UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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2024
Notice of Annual Meeting &
Proxy Statement
hcsg.com
MESSAGE FROM OUR CEO
Dear Fellow Healthcare Services Group, Inc. Shareholders,
In 2023 Healthcare Services Group, Inc. (“our”, “we”, “us”, “HCSG” or the “Company”) continued to build on its
momentum, as the wider healthcare industry emerged from a prolonged recovery. During the year we solidified our
already strong value proposition by increasing the durability of our business model and our market-leading position.
On the back of strong fundamentals, we increased important metrics such as net income and cash flow from
operations, up approximately 12% and 633% respectively. Further, we ended the year by exceeding cash flow
expectations and maintaining our high rate of cash collections at 98% and our management of cost of services to
our goal of 86%. These significant achievements were made possible by the dedication of and execution by our
employees, whose efforts are responsible for our success.
As the industry enters a multi-decade demographic tailwind, we remain focused on three priorities to capitalize on
our market position and value proposition:
1.Maintaining our cost of services target. We’ve taken a number of actions over the past few years, such
as contract enhancements, budget discipline and regulatory compliance, to provide strong operating
momentum heading into 2024. We’ll never take our operational execution for granted and are confident our
operators will continue to hit our target.
2.Delivering year over year growth. We are focused on the execution of our organic growth strategy and
believe that there are plenty of opportunities to start or expand service relationships in the skilled, long-term
and post-acute care spaces, particularly by cross selling our dining services to customers in our existing
housekeeping and laundry base.
3.Collecting what we bill. As a lagging indicator of the industry’s recovery, cash collections trends are
improving, but remain an area where we can see additional achievement. Given industry trends, there may
still be choppiness in 2024, but we believe we’ll see significant strengthening of the metric throughout the
year and into 2025.
As the industry continues to grow and evolve, so does HCSG. We are comprised of leaders who are proud to
support our Vision: To Be THE Choice For Our Customers, today and every day. The Company is steadfast in its
commitment to training and development at every level to best support our promotion-from-within philosophy and
give employees exceptional opportunities to grow and develop their career. We are proud of the dedicated
associates who make up our Company and thankful for the client partners who trust us to service their communities.
Entering 2024, we have continued to grow our new business prospects, as well as our manager and training
pipelines. We remain well positioned to make the most out of the opportunities in front of us. We believe that our
strategic priorities - combined with our customer value proposition, the need for our services and the upcoming
generational impact on the industry - position us well to deliver long-term shareholder value. I look forward to the
year ahead as we remain focused on returning to year-over-year growth.
On behalf of the entire Board of Directors, thank you for your investment in Healthcare Services Group. We invite
you to attend our Annual Meeting of Shareholders, which will be held at 10:00 a.m. Eastern Time on Tuesday,
May 28, 2024, and ask for your voting support on the items contained in this proxy.
Sincerely,
Theodore Wahl
President and Chief Executive Officer
2024 PROXY STATEMENT 1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Record Date | Meeting Date | Meeting Location | |||
April 1, 2024 | May 28, 2024 | Courtyard Philadelphia Bensalem | |||
10:00 A.M. (ET) | 3280 Tillman Drive, Bensalem, PA 19020 | ||||
2024 Proposals
Recommendation | Page | |||||
1 | To elect nine directors to the Board of Directors | FOR | ||||
2 | To consider an advisory vote on a non-binding resolution to approve the compensation of our named executive officers | FOR | ||||
3 | To approve and ratify Grant Thornton LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2024 | FOR | ||||
4 | To approve and adopt an amendment to our Restated Articles of Incorporation (the "Articles”) to increase the number of authorized shares of common stock from 100 million to 300 million | FOR |
We will also take action upon any other business as may properly come before the 2024 Annual Meeting and any
adjournments or postponements of that meeting.
How to Vote
Only holders of record of our Common Stock, $0.01 par value (the “Common Stock”) at the close of business on
April 1, 2024 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting. On the Record Date,
there were issued and outstanding approximately 73,645,000 shares of our Common Stock.
Each share of Common Stock entitles the holder thereof to one vote. This Proxy Statement is being mailed to
shareholders on or about April 26, 2024.
Shareholders can submit their proxy vote by any of the following methods:
Online | Phone | Mail | In Person | ||||
You can vote your shares online at www.proxypush.com/HCSG. | You can vote your shares by calling 1 (866) 390-5232. | You can vote your shares by marking, signing, