and Performance-Based
Performance-Vesting Equity Grants | | | Adjusted EPS | | | • Attract, retain, and motivate key executive talent
• Align interests of executives and stockholders
• Motivate and reward long-term financial
• Encourage executive stock ownership | | | | | | | | | | | Benefits | | | Retirement Benefits Personal Benefits Severance & Change in Control Benefits | | | N/A | | | • Attract and retain key executive talent
• Enhance executive productivity
• Provide opportunity for financial security in
retirement |
As illustrated in the charts below and consistent with our pay-for-performance philosophy, 82%90% of our Chief Executive Officer’s total direct compensation and, on average, 76%83% of the other Named Executive Officers’ total direct compensation for 20202021 was performance-based pay, with a significant emphasis on long-term performance and stockholder value creation. For the purposes of these charts, total direct compensation includes base salary, actual non-equity incentive compensation and the grant date fair value of our annual equity grants made in 2020.2021, and is exclusive of any retention bonuses. The stock awards portion of these charts were determined using a Monte-Carlo simulation value for performance-vesting restricted stock units issued in 2020 and 2019 and assume that target performance goals for performance vestingperformance-vesting restricted stock units issued in 2021, 2020 2019 and 2018,2019, as applicable, are attained during the 20202021 performance period in accordance with ASC 718. See “EXECUTIVE COMPENSATION – Summary Compensation Table” for more information about the compensation paid to our Named Executive Officers. 30
| | | 2020 Chief Executive Officer
Total Direct Compensation Mix | | 2020 All Other Named Executive Officers
Average Total Direct Compensation Mix
| | | |
TABLE OF CONTENTS Our Compensation Committee generally meets on an annual basis to review each Named Executive Officer’s base salary and to consider adjustments to each Named Executive Officer’s base salary for the following year. The base salaries under the employment agreements for our Named Executive Officers are subject to an annual review and potential increase in the sole discretion of the Compensation Committee. In setting base salaries for 20202021 and 2021,2022, the Compensation Committee reviewed the composition of the relevant peer group and discussed peer group information with the Compensation Committee’s independent compensation consultants. For 2020,2021, for Named Executive Officers other than herself, Ms. Osteen provided the Compensation Committee with an evaluation of the individual performance and roles and responsibilities of each executive officer. Given our financial performance for 20202021 and other considerations deemed relevant by the Compensation Committee, the committee determined to provide Ms. Osteen with a 8.9% raise to her base salary and 3.0% raises to the base salary of each of our other Named Executive Officers (other than Ms. Osteen) for 2021.The base salaries for the Named Executive Officers effective as of January 1, 2019 and 2020 were as follows:
| | | | | | | | | | | Name | | Base Salary As of January 1, 2019 | | | Base Salary As of January 1, 2020 | | | Percentage Increase | Debra K. Osteen | | $ | 900,000 | | | $ | 918,000 | | | 2.0% | David M. Duckworth | | | 623,096 | | | | 635,558 | | | 2.0% | Christopher L. Howard | | | 559,215 | | | | 581,584 | | | 4.0% | John S. Hollinsworth | | | 585,000 | (1) | | | 596,700 | | | 2.0% | Laurence L. Harrod | | | 555,000 | (2) | | | 566,100 | | | 2.0% |
(1) | As of July 15, 2019, the effective date of his appointment as our Executive Vice President of Operations.
|
(2) | As of August 12, 2019, the effective date of his appointment as our Executive Vice President of Finance.
|
31 2022.
The base salaries for the Named Executive Officers effective as of January 1, 2020 and 2021 were as follows: | | | | | | | Name | | Base Salary As of January 1, 2020 | | Base Salary As of January 1, 2021 | | Percentage Increase | Debra K. Osteen | | $918,000 | | $1,000,000 | | 8.9% | David M. Duckworth | | 635,558 | | 654,625 | | 3.0% | Christopher L. Howard | | 581,584 | | 599,032 | | 3.0% | John S. Hollinsworth | | 596,700 | | 614,601 | | 3.0% | Laurence L. Harrod | | 566,100 | | 583,083 | | 3.0% |
Debra K. Osteen | | | $918,000 | | | $1,000,000 | | | 8.9% | David M. Duckworth | | | 635,558 | | | 654,625 | | | 3.0% | Christopher L. Howard | | | 581,584 | | | 599,032 | | | 3.0% | John S. Hollinsworth | | | 596,700 | | | 614,601 | | | 3.0% | Laurence L. Harrod | | | 566,100 | | | 583,083 | | | 3.0% |
The base salaries for the Named Executive Officers effective as of January 1, 2021 and 2022 were as follows: Debra K. Osteen | | | $1,000,000 | | | $1,000,000 | | | 0.0% | David M. Duckworth | | | 654,625 | | | 674,264 | | | 3.0% | Christopher L. Howard | | | 599,032 | | | 617,003 | | | 3.0% | John S. Hollinsworth | | | 614,601 | | | 633,039 | | | 3.0% | Laurence L. Harrod | | | 583,083 | | | 600,575 | | | 3.0% |
See “EXECUTIVE COMPENSATION – Summary Compensation Table” for more information about the base salaries paid to our Named Executive Officers.
Annual Non-Equity Incentive Compensation Annual non-equity incentive awards paid to our Named Executive Officers are a reward for the realization of established performance objectives. Our Compensation Committee annually adopts a cash bonus plan pursuant to the Company’s Amended and Restated Incentive Compensation Plan (the “Incentive Plan”) for each Named Executive Officer. The Compensation Committee generally meets in February or March to review whether and the extent to which performance objectives have been achieved for the prior year. All non-equity incentive awards are subject to the review and approval of the Compensation Committee, which has the discretion to adjust any and all such awards. 2020
Annual non-equity incentive compensation payable to our Named Executive Officers for 20202021 was based 100% on the Company-wide measures Adjusted EBITDA, Adjusted EPS and revenue, with Adjusted EBITDA determining 50% of the total incentive award, Adjusted EPS determining 30% of the total incentive award and revenue determining 20% of the total incentive award. The Compensation Committee used these measures for determining annual cash incentive awards because they are important measures of our performance and the performance of our management, they drive our success and growth and they are key criteria by which management plans and analyzes our business. TABLE OF CONTENTS For purposes of determining 2020 2021 non-equity incentive compensation, we define Adjusted EBITDA as the sum of the following: (a) net income from continuing operations, (b) interest expense, (c) income tax expense, (d) depreciation and amortization expense, (e) equity-based compensation expense, (f) transaction-related expenses (e.g. acquisition-related diligence and advisory costs, contract termination costs, etc.), (g) gain or loss on extinguishment of debt, (h) impairment and other non-cash gains and charges (e.g. gain or loss on disposal of property), (i) legal settlement costs, (j) severance and restructuring costs, and (k) gain or loss on foreign currency derivatives.derivatives, as disclosed in or derived from the Company’s Annual Report on Form 10-K, press releases or other financial records, as appropriate. Adjusted EPS is defined as (a) adjusted income from continuing operations attributable to the Company divided by (b) diluted weighted-average shares outstanding. Adjusted income from continuing operations attributable to the Company is defined as the sum of (a) net income attributable to the Company; (b) income or loss from discontinued operations; and (c) provision for income taxes; plus the sum of (d) transaction-related expenses (e.g. acquisition-related diligence and advisory costs, contract termination costs, etc.); (e) gain or loss on extinguishment of debt; (f) impairment and other non-cash gains and charges (e.g. gain or loss on disposal of property); (g) legal settlement costs; (h) severance and restructuring costs; and (i) gain or loss on foreign currency derivatives; minus (j) adjusted income tax provision, as disclosed in or derived from the Company’s Annual Report on Form 10-K, press releases or other financial records, as appropriate. Adjusted EBITDA and Adjusted EPS are calculated net of non-equity incentive payments and excluding the impact of gains or losses as a result of foreign currency conversions or fluctuations in foreign currency exchange rates. Although the Company did not complete any applicable acquisitions during 2020, for purposes of determining whether 2020 performance objectives were met, our Adjusted EBITDA and revenue goals would have been adjusted to include 90% of earnings generated by acquisitions completed during 2020, while Adjusted EPS would have been adjusted to include 50% of earnings generated by acquisitions completed during 2020, in order to incentivize management to pursue accretive acquisitions that will benefit the Company without inequitably adjusting performance objectives.32
The Compensation Committee did not make any adjustments, whether for the COVID-19 pandemic or otherwise, in determining Adjusted EBITDA, Adjusted EPS and revenue goals for 20202021 compensation plan purposes. Despite various challenges relating to the COVID-19 pandemic, the Company produced solidstrong operating results in 2020.2021. Based on those results,the Company’s financial performance in 2021, our executive officers realized above target and maximum payouts under cash and equity incentive programs. The table below sets forth the threshold, target and maximum cash incentive award for 20202021 (as a percentage of base salary) for each of the applicable Named Executive Officers. | | | | | | | | | | | | | Name | | Threshold(1) | | | Target | | | Maximum | | |
|
Debra K. Osteen | | | 50.0 | % | | | 100 | % | | | 200 | % | David M. Duckworth | | | 42.5 | % | | | 85 | % | | | 170 | % | Christopher L. Howard | | | 42.5 | % | | | 85 | % | | | 170 | % | John S. Hollinsworth | | | 42.5 | % | | | 85 | % | | | 170 | % | Laurence L. Harrod | | | 42.5 | % | | | 85 | % | | | 170 | % |
Debra K. Osteen | | | 50.0% | | | 100% | | | 200% | David M. Duckworth | | | 42.5% | | | 85% | | | 170% | Christopher L. Howard | | | 42.5% | | | 85% | | | 170% | John S. Hollinsworth | | | 42.5% | | | 85% | | | 170% | Laurence L. Harrod | | | 42.5% | | | 85% | | | 170% |
(1)
| As described below, Named Executive Officers may receive an aggregate of less than the threshold percentage of their base salary listed above if performance exceeds the threshold level of one or more, but not all, of the applicable performance measures. |
These target and maximum percentages are no less than the target and maximum percentages that each executive is eligible to earn (as a percentage of base salary) pursuant to the employment agreements entered into with each applicable executive. The table below summarizes the performance measures and actual results applicable to our 2020 2021 non-equity incentive awards. Straight-line interpolation is used to determine awards for performance between goal levels. Payout ranges reflect a percentage of a Named Executive Officer’s base salary. Performance Metric
| | | | | | | | | | | | | | | | | | | Adjusted EBITDA | | | 50% | | | $467.2 | | | $505.1 | | | $543.0 | | | $559.0 | | | 110.7% | Adjusted EPS | | | 30% | | | $2.16 | | | $2.33 | | | $2.50 | | | $2.70 | | | 115.9% | Revenue | | | 20% | | | $2,096.3 | | | $2,266.3 | | | $2,436.3 | | | $2,314.4 | | | 102.1% | Performance Range (as % of Target measure) | | | | | | 92.5% | | | 100.0% | | | 107.5% | | | | | | | Payout Range (CEO) | | | | | | 50.0% | | | 100.0% | | | 200.0% | | | | | | | Payout Range (other NEOs) | | | | | | 42.5% | | | 85.0% | | | 170.0% | | | | | | |
TABLE OF CONTENTS | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighting | | | Threshold | | | Target | | | Maximum | | | Actual | | | % of Target | | | | | | | | (amounts in millions, other than EPS) | | | | | | | | Performance Metric | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA | | | 50 | % | | $ | 574.1 | | | $ | 620.6 | | | $ | 667.1 | | | $ | 647.3 | | | | 104.3 | % | Adjusted EPS | | | 30 | % | | $ | 2.13 | | | $ | 2.30 | | | $ | 2.47 | | | $ | 2.81 | | | | 122.2 | % | Revenue | | | 20 | % | | $ | 3,069.1 | | | $ | 3,317.9 | | | $ | 3,566.7 | | | $ | 3,209.7 | | | | 96.7 | % | Performance Range | | | | | | | 92.5 | % | | | 100.0 | % | | | 107.5 | % | | | | | | | | | Payout Range (CEO) | | | | | | | 50.0 | % | | | 100.0 | % | | | 200.0 | % | | | | | | | | | Payout Range (other NEOs) | | | | | | | 42.5 | % | | | 85.0 | % | | | 170.0 | % | | | | | | | | |
In February 2021,2022, the Compensation Committee evaluated whether and the extent to which the performance goals for the 20202021 annual non-equity incentive awards had been achieved. As a result of 20202021 performance, the Named Executive Officers listed below received the following cash incentive payments with respect to 2020.2021. The resulting payout for our applicable Named Executive Officers as a percentage of target was 154.4%185.7%. | | | | | | | | | | | | | | | | | Name | | EBITDA Component | | | EPS Component | | | Revenue Component | | | Total Cash Incentive Payment | | Debra K. Osteen | | $ | 722,685 | | | $ | 550,800 | | | $ | 143,683 | | | $ | 1,417,168 | | David M. Duckworth | | | 425,285 | | | | 324,134 | | | | 84,554 | | | | 833,974 | | Christopher L. Howard | | | 389,168 | | | | 296,608 | | | | 77,374 | | | | 763,150 | | John S. Hollinsworth | | | 399,283 | | | | 304,317 | | | | 79,385 | | | | 782,985 | | Laurence L. Harrod | | | 378,807 | | | | 288,711 | | | | 75,314 | | | | 742,832 | |
33
Debra K. Osteen | | | $1,000,000 | | | $600,000 | | | $256,590 | | | $1,856,590 | David M. Duckworth | | | 556,431 | | | 333,859 | | | 142,775 | | | 1,033,065 | Christopher L. Howard | | | 509,177 | | | 305,506 | | | 130,650 | | | 945,333 | John S. Hollinsworth | | | 522,411 | | | 313,447 | | | 134,046 | | | 969,903 | Laurence L. Harrod | | | 495,621 | | | 297,372 | | | 127,171 | | | 920,164 |
Equity-Based Compensation Our Compensation Committee believes that time vestingtime-vesting restricted stock and performance vestingperformance-vesting restricted stock units are a key component to the compensation of our executive officers, and providing a mix of different types of equity awards is consistent with market practice for executive officers in our peer group. The Compensation Committee believes that time-vesting restricted stock and performance-vesting restricted stock units provide a substantial incentive to our Named Executive Officers by allowing them to directly participate in any increase in our long-term value. These incentives are intended to reward, motivate and retain the services of our Named Executive Officers. The Compensation Committee believes that a mix of equity awards aligns the interests of our Named Executive Officers with those of our stockholders and is consistent with our pay-for-performance philosophy. Equity-based awards are typically granted under the Incentive Plan in March of each year. 2020 Annual
Equity Awards Granted in 2021 The Compensation Committee has maintained Adjusted EPS as the core long-term metric for purposes of performance vesting equity awards and continues to believe that a substantial portion of equity awards should be performance based (with 75% of awards being performance vestingperformance-vesting restricted stock units and 25% of awards being time vestingtime-vesting restricted stock)stock, other than for Ms. Osteen with 100% of her awards being performance-vesting restricted stock units). In addition, awards of equity-based compensation are subject to the following parameters: FinancialFor performance-vesting restricted stock units, long-term financial performance is measured annually, withagainst an Adjusted EPS goals for each of the three years in the performance periodgoal set at the beginningtime of eachthe grant for performance in the third year of a three-year performance period.
Shares earned based on Adjusted EPS results are released at the end of the three-year term of the award. The Compensation Committee believes that release of shares at the end of the three-year term increases the long-term orientation of the compensation program. The Adjusted EPS performance range is 92.5% to 107.5%. This range recognizes potential business volatility over a three-year term and is consistent with the approach taken by our peers. Effective April 23, 2021, the Compensation Committee approved annual grants of the following number of performance-vesting restricted stock units (subject to the achievement of certain performance goals and continued employment) and shares of time-vesting restricted stock under the Incentive Plan to our Named Executive Officers. Debra K. Osteen | | | 84,525 | | | — | | | $5,199,978 | David M. Duckworth | | | 15,961 | | | 5,320 | | | $1,309,207 | Christopher L. Howard | | | 16,432 | | | 5,477 | | | $1,347,842 | John S. Hollinsworth | | | 16,859 | | | 5,620 | | | $1,382,908 | Laurence L. Harrod | | | 15,639 | | | 5,213 | | | $1,282,815 |
(1)
| Reflects the aggregate grant date fair value of such time-vesting restricted stock and performance-vesting restricted stock units, computed in accordance with ASC 718. The awards are described in more detail in the “EXECUTIVE COMPENSATION - Grants of Plan-Based Awards” section below. |
TABLE OF CONTENTS Application
The allocation among performance-vesting restricted stock units (75% of the total equity award) and time-vesting restricted stock (25% of the total equity award) is not based on a formula approach but reflects the Compensation Committee’s view that most equity-based incentives should be performance-based and at risk. The Named Executive Officers must be employed by the Company at the time the performance-vesting restricted stock units and/or time-vesting restricted stock vest in order to receive the shares of Common Stock underlying each award, except in the case of certain terminations of employment as discussed under the heading “EXECUTIVE COMPENSATION — Potential Payments Upon Termination or Change in Control under the Employment Agreements.” An executive who retires prior to issuance will receive a pro rata share of any earned awards based on the date of retirement. Performance-Vesting Restricted Stock Units. For the Named Executive Officers other than Ms. Osteen, the performance-vesting restricted stock units granted effective April 23, 2021 are earned based upon the achievement of a specified performance level of Adjusted EPS for 2023. For Ms. Osteen, the performance-vesting restricted stock units granted effective April 23, 2021 are earned based upon the achievement of a specified performance level of Adjusted EPS for 2021, which aligns the performance measurement of Ms. Osteen’s equity awards with the term of her January 2021 employment agreement, as amended. The Compensation Committee established, on the grant date, the performance objectives for 2021 (for Ms. Osteen) and for 2023 (for all other Named Executive Officers) for purposes of the vesting of restricted stock units. The Compensation Committee believes that Adjusted EPS is the appropriate financial measure for determining vesting of performance-vesting restricted stock unit awards because it is an important measure of our performance and the performance of our management, it drives our success and growth and it is a key criterion by which management plans and analyzes our business. The number of shares of Common Stock that may be issued upon vesting of the performance-vesting restricted stock units ranges from 0% to 200% of the total number of units set forth above in accordance with a formula based on our Adjusted EPS. None of the performance-vesting restricted stock units will vest for performance below 92.5% of the specified Adjusted EPS. Unearned performance awards in the performance period are forfeited. For 2021, the threshold award (as a percentage of the number of performance-vesting restricted stock units eligible for vesting based on the applicable performance period) for each applicable Named Executive Officer was 50%, the target award was 100% and the maximum award was 200%. For purposes of our 2021 awards of performance-vesting restricted stock units to Ms. Osteen, our target level Adjusted EPS was $2.33. The table below sets forth the number of shares of Common Stock that Ms. Osteen was eligible to earn for 2021 (as a percentage of the number of performance-vesting restricted stock units eligible for vesting based on 2021 performance), subject to continued employment throughout the performance period, based upon the Company’s actual Adjusted EPS for 2021. For example, if our actual Adjusted EPS for 2021 was $2.33, Ms. Osteen would earn the number of shares of Common Stock equal to 100% of the number of performance-vesting restricted stock units granted. 50% - 100% | | | 100% - 200% | | | 200% |
In February 2022, the Compensation Committee evaluated whether and the extent to which the performance goals for the 2021 performance-vesting restricted stock unit awards for Ms. Osteen had been achieved. The Compensation Committee determined that actual Adjusted EPS for 2021 was $2.70, resulting in 200% of the 2021 performance-vesting restricted stock unit annual award being earned as reflected in the table below: Debra K. Osteen | | | 84,525 | | | 169,050 |
(1)
| Amount reflects the grant multiplied by 200%. |
Time-Vesting Restricted Stock. The time-vesting restricted stock granted in 2021 vests 25% per year on the four successive anniversaries of the date of grant. TABLE OF CONTENTS 2020 and 2019 Performance-Vesting Restricted Stock Unit Awards Earned On March 24, 2020 and May 2, 2019, the Compensation Committee approved grants of the following number of performance-vesting restricted stock units under the Incentive Plan to our Named Executive Officers listed below: Debra K. Osteen | | | 254,669 | | | 74,143 | David M. Duckworth | | | 80,928 | | | 28,874 | Christopher L. Howard | | | 83,313 | | | 29,153 | John S. Hollinsworth | | | 85,478 | | | 34,017 | Laurence L. Harrod | | | 79,292 | | | 31,556 |
The performance-vesting restricted stock units granted in 2020 and 2019 are earned in three equal annual installments based upon the achievement of specified performance levels of Adjusted EPS. The performance-vesting restricted stock units granted in 2020 and 2019 include the application of the TSR modifier described below that measures the Company’s TSR performance relative to a group of industry comparators over the full three-year performance period. Shares earned annually based on Adjusted EPS results are accumulated and released at the end of the three-year term of the award, subject to adjustment based on the relative TSR modifier described below. The Compensation Committee believes that release of shares at the end of the three-year term in combination with the application of a three-year relative TSR modifier increases the long-term orientation of the compensation program.
The number of shares accumulated during the term of the performance period for the applicable performance-vesting restricted stock units are increased or decreased by up to 25% at the end of the three-year term based on our three-year TSR relative to that of the TSR Peer Group. If our absolute TSR is negative, the TSR modifier is capped at 100% and cannot increase the share payout. Further, our TSR modifier schedule requires 55th percentile achievement or greater for positive (i.e., 100% or greater) increase to shares accumulated. The Adjusted EPS performance range is 92.5% to 107.5%. This range recognizes potential business volatility over a three-year term and is consistent with the approach taken by our peers.
Given the longer three-year payout, an executive whose employment is terminated during the three-year performance period due to death, disability, retirement, or without cause or for good reason will vest at the end of the three-year performance period, subject to the Company’s achievement of the performance goals.
Effective March 24, 2020, the Compensation Committee approved annual grants of the following number of performance vesting restricted stock units (subject to the achievement of certain performance goals and continued employment) and shares of time vesting restricted stock under the Incentive Plan to our Named Executive Officers.
34
| | | | | | | | | Name | | Performance Restricted Stock Units | | | Restricted Stock | | Debra K. Osteen | | | 254,669 | | | | 84,890 | | David M. Duckworth | | | 80,928 | | | | 26,976 | | Christopher L. Howard | | | 83,313 | | | | 27,771 | | John S. Hollinsworth | | | 85,478 | | | | 28,493 | | Laurence L. Harrod | | | 79,292 | | | | 26,431 | |
The allocation among performance vesting restricted stock units (75% of the total equity award) and restricted stock (25% of the total equity award) is not based on a formula approach but reflects the Compensation Committee’s view that most equity-based incentives should be performance-based and at risk. The Named Executive Officers must be employed by the Company at the time the restricted stock units and/or restricted stock vest in order to receive the shares of Common Stock underlying each award, except in the case of certain terminations of employment as discussed under the heading “EXECUTIVE COMPENSATION - Potential Payments Upon Termination or Change in Control under the Employment Agreements.”
The 2020 annual awards of performance vesting restricted stock units reflect the features described above and include the following TSR modifier:
Relative TSR Achieved
(compared to TSR Peer Group) | | | % of Target Awarded(1)(2) | | 75th percentile or greater | | | 125 | % 125% | 55th percentile | | | 100 | % 100% | 30th percentile or less | | | 75 | % 75% |
(1)
| Interpolated for performance between percentiles. |
(2)
| TSR modifier capped at 100% if the Company’s TSR is negative, regardless of applicable Adjusted EPS amount. |
Restricted Stock Units. The performance vesting restricted stock units granted effective March 24, 2020 are earned in three equal annual installments based upon the achievement of specified performance levels of Adjusted EPS for 2020, 2021 and 2022, and adjusted before vesting at the end of the full three-year period in accordance with the three-year TSR modifier. The Compensation Committee established, on the grant date, the performance objectives for 2020 for purposes of the vesting of restricted stock units. The performance objectives for 2021 and 2022 are determined by the Compensation Committee subsequent to December 31, 2020 and December 31, 2021, respectively. The Compensation Committee believes that Adjusted EPS provides the best incentive to senior management and is the appropriate financial measure for determining vesting of restricted stock unit awards because it is an important measure of our performance and the performance of our management, it drives our success and growth and it is a key criterion by which management plans and analyzes our business.
The number of shares of Common Stock that may be issued upon vesting of the restricted stock units ranges from 0% to 200% of the total number of units set forth above in accordance with a formula based on our Adjusted EPS, and adjusted in accordance with the TSR modifier. None of the performance vesting restricted stock units will vest for performance below 92.5% of the specified Adjusted EPS. Unearned performance awards in each performance period are forfeited.For 2020, the threshold award (as a percentage of the number of restricted stock units eligible for vesting based on 2020 performance) for each applicable Named Executive Officer was 50%, the target award was 100% and the maximum award was 200%. Subject to remaining vesting and the three-year TSR modifier, the actual number of shares of Common Stock earned each year is based on performance relative to the specified Adjusted EPS for the corresponding year.
For purposes of our 2020 awards of performance vesting restricted stock units, our target level Adjusted EPS was $2.30. The table below sets forth the number of shares of Common Stock that each Named Executive Officer was eligible to earn for 2020 (as a percentage of the number of restricted stock units eligible for vesting
35
based on 2020 performance), subject to continued employment throughout the performance period, based upon the Company’s actual Adjusted EPS for 2020. For example, if our actual Adjusted EPS for 2020 was $2.30, each Named Executive Officer would earn the number of shares of Common Stock equal to 100% of the number of restricted stock units that may be earned based on 2020 performance, or one-third of the 2020 target grant. The remaining two-thirds remain subject to 2021 and 2022 performance standards. All shares earned are subject to adjustment at the end of the three-year term based on the TSR modifier.
| | | | | Adjusted EPS of
$2.13 - $2.30
| | Adjusted EPS of
$2.30 - $2.47
| | Adjusted EPS of
$2.47 or Greater | |
50% - 100% | | 100% - 200% | | 200% |
In February 2021, the Compensation Committee evaluated whether and the extent to which the performance goals for the 2020 restricted stock unit awards had been achieved. The Compensation Committee determined that actual Adjusted EPS for 2020 was $2.81, resulting in 200% of the first tranche of the 2020 restricted stock unit annual award being earned as reflected in the table below, subject to remaining vesting and the three-year TSR modifier:
| | | | | | | | | | | | | Name | | 2020 Restricted Stock Unit Grant | | | Target Shares Subject to 2020 Performance(1) | | | Shares Earned Under 2020 Restricted Stock Unit Grant(2) | | Debra K. Osteen | | | 254,669 | | | | 84,889 | | | | 169,778 | | David M. Duckworth | | | 80,928 | | | | 26,976 | | | | 53,952 | | Christopher L. Howard | | | 83,313 | | | | 27,771 | | | | 55,542 | | John S. Hollinsworth | | | 85,478 | | | | 28,492 | | | | 56,984 | | Laurence L. Harrod | | | 79,292 | | | | 26,430 | | | | 52,860 | |
(1) | Amounts reflect one-third of the grant.
|
(2) | Amounts reflect one-third of the grant multiplied by 200%.
|
Restricted Stock. The time vesting restricted stock granted in 2020 vests 25% per year on the four successive anniversaries of the date of grant.
2019 and 2018 Restricted Stock Unit Awards Earned
On May 2, 2019 and March 2, 2018, the Compensation Committee approved grants of the following number of performance vesting restricted stock units under the Incentive Plan to our Named Executive Officers listed below:
| | | | | | | Name | | 2019 Performance Restricted Stock Units | | | 2018 Performance Restricted Stock Units | Debra K. Osteen | | | 74,143 | | | – | David M. Duckworth | | | 28,874 | | | 21,183 | Christopher L. Howard | | | 29,153 | | | 24,443 | John S. Hollinsworth | | | 34,017 | | | – | Laurence L. Harrod | | | 31,556 | | | – |
The restricted stock units granted in 2019 and 2018 are earned in three equal annual installments based upon the achievement of specified performance levels of Adjusted EPS. The number of shares of Common Stock that may be issued upon vesting of theperformance-vesting restricted stock units ranges from 0% to 200% of the total number of units set forth above in accordance with a formula based on our Adjusted EPS. None of the performance vestingperformance-vesting restricted stock units granted in 20192020 and 20182019 will vest for performance below 92.5% of the specified Adjusted EPS.
One-third of each of the target amounts for the 20192020 and 20182019 awards are subject to 20202021 Adjusted EPS performance. For 20202021 performance under the 2020 and 2019 and 2018performance-vesting restricted stock unit awards, the threshold award (as a percentage of the number of performance-vesting restricted stock units eligible for vesting based on 2020 performance) for each 36
applicable Named Executive Officer was 50%, the target award was 100% and the maximum award was 200%. The actual number of shares of Common Stock to be issued upon vesting of the performance-vesting restricted stock units each year is based on the Company’s actual Adjusted EPS relative to the specified Adjusted EPS for the corresponding year. For purposes of our 20192020 and 20182019 awards of performance vestingperformance-vesting restricted stock units, our target level Adjusted EPS for 20202021 was $2.30.$2.33. The tablestable below setsets forth the number of shares of Common Stock that each applicable Named Executive Officer was eligible to earn for 20202021 performance under the 2020 and 2019 and 2018performance-vesting restricted stock unit awards (as a percentage of the number of performance-vesting restricted stock units eligible for vesting based on 20202021 performance), subject to continued employment throughout the performance period, based upon the Company’s actual Adjusted EPS for 2020.2021. For example, for the 2020 and 2019 performance-vesting restricted stock unit awards, if our Adjusted EPS for 20202021 was $2.30,$2.33, each Named TABLE OF CONTENTS Executive Officer would earn the number of shares of Common Stock equal to 100% of the number of performance-vesting restricted stock units that may vest based on 20202021 performance, or one-third of the 2019respective target grant. TheFor such awards, the remaining one-thirdgrant amount remains subject to 2021future year performance standards. 2019 Restricted Stock Units
| Adjusted EPS of
$2.13 - $2.30
| | Adjusted EPS of
$2.30 - $2.47
| | Adjusted EPS of
$2.47 or Greater | |
50%2.16 - 100%$2.33 | | 100% - 200% | | 200% |
For the 2018 restricted stock unit awards, if our Adjusted EPS for 2020 was $2.30, each applicable Named Executive Officer would earn the number of shares of Common Stock equal to 100% of the number of restricted stock units that may vest based on 2020 performance, or one-third of the 2018 target grant.
| | | | | 2018 Restricted Stock Units
| Adjusted EPS of
$2.13 - $2.30
| | Adjusted EPS of
$2.30 - $2.47
| | Adjusted EPS of
$2.472.33 - $2.50 | | | Adjusted EPS of
$2.50 or Greater | |
50% - 100% | | | 100% - 200% | | | 200% |
In February 2021,2022, the Compensation Committee evaluated whether and the extent to which the 20202021 performance goals for the 2020 and 2019 and 2018performance-vesting restricted stock unit awards had been achieved. The Compensation Committee determined that actual Adjusted EPS for 20202021 was $2.81.$2.70. As a result, the following number of shares of Common Stock were earned by the Named Executive Officers listed below for 20202021 pursuant to the 20192020 performance-vesting restricted stock unit awards and the 20182019 performance-vesting restricted stock unit awards, respectively, subject to the three-year TSR modifier: 20192020-2022 Performance-Vesting Restricted Stock Units | | | | | | | | | | | | | Name | | 2019 Restricted Stock Unit Grant | | | Target Shares Subject to 2020 Performance(1) | | | Shares Earned Under 2019 Restricted Stock Unit Grant(2) | | Debra K. Osteen | | | 74,143 | | | | 24,714 | | | | 49,428 | | David M. Duckworth | | | 28,874 | | | | 9,624 | | | | 19,248 | | Christopher L. Howard | | | 29,153 | | | | 9,717 | | | | 19,434 | | John S. Hollinsworth | | | 34,017 | | | | 11,339 | | | | 22,678 | | Laurence L. Harrod | | | 31,556 | | | | 10,518 | | | | 21,036 | |
Debra K. Osteen | | | 254,669 | | | 84,889 | | | 169,778 | David M. Duckworth | | | 80,928 | | | 26,976 | | | 53,952 | Christopher L. Howard | | | 83,313 | | | 27,771 | | | 55,542 | John S. Hollinsworth | | | 85,478 | | | 28,492 | | | 56,984 | Laurence L. Harrod | | | 79,292 | | | 26,430 | | | 52,860 |
(1)
| Amounts reflect one-third of the grant. |
(2)
| Amounts reflect one-third of the grant multiplied by 200%. |
37
20182019-2021 Performance-Vesting Restricted Stock Units
| | | | | | | | | | | | | Name | | 2018 Restricted Stock Unit Grant | | | Target Shares Subject to 2020 Performance (1) | | | Shares Earned Under 2018 Restricted Stock Unit Grant(2) | | David M. Duckworth | | | 21,183 | | | | 7,061 | | | | 14,122 | | Christopher L. Howard | | | 24,443 | | | | 8,148 | | | | 16,296 | |
Debra K. Osteen | | | 74,143 | | | 24,715 | | | 49,430 | David M. Duckworth | | | 28,874 | | | 9,624 | | | 19,248 | Christopher L. Howard | | | 29,153 | | | 9,717 | | | 19,434 | John S. Hollinsworth | | | 34,017 | | | 11,339 | | | 22,678 | Laurence L. Harrod | | | 31,556 | | | 10,518 | | | 21,036 |
(1)
| Amounts reflect one-third of the grant. |
(2)
| Amounts reflect one-third of the grant multiplied by 200%. |
TABLE OF CONTENTS On February 26, 2021,25, 2022, following review of materials prepared by our independent compensation consultant, the Compensation Committee confirmed the three-year TSR results for the 20182019 performance-vesting restricted stock unit awards. The Compensation Committee determined that the Company’s three-year TSR was 47.6%101.1%, which placed the Company at the 49.7%69% percentile of the TSR Peer Group during that period. Under the terms of the award, that ranking resulted in the application of a three-year TSR modifier of 94.7%117.4% to the shares earned, as reflected in the table below: | | | | | | | | | | | | | | | | | | | | | | | Name | | 2018 Annual Restricted Stock Unit Grant | | Shares Earned in 2018(1) | | | Shares Earned in 2019(2) | | | Shares Earned in 2020 | | | Subtotal | | | Shares Issued(3) | | David M. Duckworth | | 21,183 | | | 5,917 | | | | 3,640 | | | | 14,122 | | | | 23,679 | | | | 22,424 | | Christopher L. Howard | | 24,443 | | | 6,827 | | | | 4,200 | | | | 16,296 | | | | 27,323 | | | | 25,875 | |
Debra K. Osteen | | | 74,143 | | | 12,740 | | | 49,428 | | | 49,430 | | | 111,598 | | | 131,016 | David M. Duckworth | | | 28,874 | | | 4,962 | | | 19,250 | | | 19,248 | | | 43,460 | | | 51,022 | Christopher L. Howard | | | 29,153 | | | 5,010 | | | 19,436 | | | 19,434 | | | 43,880 | | | 51,515 | John S. Hollinsworth | | | 34,017 | | | 5,845 | | | 22,678 | | | 22,678 | | | 51,201 | | | 60,110 | Laurence L. Harrod | | | 31,556 | | | 5,423 | | | 21,038 | | | 21,036 | | | 47,497 | | | 55,761 |
(1)
| See the section in our Proxy Statement dated March 21, 2019 entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – 2018— 2019 Annual Awards” for more information. |
(2)
| See the section in our Proxy Statement dated March 25, 2020 entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – 2018 and 2017 Restricted Stock Unit Awards Earned”— 2020 Annual Awards” for more information. |
(3)
| Amounts reflect application of three-year TSR modifier of 94.7%117.4%. |
Perquisites and other Benefits We provide our Named Executive Officers with modest perquisites (less than $10,000 on an annual basis) that our Compensation Committee believes are reasonable and consistent with our overall executive compensation program. Our Compensation Committee believes that such perquisites help us to retain our executive personnel and allows them to operate more effectively. Our Named Executive Officers are eligible for health and welfare benefits available to eligible Company employees during active employment under the same terms and conditions. These benefits include medical, dental, vision, short-term and long-term disability and group-term life insurance coverage. The Named Executive Officers also participate in a separate insurance plan that provides long term care benefits to the executives and their spouses. Our general policies applicable to all employees govern paid vacation and other time off for our Named Executive Officers.
Compensation Clawback Policy If the Company is required to restate its financial statements as a result of misconduct, Section 304 of the Sarbanes-Oxley Act requires the Chief Executive Officer and the Chief Financial Officer to reimburse the Company for: (i) any bonus or other incentive-based or equity-based compensation received during the 12 months following the public issuance of the financial statements; and (ii) any profits realized from the sale of Company securities during those 12 months. On February 26, 2015, the Compensation Committee adopted and approved a compensation clawback policy applicable to performance-based equity awards issued to executive officers during and after 2015. 38
Under the clawback policy, if a Named Executive Officer is determined by the Board to have engaged in fraud or misconduct contributing to restatement of the Company’s financial statements, the Board shall take appropriate action to address such events, including requiring (i) reimbursement of any equity securities that vested during the preceding three year period, including any proceeds from the sale of such securities, and (ii) cancellation of all unvested equity securities during such three-year period. Section 954 of the Dodd-Frank Act directs the SEC to promulgate additional rules requiring companies listed on stock exchanges to adopt policies regarding the recovery of executive compensation from executive officers for accounting restatements resulting from material noncompliance with any financial reporting requirement under the securities laws. In accordance with Section 954 of the Dodd-Frank Act, the SEC issued proposed rules in 2015 regarding the adoption of clawback policies. Upon the SEC’s adoption and publication of final rules implementing these requirements, the Compensation Committee will review and, if necessary, revise the Company’s clawback policy to conform with such rules. TABLE OF CONTENTS Deferred Compensation Plan On February 28, 2013, our Board adopted and approved the Acadia Healthcare Company, Inc. Deferred Compensation Plan, effective February 1, 2013 (the “Deferred Compensation Plan”). The Deferred Compensation Plan is designed to provide tax-deferred compensation for our eligible employees, including executive officers. Deferred compensation plans are common in our industry and help in the recruitment and retention of top executive talent. Under the Deferred Compensation Plan, participants may defer up to 50% of their annual base compensation and up to 100% of any performance-based compensation. Participants are fully vested in their deferral accounts as to amounts they elect to defer. No employer matching contributions are made to the Deferred Compensation Plan. Participants will be able to select from several fund choices and their deferred compensation account will increase or decrease in value in accordance with the performance of the funds selected. Participants may receive a distribution from the Deferred Compensation Plan upon a qualifying distribution event such as separation from service, disability, death, change in control or an unforeseeable emergency. Following a participant’s separation from the Company for any reason, the participant’s vested interest in the account is paid to the participant (or the participant’s beneficiary in the event of the participant’s death) either in a lump sum or up to ten annual installments, as elected by the participant. The Deferred Compensation Plan is intended to be an unfunded plan administered and maintained by the Company primarily for the purpose of providing deferred compensation benefits to participants.
In addition to overseeing the Company’s executive compensation program, the Compensation Committee considers the risk profile of the Company’s compensation policies and practices for all employees. The Compensation Committee has concluded that the Company’s compensation program does not encourage excessive or inappropriate risk taking and determined that such program is not reasonably likely to have a material adverse impact on the Company. See “CORPORATE GOVERNANCE – Risk Oversight” for more information about the Board’s role in our risk management process.
Internal Revenue Code Section 162(m) Code Section 162(m) limits the deductibility of compensation in excess of $1 million paid to certain “covered employees” of a publicly held corporation. For taxable years ending December 31, 2017 and earlier, “covered employees” generally referred to the company’s Chief Executive Officer and its next three most highly compensated executive officers (excluding the Chief Financial Officer) in the year that the compensation is paid. This limitation does not apply to compensation that is considered “qualified performance-based compensation” under the rules of Section 162(m). The exemption from Section 162(m)’s deduction limitation for “qualified performance-based compensation” was repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million is not deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. In addition, beginning with taxable years beginning after December 31, 2017, “covered employees” generally was expanded to include the Company’s chief financial officer; also, each individual who is a covered employee for any taxable year beginning after December 31, 2016 will remain a covered employee for all future years. 39
Stock Ownership Guidelines, Insider Trading Policy, Hedging and Pledging In March 2012, the Board of Directors adopted stock ownership guidelines for non-management directors. The guidelines require that each non-management director hold an investment position in our Common Stock equal in value to five times the annual cash retainer (exclusive of any Board committee retainers) paid to non-management directors. The guidelines provide for a five-year transition period during which directors can attain the required ownership. As of December 31, 2020,2021, all of our non-management directors not in a transition period satisfied the applicable stock ownership guidelines.
TABLE OF CONTENTS In December 2014, the Board of Directors adopted stock ownership guidelines for certain designated officers. The guidelines require that the Named Executive Officers hold an investment position in our Common Stock equal to the following multiples of annual base salary: Position | | Fair Market Value of Stock Holdings
as a Multiple of Base Salary | Chief Executive Officer | | | 5x | Other Named Executive Officers | | | 3x |
The guidelines provide for a five-year transition period during which executive officers can attain the required ownership. If an executive officer becomes subject to a greater ownership threshold due to an increase in the amount of his or her annual base salary, the executive officer must satisfy the greater ownership threshold within the later of the original five-year transition period or two years from the effective date of the increase in annual base salary. As of December 31, 2020,2021, all of our Named Executive Officers satisfied the applicable stock ownership guidelines. Pursuant to the stock ownership guidelines applicable to non-management directors and executive officers, ownership of the following shares of Common Stock (“Qualified Shares”) are counted toward the satisfaction of the applicable ownership requirements: (i) shares owned directly by the non-management director or the executive officer; (ii) shares owned indirectly (e.g. by a spouse or in trust); (iii) restricted shares, including restricted shares that have been granted but that have not vested; (iv) shares issuable upon the settlement of vested performance-vesting restricted stock units; and (v) shares obtained through stock option exercises. For the avoidance of doubt, shares that underlie unexercised options, whether or not vested, will not be deemed to be Qualified Shares. We maintain an insider trading policy that governs transactions in our securities by directors, officers and other employees. Among other provisions, the policy prohibits “short-selling” of any equity security of the Company and any hedging transactions. Directors and officers are also prohibited from holding our securities in a margin account or otherwise pledging our securities as collateral for a loan.
Termination and Change-in-Control Arrangements Under the terms of the compensation plans and employment agreements with the Named Executive Officers, the Named Executive Officers are entitled to payments and benefits upon the occurrence of specified events including termination of employment. The specific terms of these arrangements are discussed under the heading “EXECUTIVE COMPENSATION – —Potential Payments Upon Termination or Change in Control under the Employment Agreements.” The Compensation Committee believes that these arrangements are appropriate and necessary to attract and retain talented senior executives. The Compensation Committee believes that the potential payments and benefits provide security and encourage retention in the event of an actual or potential change in control, such as a sale or “hostile” takeover. The absence of such arrangements could impact our ability to hire talented executives and an executive’s willingness to work through a merger or sale transaction which could be beneficial to our stockholders.
COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by SEC Regulation S-K, Item 402(b) with management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. | | | COMPENSATION COMMITTEE: | COMPENSATION COMMITTEE: | | | | | | | Wade D. Miquelon, Chairman | | | | | | | | | | | | William M. Petrie, M.D. |
Summary Compensation Table The following summary compensation table reflects the compensation paid or accrued by us with respect to each of the Named Executive Officers: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and
Principal Position
| | Year | | | Salary | | | Bonus | | | Stock
Awards(1) | | | Option
Awards(2) | | | Non-Equity
Incentive Plan
Compensation(3) | | | All Other
Compensation(4) | | | Total | | Debra K. Osteen(5)
Chief Executive Officer
| |
| 2020
2019
2018
|
| | $
| 918,000
900,000
37,500
|
| | $
| —
2,500,000
350,000
|
(6)
(8)
| | $
| 2,789,779
3,672,558
—
|
(7)
| | $
| —
—
—
|
| | $
| 1,417,168
568,927
—
|
| | $
| 6,448
81,116
—
|
| | $
| 5,131,395
7,722,601
387,500
|
| David M. Duckworth
Chief Financial Officer
| |
| 2020
2019
2018
|
| |
| 635,558
623,096
610,878
|
| |
| —
—
—
|
| |
| 1,248,999
1,179,746
788,848
|
| |
| —
—
—
|
| |
| 833,974
334,802
323,095
|
| |
| 21,185
16,240
16,241
|
| |
| 2,739,716
2,153,884
1,739,062
|
| Christopher L. Howard
Executive Vice President, General Counsel and Secretary
| |
| 2020
2019
2018
|
| |
| 581,584
559,215
548,250
|
| |
| —
—
—
|
| |
| 1,316,121
1,266,389
910,274
|
| |
| —
—
—
|
| |
| 763,150
300,477
328,633
|
| |
| 5,337
5,461
5,502
|
| |
| 2,666,192
2,131,542
1,792,659
|
| John S. Hollinsworth(9)
Executive Vice President of Operations
| |
| 2020
2019
|
| |
| 596,700
480,288
|
| |
| —
120,000
|
(10)
| |
| 986,564
1,242,959
|
| |
| —
52,250
|
| |
| 782,985
146,401
|
| |
| 6,121
35,301
|
| |
| 2,424,620
2,197,199
|
| Laurence L. Harrod(11)
Executive Vice President of Finance
| |
| 2020
2019
|
| |
| 566,100
202,789
|
| |
| 410,000
200,000
| (12)
(13)
| |
| 915,185
628,900
|
| |
| —
—
|
| |
| 742,832
116,017
|
| |
| 5,306
153
|
| |
| 2,639,423
1,147,859
|
|
Debra K. Osteen
Former Chief Executive Officer
| | | 2021 | | | $1,000,000 | | | $— | | | $6,989,753 | | | $— | | | $1,856,590 | | | $6,764 | | | $9,853,107 | | 2020 | | | 918,000 | | | — | | | 2,789,779 | | | — | | | 1,417,168 | | | 6,448 | | | 5,131,395 | | 2019 | | | 900,000 | | | 2,500,000(5) | | | 3,672,558(6) | | | — | | | 568,927 | | | 81,116 | | | 7,722,601 | | | | | | | | | | | | | | | | | | | | | | | | | | David M. Duckworth
Chief Financial Officer
| | | 2021 | | | 654,625 | | | — | | | 1,941,749 | | | — | | | 1,033,065 | | | 21,463 | | | 3,659,902 | | 2020 | | | 635,558 | | | — | | | 1,248,999 | | | — | | | 833,974 | | | 21,185 | | | 2,739,716 | | 2019 | | | 623,096 | | | — | | | 1,179,746 | | | — | | | 334,802 | | | 16,240 | | | 2,153,884 | | | | | | | | | | | | | | | | | | | | | | | | | | Christopher L. Howard
Executive Vice President, General Counsel and Secretary
| | | 2021 | | | 599,032 | | | — | | | 1,992,159 | | | — | | | 945,333 | | | 5,602 | | | 3,542,126 | | 2020 | | | 581,584 | | | — | | | 1,316,121 | | | — | | | 763,150 | | | 5,337 | | | 2,666,192 | | 2019 | | | 559,215 | | | — | | | 1,266,389 | | | — | | | 300,477 | | | 5,461 | | | 2,131,542 | | | | | | | | | | | | | | | | | | | | | | | | | | John S. Hollinsworth(7)
Executive Vice President of Operations
| | | 2021 | | | 614,601 | | | — | | | 2,033,824 | | | — | | | 969,903 | | | 6,437 | | | 3,624,765 | | 2020 | | | 596,700 | | | — | | | 986,564 | | | — | | | 782,985 | | | 6,121 | | | 2,372,370 | | 2019 | | | 480,288 | | | 120,000(8) | | | 1,242,959 | | | 52,250 | | | 146,401 | | | 35,301 | | | 2,197,199 | | | | | | | | | | | | | | | | | | | | | | | | | | Laurence L. Harrod(9)
Executive Vice President of Finance
| | | 2021 | | | 583,083 | | | 410,000(10) | | | 1,886,643 | | | — | | | 920,164 | | | 6,764 | | | 3,806,654 | | 2020 | | | 566,100 | | | 410,000(11) | | | 915,185 | | | — | | | 742,832 | | | 5,306 | | | 2,639,423 | | 2019 | | | 202,789 | | | 200,000(12) | | | 628,900 | | | — | | | 116,017 | | | 153 | | | 1,147,859 |
(1)
| Reflects the aggregate grant date fair value of time-vesting restricted stock and performance-vesting restricted stock units granted to each applicable Named Executive Officer pursuant to the Incentive Plan, determined using a Monte-Carlo simulation value (other than the time-vesting restricted stock and 2021 performance-vesting restricted stock unit awards) and computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation,” or ASC 718. The awards are described in more detail in the Grants of Plan-Based Awards section below. See Note 1316 to the Consolidated Financial Statements contained in the Company’s 20202021 Annual Report on Form 10-K for assumptions relevant to the valuation of stock awards. With respect to annual grants of performance-vesting restricted stock units, other than the 2021 performance-vesting restricted stock unit awards, the units vest over three years and the amounts for a given year assume that the performance goals are attained during a respective annual performance period in accordance with ASC 718. With respect to annual grants of performance-vesting restricted stock units in 2021, the units vest based upon the achievement of specified performance goals in 2023 and the amounts assume that such performance goals are attained during such performance period in accordance with ASC 718. |
The amounts relating to performance-vesting restricted stock unit awards for 2021 represent the sum of the grant date fair value of the target number of shares that may be earned based on 2021 performance pursuant to (a) the target amount of the 2021 performance-vesting restricted stock unit award, (b) the second tranche of the 2020 performance-vesting restricted stock unit award and (c) the third tranche of the 2019 performance-vesting restricted stock unit award, as applicable to each Named Executive Officer. The amounts relating to performance-vesting restricted stock unit awards for 2020 represent the sum of the grant date fair value of the target number of shares that may be earned based on 2020 performance pursuant to (a) the first tranche of the 2020 performance-vesting restricted stock unit award, (b) the second tranche of the 2019 performance-vesting restricted stock unit award and (c) the third tranche of the 2018 performance-vesting restricted stock unit award, as applicable to each Named Executive Officer. The amounts relating to performance-vesting restricted stock unit awards for 2019 represent the sum of the grant date fair value of the target number of shares that may be earned based on 2019 performance pursuant to (a) the first tranche of the 2019 performance-vesting restricted stock unit award, (b) the second tranche of the 2018 annual performance-vesting restricted stock unit award and (c) the second tranche of the 2018 transition performance-vesting restricted stock unit award, as applicable to each Named Executive Officer.
TABLE OF CONTENTS The amounts relating to restricted stock unit awards for 2018 represent the sum of the grant date fair value of the target number of shares that may be earned based on 2018 performance pursuant to (a) the first tranche of the 2018 annual restricted stock unit award and (b) the first tranche of the 2018 transition restricted stock unit award, as applicable to each Named Executive Officer.
Assuming that the maximum performance goals are attained during a respective annual performance period in accordance with ASC 718 for the applicable tranche of the performance-vesting restricted stock units granted in 2021, 2020 2019 and 2018,2019, (i) the aggregate grant date fair value of the annual grants of performance-vesting restricted stock units would have been, and (ii) the aggregate grant date fair value of the total stock awards (including awards of both time-vesting restricted stock and performance-vesting restricted stock units) would have been: 42
Debra K. Osteen | | | 2021 | | | $10,399,956 | | | $1,779,647 | | | $1,779,902 | | | $— | | | $13,979,505 | | | $13,979,505 | | 2020 | | | — | | | 1,779,647 | | | 1,779,902 | | | — | | | 3,579,549 | | | 4,579,553 | | 2019 | | | — | | | — | | | 1,779,902 | | | — | | | 1,779,902 | | | 4,562,510 | | | | | | | | | | | | | | | | | | | | | | | David M. Duckworth | | | 2021 | | | 2,021,793 | | | 571,891 | | | 693,193 | | | — | | | 3,228,925 | | | 3,556,212 | | 2020 | | | — | | | 571,891 | | | 693,193 | | | 597,361 | | | 1,862,444 | | | 2,180,222 | | 2019 | | | — | | | — | | | 1,139,010 | | | 597,361 | | | 1,736,370 | | | 2,047,932 | | | | | | | | | | | | | | | | | | | | | Christopher L. Howard | | | 2021 | | | 1,963,841 | | | 588,745 | | | 699,890 | | | — | | | 3,310,429 | | | 3,647,374 | | 2020 | | | — | | | 588,745 | | | 699,890 | | | 689,321 | | | 1,977,956 | | | 2,305,099 | | 2019 | | | — | | | — | | | 1,214,314 | | | 689,321 | | | 1,903,635 | | | 2,218,207 | | | | | | | | | | | | | | | | | | | | | | | John S. Hollinsworth | | | 2021 | | | 2,074,331 | | | 604,030 | | | 697,802 | | | — | | | 3,376,164 | | | 3,721,906 | | 2020 | | | — | | | 604,030 | | | 697,802 | | | — | | | 1,301,832 | | | 1,637,480 | | 2019 | | | — | | | — | | | 697,802 | | | — | | | 697,802 | | | 1,591,860 | | | | | | | | | | | | | | | | | | | | | | | Laurence L. Harrod | | | 2021 | | | 1,924,223 | | | 560,316 | | | 647,339 | | | — | | | 3,131,878 | | | 3,452,582 | | 2020 | | | — | | | 560,316 | | | 647,339 | | | — | | | 1,207,655 | | | 1,519,012 | | 2019 | | | — | | | — | | | 647,278 | | | — | | | 647,278 | | | 952,539 |
| | | | | | | | | | | | | | | | | | | | | | | | | Name
| | Year | | | 2020 RSU
Awards | | | 2019 RSU
Awards | | | 2018 RSU
Awards | | | Total RSU
Awards | | | Total Stock
Awards | | Debra K. Osteen
| |
| 2020
2019 |
| | $
| 1,779,647
— |
| | $
| 1,779,902
1,779,902 |
| | $
| —
—
|
| | $
| 3,579,549
1,779,902 |
| | $
| 4,579,553
4,562,510 |
| David M. Duckworth
| |
| 2020
2019
2018 |
| |
| 571,891
—
—
|
| |
| 693,193
1,139,010
— |
| |
| 597,361
597,361
1,043,178 |
| |
| 1,862,444
1,736,370
1,043,178 |
| |
| 2,180,222
2,047,932
1,310,347 |
| Christopher L. Howard
| |
| 2020
2019
2018 |
| |
| 588,745
—
—
|
| |
| 699,890
1,214,314
— |
| |
| 689,321
689,321
1,203,745 |
| |
| 1,977,956
1,903,635
1,203,745 |
| |
| 2,305,099
2,218,207
1,512,147 |
| John S. Hollinsworth
| |
| 2020
2019 |
| |
| 604,030
—
|
| |
| 697,802
697,802 |
| |
| —
—
|
| |
| 1,301,832
697,802 |
| |
| 1,637,480
1,591,860 |
| Laurence L. Harrod
| |
| 2020
2019 |
| |
| 560,316
—
|
| |
| 647,339
647,278 |
| |
| —
—
|
| |
| 1,207,655
647,278 |
| |
| 1,519,012
952,539 |
|
See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS –— Components of Executive Compensation – Equity-Based—Equity-Based Compensation” for more information about the time-vesting restricted stock and performance-vesting restricted stock units. (2)
| Reflects the grant date fair value of stock options granted to Mr. Hollinsworth pursuant to the Incentive Plan, computed in accordance with ASC 718. See Note 1316 to the Consolidated Financial Statements contained in the Company’s 20202021 Annual Report on Form 10-K regarding assumptions underlying valuation of the stock options. Mr. Hollinsworth received 5,000 non-qualified, time-vesting stock options on March 7, 2019 related to his former role as the Company’s Eastern Group President. |
(3)
| Reflects cash awards earned during the years indicated under the Incentive Plan. See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS –— Components of Executive Compensation –— Annual Non-Equity Incentive Compensation” for more information. |
(4)
| Represents certain long term care insurance benefits and 401(k) plan matching contributions by the Company to each Named Executive Officer. Ms. Osteen was not enrolled in the Company’s benefit plans in 2018. For Ms. Osteen and Mr. Hollinsworth, amounts for 2019 include relocation benefits of $75,570 and $30,000, respectively. |
(5)
| Reflects Ms. Osteen was appointed Chief Executive Officer effective December 16, 2018. Osteen’s one-time make-whole bonus. |
(6)
| Reflects Ms. Osteen’s one-time make-whole bonus.
|
(7) | Includes 72,464 shares of time-vesting restricted stock granted to Ms. Osteen on February 1, 2019. Ms. Osteen initially was granted 240,942 shares of time-vesting restricted stock on February 1, 2019, which grant was subsequently reduced pursuant to the terms of her employment agreement to 72,464 shares on May 31, 2019 based on the final value of equity awards issued to Ms. Osteen by her former employer. |
(8)(7)
| Reflects Ms. Osteen’s one-time cash sign-on bonus.
|
(9) | Mr. Hollinsworth was appointed Executive Vice President of Operations effective July 15, 2019. |
(10)(8)
| Bonus related to Mr. Hollingsworth’s former role as the Company’s Eastern Group President from January 28, 2019 to July 15, 2019. |
(11)(9)
| Mr. Harrod was appointed Executive Vice President of Finance effective August 12, 2019. |
(12)(10)
| Reflects Mr. Harrod’s second anniversary retention bonus pursuant to the terms of his Employment Agreement. |
(11)
| Reflects Mr. Harrod’s first anniversary retention bonus pursuant to the terms of his Employment Agreement. |
(13)(12)
| Reflects Mr. Harrod’s one-time cash sign-on bonus pursuant to the terms of his Employment Agreement. |
Grants of Plan-Based Awards The following table sets forth certain information regarding plan-based awards granted to the Named Executive Officers during 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name
| | Type | | Grant
Date | | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under
Equity Incentive Plan Awards(2) | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3) | | | Grant
Date Fair
Value of
Stock
and Option
Awards(4) | | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | Debra K. Osteen
| | Bonus
RSA
2020 RSU
2019 RSU | | N/A
3/24/20
3/24/20
3/24/20 | | $
| 459,000
— —
—
|
| | $
| 918,000
— —
—
|
| | $
| 1,836,000
—
—
—
|
| |
| —
—
42,445
12,357
|
| |
| —
—
84,889
24,714
|
| |
| —
—
169,778
49,428
|
| |
| —
84,890
—
—
|
| | $
| —
1,000,004
899,823889,951
|
(5)(6)
| David M. Duckworth
| | Bonus
RSA
2020 RSU
2019 RSU
2018 RSU | | N/A
3/24/20
3/24/20
3/24/20
3/24/20 | |
| 270,112
—
—
—
—
|
| |
| 540,224
—
—
—
—
|
| |
| 1,080,449
—
—
—
—
|
| |
| —
—
13,488
4,813
3,531
|
| |
| —
—
26,976
9,625
7,061
|
| |
| —
—
53,952
19,250
14,122
|
| |
| —
26,976
—
—
—
|
| |
| —
317,777
285,946346,596
298,680
|
(5)(6)
(7)
| Christopher L. Howard
| | Bonus
RSA
2020 RSU
2019 RSU
2018 RSU | | N/A
3/24/20
3/24/20
3/24/20
3/24/20 | |
| 247,173
—
—
—
—
|
| |
| 494,346
—
—
—
—
|
| |
| 988,693
—
—
—
—
|
| |
| —
—
13,886
4,859
4,074
|
| |
| —
—
27,771
9,718
8,148
|
| |
| —
—
55,542
19,436
16,296
|
| |
| —
27,771
—
—
—
|
| |
| —
327,142
294,373349,945
344,660
|
(5)(6)
(7)
| John S. Hollinsworth
| | Bonus
RSA
2020 RSU
2019 RSU | | N/A
3/24/20
3/24/20
3/24/20 | |
| 253,598
—
—
—
|
| |
| 507,195
—
—
—
|
| |
| 1,014,390
—
—
—
|
| |
| —
—
14,246
5,670
|
| |
| —
—
28,492
11,339
|
| |
| —
—
56,984
22,678
|
| |
| —
28,493
—
—
|
| |
| —
335,648
302,015348,901
|
(5)(6)
| Laurence L. Harrod
| | Bonus
RSA
2020 RSU
2019 RSU | | N/A
3/24/20
3/24/20
3/24/20 | |
| 240,593
—
—
—
|
| |
| 481,185
—
—
—
|
| |
| 962,370
—
—
—
|
| |
| —
—
13,215
5,260
|
| |
| —
—
26,430
10,519
|
| |
| —
—
52,860
21,038
|
| |
| —
26,431
—
—
|
| |
| —
311,357
280,158323,670
|
(5)(6)
| 2021:Debra K. Osteen | | | Bonus | | | N/A | | | $500,000 | | | $1,000,000 | | | $2,000,000 | | | — | | | — | | | — | | | — | | | $— | | 2021 RSU | | | 4/23/21 | | | | | | | | | | | | 42,263 | | | 84,525 | | | 169,050 | | | | | | 5,199,978(5) | | 2020 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 42,445 | | | 84,889 | | | 169,778 | | | — | | | 899,823(6) | | 2019 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 12,358 | | | 24,715 | | | 49,430 | | | — | | | 889,951(7) | David M. Duckworth | | | Bonus | | | N/A | | | 286,562 | | | 573,124 | | | 1,146,249 | | | — | | | — | | | — | | | — | | | — | | RSA | | | 4/23/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,320 | | | 327,286 | | 2021 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 7,981 | | | 15,961 | | | 31,922 | | | — | | | 981,921(5) | | 2020 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 13,488 | | | 26,976 | | | 53,952 | | | — | | | 285,946(6) | | 2019 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 4,812 | | | 9,624 | | | 19,248 | | | — | | | 346,596(7) | Christopher L. Howard | | | Bonus | | | N/A | | | 262,226 | | | 524,453 | | | 1,048,905 | | | — | | | — | | | — | | | — | | | — | | RSA | | | 4/23/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,477 | | | 336,945 | | 2021 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 8,216 | | | 16,432 | | | 32,864 | | | — | | | 1,010,897(5) | | 2020 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 13,886 | | | 27,771 | | | 55,542 | | | — | | | 294,373(6) | | 2019 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 4,859 | | | 9,717 | | | 19,434 | | | — | | | 349,945(7) | John S. Hollinsworth | | | Bonus | | | N/A | | | 269,042 | | | 538,083 | | | 1,076,166 | | | — | | | — | | | — | | | — | | | — | | RSA | | | 4/23/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,620 | | | 345,742 | | 2021 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 8,430 | | | 16,859 | | | 33,718 | | | — | | | 1,037,166(5) | | 2020 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 14,246 | | | 28,492 | | | 56,984 | | | — | | | 302,015(6) | | 2019 RSU | | | 4/23/21 | | | | | | | | | | | | 5,670 | | | 11,339 | | | 22,678 | | | | | | 348,901(7) | Laurence L. Harrod | | | Bonus | | | N/A | | | 255,244 | | | 510,489 | | | 1,020,978 | | | — | | | — | | | — | | | — | | | — | | RSA | | | 4/23/21 | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,213 | | | 320,704 | | 2021 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 7,820 | | | 15,639 | | | 31,278 | | | — | | | 962,111(5) | | 2020 RSU | | | 4/23/21 | | | — | | | — | | | — | | | 13,215 | | | 26,430 | | | 52,860 | | | — | | | 280,158(6) | | 2019 RSU | | | 4/23/21 | | | | | | | | | | | | 5,259 | | | 10,518 | | | 21,036 | | | | | | 323,670(7) |
(1)
| The estimated payouts shown reflect non-equity incentive awards granted under the Incentive Plan, where receipt is contingent upon the achievement of specified performance goals. The amounts in the “Threshold” column assume threshold performance for all of the specified performance goals. See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Annual Non-Equity Incentive Compensation” for more information about the awards. |
(2)
| Reflects the number of shares of Common Stock issuable upon vesting of performance-vesting restricted stock units granted under the Incentive Plan, subject to adjustment (in the case of the 2020 RSU and 2019 RSU awards) based on the TSR modifier. Each of the first2021 RSU award for Ms. Osteen, the second tranche of performance-vesting restricted stock units granted March 24, 2020 to all Named Executive Officers, and the secondthird tranche of performance-vesting restricted stock units granted May 2, 2019 and the third tranche of restricted stock units granted March 2, 2018to all Named Executive Officers is earned based upon the achievement of certain performance goals in 20202021 and continued employment. See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation - Equity-Based—Equity-Based Compensation” for more information about the performance-vesting restricted stock units. |
(3)
| Reflects shares of time-vesting restricted stock granted under the Incentive Plan, which will vest in four equal annual installments commencing one year after the date of grant. |
(4)
| Reflects the aggregate grant date fair value computed in accordance with ASC 718. |
(5)
| The amounts shown were determined using a Monte-Carlo simulation value and reflect the grant date fair value of the target number of shares subject to the first tranche of the 20202021 annual award of performance-vesting restricted stock units assuming that target performance goals are attained during the initial year of the performance period in accordance with ASC 718, continued employment throughout the performance period, and no adjustment as a result of the TSR modifier.period. For additional information, see the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation - 2020 Annual Awards.—Equity Awards Granted in 2021.” |
(6)
| The amounts shown were determined using a Monte-Carlo simulation value and reflect the grant date fair value of the target number of shares subject to the second tranche of the 20192020 annual award of performance-vesting restricted stock units assuming that target performance goals are attained during the second year of the performance period in accordance with ASC 718, continued employment throughout the performance period, and no adjustment as a result of the TSR modifier. For additional information, see the section entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – 2019—2020 Annual Awards” in our Proxy Statement dated March 25, 2020.24, 2021. |
(7)
| The amounts shown were determined using a Monte-Carlo simulation value and reflect the grant date fair value of the target number of shares subject to the third tranche of the 20182019 annual award of performance-vesting restricted stock units assuming that target performance goals are attained during the third year of the performance period in accordance with ASC 718, continued employment throughout the performance period, and no adjustment as a result of the TSR modifier. For additional information, see the section entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – 20182019 Annual Awards” in our Proxy Statement dated March 21, 2019. 25, 2020. |
Outstanding Equity Awards at Fiscal Year-EndThe following table provides certain information with respect to the applicable Named Executive Officers regarding outstanding equity awards as of December 31, 20202021 that represent potential amounts that may be realized in the future: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name
| | Option Awards | | | Stock Awards | | | Number of Securities
Underlying Unexercised
Options(1) | | | Option
Exercise
Price | | | Option
Expiration
Date | | | Number
of Shares
or Units
of Stock
That
Have Not
Vested | | | Market
Value of
Shares or
Units of
Stock Held
that Have
Not Vested(2) | | | Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested | | | Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested(2) | | | (Exercisable) | | | (Unexercisable) | | Debra K. Osteen
| |
| —
—
—
— |
| |
| —
—
—
— |
| | $
| —
— —
—
|
| |
| —
—
—
—
|
| |
| 18,536
—
84,890
—
| (3)
(4)
| | $
| 931,619
—
4,266,571
— |
| |
| —
74,143—
254,669
|
(5)
(6)
| | $
| —
3,726,427
—
12,799,664 |
| David M. Duckworth
| |
| 875
814
7,591
9,500
3,897
—
—
—
—
—
—
— |
| |
| —
—
—
—
—
—
—
—
—
—
— |
| |
| 9.40
15.96
16.60
29.39
50.75
—
—
—
—
—
—
—
|
| |
| 11/16/21
3/19/22
8/2/22
3/29/23
2/27/24
—
—
—
—
—
—
—
|
| |
| —
—
—
—
—
1,505
3,531
—
7,219
—
26,976
—
|
(7)
(8)
(3)
(4)
| |
| —
—
—
—
—
75,641
177,468
—
362,827
—
1,355,814
—
|
| |
| —
—
—
—
—
—
—
21,183
—
28,874
—
80,928
|
(9)
(5)
(6)
| |
| —
—
—
—
—
—
—
1,064,658
—
1,451,207
—
4,067,441
|
| Christopher L. Howard
| |
| 6,466
9,500
6,137
—
—
—
—
—
—
— |
| |
| —
—
—
—
—
—
—
—
—
— |
| |
| 15.96
29.39
50.75
—
—
—
—
—
—
—
|
| |
| 3/19/22
3/29/23
2/27/24
—
—
—
—
—
—
—
|
| |
| —
—
—
1,734
4,074
—
7,289
—
27,771
—
|
(7)
(8)
(3)
(4)
| |
| —
—
—
87,151
204,759
—
366,345
—
1,395,770
—
|
| |
| —
—
—
—
—
24,443
—
29,153
—
83,313
|
(9)
(5)
(6)
| |
| —
—
—
—
—
1,228,505
—
1,465,230
—
4,187,311
|
| John S. Hollinsworth
| |
| 1,250
—
—
—
—
— |
| |
| 3,750
—
—
—
—
—
| (10)
| |
| 28.25
—
—
—
—
—
|
| |
| 3/7/29
—
—
—
—
—
|
| |
| —
15,0008,505
—
28,493
—
|
(11)(12)
(4)
| |
| —
753,900
427,461
—
1,432,058
—
|
| |
| —
—
—
34,017
—
85,478
|
(5)
(6)
| |
| —
—
—
1,709,684
—
4,296,124
|
| Laurence L. Harrod
| |
| —
—
—
— |
| |
| —
—
—
— |
| |
| —
—
—
—
|
| |
| —
—
—
—
|
| |
| 7,890
—
26,431
—
| (12)
(4)
| |
| 396,551 —
1,328,422
— |
| |
| —
31,556—
79,292
|
(5)
(6)
| |
| —
1,586,005
—
3,985,216 |
|
Debra K. Osteen | | | — | | | — | | | — | | | — | | | 12,358(3) | | | $750,131 | | | — | | | $— | | — | | | — | | | — | | | — | | | — | | | — | | | 74,143(4) | | | 4,500,480 | | — | | | — | | | — | | | — | | | 63,668(5) | | | 3,864,648 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 254,669(6) | | | 30,916,817 | | — | | | — | | | — | | | — | | | — | | | — | | | 84,525(7) | | | 10,261,335 | David M. Duckworth | | | 3,897 | | | — | | | 50.75 | | | 2/27/24 | | | — | | | — | | | — | | | — | | — | | | — | | | — | | | — | | | 1,766(8) | | | 107,196 | | | — | | | — | | — | | | — | | | — | | | — | | | 4,813(3) | | | 292,149 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 28,874(4) | | | 1,752,652 | | — | | | — | | | — | | | — | | | 20,232(5) | | | 1,228,082 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 80,928(6) | | | 9,824,659 | | — | | | — | | | — | | | — | | | 5,320(9) | | | 322,924 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 15,961(7) | | | 1,937,665 | Christopher L. Howard | | | 6,137 | | | — | | | 50.75 | | | 2/27/24 | | | — | | | — | | | — | | | — | | — | | | — | | | — | | | — | | | 2,037(8) | | | 123,646 | | | — | | | — | | — | | | — | | | — | | | — | | | 4,860(3) | | | 295,002 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 29,153(4) | | | 1,769,587 | | — | | | — | | | — | | | — | | | 20,829(5) | | | 1,264,320 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 83,313(6) | | | 10,114,198 | | — | | | — | | | — | | | — | | | 5,477(9) | | | 332,454 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 16,432(7) | | | 1,994,845 | John S. Hollinsworth | | | 2,500 | | | 2,500(10) | | | 28.25 | | | 3/7/29 | | | — | | | — | | | — | | | — | | — | | | — | | | — | | | — | | | 10,000(11) | | | 607,000 | | | — | | | — | | — | | | — | | | — | | | — | | | 5,671(12) | | | 344,320 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 34,017(4) | | | 2,064,832 | | — | | | — | | | — | | | — | | | 21,370(5) | | | 1,297,159 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 85,478(6) | | | 10,377,029 | | — | | | — | | | — | | | — | | | 5,620(9) | | | 341,134 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 16,859(7) | | | 2,046,683 | Laurence L. Harrod | | | — | | | — | | | — | | | — | | | 5,261(12) | | | 319,343 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 31,556(4) | | | 1,915,449 | | — | | | — | | | — | | | — | | | 19,824(5) | | | 1,203,317 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 79,292(6) | | | 9,626,049 | | — | | | — | | | — | | | — | | | 5,213(9) | | | 316,429 | | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | | | 15,639(7) | | | 1,898,575 |
(1)
| The amounts shown reflect stock options granted under the Incentive Plan. |
(2)
| Based on the closing sales price of our Common Stock of $50.26$60.70 on The NASDAQ Global Select Market on December 31, 2020. 2021. |
(3)
| One-thirdOne-half of these shares of time-vesting restricted stock vest on each of May 2, 2021, May 2, 2022 and May 2, 2023.
|
45
(4) | One-fourth of these shares of restricted stock vest on each of March 24, 2021, March 24, 2022, March 24, 2023 and March 24, 2024.
|
(5)(4)
| Reflects the aggregate target number of shares that will vest upon the achievement of certain performance goals established for the annual award of performance-vesting restricted stock units granted in 2019 under the Incentive Plan and continued employment. See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – —2020 and 2019 and 2018Performance-Vesting Restricted Stock Unit Awards Earned” for more information about the performance-vesting restricted stock units. |
TABLE OF CONTENTS (5)
| One-third of these shares of time-vesting restricted stock vest on each of March 24, 2022, March 24, 2023 and March 24, 2024. |
(6)
| Reflects the aggregate targetmaximum number of shares that will vest upon the achievement of certain performance goals established for the annual award of performance-vesting restricted stock units granted in 2020 under the Incentive Plan and continued employment. See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – —2020 Annual Awards”and 2019 Performance-Vesting Restricted Stock Unit Awards Earned” for more information about the performance-vesting restricted stock units. |
(7)
| These shares of restricted stock vest on March 29, 2021.
|
(8) | One-half of these shares of restricted stock vest on each of March 2, 2021 and March 2, 2022.
|
(9) | Reflects the aggregate targetmaximum number of shares that will vest upon the achievement of certain performance goals established for the annual award of performance-vesting restricted stock units granted in 20182021 under the Incentive Plan and continued employment. See the section above entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – 2019 and 2018 Restricted Stock Unit—Equity Awards Earned”Granted in 2021” for more information about the performance-vesting restricted stock units. |
(8)
| These shares of time-vesting restricted stock vest on March 2, 2022. |
(9)
| One-fourth of these shares of time-vesting restricted stock vest on each of April 23, 2022, April 23, 2023, April 23, 2024 and April 23, 2025. |
(10)
| One-thirdOne-half of these stock options will become exercisable on each of March 7, 2021, March 7, 2022 and March 7, 2023.
|
(11)
| One-thirdOne-half of these shares of time-vesting restricted stock vest on each of March 7, 2021, March 7, 2022 and March 7, 2023.
|
(12)
| One-thirdOne-half of these shares of time-vesting restricted stock vest on each of August 14, 2021, August 14, 2022 and August 14, 2023.
|
Option Exercises and Stock Vested The Named Executive Officers did not exercise options during 2020.
The following table shows the amounts received by the Named Executive Officers upon the exercise of stock options or the vesting of time-vesting restricted stock and performance-vesting restricted stock units during 2020: | | | | | | | | | Name | | Stock Awards | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting | | Debra K. Osteen | |
| 36,232 6,178 | | | $
| 1,810,151138,820 | (1) (2) | David M. Duckworth | |
| 5,892 2,406 1,765 1,502 973 | | |
| 182,534
54,063 52,826 27,081 33,101 | (3)
(2) (4) (5) (6) | Christopher L. Howard | |
| 6,799 2,429 2,037 1,734 1,241 | | |
| 210,633
54,580 60,967 31,264 42,219 | (3)
(2) (4) (5) (6) | John S. Hollinsworth | |
| 5,000 2,834 | | |
| 147,400
63,680 | (7)
(2) | Laurence L. Harrod | | | 2,629 | | | | 59,074 | (2) |
2021:Debra K. Osteen | | | — | | | $— | | | 21,222 | | | $1,167,634(1) | | — | | | — | | | 6,178 | | | 376,364(2) | David M. Duckworth | | | 875 | | | 43,269(3) | | | 22,424 | | | 1,238,702(4) | | 814 | | | 34,912(5) | | | 6,744 | | | 371,055(1) | | 7,591 | | | 320,720(6) | | | 2,406 | | | 146,574(2) | | 9,500 | | | 279,870(7) | | | 1,765 | | | 98,487(8) | | — | | | — | | | 1,502 | | | 85,103(9) | Christopher L. Howard | | | 6,466 | | | 277,327(5) | | | 25,875 | | | 1,429,335(4) | | 9,500 | | | 279,870(7) | | | 6,942 | | | 381,949(1) | | — | | | — | | | 2,429 | | | 147,975(2) | | — | | | — | | | 2,037 | | | 113,665(8) | | — | | | — | | | 1,734 | | | 98,248(9) | John S. Hollinsworth | | | — | | | — | | | 7,123 | | | 391,907(1) | | — | | | — | | | 5,000 | | | 274,900(10) | | — | | | — | | | 2,834 | | | 175,425(11) | Laurence L. Harrod | | | — | | | — | | | 6,607 | | | 363,517(1) | | — | | | — | | | 2,629 | | | 162,735(11) |
(1)
| Based on the closing sales price of our Common Stock of $49.96$55.02 on The NASDAQ Global Select Market on December 17, 2020,March 24, 2021, the date that the shares of time-vesting restricted stock vested. |
(2)
| Based on the closing sales price of our Common Stock of $22.47$60.92 on The NASDAQ Global Select Market on May 1, 2020, the first business day immediately prior to2, 2021, the date that the shares of restricted stock vested. |
(3) | Based on the closing sales price of our Common Stock of $30.98 on The NASDAQ Global Select Market on March 4, 2020, the date that theperformance-vesting restricted stock units vested. See the section entitled “COMPENSATION DISCUSSION AND ANALYSIS – Components of Executive Compensation – Equity-Based Compensation – 2018 TransitionAnnual Awards” in our Proxy Statement dated March 25, 202021, 2019 for more information about the performance-vesting restricted stock units.
|
46
(3)
| Based on the closing sales price of our Common Stock of $58.85 on The NASDAQ Global Select Market on March 11, 2021, the date that the options were exercised, less the option exercise price of $9.40. |
(4)
| Based on the closing sales price of our Common Stock of $29.93 on The NASDAQ Global Select Market on March 2, 2020,April 30, 2021, the first business day immediately prior to the date that the shares of time-vesting restricted stock vested. |
(5)
| Based on the closing sales price of our Common Stock of $18.03$58.85 on The NASDAQ Global Select Market on March 27, 2020,11, 2021, the date that the options were exercised, less the option exercise price of $15.96. |
(6)
| Based on the closing sales price of our Common Stock of $58.85 on The NASDAQ Global Select Market on March 11, 2021, the date that the options were exercised, less the option exercise price of $16.60. |
(7)
| Based on the closing sales price of our Common Stock of $58.85 on The NASDAQ Global Select Market on March 11, 2021, the date that the options were exercised, less the option exercise price of $29.39. |
TABLE OF CONTENTS (8)
| Based on the closing sales price of our Common Stock of $55.80 on The NASDAQ Global Select Market on March 2, 2021, the date that the shares of time-vesting restricted stock vested. |
(9)
| Based on the closing sales price of our Common Stock of $54.66 on The NASDAQ Global Select Market on March 5, 2021, the first business day immediately prior to the date that the shares of time-vesting restricted stock vested. |
(6)(10)
| Based on the closing sales price of our Common Stock of $34.02$54.98 on The NASDAQ Global Select Market on February 5, 2020,March 7, 2021, the date that the shares of time-vesting restricted stock vested. |
(7)(11)
| Based on the closing sales price of our Common Stock of $29.48$61.90 on The NASDAQ Global Select Market on March 6, 2020, the first business day immediately prior toAugust 13, 2021, the date that the shares of time-vesting restricted stock vested. |
Nonqualified Deferred Compensation The following table shows the activity during 20202021 and the aggregate balances held by each of our Named Executive Officers at December 31, 20202021 under the Deferred Compensation Plan. | | | | | | | | | | | | | | | | | | | | | Name | | Executive Contributions in 2020($)(1) | | | Company Contributions in 2020($) | | | Aggregate Earnings in 2020($) | | | Aggregate Withdrawals / Distributions($) | | | Aggregate Balance at December 31, 2020($)(2) | | Debra K. Osteen | | $ | — | | | $
| —
|
| | $ | — | | | $ | — | | | $ | — | | David M. Duckworth | | | 84,205 | | | | — | | | | 203,490 | | | | (23,978 | ) | | | 1,481,425 | | Christopher L. Howard | | | 122,159 | | | | — | | | | 536,279 | | | | — | | | | 2,324,304 | | John S. Hollinsworth | | | 5,964 | | | | — | | | | 1,060 | | | | — | | | | 7,024 | | Laurence L. Harrod | | | 45,264 | | | | — | | | | 6,391 | | | | — | | | | 51,656 | |
Debra K. Osteen | | | $— | | | $— | | | $— | | | $— | | | $— | David M. Duckworth | | | 311,811 | | | — | | | 201,773 | | | (52,603) | | | 1,942,407 | Christopher L. Howard | | | 217,648 | | | — | | | 324,343 | | | — | | | 2,866,295 | John S. Hollinsworth | | | 17,733 | | | — | | | 1,793 | | | — | | | 26,550 | Laurence L. Harrod | | | 777,070 | | | — | | | 68,740 | | | — | | | 897,465 |
(1)
| These amounts are included in the Summary Compensation Table above. |
(2)
| All amounts other than 20202021 earnings are included in the Summary Compensation Table above. |
Under the plan, participants may defer up to 50% of their annual base compensation and up to 100% of any performance-based compensation. Participants are fully vested in their deferral accounts as to amounts they elect to defer. No employer matching contributions are made to the Deferred Compensation Plan. Participants will be able to select from several fund choices and their deferred compensation account will increase or decrease in value in accordance with the performance of the funds selected. Participants may receive a distribution from the Deferred Compensation Plan upon a qualifying distribution event such as separation from service, disability, death, change in control or an unforeseeable emergency or on a specified date selected by a participant. Following a participant’s separation from the Company for any reason, the participant’s vested interest in the account is paid to the participant (or the participant’s beneficiary in the event of the participant’s death) either in a lump sum or up to ten annual installments, as elected by the participant. The Deferred Compensation Plan is intended to be an unfunded plan administered and maintained by the Company primarily for the purpose of providing deferred compensation benefits to participants. Potential Payments Upon Termination or Change in Control under the Employment Agreements In December 2018, we
We entered into an employment agreement with Ms. Osteen in January 2021, as amended in December 2021 and January 31, 2022 (the “Osteen Agreement”). In July and August 2019, we entered into employment agreements with Messrs. Hollinsworth and Harrod, respectively (the “EVP 2019 Agreements”). In April 2014, we entered into an amended and restated employment agreement with Mr. Howard, and an employment agreement with Mr. Duckworth (collectively with the Osteen Agreement and the EVP 2019 Agreements, the “Employment Agreements”). A summary of the Employment Agreements is provided below. 47
Compensation and Benefits The base salaries under the Employment Agreements are subject to an annual increase in the sole discretion of our Board. In addition to base salary, under the Employment Agreements the executives are entitled to participate, in their sole discretion, in all of our employee benefit programs for which senior executive employees are generally eligible. Each executive is also reimbursed for reasonable expenses incurred in connection with services performed under each executive’s Employment Agreement.
Non-Competition and Non-SolicitationDuring the term of each Employment Agreement and for 12 months thereafter (in the case of Ms. Osteen and Messrs. Duckworth, Harrod and Hollinsworth) or 24 months thereafter (in the case of Ms. Osteen and Mr. Howard), each such executive is prohibited from (i) directly or indirectly managing, controlling, consulting, rendering services TABLE OF CONTENTS for or participating, engaging or owning an interest in any business which derives 25% of its gross revenue from the business of providing behavioral healthcare and/or related services and (ii) directly or indirectly managing, controlling, rendering services for or participating or consulting with any unit, division, segment or subsidiary of any other business that engages in or otherwise competes with (or was organized for the purpose of engaging in or competing with) the business of providing behavioral healthcare and/or related services (subject to certain exceptions), in each case within any geographical area in which we engage in such businesses. During the term of each Employment Agreement and for 12 months thereafter (in the case of Ms. Osteen and Messrs. Duckworth, Harrod and Hollinsworth) or 24 months thereafter (in the case of Ms. Osteen and Mr. Howard), each such executive is prohibited from directly or indirectly soliciting or hiring any employee or independent contractor of ours or directly or indirectly soliciting any customer, supplier, licensee, licensor or other business relation of ours. In addition, the executives are subject to customary confidentiality and non-disparagement obligations both during and following their employment with the Company.
Retention Bonus Under the Osteen Agreement, Ms. Osteen received a retention bonus equal to $900,000 following her continued service through March 31, 2022. Under the Employment Agreements for Messrs. Duckworth and Howard, if the executive is terminated without “Cause” or resigns with “Good Reason,” such executive is generally entitled to receive (subject to the satisfaction of certain conditions): Such executive’s base salary through the termination date; A prorated bonus amount for the calendar year in which the termination occurs; An amount equal to a multiple of the target annual cash bonus amount to which such executive would be entitled with respect to the calendar year in which the termination date occurs, determined as if all of the performance objectives for such year have been achieved at the target level; An amount equal to a multiple of such executive’s base salary as in effect on the termination date; Any unused and unpaid time off and sick pay accrued through the termination date and any incurred but unreimbursed business expenses as of the termination date; An amount equal to the cost of the premiums for continued health and dental insurance for the executive and/or his dependents in accordance with COBRA for a specified period; Full and immediate vesting of such executive’s stock options, time-vesting restricted stock and other equity-based awards that are not intended to be performance-based compensation under Code Section 162(m); and Delay of vesting and forfeiture of such executive’s time-vesting restricted stock and other equity-based awards that are intended to be performance-based compensation under Code Section 162(m) until the Company certifies the applicable performance goals have been met (collectively, the “Old Termination Payments”). 48
Under the Employment Agreements for Ms. Osteen and Messrs. Harrod and Hollinsworth, if the executive is terminated without “Cause” or resigns with “Good Reason,” such executive is generally entitled to receive (subject to the satisfaction of certain conditions): Such executive’s base salary through the termination date; Any accrued but unpaid cash bonus with respect to a completed performance period; Any unused and unpaid time off and sick pay accrued through the termination date, any incurred but unreimbursed business expenses as of the termination date, and all other payments, benefits or fringe benefits pursuant to any applicable compensation arrangement as of the termination date; AnFor Messrs. Harrod and Hollinsworth, an amount equal to two (2) times such executive’s base salary as in effect on the termination date date;A prorated cash bonus amount for the calendar year in which the termination occurs, determined as if all of the subjective performance objectives for such year have been achieved at the target level; TABLE OF CONTENTS An amount equal to the after-tax cost of the premiums for continued health and dental insurance for the executive and/or his or her dependents in accordance with COBRA for a specified period; For Ms. Osteen, full and immediate vesting of the time-vesting components of her annual equity and equity-based awards granted in 2019 and 2020, (the “2019 and 2020 Awards”), and delay of vesting and forfeiture of theher annual equity and equity-based awards granted in 2019, 2020 and 2020 Awards2021 that are subject to performance-based vestingperformance-vesting criteria (collectively, the “New Termination Payments”). “Cause” (as defined in the Employment Agreements for Messrs. Duckworth and Howard) means the occurrence of one or more of the following with respect to the applicable executive: The conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude or the conviction of any crime involving misappropriation, embezzlement or fraud with respect to the Company or any of its subsidiaries or any of their customers, suppliers or other business relations; Conduct outside the scope of such executive’s duties and responsibilities under his Employment Agreement that causes the Company or any of its subsidiaries substantial public disgrace or disrepute or economic harm; Repeated failure to perform duties consistent with such Employment Agreement as reasonably directed by our Board; Any act or knowing omission aiding or abetting a competitor, supplier or customer of ours to our disadvantage or detriment; Breach of fiduciary duty, gross negligence or willful misconduct with respect to us; An administrative or other proceeding resulting in the suspension or debarment of such executive from participation in any contracts with, or programs of, the United States or any individual state or any agency or department thereof; or Any other material breach by such executive of his Employment Agreement or any other agreement between such executive and us, which is not cured to the reasonable satisfaction of our Board within 30 days after written notice thereof to such executive. 49
“Cause” (as defined in the Employment Agreements for Ms. Osteen and Messrs. Harrod and Hollinsworth) means the occurrence of one or more of the following with respect to such executive; provided that no determination of “Cause” may be made until such executive has been given written notice detailing the specific Cause event and a period of fifteen (15) business days following receipt of such notice to cure such event: The conviction of or plea of nolo contendere to a felony or the conviction of any crime involving misappropriation, embezzlement or fraud with respect to the Company or any of its subsidiaries or any of their customers, suppliers or other business relations; Willful conduct outside the scope of such executive’s duties and responsibilities under their Employment Agreement that causes the Company or any of its subsidiaries substantial public disgrace or disrepute or demonstrable economic harm; Repeated failure to perform duties consistent with such Employment Agreement as reasonably directed by our Board; Any willful act or knowing omission of aiding or abetting a competitor of ours to our disadvantage or detriment; Material breach of fiduciary duty, gross negligence or willful misconduct with respect to us; An administrative or other proceeding arising as a result of such executive’s actions that results in the suspension or debarment of such executive from participation in any contracts with, or programs of, the United States or any individual state or any agency or department thereof, or any finding of a governmental agency that such executive personally has engaged in misconduct in connection with her employment by the Company or any predecessor employer; or Any other material breach by such executive of their Employment Agreement or any other agreement between such executive and us. “Good Reason” (as defined in the Employment Agreements) means if the applicable executive resigns his or her employment with the Company as a result of one or more of the following actions (in each case taken TABLE OF CONTENTS without the executive’s written consent): (i) a reduction in such executive’s base salary (other than, for Messrs. Duckworth and Howard, as part of an across-the-board reduction that (A) results in a 10% or less reduction of such executive’s base salary as in effect on the date of any such reduction or (B) is approved by our Chief Executive Officer); (ii) a material diminution of such executive’s job duties or responsibilities inconsistent with the executive’s position; (iii) any other material breach by us of such Employment Agreement; or (iv) a relocation of our principal executive offices and corporate headquarters outside of a 30-mile radius of Nashville, Tennessee following relocation thereto in accordance with such Employment Agreement; provided that, none of the events described in clauses (i) through (iv) shall constitute Good Reason unless such executive shall have notified us in writing describing the event which constitutes Good Reason within 90 days after the occurrence of such event and then only if we shall have failed to cure such event within 30 days after our receipt of such written notice and such executive elects to terminate his or her employment as a result at the end of such 30 day period. If an executive that is party to an Employment Agreement dies or becomes disabled, such executive is entitled to the Old Termination Payments (other than the amount equal to a multiple of the target annual cash bonus amount and the amount equal to a multiple of such executive’s base salary as in effect on the termination date) or New Termination Payments, as applicable. In the event that an executive becomes disabled not due to death, such executive is entitled to receive continued installment payments of such executive’s base salary as in effect on the termination date for a specified period of time. If we terminate an executive under an Employment Agreement for Cause or if any such executive resigns without Good Reason, such executive is only entitled to receive his or her unpaid base salary through the termination date and any bonus amount to which such executive is entitled by reference to the calendar year that ended on or prior to the termination date, and in the case of Ms. Osteen and Messrs. Harrod and Hollinsworth, all other payments, benefits or fringe benefits pursuant to any applicable compensation arrangement as of the termination date. Upon any termination of employment under an Employment Agreement, whether voluntary or otherwise, such executive has the option to elect to continue health insurance coverage until the earlier of (A) such time as the executive is eligible to participate in another health plan or (B) the executive becomes eligible for Medicare. 50
The tables below show the amounts that each Named Executive Officer would have received assuming that the Named Executive Officer’s employment was terminated or he or she died or became disabled effective December 31, 2020.2021. As of December 31, 2020,2021, none of the Named Executive Officers were entitled to any compensation or benefits for resignation or retirement. Furthermore, the Employment Agreements do not distinguish a termination following a change in control from a termination in another context. Therefore, a termination following a change in control will entitle a Named Executive Officer to severance benefits only if the Named Executive Officer’s employment is otherwise terminated without Cause by the Company or by the Named Executive Officer for Good Reason.
Ms. Osteen | | | | | | | | | Executive Benefits and Payments upon Termination | | Involuntary Termination without Cause(1) | | | Death or Disability | | Base Salary | | $ | 1,836,000 | (2) | | $ | 459,000 | (3) | Non-Equity Incentive Plan Compensation(4) | | | 1,836,000 | | | | 1,836,000 | | Restricted Stock (unvested)(5) | | | 5,198,191 | | | | 5,198,191 | | Insurance Benefits | | | 41,112 | (6) | | | 13,704 | (7) | Accrued Vacation(8) | | | 70,616 | | | | 70,616 | |
Base Salary | | | $0(2) | | | $500,000(3) | Non-Equity Incentive Plan Compensation(4) | | | 2,000,000 | | | 2,000,000 | Time-Vesting Restricted Stock (unvested)(5) | | | 4,614,778 | | | 4,614,778 | Insurance Benefits | | | 44,294(6) | | | 14,765(7) | Accrued Vacation(8) | | | 76,923 | | | 76,923 |
Mr. Duckworth Base Salary | | | $674,264 (2) | | | $337,132(3) | Non-Equity Incentive Plan Compensation(4) | | | 1,146,249 | | | 1,146,249 | Time-Vesting Restricted Stock (unvested)(5) | | | 1,950,352 | | | 1,950,352 | Insurance Benefits | | | 29,378(6) | | | 14,689(7) | Accrued Vacation(8) | | | 50,355 | | | 50,355 |
TABLE OF CONTENTS | | | | | | | | | Executive Benefits and Payments upon Termination | | Involuntary Termination without Cause(1) | | | Death or Disability | | Base Salary | | $ | 635,558 | (2) | | $ | 317,779 | (3) | Non-Equity Incentive Plan Compensation(4) | | | 1,080,449 | | | | 1,080,449 | | Restricted Stock (unvested)(5) | | | 1,971,750 | | | | 1,971,750 | | Insurance Benefits | | | 27,408 | (6) | | | 13,704 | (7) | Accrued Vacation(8) | | | 48,890 | | | | 48,890 | |
Mr. Howard | | | | | | | | | Executive Benefits and Payments upon Termination | | Involuntary Termination without Cause(1) | | | Death or Disability | | Base Salary | | $ | 1,163,168 | (2) | | $ | 290,792 | (3) | Non-Equity Incentive Plan Compensation(4) | | | 988,693 | | | | 988,693 | | Restricted Stock (unvested)(5) | | | 2,054,026 | | | | 2,054,026 | | Insurance Benefits | | | 53,352 | (6) | | | 13,338 | (7) | Accrued Vacation(8) | | | 44,738 | | | | 44,738 | |
Base Salary | | | $1,234,006(2) | | | $308,502(3) | Non-Equity Incentive Plan Compensation(4) | | | 1,048,905 | | | 1,048,905 | Time-Vesting Restricted Stock (unvested)(5) | | | 2,015,422 | | | 2,015,422 | Insurance Benefits | | | 46,069(6) | | | 11,517(7) | Accrued Vacation(8) | | | 46,080 | | | 46,080 |
Mr. Hollinsworth | | | | | | | | | Executive Benefits and Payments upon Termination | | Involuntary Termination without Cause(1) | | | Death or Disability | | Base Salary | | $ | 1,193,400 | (2) | | $ | 298,350 | (3) | Non-Equity Incentive Plan Compensation(4) | | | 1,014,390 | | | | 1,014,390 | | Restricted Stock (unvested)(5) | | | 2,613,419 | | | | 2,613,419 | | Insurance Benefits | | | 28,188 | (6) | | | 9,396 | (7) | Accrued Vacation(8) | | | 44,753 | | | | 44,753 | |
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Base Salary | | | $1,266,078(2) | | | $316,520(3) | Non-Equity Incentive Plan Compensation(4) | | | 1,076,166 | | | 1,076,166 | Time-Vesting Restricted Stock (unvested)(5) | | | 2,589,523 | | | 2,589,523 | Insurance Benefits | | | 30,346(6) | | | 10,115(7) | Accrued Vacation(8) | | | 47,277 | | | 47,277 |
Mr. Harrod | | | | | | | | | Executive Benefits and Payments upon Termination | | Involuntary Termination without Cause(1) | | | Death or Disability | | Base Salary | | $ | 1,132,200 | (2) | | $ | 283,050 | (3) | Non-Equity Incentive Plan Compensation(4) | | | 962,370 | | | | 962,370 | | Restricted Stock (unvested)(5) | | | 1,724,973 | | | | 1,724,973 | | Insurance Benefits | | | 30,132 | (6) | | | 10,044 | (7) | Accrued Vacation(8) | | | 38,581 | | | | 38,581 | |
Base Salary | | | $1,201,150(2) | | | $300,288(3) | Non-Equity Incentive Plan Compensation(4) | | | 1,020,978 | | | 1,020,978 | Time-Vesting Restricted Stock (unvested)(5) | | | 1,839,089 | | | 1,839,089 | Insurance Benefits | | | 32,440(6) | | | 10,813(7) | Accrued Vacation(8) | | | 44,270 | | | 44,270 |
(1)
| The amounts shown would have been payable if we terminated the Named Executive Officer’s employment without Cause (as defined in his or her Employment Agreement) or if the Named Executive Officer resigned his or her employment for Good Reason (as defined in his or her Employment Agreement), provided that the Named Executive Officer had not breached the non-competition, non-solicitation, confidentiality and proprietary information provisions of his or her Employment Agreement. |
(2)
| The amount shown reflects the product of two times the Named Executive Officer’s base salary (except for Ms. Osteen, who is not entitled to additional salary, and Mr. Duckworth, which amount reflects twelve months of his base salary) as in effect on December 31, 20202021 pursuant to the terms of his or her Employment Agreement (assuming that he or she is not in violation of the restrictive covenants set forth in his or her Employment Agreement or his or her General Release, if applicable). Pursuant to the Employment Agreements, base salary amounts are payable in regular installments over the course of the applicable severance period. |
(3)
| The amount shown reflects the Named Executive Officer’s base salary as in effect on December 31, 20202021 payable for a period of six months in the event of disability pursuant to the terms of his or her Employment Agreement. |
(4)
| The amount shown reflects the cash incentive award for 20202021 of 100% of the base salary for Ms. Osteen, two times 85% of the base salary for Messrs. Duckworth, Harrod, Hollinsworth and Howard, assuming achievement of the performance goals at the target level, pursuant to the terms of their non-equity incentive compensation plans for 2020. 2021. |
(5)
| The amount shown reflects the value of all unvested time-vesting restricted stock not intended to qualify as performance-based compensation for each Named Executive Officer, which will immediately vest pursuant to the terms of his or her Employment Agreement, based on a market value of $50.26$60.70 per share as of December 31, 2020.2021. See “EXECUTIVE COMPENSATION – Outstanding—Outstanding Equity Awards at Fiscal Year-End.” Pursuant to each Named Executive Officer’s Employment Agreement, unvested performance-vesting restricted stock unit awards intended to qualify as performance-based compensation are not immediately forfeited at termination but remain subject to forfeiture restrictions related to pre-established performance goals until the results of the related goals have been satisfied. As of December 31, 2020,2021, all unvested performance-vesting restricted stock units of each Named Executive Officer would remain subject to pre-established performance goals and would vest in future years based on future performance. See “EXECUTIVE COMPENSATION – Outstanding—Outstanding Equity Awards at Fiscal Year-End” for potential amounts that may be realized in the future with respect to each Named Executive Officer’s unvested performance-vesting restricted stock units as of December 31, 2020. 2021. |
(6)
| The amount shown reflects the cost of the premiums for continued health, dental and dentalvision insurance for the Named Executive Officer or his or her dependents, in accordance with COBRA, for a period of 24 months for Mr. Howard, 18 months for Ms. Osteen and for Messrs. Harrod and Hollinsworth, and 12 months for Mr. Duckworth, pursuant to the terms of the Employment Agreements. |
(7)
| The amount shown reflects the cost of the premiums for continued health, dental and dentalvision insurance for the Named Executive Officer or his or her dependents, in accordance with COBRA, for a period of six months pursuant to the terms of his or her Employment Agreement. |
(8)
| The amount shown reflects unused paid time off, pursuant to the terms of the Named Executive Officer’s Employment Agreement and our paid time off policies. |
In January 2021, we entered into an new employment agreement with Ms. Osteen effective as of January 1, 2021 (the “New Osteen Agreement”). The New Osteen Agreement contains substantially similar terms as the Osteen Agreement applicable through December 31, 2020, other than the following material changes: (i) Ms. Osteen’s 2021 long-term incentive equity awards will consist entirely of performance vesting restricted stock units (rather than including a portion of time vesting restricted stock) with a one-year performance period (rather than three years), (ii) in the event of a termination without Cause or by Ms. Osteen with Good Reason, she will be entitled to her base salary through December 31, 2021 rather than two (2) times her base salary for the twelve (12) month period following the termination date, and (iii) the non-compete period was extended from twelve (12) months to twenty-four months following termination of Ms. Osteen’s employment.TABLE OF CONTENTS
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2019, 2020 and 2021 Performance Vesting Equity Awards As described in “COMPENSATION DISCUSSION AND ANALYSIS – Components—Components of Executive Compensation – Equity-Based—Equity-Based Compensation,” shares earned annually under performance vestingperformance-vesting restricted stock unit awards made in 2019, 2020 and 2021 are generally accumulated and released at the end of the three-year term of the award, and for such awards made in 2019 and 2020, subject to adjustment based on the relative TSR modifier. Given the longer payout for such awards, awards of an executive whose employment is terminated during the performance period due to death, disability, retirement, or without cause or for good reason will vest at the end of the performance period, subject to the Company’s achievement of the performance goals. As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Ms. Osteen, our Chief Executive Officer: the median of the annual total compensation of all employees of the Company (other than our former Chief Executive Officer) was $27,333;$40,327; and the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement, was $5,131,395. $9,853,107.Based on this information, for 2020,2021, the ratio of the annual total compensation of Ms. Osteen, our former Chief Executive Officer, to the median of the annual total compensation of all employees was 188244 to 1. For purposes of the foregoing pay ratio disclosure, we were required to identify the median employee of all employees of the Company, without regard to their location, compensation arrangements or employment status (full-time versus part-time) and then determine the annual total compensation that “median employee” earned during 2020.2021. To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee in 2020,2021, we took the following steps: Pursuant to applicable regulations, we are required to identity our median employee only once every three years. Accordingly,Given the sale of our U.K. operations in January 2021, for purposes of determining the median annual total compensation of employees and the resulting pay ratio for 2020,2021, we have used the 20202021 compensation of the median employee that we identified as of December 31, 2019.2021. We determined that, as of December 31, 2019,2021, our employee population consisted of approximately 42,80022,500 individuals working at the Company and its consolidated subsidiaries with approximately 21,900 of these individuals located in the United States and Puerto Rico and approximately 21,900 located in the United Kingdom (as reported in Item 1, Business, in our Annual Report on Form 10-K for the year ended December 31, 2019)2021). This population consisted of our full-time, part-time and temporary employees.employees, but excluded approximately 800 employees of CenterPointe Behavioral Health System, LLC and its affiliates that we acquired on December 31, 2021. The inclusion of part-time and temporary employees substantially reduces the median of the annual total compensation of all of our employees. We prepared a list of employees at December 31, 20192021 from our payroll records and evaluated total compensation. Total compensation includes salary, stock awards and non-equity incentive plan compensation. Compensation for full-time and part-time employees who commenced employment after January 1, 20192021 was annualized. Compensation for temporary employees was not annualized. We used the exchange rate for the year ended December 31, 2019 of 1.28British pounds to U.S. dollars to calculate total compensation for our employees located in the United Kingdom.The median employee determined as of December 19, 2019 was still employed by the Company as of December 31, 2020 and the compensation of such employee for 2020 was fairly consistent with the compensation of such employee for 2019.
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The SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies, including those within our peer group and industry.
The table below sets forth the 20202021 compensation earned by or paid to our non-management directors. Ms. Osteen does not receive any additional compensation for her service as a director. | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash(1) | | | Stock Awards(2) | | | Total | | Jason R. Bernhard | | $ | 102,000 | | | $ | 320,005 | | | $ | 422,005 | | E. Perot Bissell | | | 357,750 | | | | 160,004 | | | | 517,754 | | Michael J. Fucci (3) | | | — | | | | 160,007 | | | | 160,007 | | Vicky B. Gregg | | | 197,000 | | | | 160,004 | | | | 357,004 | | William F. Grieco | | | 350,750 | | | | 160,004 | | | | 510,754 | | Wade D. Miquelon | | | 175,750 | | | | 160,004 | | | | 335,754 | | William M. Petrie, M.D. | | | 122,000 | | | | 160,004 | | | | 282,004 | | Reeve B. Waud | | | 442,000 | | | | 160,004 | | | | 602,004 | |
Jason R. Bernhard | | | $102,000 | | | $160,038 | | | $262,038 | E. Perot Bissell | | | 139,000 | | | 160,038 | | | 299,038 | Michael J. Fucci | | | 129,500 | | | 160,038 | | | 289,538 | Vicky B. Gregg | | | 137,000 | | | 160,038 | | | 297,038 | William F. Grieco | | | 139,500 | | | 160,038 | | | 299,538 | Wade D. Miquelon | | | 129,500 | | | 160,038 | | | 289,538 | William M. Petrie, M.D. | | | 112,000 | | | 160,038 | | | 272,038 | Reeve B. Waud | | | 187,000 | | | 160,038 | | | 347,038 |
__________ (1)
| Includes annual retainers and fees associated with serving on a Board committee. Includes pro-rated annual cash retainer amounts of $8,750 for Messrs. Bissell, Grieco and Miquelon, and $17,500 for Mr. Waud, related to their service on the Finance Committee from October 2018 through May 2019, which amounts were paid in 2020. In addition, includes cash compensation of $60,000, $210,000, $187,500, $37,500 and $247,500 for Ms. Gregg and Messrs. Bissell, Grieco, Miquelon and Waud, respectively, for extraordinary time and effort relating to service on the Finance Committee from October 2018 through February 2020, particularly relating to our Chief Executive Officer transition and the sale of our U.K. operations, which amounts were paid in 2020. |
(2)
| This column reflects the grant date fair value of time-vesting restricted stock awards granted to directors calculated in accordance with ASC 718. The grants include the following: |
| (a) | On February 25, 2020, Mr. Bernhard received an award of 4,745 shares of restricted stock. The calculation of grant date fair value for those shares is based on the closing market price of our Common Stock on the date immediately preceding the date of grant ($33.72).
|
| (b) | On May 7, 2020,6, 2021, each non-management director elected or continuing to serve as a member of the Board received an award of 6,6092,550 shares of time-vesting restricted stock. The grant date fair value of time-vesting restricted stock awards is computed by multiplying the total number of shares subject to the award by the closing market price of our Common Stock on the date immediately preceding the date of grant ($24.21)62.76).
|
| (c) | On October 28, 2020, Mr. Fucci received an award of 5,293 shares of restricted stock following his election to the Board. The calculation of grant date fair value for those shares is based on the closing market price of our Common Stock on the date immediately preceding the date of grant ($30.23).
|
As of December 31, 2020,2021, each of the non-management directors (other than Mr. Bernhard and Mr. Fucci) held 11,2808,605 shares of time-vesting restricted stock. (3) | Mr. Fucci was appointed as a member of the Board effective October 22, 2020.
|
55 As of December 31, 2021, Mr. Bernhard held 8,539 shares of time-vesting restricted stock and Mr. Fucci held 6,079 shares of stock.
Our Board of Directors adopted a compensation plan for non-management directors effective January 1, 2013, as amended in 2016, 2019 and 2020 (the “Directors Plan”), which provides: An annual cash retainer of $87,000; An annual cash retainer of $15,000 for each member of the Audit and Risk Committee and $30,000 for the chair of the Audit and Risk Committee; An annual cash retainer of $12,500 for each member of the Compensation Committee and $27,500 for the chair of the Compensation Committee; An annual cash retainer of $10,000 for each member of the Nominating Committee and $22,000 for the chair of the Nominating Committee; An annual cash retainer of $12,500 for each member of the Compliance Committee and $27,500 for the chair of the Compliance Committee; An annual cash retainer of $15,000 for each member of the Finance Committee and $30,000 for the chair of the Finance Committee; An annual cash retainer of $45,000 for the Lead Director (if applicable) and $45,000 for the Chairman of the Board (if held by a non-management director); Additional cash compensation to be approved by the Chairman of the Board and Chairman of the Compensation Committee for each director who, at the discretion of the Chairman of the Board and Chairman of the Compensation Committee, devotes extraordinary time and effort to the Company; An initial grant of time-vesting restricted stock having a value equal to $160,000; An annual grant of time-vesting restricted stock having a value equal to $160,000; and An annual director compensation limit of $600,000 earned in a given year, including both cash compensation and awards of restricted stock. In addition to the compensation described above, we also reimburse our directors for travel and out-of-pocket expenses in connection with their attendance at meetings of our Board of Directors.
TABLE OF CONTENTS Under the Directors Plan, all annual retainers shall be paid on the date of our annual meeting of stockholders (the “Annual Meeting Date”). Each year as of the Annual Meeting Date, each non-management member of our Board who is re-elected or who otherwise continues to be a member of the Board immediately thereafter is automatically granted under the Directors Plan, without further action by us, our Board of Directors, the Compensation Committee or our stockholders, shares of our time-vesting restricted stock having a value equal to $160,000. The value of the restricted shares shall be based on the closing trading price of our Common Stock on the trading day immediately preceding the Annual Meeting Date. All restricted shares issued to non-management directors shall vest over three years with such shares to vest 33 1⁄∕3% per year on the three successive anniversary dates of the grant of time-vesting restricted stock beginning on the first anniversary of the grant date. Each of our directors is a party to an Indemnification Agreement with the Company pursuant to which we have agreed to indemnify and advance expenses to such director in connection with his or her service as our director, officer or agent to the fullest extent permitted by law and as set forth in each such agreement and, to the extent applicable, to maintain insurance coverage for each such director under our policies of directors’ and officers’ liability insurance.
AUDIT AND RISK COMMITTEE REPORT Our management has primary responsibility for preparing our financial statements and implementing internal controls over financial reporting. Our independent registered public accounting firm, Ernst & Young LLP, is responsible for expressing an opinion on the conformity of our audited financial statements with accounting principles generally accepted in the United States and the effectiveness of our internal control over financial reporting. The role and responsibilities of the Audit and Risk Committee are set forth in a written charter adopted by our Board of Directors. The charter is available on our website, www.acadiahealthcare.com, under the webpage “Investors –— Corporate Governance.” The Audit and Risk Committee reviews and reassesses the adequacy of the charter annually or more often as necessary and recommends any proposed changes to the Board. The Audit and Risk Committee acted in accordance with its charter in 2020.2021. In fulfilling its responsibilities for fiscal year 2020,2021, the Audit and Risk Committee: Pre-approved all auditing and non-auditing services of Ernst & Young LLP; Reviewed and discussed with management our unaudited quarterly financial statements during 20202021 and our audited financial statements for the fiscal year ended December 31, 2020,2021, including a discussion of critical accounting policies used in such financial statements; Reviewed and discussed with the internal auditor the quality and appropriateness of our internal controls and reporting procedures; Discussed with Ernst & Young LLP the matters required to be discussed by Statement on Auditing Standards No. 1301, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T, both with and without management present; and Received the written disclosures and the letter from Ernst & Young LLP as required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit and Risk Committee concerning independence and discussed with Ernst & Young LLP their independence from us and management. Based on the Audit and Risk Committee’s review of the audited financial statements and discussions with management and Ernst & Young LLP as described above, and in reliance thereon, the Audit and Risk Committee recommended to our Board of Directors that the audited financial statements for the fiscal year ended December 31, 20202021 be included in our Annual Report on Form 10-K for filing with the SEC. | | | AUDIT AND RISK COMMITTEE: | | | | | | | | | | | | | | William F. Grieco, Chairman |
E. Perot Bissell |
Michael J. Fucci |
Reeve B. Waud | | | |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS Stockholder Proposals for 20222023 Annual Meeting Pursuant to Rule 14a-8 under the Exchange Act, proper stockholder proposals intended to be presented at our 20222023 annual meeting of stockholders must be received by us at our principal executive offices at 6100 Tower Circle, Suite 1000, Franklin, Tennessee 37067 no later than November 24, 2021 December 9, 2022 for the proposals to be included in the Proxy Statement and form of proxy card for that meeting. If a stockholder desires to bring a matter before our annual meeting of stockholders and the matter is submitted outside the process of Rule 14a-8, including with respect to nominations for election as directors, the stockholder must follow the procedures set forth in our Bylaws. Our Bylaws provide generally that stockholder proposals and director nominations to be considered at an annual meeting of stockholders may be made by a stockholder only if (1) the stockholder is a stockholder of record and is entitled to vote at the meeting, and (2) the stockholder gives timely written notice of the matter to our corporate secretary. To be timely, a stockholder’s notice must be received at our principal executive offices no later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting of stockholders. However, in the event that our annual meeting is more than 30 days before or more than 70 days after the date of first anniversary of the preceding year’s annual meeting of stockholders, notice by the stockholder must be so delivered not earlier than the close of business on 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 tenth day following the day on which public announcement of the date of such meeting is first made by the Company. Under our Bylaws, notice with respect to the 20222023 annual meeting of stockholders must be received at our principal executive offices between the close of business on January 6, 202219, 2023 and the close of business on February 5, 2022,18, 2023, unless the 20222023 annual meeting is called for a date that is more than 30 days before or more than 70 days after May 6, 2022.19, 2023. The notice must set forth the information required by the provisions of our Bylaws dealing with stockholder proposals and nominations of directors.
Annual Report on Form 10-KAs indicated in the Notice of Internet Availability of Proxy Materials, a copy of this Proxy Statement and our 20202021 Annual Report to Stockholders has been posted on the website www.proxyvote.com.www.proxyvote.com.Upon the written request of any stockholder entitled to vote at the Annual Meeting, we will furnish, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2020,2021, as filed with the SEC. Requests should be directed to Acadia Healthcare Company, Inc., 6100 Tower Circle, Suite 1000, Franklin, Tennessee 37067, Attention: Christopher L. Howard, Esq., Executive Vice President, General Counsel and Secretary, (615) 851-6000. Our Annual Report to Stockholders and Annual Report on Form 10-K are not proxy soliciting materials. Delivery of Documents to Stockholders Sharing an Address Householding is a program adopted by the SEC that permits companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for annual reports, proxy statements and the Notices of Internet Availability of proxy materials sent to multiple stockholders of record who have the same address by delivering a single annual report, proxy statement or Notice of Internet Availability of Proxy Materials to that address. Householding is designed to reduce a company’s printing costs and postage fees. Brokers with account holders who are stockholders of the Company may be householding the Company’s proxy materials. If your household participates in the householding program, you will receive one Notice of Internet Availability of Proxy Materials. If you are a beneficial holder, you can request information about householding from your broker, bank or other nominee. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement, annual report or Notice of Internet Availability of Proxy Materials, please notify your broker if your shares are held 58
in a brokerage account or us if you are a stockholder of record. You can notify us by sending a written request to our General Counsel and Secretary at 6100 Tower Circle, Suite 1000, Franklin, Tennessee 37067, or by calling (615) 861-6000. In addition, we will promptly deliver, upon written or oral
TABLE OF CONTENTS request to the address or telephone number above, a separate copy of the annual report, proxy statement and Notice of Internet Availability of Proxy Materials to a stockholder at a shared address to which a single copy of the documents was delivered. If you receive more than one Notice of Internet Availability of Proxy Materials, this means that you have multiple accounts holding Common Stock with brokers and/or the Company’s transfer agent. Please vote all of your shares by following the instructions included on each Notice of Internet Availability of Proxy Materials. Additionally, to avoid receiving multiple sets of proxy materials in the future, the Company recommends that you contact Broadridge Financial Services, Inc. at www.proxyvote.com or (800) 579-1639 to consolidate as many accounts as possible under the same name and address. If you are a beneficial holder, please call your broker for instructions. Electronic Access to Proxy Statement and Annual Report to Stockholders We have elected to provide this Proxy Statement and our 20202021 Annual Report to Stockholders over the Internet through a “notice and access” model. The Notice of Internet Availability of Proxy Materials provides instructions on how you may access this Proxy Statement and our 20202021 Annual Report to Stockholders on the Internet at www.proxyvote.com or request a printed copy at no charge. In addition, the Notice of Internet Availability of Proxy Materials provides instructions on how you may request to receive, at no charge, all future proxy materials in printed form by mail or electronically by email. Your election to receive proxy materials by mail or email will remain in effect until you revoke it. Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to stockholders and will reduce the impact of our annual meetings on the environment. | | | ACADIA HEALTHCARE COMPANY, INC. | | | | | | | | Christopher H. Hunter | | Debra K. Osteen | | Chief Executive Officer and Director
(Effective April 11, 2022)
|
April 8, 2022
Reconciliation of Adjusted EBITDA for Purposes of Compensation Plans
(Unaudited) Net (loss) income attributable to Acadia Healthcare Company, Inc. | | | $190,635 | | | $(672,132) | Net income attributable to noncontrolling interests | | | 4,927 | | | 2,933 | Loss (income) from discontinued operations, net of taxes | | | 12,641 | | | 812,390 | Provision for income taxes | | | 67,557 | | | 40,606 | Interest expense, net | | | 76,993 | | | 158,105 | Depreciation and amortization | | | 106,717 | | | 95,256 | Continuing operations EBITDA | | | 459,470 | | | 437,158 | Adjustments:
| | | | | | | Equity-based compensation expense(a) | | | 37,530 | | | 22,504 | Transaction-related expenses(b) | | | 12,778 | | | 11,720 | Debt extinguishment costs(c) | | | 24,650 | | | 7,233 | Loss on impairment(d) | | | 24,293 | | | 4,751 | Continuing operations adjusted EBITDA, as reported | | | $558,721 | | | $483,366 | Discontinued operations adjusted EBITDA, as reported(e) | | | $— | | | $160,776 | Severance and restructuring costs(f) | | | 893 | | | 2,431 | Other non-cash gains and charges(g) | | | (594) | | | 766 | Adjusted EBITDA for purposes of compensation plans | | | $559,020 | | | $647,339 |
TABLE OF CONTENTS (Unaudited)
| | | | | | | | | (in thousands) | | 2020 | | | 2019 | | Net (loss) income attributable to Acadia Healthcare Company, Inc. | | $ | (672,132 | ) | | $ | 108,923 | | Net income attributable to noncontrolling interests | | | 2,933 | | | | 1,199 | | Loss (income) from discontinued operations, net of taxes | | | 812,390 | | | | (56,812 | ) | Provision for income taxes | | | 40,606 | | | | 25,085 | | Interest expense, net | | | 158,105 | | | | 187,325 | | Depreciation and amortization | | | 95,256 | | | | 87,923 | | | | | | | | | | | Continuing operations EBITDA | | | 437,158 | | | | 353,643 | | Adjustments: | | | | | | | | | Equity-based compensation expense (a) | | | 22,504 | | | | 17,307 | | Transaction-related expenses (b) | | | 11,720 | | | | 21,157 | | Debt extinguishment costs (c) | | | 7,233 | | | | — | | Loss on impairment (d) | | | 4,751 | | | | 27,217 | | | | | | | | | | | Continuing operations adjusted EBITDA, as reported | | $ | 483,366 | | | $ | 419,324 | | | | | | | | | | | Discontinued operations adjusted EBITDA, as reported | | $ | 160,776 | | | $ | 166,559 | | | | | | | | | | | Combined adjusted EBITDA, as reported | | $ | 644,142 | | | $ | 585,883 | | Foreign currency translation adjustment (e) | | | — | | | | 3,097 | | Facility closures (f) | | | — | | | | 3,466 | | Natural disasters (g) | | | — | | | | 774 | | Severance and restructuring costs (h) | | | 2,431 | | | | 2,201 | | Other non-cash gains and charges (i) | | | 766 | | | | (576 | ) | | | | | | | | | | Adjusted EBITDA for purposes of compensation plans | | $ | 647,339 | | | $ | 594,845 | | | | | | | | | | |
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Reconciliation of Adjusted EPS for Purposes of Compensation Plans
(Unaudited) | | | | | | | | | (in thousands) | | 2020 | | | 2019 | | Net (loss) income attributable to Acadia Healthcare Company, Inc. | | $ | (672,132 | ) | | $ | 108,923 | | Loss (income) from discontinued operations, net of taxes | | | 812,390 | | | | (56,812 | ) | Adjustments to income: | | | | | | | | | Transaction related expenses (b) | | | 11,720 | | | | 21,157 | | Debt extinguishment costs (c) | | | 7,233 | | | | — | | Loss on impairment (d) | | | 4,751 | | | | 27,217 | | Provision for income taxes | | | 40,606 | | | | 25,085 | | | | | | | | | | | Adjusted income from continuing operations before income taxes attributable to Acadia Healthcare Company, Inc. | | | 204,568 | | | | 125,570 | | Adjusted income from discontinued operations before income taxes | | | 86,258 | | | | 90,669 | | | | | | | | | | | Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc. | | | 290,826 | | | | 216,239 | | Adjustments to income for purposes of compensation plans: | | | | | | | | | Foreign currency translation adjustment (e) | | | — | | | | 1,723 | | Facility closures (f) | | | — | | | | 1,751 | | Natural disasters (g) | | | — | | | | 774 | | Severance and restructuring costs (h) | | | 2,431 | | | | 2,201 | | Other non-cash gains and charges (i) | | | 766 | | | | (576 | ) | Income tax effect of adjustments to income (j) | | | (44,986 | ) | | | (38,114 | ) | | | | | | | | | | Adjusted income attributable to Acadia Healthcare Company, Inc. for purposes of compensation plans | | $ | 249,037 | | | $ | 183,998 | | | | | | | | | | | Weighted-average shares outstanding—diluted | | | 88,595 | | | | 87,816 | | Adjusted EPS for purposes of compensation plans | | $ | 2.81 | | | $ | 2.10 | | | | | | | | | | |
Net (loss) income attributable to Acadia Healthcare Company, Inc. | | | $190,635 | | | $(672,132) | Loss (income) from discontinued operations, net of taxes | | | 12,641 | | | 812,390 | Adjustments to income:
| | | | | | | Transaction related expenses(b) | | | 12,778 | | | 11,720 | Debt extinguishment costs(c) | | | 24,650 | | | 7,233 | Loss on impairment(d) | | | 24,293 | | | 4,751 | Provision for income taxes | | | 67,557 | | | 40,606 | Adjusted income from continuing operations before income taxes attributable to Acadia Healthcare Company, Inc. | | | 332,554 | | | 204,568 | Adjusted income from discontinued operations before income taxes(e) | | | — | | | 86,258 | Adjusted income before income taxes attributable to Acadia Healthcare Company, Inc. | | | 332,554 | | | 290,826 | Adjustments to income for purposes of compensation plans:
| | | | | | | Severance and restructuring costs(f) | | | 893 | | | 2,431 | Other non-cash gains and charges(g) | | | (594) | | | 766 | Income tax effect of adjustments to income(h) | | | (87,579) | | | (44,986) | Adjusted income attributable to Acadia Healthcare Company, Inc. for purposes of compensation plans | | | $245,274 | | | $249,037 | Weighted-average shares outstanding - diluted | | | 90,793 | | | 88,595 | Adjusted EPS for purposes of compensation plans | | | $2.70 | | | $2.81 |
(a)
| Represents the equity-based compensation expense of Acadia. |
(b)
| Represents transaction-related expenses incurred by Acadia primarily related to termination, restructuring, strategic review, management transition and other similar costs. |
(c)
| Represents debt extinguishment costs recorded in connection with the repayment of the 6.125% Senior Notes and 5.125% Senior Notes in June 2020, issuance of the 5.000% Senior Notes in October 2020 and the Fourth Repricing Facilities Amendment to the Amended and Restated Credit Facility in November 2020. |
(d)
| Represents non-cash long-lived asset impairment charges related to certain facility closures. |
(e)
| RepresentsDiscontinued operations include the impactCompany’s U.K. business that was sold on January 19, 2021. Earnings of foreign earnings translation based on the differenceU.K. business were included in compensation targets and calculations for 2020, but were excluded from compensation targets and calculations in 2021 due to the actual exchange rate forcompletion of the year ended December 31, 2019 and the exchange rate used to establish Adjusted EBITDA and Adjusted EPS targets. sale. |
(f)
| Represents the impact of closing four U.S. facilities.
|
(g) | Represents the impact of certain natural disasters.
|
(h) | Represents severance and restructuring costs not included in transaction costs. |
(i)(g)
| Represents non-cash gains and charges such as gain or loss on disposal of assets and other one-time charges. |
(j)(h)
| Represents the income tax effect of adjustments to income based on tax rates of 15.3%26.3% and 17.2%15.3% for the year ended December 31, 2021 and 2020, and 2019, respectively. |
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APPENDIX A
Second Amendment to the
Acadia Healthcare Company, Inc.
Incentive Compensation Plan
This Amendment to the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Plan”) is adopted by Acadia Healthcare Company, Inc. (the “Company”), effective as of May 6, 2021.
WHEREAS, the Company has established the Plan through which the Company may grant awards of stock options, stock appreciation rights, restricted stock and other stock-based and cash-based awards to directors, officers and other employees of the Company and its subsidiaries, as well as other persons performing consulting or advisory services for the Company; and
WHEREAS, the Company desires to amend the Plan to increase the total number of shares that may be granted pursuant to the Plan by 4,500,000 shares, resulting in a total of 12,700,000 shares that may be granted under the Plan, (ii) specifically prohibit certain share recycling and (iii) prohibit payment of dividends on unvested awards unless conditioned on vesting.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. | By deleting Section 4.1(a) in its entirety and inserting the following in its place and stead:
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(a) (a) The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted under the Plan shall not exceed 12,700,000 shares (subject to any increase or decrease pursuant to Section 4.2), which may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be 12,700,000 shares. Notwithstanding any provision of the Plan to the contrary, the following shares of Common Stock shall not be added to the shares authorized for grant under Section 4.1(a) and the individual share limitations of Section 4.1(b) and shall not be available for future grants of Awards: (i) shares of Common Stock tendered by a Participant or withheld by the Company in payment of the exercise price of an Option, (ii) shares of Common Stock tendered by a Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award, (iii) shares of Common Stock subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof and (iv) shares of Common Stock purchased by the Company with the cash proceeds from the exercise of Options. If any Option, Stock Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan. If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in tandem with an Option, such grant shall only apply once against the maximum number of shares of Common Stock which may be issued under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations. Notwithstanding any provision of the Plan to the contrary, in no event will dividends or dividend equivalents be granted with respect to unvested Awards, except that the Committee may provide in the applicable Award Agreement at the time of grant that the payment of dividends shall be deferred until, and conditioned upon, vesting of the Award.”
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2. | By deleting Section 8.3(b) in its entirety and inserting the following in its place and stead:
|
“(b) Rights as a Stockholder. Except as provided in Section 8.3(a) with respect to the Restriction Period and this Section 8.3(b) with respect to dividends or as otherwise provided by the Committee in the applicable Award Agreement at the time of grant, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of shares of Common Stock of the Company, including, without limitation, the right to vote such shares and, subject to and conditioned upon the full vesting of shares of Restricted Stock, the right to tender such shares. Notwithstanding the foregoing and any provision of the Plan to the contrary, in no event will dividends or dividend equivalents be granted with respect to unvested shares of Restricted Stock, except that the Committee may provide in the applicable Award Agreement at the time of grant that the payment of dividends shall be deferred until, and conditioned upon, vesting of the shares of Restricted Stock.”
3. | By deleting Section 9.2(d) in its entirety and inserting the following in its place and stead:
|
“(d) Dividends. Amounts equal to dividends declared during the Performance Period with respect to the number of shares of Common Stock covered by a Performance Award will not be paid to the Participant, except that the Committee may provide in the applicable Award Agreement at the time of grant that the payment of dividends shall be deferred until, and conditioned upon, vesting of the Performance Award.”
4. | By deleting Section 10.2(b) in its entirety and inserting the following in its place and stead:
|
“(b) Dividends. The recipient of an Award under this Article X shall not be entitled to receive dividends or dividend equivalents in respect of the number of shares of Common Stock covered by the Award, except that the Committee may provide in the applicable Award Agreement at the time of grant that the payment of dividends shall be deferred until, and conditioned upon, vesting of the Award.”
[signature page follows]
IN WITNESS WHEREOF, this Amendment is hereby executed by the undersigned officer of the Company, to be effective as of the date first written above.
| | | Acadia Healthcare Company, Inc. | | | By: | | | Name: | | Christopher L. Howard | Title: | | Executive Vice President, General Counsel and Secretary |
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APPENDIX B
First Amendment to the
Acadia Healthcare Company, Inc.
Incentive Compensation Plan
This Amendment to the Acadia Healthcare Company, Inc. Incentive Compensation Plan (the “Plan”) is adopted by Acadia Healthcare Company, Inc. (the “Company”), effective as of May 19, 2016.
WHEREAS, the Company has established the Plan through which the Company may grant awards of stock options, stock appreciation rights, restricted stock and other stock-based and cash-based awards to directors, officers and other employees of the Company and its subsidiaries, as well as other persons performing consulting or advisory services for the Company; and
WHEREAS, the Company desires to amend the Plan to increase the total number of shares that may be granted pursuant to the Plan by 3,500,000 shares, resulting in a total of 8,200,000 shares that may be granted under the Plan, and to clarify the provisions limiting cash buyouts and share re-pricing for options and stock appreciation rights.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. | By deleting Section 4.1(a) in its entirety and inserting the following in its place and stead:
|
(a) The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted under the Plan shall not exceed 8,200,000 shares (subject to any increase or decrease pursuant to Section 4.2), which may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be 8,200,000 shares. With respect to Stock Appreciation Rights settled in Common Stock, upon settlement, only the number of shares of Common Stock delivered to a Participant (based on the difference between the Fair Market Value of the shares of Common Stock subject to such Stock Appreciation Right on the date such Stock Appreciation Right is exercised and the exercise price of each Stock Appreciation Right on the date such Stock Appreciation Right was awarded) shall count against the aggregate and individual share limitations set forth under Sections 4.1(a) and 4.1(b). If any Option, Stock Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of Common Stock underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan. If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in tandem with an Option, such grant shall only apply once against the maximum number of shares of Common Stock which may be issued under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations.”
2. | By deleting Section 6.4(l) in its entirety and inserting the following in its place and stead:
|
“(l) Form of Stock Options; No Re-Pricing. Subject to the terms and conditions and within the limitations of the Plan, Stock Options shall be evidenced by such form of agreement or grant as is approved by the Committee. Except as provided in Section 4.2 or Article XII, without stockholder approval the Committee shall not be permitted to (i) amend an outstanding Stock Option to lower or reduce the exercise price thereof; (ii) cancel an outstanding Stock Option when the
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exercise price per share exceeds the Fair Market Value of the underlying shares in exchange for cash or another Award for the purpose of re-pricing the Stock Option; or (iii) cancel or accept the surrender of an outstanding Stock Option in exchange for a Stock Option with an exercise price that is less than the exercise price of the cancelled or surrendered Award.”
3. | By deleting Section 7.7 in its entirety and inserting the following in its place and stead:
|
“7.7 Other Terms and Conditions. The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of the term of such Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Stock Appreciation Right exceeds the exercise price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 14.4. Stock Appreciation Rights may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate. Except as provided in Section 4.2 or Article XII, and notwithstanding any other provision, without stockholder approval the Committee shall not be permitted to (i) amend an outstanding Stock Appreciation Right to lower or reduce the exercise price thereof; (ii) cancel an outstanding Stock Appreciation Right when the exercise price per share exceeds the Fair Market Value of the underlying shares in exchange for cash or another Award for the purpose of re-pricing the Stock Appreciation Right; or (iii) cancel or accept the surrender of an outstanding Stock Appreciation Right in exchange for a Stock Appreciation Right with an exercise price that is less than the exercise price of the cancelled or surrendered Award.”
IN WITNESS WHEREOF, this Amendment is hereby executed by the undersigned officer of the Company, to be effective as of the date first written above.
TABLE OF CONTENTS | | | Acadia Healthcare Company, Inc. | | | By: | | /s/ Christopher L. Howard | Name: | | Christopher L. Howard | Title: | | Executive Vice President, General Counsel and Secretary |
Acadia Healthcare Company, Inc.
Incentive Compensation Plan
Article I
PURPOSE
Acadia Healthcare Company, Inc. hereby amends and restates the 2011 Incentive Compensation Plan, as the Acadia Healthcare Company, Inc. Incentive Compensation Plan, effective as of the date set forth in Article XV to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s stockholders.
Article II
DEFINITIONS
For purposes of the Plan, the following terms shall have the following meanings:
2.1“Acquisition Event” has the meaning set forth in Section 4.2(d).
2.2“Affiliate” means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade or business (including, without limitation, a partnership or limited liability company) which is directly or indirectly controlled 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) by the Company or one of its Affiliates; (d) any trade or business (including, without limitation, a partnership or limited liability company) which directly or indirectly controls 50% or more (whether by ownership of stock, assets or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any of its Affiliates has a material equity interest and which is designated as an “Affiliate” by resolution of the Committee; provided that, unless otherwise determined by the Committee, the Common Stock subject to any Award constitutes “service recipient stock” for purposes of Section 409A of the Code or otherwise does not subject the Award to Section 409A of the Code.
2.3“Award” means any award under the Plan of any Stock Option, Stock Appreciation Right, Restricted Stock, Performance Award, Other Stock-Based Award or Other Cash-Based Award. All Awards shall be granted by, confirmed by, and subject to the terms of, a written agreement executed by the Company and the Participant.
2.4“Award Agreement” means the written or electronic agreement setting forth the terms and conditions applicable to an Award.
2.5“Board” means the Board of Directors of the Company.
2.6“Cause” means, unless otherwise provided by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination of Employment or Termination of Consultancy, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import)), termination due to a (i) willful or serious misconduct or gross negligence in the performance of the Participant’s duties to the Company; (ii) willful or repeated failure to satisfactorily perform the Participant’s duties to the Company or to follow the lawful directives of the Board or any executive or supervisor to which the Participant reports (other than as a result of death or due to Disability); (iii) commission of, indictment for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving moral turpitude; (iv) performance of any act of theft, embezzlement, fraud, malfeasance, dishonesty or misappropriation of the Company’s property; or (v) breach of, or failure to comply with, any material agreement with the Company, or a violation of the Company’s code of conduct or other written policy; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement;
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provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. With respect to a Participant’s Termination of Directorship, “cause” means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law.
2.7“Change in Control” has the meaning set forth in 11.2.
2.8“Change in Control Price” has the meaning set forth in Section 11.1.
2.9“Code” means the Internal Revenue Code of 1986, as amended. Any reference to any section of the Code shall also be a reference to any successor provision and any treasury regulation promulgated thereunder.
2.10“Committee” means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, the term “Committee” shall be deemed to refer to the Board for all purposes under the Plan.
2.11“Common Stock” means the common stock, $0.01 par value per share, of the Company.
2.12“Company” means Acadia Healthcare Company, Inc., a Delaware corporation, and its successors by operation of law.
2.13“Consultant” means any Person who is an advisor or consultant to the Company or its Affiliates.
2.14“Disability” means, unless otherwise provided by the Committee in the applicable Award Agreement, with respect to a Participant’s Termination, a permanent and total disability as defined in Section 22(e)(3) of the Code. Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.
2.15“Effective Date” means the effective date of the Plan as defined in Article XV.
2.16“Eligible Employees” means each employee of the Company or an Affiliate.
2.17“Eligible Individual” means any Eligible Employee, Non-Employee Director or Consultant.
2.18“Exchange Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the Exchange Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.19“Fair Market Value” means, for purposes of the Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date: (a) as reported on the principal national securities exchange in the United States on which it is then traded or (b) if the Common Stock is not traded, listed or otherwise reported or quoted, the Committee shall determine in good faith the Fair Market Value in whatever manner it considers appropriate taking into account the requirements of Section 409A of the Code. For purposes of the grant of any Award, the applicable date shall be the trading day immediately prior to the date on which the Award is granted. For purposes of the exercise of any Award, the applicable date shall be the date a notice of exercise is received by the Committee or, if not a day on which the applicable market is open, the next day that it is open.
2.20“Family Member” means “family member” as defined in Section A.1.(a)(5) of the general instructions of Form S-8.
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2.21“Incentive Stock Option” means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries and its Parents (if any) under the Plan intended to be and designated as an “Incentive Stock Option” within the meaning of Section 422 of the Code.
2.22“Non-Employee Director” means a director or a member of the Board of the Company or any Affiliate who is not an active employee of the Company or any Affiliate.
2.23“Non-Qualified Stock Option” means any Stock Option awarded under the Plan that is not an Incentive Stock Option.
2.24“Non-Tandem Stock Appreciation Right” shall mean the right to receive an amount in cash and/or stock equal to the difference between (x) the Fair Market Value of a share of Common Stock on the date such right is exercised, and (y) the aggregate exercise price of such right, otherwise than on surrender of a Stock Option.
2.25“Other Cash-Based Award” means an Award granted pursuant to Section 10.3 of the Plan and payable in cash at such time or times and subject to such terms and conditions as provided by the Committee in the applicable Award Agreement.
2.26“Other Stock-Based Award” means an Award under Article X of the Plan that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including, without limitation, an Award valued by reference to an Affiliate.
2.27“Parent” means any parent corporation of the Company within the meaning of Section 424(e) of the Code.
2.28“Participant” means an Eligible Individual to whom an Award has been granted pursuant to the Plan.
2.29“Performance Award” means an Award granted to a Participant pursuant to Article IX hereof contingent upon achieving certain Performance Goals.
2.30“Performance Goals” means goals established by the Committee as contingencies for Awards to vest and/or become exercisable or distributable based on one or more of the performance goals set forth in Exhibit A hereto.
2.31“Performance Period” means the period designated during which the Performance Goals must be satisfied with respect to the Award to which the Performance Goals relate.
2.32“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a government or any branch, department, agency, political subdivision or official thereof.
2.33“Plan” means this Incentive Compensation Plan, as an amendment and restatement of the 2011 Incentive Compensation Plan and as amended from time to time.
2.34“Reference Stock Option” has the meaning set forth in Section 7.1.
2.35“Registration Date” means the date on which the Company sells its Common Stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act.
2.36“Restricted Stock” means an Award of shares of Common Stock under the Plan that is subject to restrictions under Article VIII.
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2.37“Restriction Period” has the meaning set forth in Section 8.3(a) with respect to Restricted Stock.
2.38“Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as then in effect or any successor provision.
2.39“Section 162(m) of the Code” means the exception for performance-based compensation under Section 162(m) of the Code and any applicable treasury regulations thereunder.
2.40“Section 409A of the Code” means the nonqualified deferred compensation rules under Section 409A of the Code and any applicable treasury regulations and other official guidance thereunder.
2.41“Securities Act” means the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder. Reference to a specific section of the Securities Act or regulation thereunder shall include such section or regulation, any valid regulation or interpretation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.
2.42“Stock Appreciation Right” shall mean the right pursuant to an Award granted under Article VII.
2.43“Stock Option” or “Option” means any option to purchase shares of Common Stock granted to Eligible Individuals granted pursuant to Article VI.
2.44“Subsidiary” means any subsidiary corporation of the Company within the meaning of Section 424(f) of the Code.
2.45“Tandem Stock Appreciation Right” shall mean the right to surrender to the Company all (or a portion) of a Stock Option in exchange for an amount in cash and/or stock equal to the difference between (i) the Fair Market Value on the date such Stock Option (or such portion thereof) is surrendered, of the Common Stock covered by such Stock Option (or such portion thereof), and (ii) the aggregate exercise price of such Stock Option (or such portion thereof).
2.46 “Ten Percent Stockholder” means a Person owning stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, its Subsidiaries or its Parent.
2.47 “Termination” means a Termination of Consultancy, Termination of Directorship or Termination of Employment, as applicable.
2.48 “Termination of Consultancy” means: (a) that the Consultant is no longer acting as a consultant to the Company or an Affiliate; or (b) when an entity which is retaining a Participant as a Consultant ceases to be an Affiliate unless the Participant otherwise is, or thereupon becomes, a Consultant to the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that a Consultant becomes an Eligible Employee or a Non-Employee Director upon the termination of such Consultant’s consultancy, no Termination of Consultancy shall be deemed to occur until such time as such Consultant is no longer a Consultant, an Eligible Employee or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Consultancy in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Consultancy thereafter, provided that any such change to the definition of the term “Termination of Consultancy” does not subject the applicable Award to Section 409A of the Code.
2.49 “Termination of Directorship” means that the Non-Employee Director has ceased to be a director of the Company; except that if a Non-Employee Director becomes an Eligible Employee or a Consultant upon the termination of such Non-Employee Director’s directorship, such Non-Employee Director’s ceasing to be a director of the Company shall not be treated as a Termination of Directorship unless and until the Participant has a Termination of Employment or Termination of Consultancy, as the case may be.
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2.50 “Termination of Employment” means: (a) a termination of employment (for reasons other than a military or personal leave of absence granted by the Company) of a Participant from the Company and its Affiliates; or (b) when an entity which is employing a Participant ceases to be an Affiliate, unless the Participant otherwise is, or thereupon becomes, employed by the Company or another Affiliate at the time the entity ceases to be an Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee Director upon the termination of such Eligible Employee’s employment, no Termination of Employment shall be deemed to occur until such time as such Eligible Employee is no longer an Eligible Employee, a Consultant or a Non-Employee Director. Notwithstanding the foregoing, the Committee may otherwise define Termination of Employment in the Award Agreement or, if no rights of a Participant are reduced, may otherwise define Termination of Employment thereafter, provided that any such change to the definition of the term “Termination of Employment” does not subject the applicable Award to Section 409A of the Code.
2.51 “Transfer” means: (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance or other disposition (including the issuance of equity in any entity), whether for value or no value and whether voluntary or involuntary (including by operation of law), and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including the issuance of equity in any entity) whether for value or for no value and whether voluntarily or involuntarily (including by operation of law). “Transferred” and “Transferable” shall have a correlative meaning.
2.52 “Transition Period” means the period beginning with the Registration Date and ending as of the earlier of: (i) the date of the first annual meeting of stockholders of the Company at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the Registration Date occurs; and (ii) the expiration of the “reliance period” under Treasury Regulation Section 1.162-27(f)(2).
Article III
ADMINISTRATION
3.1The Committee. The Plan shall be administered and interpreted by the Committee. To the extent required by applicable law, rule or regulation, it is intended that each member of the Committee shall qualify as (a) a “non-employee director” under Rule 16b-3, (b) an “outside director” under Section 162(m) of the Code and (c) an “independent director” under the rules of any national securities exchange or national securities association, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify.
3.2Grants of Awards. The Committee shall have full authority to grant, pursuant to the terms of the Plan, to Eligible Individuals: (i) Stock Options; (ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv) Performance Awards; (v) Other Stock-Based Awards; and (vi) Other Cash-Based Awards. In particular, the Committee shall have the authority:
(a) to select the Eligible Individuals to whom Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Awards, or any combination thereof, are to be granted hereunder to one or more Eligible Individuals;
(c) to determine the number of shares of Common Stock to be covered by each Award granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder (including, but not limited to, the exercise or purchase price (if any), any restriction or limitation, any vesting schedule or acceleration thereof, or any forfeiture restrictions or waiver thereof, regarding any Award and the shares of Common Stock relating thereto, based on such factors, if any, as the Committee shall determine);
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(e) to determine the amount of cash to be covered by each Award granted hereunder;
(f) to determine whether, to what extent and under what circumstances grants of Options and other Awards under the Plan are to operate on a tandem basis and/or in conjunction with or apart from other awards made by the Company outside of the Plan;
(g) to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d);
(h) to determine whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock Option;
(i) to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of shares acquired pursuant to the exercise of an Award for a period of time as determined by the Committee following the date of the acquisition or exercise of such Award;
(j) to modify, extend or renew an Award, subject to Article XII and Section 6.4(l), provided, however, that such action does not subject the Award to Section 409A of the Code without the consent of the Participant; and
(k) solely to the extent permitted by applicable law, to determine whether, to what extent and under what circumstances to provide loans (which may be on a recourse basis and shall bear interest at the rate the Committee shall provide) to Participants in order to exercise Options under the Plan.
3.3Guidelines. Subject to Article XII hereof, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by applicable law and applicable stock exchange rules), as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for Persons who are residing in or employed in, or subject to, the taxes of, any domestic or foreign jurisdictions to comply with applicable tax and securities laws of such domestic or foreign jurisdictions. Notwithstanding the foregoing, no action of the Committee under this Section 3.3 shall impair the rights of any Participant without the Participant’s consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and with respect to Awards intended to be “performance-based,” the applicable provisions of Section 162(m) of the Code, and the Plan shall be limited, construed and interpreted in a manner so as to comply therewith.
3.4Decisions Final. Any decision, interpretation or other action made or taken in good faith by or at the direction of the Company, the Board or the Committee (or any of its members) arising out of or in connection with the Plan shall be within the absolute discretion of all and each of them, as the case may be, and shall be final, binding and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors and assigns.
3.5Procedures. If the Committee is appointed, the Board shall designate one of the members of the Committee as chairman and the Committee shall hold meetings, subject to the By-Laws of the Company, at such times and places as it shall deem advisable, including, without limitation, by telephone conference or by written consent to the extent permitted by applicable law. A majority of the Committee members shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members. Any decision or determination reduced to writing and signed by all of the Committee members in accordance with the By-Laws of the Company, shall be fully effective as if it had been made by a vote at a meeting duly called and held. The Committee shall keep minutes of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.
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3.6Designation of Consultants/Liability.
(a) The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and (to the extent permitted by applicable law and applicable exchange rules) may grant authority to officers to grant Awards and/or execute agreements or other documents on behalf of the Committee. In the event of any designation of authority hereunder, subject to applicable law, applicable stock exchange rules and any limitations imposed by the Committee in connection with such designation, such designee or designees shall have the power and authority to take such actions, exercise such powers and make such determinations that are otherwise specifically designated to the Committee hereunder.
(b) The Committee may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant or agent shall be paid by the Company. The Committee, its members and any Person designated pursuant to sub-section (a) above shall not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by applicable law, no officer of the Company or member or former member of the Committee or of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.
3.7Indemnification. To the maximum extent permitted by applicable law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such person, each officer or employee of the Company or any Affiliate and member or former member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably acceptable to the Committee) or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officer’s, employee’s, member’s or former member’s own fraud or bad faith. Such indemnification shall be in addition to any right of indemnification the employees, officers, directors or members or former officers, directors or members may have under applicable law or under the Certificate of Incorporation or By-Laws of the Company or any Affiliate. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to such individual under the Plan.
Article IV
SHARE LIMITATION
4.1Shares.
(a) The aggregate number of shares of Common Stock that may be issued or used for reference purposes or with respect to which Awards may be granted under the Plan shall not exceed 4,700,000 shares (subject to any increase or decrease pursuant to Section 4.2), which may be either authorized and unissued Common Stock or Common Stock held in or acquired for the treasury of the Company or both. The maximum number of shares of Common Stock with respect to which Incentive Stock Options may be granted under the Plan shall be 4,700,000 shares. With respect to Stock Appreciation Rights settled in Common Stock, upon settlement, only the number of shares of Common Stock delivered to a Participant (based on the difference between the Fair Market Value of the shares of Common Stock subject to such Stock Appreciation Right on the date such Stock Appreciation Right is exercised and the exercise price of each Stock Appreciation Right on the date such Stock Appreciation Right was awarded) shall count against the aggregate and individual share limitations set forth under Sections 4.1(a) and 4.1(b). If any Option, Stock Appreciation Right or Other Stock-Based Awards granted under the Plan expires, terminates or is canceled for any reason without having been exercised in full, the number of shares of
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Common Stock underlying any unexercised Award shall again be available for the purpose of Awards under the Plan. If any shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock awarded under the Plan to a Participant are forfeited for any reason, the number of forfeited shares of Restricted Stock, Performance Awards or Other Stock-Based Awards denominated in shares of Common Stock shall again be available for purposes of Awards under the Plan. If a Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is granted in tandem with an Option, such grant shall only apply once against the maximum number of shares of Common Stock which may be issued under the Plan. Any Award under the Plan settled in cash shall not be counted against the foregoing maximum share limitations.
(b) Individual Participant Limitations. To the extent required by Section 162(m) of the Code for Awards under the Plan to qualify as “performance-based compensation,” the following individual Participant limitations shall only apply after the expiration of the Transition Period:
(i) The maximum number of shares of Common Stock subject to any Award of Stock Options, or Stock Appreciation Rights, or shares of Restricted Stock, or Other Stock-Based Awards for which the grant of such Award or the lapse of the relevant Restriction Period is subject to the attainment of Performance Goals in accordance with Section 8.3(a)(ii) which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 750,000 shares per type of Award (which shall be subject to any further increase or decrease pursuant to Section 4.2), provided that the maximum number of shares of Common Stock for all types of Awards does not exceed 1,500,000 shares (which shall be subject to any further increase or decrease pursuant to Section 4.2) during any fiscal year of the Company. If a Tandem Stock Appreciation Right is granted or a Limited Stock Appreciation Right is granted in tandem with a Stock Option, it shall apply against the Participant’s individual share limitations for both Stock Appreciation Rights and Stock Options.
(ii) There are no annual individual share limitations applicable to Participants on Restricted Stock or Other Stock-Based Awards for which the grant, vesting or payment (as applicable) of any such Award is not subject to the attainment of Performance Goals.
(iii) The maximum number of shares of Common Stock subject to any Performance Award which may be granted under the Plan during any fiscal year of the Company to any Participant shall be 750,000 shares (which shall be subject to any further increase or decrease pursuant to Section 4.2) with respect to any fiscal year of the Company.
(iv) The maximum value of a cash payment made under a Performance Award which may be granted under the Plan with respect to any fiscal year of the Company to any Participant shall be $10,000,000.
(v) The individual Participant limitations set forth in this Section 4.1(b) (other than Section 4.1(b)(iii)) shall be cumulative; that is, to the extent that shares of Common Stock for which Awards are permitted to be granted to a Participant during a fiscal year are not covered by an Award to such Participant in a fiscal year, the number of shares of Common Stock available for Awards to such Participant shall automatically increase in the subsequent fiscal years during the term of the Plan until used.
4.2Changes.
(a) The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Board or the stockholders of the Company to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate or (vi) any other corporate act or proceeding.
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(b) Subject to the provisions of Section 4.2(d), if there shall occur any such change in the capital structure of the Company by reason of any stock split, reverse stock split, stock dividend, subdivision, combination or reclassification of shares that may be issued under the Plan, any recapitalization, any merger, any consolidation, any spin off, any reorganization or any partial or complete liquidation, or any other corporate transaction or event having an effect similar to any of the foregoing (a “Section 4.2 Event”), then (i) the aggregate number and/or kind of shares that thereafter may be issued under the Plan, (ii) the number and/or kind of shares or other property (including cash) to be issued upon exercise of an outstanding Award granted under the Plan, and/or (iii) the purchase price thereof, shall be appropriately adjusted. In addition, subject to Section 4.2(d), if there shall occur any change in the capital structure or the business of the Company that is not a Section 4.2 Event (an “Other Extraordinary Event”), including by reason of any extraordinary dividend (whether cash or stock), any conversion, any adjustment, any issuance of any class of securities convertible or exercisable into, or exercisable for, any class of stock, or any sale or transfer of all or substantially all of the Company’s assets or business, then the Committee, in its sole discretion, may adjust any Award and make such other adjustments to the Plan. Any adjustment pursuant to this Section 4.2 shall be consistent with the applicable Section 4.2 Event or the applicable Other Extraordinary Event, as the case may be, and in such manner as the Committee may, in its sole discretion, deem appropriate and equitable to prevent substantial dilution or enlargement of the rights granted to, or available for, Participants under the Plan. Any such adjustment determined by the Committee shall be final, binding and conclusive on the Company and all Participants and their respective heirs, executors, administrators, successors and permitted assigns. Except as expressly provided in this Section 4.2 or in the applicable Award Agreement, a Participant shall have no rights by reason of any Section 4.2 Event or any Other Extraordinary Event.
(c) Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a) or 4.2(b) shall be aggregated until, and eliminated at, the time of exercise by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding. Notice of any adjustment shall be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) shall be effective and binding for all purposes of the Plan.
(d) In the event of a merger or consolidation in which the Company is not the surviving entity or in the event of any transaction that results in the acquisition of substantially all of the Company’s outstanding Common Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of all or substantially all of the Company’s assets (all of the foregoing being referred to as an “Acquisition Event”), then the Committee may, in its sole discretion, terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, or any Other Stock-Based Award that provides for a Participant elected exercise, effective as of the date of the Acquisition Event, by (i) cashing-out such Awards upon the date of consummation of the Acquisition Event, or (ii) delivering notice of termination to each Participant at least 20 days prior to the date of consummation of the Acquisition Event, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each such Participant shall have the right to exercise in full all of such Participant’s Awards that are then outstanding (without regard to any limitations on exercisability otherwise contained in the Award Agreements), but any such exercise shall be contingent on the occurrence of the Acquisition Event, and, provided that, if the Acquisition Event does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.
If an Acquisition Event occurs but the Committee does not terminate the outstanding Awards pursuant to this Section 4.2(d), then the provisions of Section 4.2(b) and Article XI shall apply.
4.3Minimum Purchase Price. Notwithstanding any provision of the Plan to the contrary, if authorized but previously unissued shares of Common Stock are issued under the Plan, such shares shall not be issued for a consideration that is less than as permitted under applicable law.
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Article V
ELIGIBILITY
5.1General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan shall be determined by the Committee.
5.2Incentive Stock Options. Notwithstanding the foregoing, only Eligible Employees of the Company, its Subsidiaries and its Parent (if any) are eligible to be granted Incentive Stock Options under the Plan. Eligibility for the grant of an Incentive Stock Option and actual participation in the Plan shall be determined by the Committee.
5.3General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Employee, Consultant or Non-Employee Director, respectively.
Article VI
STOCK OPTIONS
6.1Options. Stock Options may be granted alone or in addition to other Awards granted under the Plan. Each Stock Option granted under the Plan shall be of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock Option.
6.2Grants. The Committee shall have the authority to grant to any Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock Options. The Committee shall have the authority to grant any Consultant or Non-Employee Director one or more Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such Stock Option or the portion thereof which does not so qualify shall constitute a separate Non-Qualified Stock Option.
6.3Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under such Section 422.
6.4Terms of Options. Options granted under the Plan shall be subject to the following terms and conditions and shall be in such form and contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Exercise Price. The exercise price per share of Common Stock subject to a Stock Option shall be provided by the Committee in the applicable Award Agreement at the time of grant, provided that the per share exercise price of a Stock Option shall not be less than 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the time of grant.
(b) Stock Option Term. The term of each Stock Option shall be fixed by the Committee, provided that no Stock Option shall be exercisable more than 10 years after the date the Option is granted; and provided further that the term of an Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed five years.
(c) Exercisability. Unless otherwise provided by the Committee in accordance with the provisions of this Section 6.4, Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be provided by the Committee in the applicable Award Agreement at the time of grant. If the Committee provides, in its discretion, that any Stock Option is exercisable subject to certain limitations (including, without limitation, that such Stock Option is exercisable only in installments or within certain time periods), the Committee may waive such limitations
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on the exercisability at any time at or after the time of grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such Stock Option may be exercised), based on such factors, if any, as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment exercise and waiting period provisions apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Option term, by giving written notice of exercise to the Company specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied by payment in full of the purchase price as follows: (i) in cash or by check, bank draft or money order payable to the order of the Company; (ii) solely to the extent permitted by applicable law, if the Common Stock is traded on a national securities exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the purchase price; or (iii) on such other terms and conditions as may be acceptable to the Committee (including, without limitation, having the Company withhold shares of Common Stock issuable upon exercise of the Stock Option, or by payment in full or in part in the form of Common Stock owned by the Participant, based on the Fair Market Value of the Common Stock on the payment date as determined by the Committee). No shares of Common Stock shall be issued until payment therefor, as provided herein, has been made or provided for.
(e) Non-Transferability of Options. No Stock Option shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options shall be exercisable, during the Participant’s lifetime, only by the Participant. Notwithstanding the foregoing, the Committee may provide in the applicable Award Agreement at the time of grant or thereafter that a Non-Qualified Stock Option that is otherwise not Transferable pursuant to this Section is Transferable to a Family Member or such other Person or entity in whole or in part and in such circumstances, and under such conditions, as specified by the Committee. A Non-Qualified Stock Option that is Transferred to a Family Member or such other Person or entity pursuant to the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution and (ii) remains subject to the terms of the Plan and the applicable Award Agreement. Any shares of Common Stock acquired upon the exercise of a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified Stock Option or a permissible transferee pursuant to a Transfer after the exercise of the Non-Qualified Stock Option shall be subject to the terms of the Plan and the applicable Award Agreement.
(f) Termination by Death and Disability. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of one year from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, following a termination by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant shall thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of one year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options.
(g) Involuntary Termination Without Cause. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is by involuntary termination by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of 90 days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.
(h) Voluntary Termination. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination is voluntary (other than a voluntary termination described in Section 6.4(i)(y) hereof), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participant’s Termination may be exercised by the Participant at any time within a period of 30 days from the date of such Termination, but in no event beyond the expiration of the stated term of such Stock Options.
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(i) Termination for Cause. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced, thereafter, if a Participant’s Termination (x) is for Cause or (y) is a voluntary Termination (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Termination for Cause, all Stock Options, whether vested or not vested, that are held by such Participant shall thereupon terminate and expire as of the date of such Termination.
(j) Unvested Stock Options. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, or if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participant’s Termination for any reason shall terminate and expire as of the date of such Termination.
(k) Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by an Eligible Employee during any calendar year under the Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options. Should any provision of the Plan not be necessary in order for the Stock Options to qualify as Incentive Stock Options, or should any additional provisions be required, the Committee may amend the Plan accordingly, without the necessity of obtaining the approval of the stockholders of the Company.
(l) Form, Modification, Extension and Renewal of Stock Options. Subject to the terms and conditions and within the limitations of the Plan, Stock Options shall be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend or renew outstanding Stock Options granted under the Plan (provided that the rights of a Participant are not reduced without such Participant’s consent and provided further that such action does not subject the Stock Options to Section 409A of the Code without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding anything herein to the contrary, the exercise price with respect to a Stock Option cannot be lowered, and a Stock Option cannot be replaced (including replacement with cash) or regranted to the affected Participant through cancellation without stockholder approval.
(m) Deferred Delivery of Common Shares. The Committee may in its discretion permit Participants to defer delivery of Common Stock acquired pursuant to a Participant’s exercise of an Option in accordance with the terms and conditions established by the Committee in the applicable Award Agreement, which shall be intended to comply with the requirements of Section 409A of the Code.
(n) Early Exercise. The Committee may provide that a Stock Option include a provision whereby the Participant may elect at any time before the Participant’s Termination to exercise the Stock Option as to any part or all of the shares of Common Stock subject to the Stock Option prior to the full vesting of the Stock Option and such shares shall be subject to the provisions of Article VIII and be treated as Restricted Stock. Unvested shares of Common Stock so purchased may be subject to a repurchase option in favor of the Company or to any other restriction the Committee determines to be appropriate.
(o) Cashing-Out of Stock Options. Unless otherwise provided in the Award Agreement, on receipt of written notice of exercise, the Committee may elect to cash-out all or part of the portion of the shares for which an Option is being exercised by paying the optionee an amount, in cash or shares of Common Stock, equal to the excess of the Fair Market Value of the shares of Common Stock over the exercise price multiplied by the number of shares of Common Stock for which the Option is being exercised on the effective date of such cash-out.
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(p) Other Terms and Conditions. The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Non-Qualified Stock Option on a cashless basis on the last day of the term of such Option if the Participant has failed to exercise the Non-Qualified Stock Option as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Non-Qualified Stock Option exceeds the exercise price of such Non-Qualified Stock Option on the date of expiration of such Option, subject to Section 14.4. Stock Options may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate.
Article VII
STOCK APPRECIATION RIGHTS
7.1Tandem Stock Appreciation Rights. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option (a “Reference Stock Option”) granted under the Plan (“Tandem Stock Appreciation Rights”). In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of the grant of such Reference Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of the grant of such Reference Stock Option.
7.2Terms and Conditions of Tandem Stock Appreciation Rights. Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be provided by the Committee in the applicable Award Agreement at the time of grant, and the following:
(a) Exercise Price. The exercise price per share of Common Stock subject to a Tandem Stock Appreciation Right shall be provided by the Committee in the applicable Award Agreement at the time of grant, provided that the per share exercise price of a Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.
(b) Term. A Tandem Stock Appreciation Right or applicable portion thereof granted with respect to a Reference Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the Reference Stock Option, except that, unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, a Tandem Stock Appreciation Right granted with respect to less than the full number of shares covered by the Reference Stock Option shall not be reduced until, and then only to the extent that the exercise or termination of the Reference Stock Option causes, the number of shares covered by the Tandem Stock Appreciation Right to exceed the number of shares remaining available and unexercised under the Reference Stock Option.
(c) Exercisability. Tandem Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Reference Stock Options to which they relate shall be exercisable in accordance with the provisions of Article VI, and shall be subject to the provisions of Section 6.4(c).
(d) Method of Exercise. A Tandem Stock Appreciation Right may be exercised by the Participant by surrendering the applicable portion of the Reference Stock Option. Upon such exercise and surrender, the Participant shall be entitled to receive an amount determined in the manner prescribed in this Section 7.2. Stock Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent that the related Tandem Stock Appreciation Rights have been exercised.
(e) Payment. Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall be entitled to receive up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market Value of one share of Common Stock over the Option exercise price per share specified in the Reference Stock Option agreement multiplied by the number of shares of Common Stock in respect of which the Tandem Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment.
(f) Deemed Exercise of Reference Stock Option. Upon the exercise of a Tandem Stock Appreciation Right, the Reference Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Article IV of the Plan on the number of shares of Common Stock to be issued under the Plan.
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(g) Non-Transferability. Tandem Stock Appreciation Rights shall be Transferable only when and to the extent that the underlying Stock Option would be Transferable under Section 6.4(e) of the Plan.
7.3Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights may also be granted without reference to any Stock Options granted under the Plan.
7.4Terms and Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be provided by the Committee in the applicable Award Agreement at the time of grant, and the following:
(a) Exercise Price. The exercise price per share of Common Stock subject to a Non-Tandem Stock Appreciation Right shall be provided by the Committee in the applicable Award Agreement at the time of grant, provided that the per share exercise price of a Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair Market Value of the Common Stock at the time of grant.
(b) Term. The term of each Non-Tandem Stock Appreciation Right shall be fixed by the Committee, but shall not be greater than 10 years after the date the right is granted.
(c) Exercisability. In accordance with the provisions of this Section 7.4, Non-Tandem Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions as shall be provided by the Committee in the applicable Award Agreement at the time of grant. If the Committee provides, in its discretion, that any such right is exercisable subject to certain limitations (including, without limitation, that it is exercisable only in installments or within certain time periods), the Committee may waive such limitations on the exercisability at any time at or after grant in whole or in part (including, without limitation, waiver of the installment exercise provisions or acceleration of the time at which such right may be exercised), based on such factors, if any, as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment exercise and waiting period provisions apply under Section 7.4(c), Non-Tandem Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award Agreement, by giving written notice of exercise to the Company specifying the number of Non-Tandem Stock Appreciation Rights to be exercised.
(e) Payment. Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant shall be entitled to receive, for each right exercised, up to, but no more than, an amount in cash and/or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market Value of one share of Common Stock on the date that the right is exercised over the Fair Market Value of one share of Common Stock on the date that the right was awarded to the Participant.
(f) Termination. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the provisions of the applicable Award Agreement and the Plan, upon a Participant’s Termination for any reason, Non-Tandem Stock Appreciation Rights will remain exercisable following a Participant’s Termination on the same basis as Stock Options would be exercisable following a Participant’s Termination in accordance with the provisions of Sections 6.4(f) through 6.4(j).
(g) Non-Transferability. No Non-Tandem Stock Appreciation Rights shall be Transferable by the Participant other than by will or by the laws of descent and distribution, and all such rights shall be exercisable, during the Participant’s lifetime, only by the Participant.
7.5Limited Stock Appreciation Rights. The Committee may grant Tandem and Non-Tandem Stock Appreciation Rights either as a general Stock Appreciation Right or as a Limited Stock Appreciation Right. Limited
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Stock Appreciation Rights may be exercised only upon the occurrence of a Change in Control or such other event as the Committee may designate at the time of grant or thereafter. Upon the exercise of Limited Stock Appreciation Rights, except as otherwise provided in an Award Agreement, the Participant shall receive in cash and/or Common Stock, an amount equal to the amount (i) set forth in Section 7.2(e) with respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights.
7.6Cashing-Out of SARs. Unless otherwise provided in the Award Agreement, on receipt of written notice of exercise, the Committee may elect to cash-out all or part of the portion of the shares underlying a SAR by paying the holder an amount, in cash or shares of Common Stock, equal to the excess of the Fair Market Value of the shares of Common Stock over the base price multiplied by the number of shares of Common Stock for which the SAR is being exercised on the effective date of such cash-out.
7.7Other Terms and Conditions. The Committee may include a provision in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of the term of such Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the shares of Common Stock underlying the Stock Appreciation Right exceeds the exercise price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 14.4. Stock Appreciation Rights may contain such other provisions, which shall not be inconsistent with any of the terms of the Plan, as the Committee shall deem appropriate. Notwithstanding anything herein to the contrary, the exercise price with respect to a Stock Option, or base price with respect to a Stock Appreciation Right, cannot be lowered, and neither a Stock Option nor a Stock Appreciation Right can be replaced (including replacement with cash) or regranted to the affected Participant through cancellation without stockholder approval.
Article VIII
RESTRICTED STOCK
8.1Awards of Restricted Stock. Shares of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Eligible Individuals, to whom, and the time or times at which, grants of Restricted Stock shall be made, the number of shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards.
The Committee may condition the grant or vesting of Restricted Stock upon the attainment of specified performance targets (including, the Performance Goals) or such other factor as the Committee may determine, including to comply with the requirements of Section 162(m) of the Code.
Restricted Stock for which the grant is conditioned on Performance Goals or other factors may be referred to as “Restricted Stock Units.”
8.2Awards and Certificates. Eligible Individuals selected to receive Restricted Stock shall not have any right with respect to such Award, unless and until such Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent required by the Committee, and has otherwise complied with the applicable terms and conditions of such Award. Further, such Award shall be subject to the following conditions:
(a) Purchase Price. The purchase price of Restricted Stock shall be fixed by the Committee. Subject to Section 4.3, the purchase price for shares of Restricted Stock may be zero to the extent permitted by applicable law, and, to the extent not so permitted, such purchase price may not be less than par value.
(b) Acceptance. Awards of Restricted Stock must be accepted within a period of 60 days (or such shorter period as the Committee may specify at grant) after the grant date, by executing a Restricted Stock agreement and by paying whatever price (if any) the Committee has designated thereunder.
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(c) Legend. Each Participant receiving Restricted Stock shall be issued a stock certificate in respect of such shares of Restricted Stock, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and shall, in addition to such legends required by applicable securities laws, bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:
“The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance or charge of the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Acadia Healthcare Company, Inc. (the “Company”) Incentive Compensation Plan (the “Plan”) and an Agreement entered into between the registered owner and the Company dated _________. Copies of such Plan and Agreement are on file at the principal office of the Company.”
(d) Custody. If stock certificates are issued in respect of shares of Restricted Stock, the Committee may require that any stock certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any grant of Restricted Stock, the Participant shall have delivered a duly signed stock power or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the shares subject to the Restricted Stock Award in the event that such Award is forfeited in whole or part.
8.3Restrictions and Conditions. The shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:
(a) Restriction Period.
(i) The Participant shall not be permitted to Transfer shares of Restricted Stock awarded under the Plan during the period or periods set by the Committee (the “Restriction Period”) commencing on the date of such Award, as set forth in the Restricted Stock Award Agreement and such agreement shall set forth a vesting schedule and any event that would accelerate vesting of the shares of Restricted Stock. Within these limits, based on service, attainment of Performance Goals pursuant to Section 8.3(a)(ii) and/or such other factors or criteria as the Committee may determine, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Stock Award and/or waive the deferral limitations for all or any part of any Restricted Stock Award.
(ii) If the grant of shares of Restricted Stock or the lapse of restrictions is based on the attainment of Performance Goals, the Committee shall establish the objective Performance Goals and the applicable vesting percentage of the Restricted Stock applicable to each Participant or class of Participants in writing prior to the beginning of the applicable fiscal year or at such later date as otherwise determined by the Committee and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. With regard to a Restricted Stock Award that is intended to comply with Section 162(m) of the Code, to the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect.
(b) Rights as a Stockholder. Except as provided in Section 8.3(a) and this Section 8.3(b) or as otherwise provided by the Committee in the applicable Award Agreement at the time of grant, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a holder of shares of Common Stock of the Company, including, without limitation, the right to receive dividends, the right to vote such shares and, subject to and conditioned upon the full vesting of shares of Restricted Stock, the right to tender such shares. The Committee may provide in the applicable Award Agreement at the time of grant that the payment of dividends shall be deferred until, and conditioned upon, the expiration of the applicable Restriction Period.
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(c) Termination. Unless otherwise provided by the Committee in the applicable Award Agreement at grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any reason during the relevant Restriction Period, all Restricted Stock still subject to restriction will be forfeited in accordance with the terms and conditions established by the Committee at grant or thereafter.
(d) Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the Participant. All legends shall be removed from said certificates at the time of delivery to the Participant, except as otherwise required by applicable law or other limitations imposed by the Committee.
Article IX
PERFORMANCE AWARDS
9.1Performance Awards. The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. The Committee may grant Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, as well as Performance Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code. If the Performance Award is payable in shares of Restricted Stock, such shares shall be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in shares of Restricted Stock (based on the then current Fair Market Value of such shares), as provided by the Committee in the applicable Award Agreement at the time of grant. Each Performance Award shall be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may from time to time approve.
With respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall condition the right to payment of any Performance Award upon the attainment of objective Performance Goals established pursuant to Section 9.2(c).
9.2Terms and Conditions. Performance Awards awarded pursuant to this Article IX shall be subject to the following terms and conditions:
(a) Earning of Performance Award. At the expiration of the applicable Performance Period, the Committee shall determine the extent to which the Performance Goals established pursuant to Section 9.2(c) are achieved and the percentage of each Performance Award that has been earned.
(b) Non-Transferability. Subject to the applicable provisions of the Award Agreement and the Plan, Performance Awards may not be Transferred during the Performance Period.
(c) Objective Performance Goals, Formulae or Standards. With respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
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(d) Dividends. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, amounts equal to dividends declared during the Performance Period with respect to the number of shares of Common Stock covered by a Performance Award will not be paid to the Participant. Notwithstanding anything herein to the contrary, no dividends or dividend equivalents will be granted with respect to unearned Performance Awards.
(e) Payment. Following the Committee’s determination in accordance with Section 9.2(a), the Company shall settle Performance Awards, in such form (including, without limitation, in shares of Common Stock or in cash) as determined by the Committee, in an amount equal to such Participant’s earned Performance Awards. With respect to any Award that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee shall be precluded from having discretion to increase the amount of compensation payable under the terms of such Award.
(f) Termination. Subject to the applicable provisions of the Award Agreement and the Plan, upon a Participant’s Termination for any reason during the Performance Period for a given Performance Award, the Performance Award in question will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant.
(g) Accelerated Vesting. Based on service, performance and/or such other factors or criteria, if any, as the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award.
Article X
OTHER STOCK-BASED AND CASH-BASED AWARDS
10.1Other Stock-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Stock-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to shares of Common Stock, including but not limited to, shares of Common Stock awarded purely as a bonus and not subject to restrictions or conditions, shares of Common Stock in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock units, and Awards valued by reference to book value of shares of Common Stock. Other Stock-Based Awards may be granted either alone or in addition to or in tandem with other Awards granted under the Plan.
Subject to the provisions of the Plan, the Committee shall have authority to determine the Eligible Individuals, to whom, and the time or times at which, such Awards shall be made, the number of shares of Common Stock to be awarded pursuant to such Awards, and all other conditions of the Awards. The Committee may also provide for the grant of Common Stock under such Awards upon the completion of a specified Performance Period.
The Committee may condition the grant or vesting of Other Stock-Based Awards upon the attainment of specified Performance Goals as the Committee may determine; provided that to the extent that such Other Stock-Based Awards are intended to comply with Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the grant or vesting of such Other Stock-Based Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
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10.2Terms and Conditions. Other Stock-Based Awards made pursuant to this Article X shall be subject to the following terms and conditions:
(a) Non-Transferability. Subject to the applicable provisions of the Award Agreement and the Plan, shares of Common Stock subject to Awards made under this Article X may not be Transferred prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
(b) Dividends. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant, subject to the provisions of the Award Agreement and the Plan, the recipient of an Award under this Article X shall not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents in respect of the number of shares of Common Stock covered by the Award.
(c) Vesting. Any Award under this Article X and any Common Stock covered by any such Award shall vest or be forfeited to the extent so provided in the Award Agreement.
(d) Price. Common Stock issued on a bonus basis under this Article X may be issued for no cash consideration. Common Stock purchased pursuant to a purchase right awarded under this Article X shall be priced, as determined by the Committee.
10.3Other Cash-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Cash-Based Awards in such amounts, on such terms and conditions, and for such consideration, including no consideration or such minimum consideration as may be required by applicable law. Other Cash-Based Awards may be granted subject to the satisfaction of vesting conditions or may be awarded purely as a bonus and not subject to restrictions or conditions, and if subject to vesting conditions, the Committee may accelerate the vesting of such Awards at any time. The grant of an Other Cash-Based Award shall not require a segregation of any of the Company’s assets for satisfaction of the Company’s payment obligation thereunder.
Subject to the provisions of the Plan, the Committee shall have authority to determine the Eligible Individuals, to whom, and the time or times at which, such Other Cash-Based Awards shall be made, the amounts to be awarded pursuant to such Awards, and all other conditions of the Awards. The Committee may also provide for the grant of Cash-Based Awards upon the completion of a specified Performance Period.
The Committee may condition the grant or vesting of Other Cash-Based Awards upon the attainment of specified Performance Goals as the Committee may determine; provided that to the extent that such Other Cash-Based Awards are intended to comply with Section 162(m) of the Code, the Committee shall establish the objective Performance Goals for the grant or vesting of such Other Cash-Based Awards based on a Performance Period applicable to each Participant or class of Participants in writing prior to the beginning of the applicable Performance Period or at such later date as permitted under Section 162(m) of the Code and while the outcome of the Performance Goals are substantially uncertain. Such Performance Goals may incorporate, if and only to the extent permitted under Section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. To the extent that any such provision would create impermissible discretion under Section 162(m) of the Code or otherwise violate Section 162(m) of the Code, such provision shall be of no force or effect, with respect to Performance Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
Article XI
CHANGE IN CONTROL PROVISIONS
11.1Benefits. In the event of a Change in Control of the Company (as defined below), and except as otherwise provided by the Committee in an Award Agreement, a Participant’s unvested Award shall not vest automatically and a Participant’s Award shall be treated in accordance with one of the following methods as determined by the Committee:
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(a) Awards, whether or not then vested, shall be continued, assumed, have new rights substituted therefor or be treated in accordance with Section 4.2(d) hereof, as determined by the Committee, and restrictions to which shares of Restricted Stock or any other Award granted prior to the Change in Control are subject shall not lapse upon a Change in Control and the Restricted Stock or other Award shall, where appropriate in the sole discretion of the Committee, receive the same distribution as other Common Stock on such terms as determined by the Committee; provided that the Committee may decide to award additional Restricted Stock or other Awards in lieu of any cash distribution. Notwithstanding anything to the contrary herein, for purposes of Incentive Stock Options, any assumed or substituted Stock Option shall comply with the requirements of Treasury Regulation Section 1.424-1 (and any amendment thereto).
(b) The Committee, in its sole discretion, may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess of the Change in Control Price (as defined below) of the shares of Common Stock covered by such Awards, over the aggregate exercise price of such Awards. For purposes of this Section 11.1, “Change in Control Price” shall mean the highest price per share of Common Stock paid in any transaction related to a Change in Control of the Company.
(c) Notwithstanding any other provision herein to the contrary, the Committee may, in its sole discretion, provide for accelerated vesting or lapse of restrictions, of an Award at any time.
11.2Change in Control. Unless otherwise provided by the Committee in the applicable Award Agreement at the time of grant or other written agreement approved by the Committee, a “Change in Control” shall be deemed to occur if:
(a) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Stock of the Company), becoming the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities;
(b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), (c), or (d) of this Section 11.2 or a director whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such term is used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board;
(c) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person (other than those covered by the exceptions in Section 11.2(a)) acquires more than 50% of the combined voting power of the Company’s then outstanding securities shall not constitute a Change in Control of the Company; or
(d) a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Company’s assets other than the sale or disposition of all or substantially all of the assets of the Company to a person or persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale.
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Notwithstanding the foregoing, with respect to any Award that is characterized as “nonqualified deferred compensation” within the meaning of Section 409A of the Code, an event shall not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a “change in ownership,” a “change in effective control” or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Section 409A of the Code.
11.3Initial Public Offering not a Change in Control. Notwithstanding the foregoing, for purposes of the Plan, the occurrence of the Registration Date or any change in the composition of the Board within one year following the Registration Date shall not be considered a Change in Control.
Article XII
TERMINATION OR AMENDMENTTABLE OF PLAN
12.1Termination or Amendment. Notwithstanding any other provision of the Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan (including any amendment deemed necessary to ensure that the Company may comply with any regulatory requirement referred to in Article XIV or Section 409A of the Code), or suspend or terminate it entirely, retroactively or otherwise; provided, however, that, unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Awards granted prior to such amendment, suspension or termination, may not be impaired without the consent of such Participant and, provided further, that without the approval of the holders of the Company’s Common Stock entitled to vote in accordance with applicable law, no amendment may be made that would (i) increase the aggregate number of shares of Common Stock that may be issued under the Plan (except by operation of Section 4.2); (ii) increase the maximum individual Participant limitations for a fiscal year under Section 4.1(b) (except by operation of Section 4.2); (iii) change the classification of individuals eligible to receive Awards under the Plan; (iv) decrease the minimum option price of any Stock Option or Stock Appreciation Right; (v) extend the maximum option period under Section 6.4; (vi) alter the Performance Goals for Restricted Stock, Performance Awards, Other Stock-Based Awards or Other Cash-Based Awards as set forth in Exhibit A hereto; (vii) award any Stock Option or Stock Appreciation Right in replacement of a canceled Stock Option or Stock Appreciation Right with a higher exercise price than the replacement award, except in accordance with Section 6.4(l); or (viii) require stockholder approval in order for the Plan to continue to comply with the applicable provisions of Section 162(m) of the Code or, to the extent applicable to Incentive Stock Options, Section 422 of the Code. In no event may the Plan be amended without the approval of the stockholders of the Company in accordance with the applicable laws of the State of Delaware to increase the aggregate number of shares of Common Stock that may be issued under the Plan, decrease the minimum exercise price of any Award, or to make any other amendment that would require stockholder approval under Financial Industry Regulatory Authority (FINRA) rules and regulations or the rules of any exchange or system on which the Company’s securities are listed or traded at the request of the Company. Notwithstanding anything herein to the contrary, the Board may amend the Plan or any Award Agreement at any time without a Participant’s consent to comply with applicable law including Section 409A of the Code.
The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Article IV or as otherwise specifically provided herein, no such amendment or other action by the Committee shall impair the rights of any holder without the holder’s consent.
Article XIII
UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but which are not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any right that is greater than those of a general unsecured creditor of the Company.
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Article XIV
GENERAL PROVISIONS
14.1Legend. The Committee may require each Person receiving shares of Common Stock pursuant to a Stock Option or other Award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for such shares may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities exchange system upon whose system the Common Stock is then quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
14.2Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.
14.3No Right to Employment/Directorship/Consultancy. Neither the Plan nor the grant of any Option or other Award hereunder shall give any Participant or other employee, Consultant or Non-Employee Director any right with respect to continuance of employment, consultancy or directorship by the Company or any Affiliate, nor shall there be a limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy or directorship at any time.
14.4Withholding of Taxes. The Company shall have the right to deduct from any payment to be made pursuant to the Plan, or to otherwise require, prior to the issuance or delivery of shares of Common Stock or the payment of any cash hereunder, payment by the Participant of, any federal, state or local taxes required by law to be withheld. Upon the vesting of Restricted Stock (or other Award that is taxable upon vesting), or upon making an election under Section 83(b) of the Code, a Participant shall pay all required withholding to the Company. Any statutorily required withholding obligation with regard to any Participant may be satisfied, subject to the consent of the Committee, by reducing the number of shares of Common Stock otherwise deliverable or by delivering shares of Common Stock already owned. Any fraction of a share of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant.
14.5No Assignment of Benefits. No Award or other benefit payable under the Plan shall, except as otherwise specifically provided by law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit shall be void, and any such benefit shall not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of any Person who shall be entitled to such benefit, nor shall it be subject to attachment or legal process for or against such Person.
14.6Listing and Other Conditions.
(a) Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. The Company shall have no obligation to issue such shares unless and until such shares are so listed, and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Option or other Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on the Company under the statutes, rules or regulations of any applicable jurisdiction, the Company shall have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to shares of Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of said counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on the Company.
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(c) Upon termination of any period of suspension under this Section 14.6, any Award affected by such suspension which shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares which would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any Award.
(d) A Participant shall be required to supply the Company with certificates, representations and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent or approval the Company deems necessary or appropriate.
14.7Stockholders Agreement and Other Requirements. Notwithstanding anything herein to the contrary, as a condition to the receipt of shares of Common Stock pursuant to an Award under the Plan, to the extent required by the Committee, the Participant shall execute and deliver a stockholder’s agreement or such other documentation that shall set forth certain restrictions on transferability of the shares of Common Stock acquired upon exercise or purchase, and such other terms as the Board or Committee shall from time to time establish. Such stockholder’s agreement or other documentation shall apply to the Common Stock acquired under the Plan and covered by such stockholder’s agreement or other documentation. The Company may require, as a condition of exercise, the Participant to become a party to any other existing stockholder agreement (or other agreement).
14.8Governing Law. The Plan and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).
14.9Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding with respect to the Plan or any Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of any thereof, shall be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and without limiting the generality of the foregoing, the Company and each Participant shall irrevocably and unconditionally (a) submit in any proceeding relating to the Plan or any Award Agreement, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the State of Delaware, the court of the United States of America for the District of Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agree that all claims in respect of any such Proceeding shall be heard and determined in such Delaware State court or, to the extent permitted by law, in such federal court, (b) consent that any such Proceeding may and shall be brought in such courts and waives any objection that the Company and each Participant may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agree not to plead or claim the same, (c) waive all right to trial by jury in any Proceeding (whether based on contract, tort or otherwise) arising out of or relating to the Plan or any Award Agreement, (d) agree that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participant’s address shown in the books and records of the Company or, in the case of the Company, at the Company’s principal offices, attention General Counsel, and (e) agree that nothing in the Plan shall affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware.
14.10Construction. Wherever any words are used in the Plan in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply.
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14.11Other Benefits. No Award granted or paid out under the Plan shall be deemed compensation for purposes of computing benefits under any retirement plan of the Company or its Affiliates nor affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation.
14.12Costs. The Company shall bear all expenses associated with administering the Plan, including expenses of issuing Common Stock pursuant to Awards hereunder.
14.13No Right to Same Benefits. The provisions of Awards need not be the same with respect to each Participant, and such Awards to individual Participants need not be the same in subsequent years.
14.14Death/Disability. The Committee may in its discretion require the transferee of a Participant to supply it with written notice of the Participant’s death or Disability and to supply it with a copy of the will (in the case of the Participant’s death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require that the agreement of the transferee to be bound by all of the terms and conditions of the Plan.
14.15Section 16(b) of the Exchange Act. All elections and transactions under the Plan by Persons subject to Section 16 of the Exchange Act involving shares of Common Stock are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder.
14.16Section 409A of the Code. The Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto. Notwithstanding anything herein to the contrary, any provision in the Plan that is inconsistent with Section 409A of the Code shall be deemed to be amended to comply with Section 409A of the Code and to the extent such provision cannot be amended to comply therewith, such provision shall be null and void. The Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A of the Code, responsibility for payment of such penalties shall rest solely with the affected Participants and not with the Company. Notwithstanding any contrary provision in the Plan or Award Agreement, any payment(s) of “nonqualified deferred compensation” (within the meaning of Section 409A of the Code) that are otherwise required to be made under the Plan to a “specified employee” (as defined under Section 409A of the Code) as a result of such employee’s separation from service (other than a payment that is not subject to Section 409A of the Code) shall be delayed for the first six (6) months following such separation from service (or, if earlier, the date of death of the specified employee) and shall instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period.
14.17Successor and Assigns. The Plan shall be binding on all successors and permitted assigns of a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate.
14.18Severability of Provisions. If any provision of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and enforced as if such provisions had not been included.
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14.19Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipt thereof shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Committee, the Board, the Company, its Affiliates and their employees, agents and representatives with respect thereto.
14.20Agreement. As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the “Lead Underwriter”), a Participant shall irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time following the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter shall specify (the “Lock-Up Period”). The Participant shall further agree to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agree that the Company may impose stop-transfer instructions with respect to Common Stock acquired pursuant to an Award until the end of such Lock-Up Period.
14.21Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.
14.22Section 162(m) of the Code. Notwithstanding any other provision of the Plan to the contrary, (i) prior to the Registration Date and during the Transition Period, the provisions of the Plan requiring compliance with Section 162(m) of the Code for Awards intended to qualify as “performance-based compensation” shall only apply to the extent required by Section 162(m) of the Code, and (ii) the provisions of the Plan requiring compliance with Section 162(m) of the Code shall not apply to Awards granted under the Plan that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code.
14.23Post-Transition Period. Following the Transition Period, any Award granted under the Plan that is intended to be “performance-based compensation” under Section 162(m) of the Code, shall be subject to the approval of the material terms of the Plan by a majority of the stockholders of the Company in accordance with Section 162(m) of the Code and the treasury regulations promulgated thereunder.
14.24Company Recoupment of Awards. A Participant’s rights with respect to any Award hereunder shall in all events be subject to (i) any right that the Company may have under any Company recoupment policy or other agreement or arrangement with a Participant, or (ii) any right or obligation that the Company may have regarding the clawback of “incentive-based compensation” under Section 10D of the Exchange Act and any applicable rules and regulations promulgated thereunder from time to time by the U.S. Securities and Exchange Commission.
Article XV
EFFECTIVE DATE OF PLAN
The Plan originally became effective on September 7, 2011, which is the date of its adoption by the Board, subject to the approval of the Plan by the stockholders of the Company in accordance with the requirements of the laws of the State of Delaware. Following its adoption by the Committee, this amendment and restatement of the Plan shall become effective as of May 23, 2013 upon receipt of the requisite approval of the stockholders of the Company at the 2013 Annual Meeting of Stockholders. In the absence of such stockholder approval, any outstanding Awards for which the terms have been established under this amended and restated Plan and subject to such stockholder approval shall be null and void.
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Article XVI
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the tenth anniversary of the earlier of the date that this amended and restated Plan is adopted or the date of stockholder approval, but Awards granted prior to such tenth anniversary may extend beyond that date; provided that no Award (other than a Stock Option or Stock Appreciation Right) that is intended to be “performance-based compensation” under Section 162(m) of the Code shall be granted on or after the fifth anniversary of the stockholder approval of the Plan unless the Performance Goals are re-approved (or other designated Performance Goals are approved) by the stockholders no later than the first stockholder meeting that occurs in the fifth year following the year in which stockholders approve the Performance Goals.
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EXHIBIT A
PERFORMANCE GOALS
To the extent permitted under Section 162(m) of the Code, performance goals established for purposes of Awards intended to be “performance-based compensation” under Section 162(m) of the Code, shall be based on the attainment of certain target levels of, or a specified increase or decrease (as applicable) in one or more of the following performance goals:
CONTENTS earnings per share;
net income (before or after taxes);
gross profit return on investment;
gross margin return on investment;
earnings before interest and taxes;
earnings before interest, tax, depreciation and amortization;
return on invested capital;
revenue growth, as to either gross or net revenues;
annual recurring net or gross revenues;
recurring net or gross revenues;
total stockholder return;
specified objectives with regard to limiting the level of increase in all or a portion of the Company’s bank debt or other long-term or short-term public or private debt or other similar financial obligations of the Company, which may be calculated net of cash balances and/or other offsets and adjustments as may be established by the Committee;
the fair market value of a share of Common Stock;
the growth in the value of an investment in the Common Stock assuming the reinvestment of dividends;
reduction in operating expenses; or
other objective criteria determined by the Committee.
With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, the Committee may, in its sole discretion, also exclude, or adjust to reflect, the impact of an event or occurrence that the Committee determines should be appropriately excluded or adjusted, including:
(a) restructurings, discontinued operations, extraordinary items or events, and other unusual or non-recurring charges as described in Accounting Standards Codification 225-20, “Extraordinary and Unusual Items,” and/or management’s discussion and analysis of financial condition and results of operations appearing or incorporated by reference in the Company’s Form 10-K for the applicable year;
(b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management; or
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(c) a change in tax law or accounting standards required by generally accepted accounting principles.
Performance goals may also be based upon individual participant performance goals, as determined by the Committee. In addition, Awards that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code may be based on the performance goals set forth herein or on such other performance goals as determined by the Committee in its sole discretion.
In addition, such performance goals may be based upon the attainment of specified levels of Company (or subsidiary, division, other operational unit, administrative department or product category of the Company) performance under one or more of the measures described above relative to the performance of other corporations. With respect to Awards that are intended to qualify as “performance-based compensation” under Section 162(m) of the Code, to the extent permitted under Section 162(m) of the Code, but only to the extent permitted under Section 162(m) of the Code (including, without limitation, compliance with any requirements for stockholder approval), the Committee may also:
(a) designate additional business criteria on which the performance goals may be based; or
(b) adjust, modify or amend the aforementioned business criteria.
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| | | ACADIA HEALTHCARE COMPANY, INC.
C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS
PO BOX 1342
BRENTWOOD, NY 11717
| | VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/ACHC2021
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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| | | | | | | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | | | | | | D38890-P50460
| | | KEEP THIS PORTION FOR YOUR RECORDS | | — — — — — — — — — — — —— — — — — — — — — — — — — — — — — — —— — — — — — — — — — — — — — — — —— —— — — — — — — — — — — — — — — — — — | | | | | | | DETACH AND RETURN THIS PORTION ONLY | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | | | | | | | | | | ACADIA HEALTHCARE COMPANY, INC.
| | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR
the following:
| | | | | | | | | | | | | | | | | | | | 1.
| | Election of Directors
| | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1a.
| | E. Perot Bissell
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1b.
| | Vicky B. Gregg
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1c.
| | Debra K. Osteen
| | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2, 3 and 4.
| | | | For | | Against | | Abstain | | | | | | | | | | | | | 2.
| | Approve an amendment to the Acadia Healthcare Company, Inc. Incentive Compensation Plan.
| | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | 3.
| | Advisory vote on the compensation of the Company’s named executive officers as presented in the Proxy Statement.
| | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | 4.
| | Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.
| | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | NOTE: In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof.
| | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please sign in full corporate
or partnership name by authorized officer.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX]
| | Date | | | | | | | | Signature (Joint Owners)
| | Date | | | | | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
| | | | | | | | | | | | | | | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
| | | | | | | | | | | D38891-P50460
| ACADIA HEALTHCARE COMPANY, INC.
REVOCABLE PROXY
2021 ANNUAL MEETING OF STOCKHOLDERS
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 6, 2021: The Notice & Proxy Statement and the Company’s 2020 Annual Report to Stockholders are available at www.proxyvote.com.
The undersigned hereby appoints David M. Duckworth and Christopher L. Howard, and either of them, as proxies, with full power of substitution and resubstitution, to vote all of the shares of Common Stock that the undersigned is entitled to vote at the Annual Meeting of Stockholders of Acadia Healthcare Company, Inc., to be held virtually at www.virtualshareholdermeeting.com/ACHC2021, on Thursday, May 6, 2021, at 9:00 a.m. (Central Time), and at any adjournment thereof.
This proxy is being solicited by the Board of Directors and will be voted as specified. If not otherwise specified, the above named proxies will vote (a) FOR the election as directors of the nominees named on the reverse side and (b) FOR each of proposals 2, 3 and 4.
| | | | | | | | Continued andto be signed on reverse side
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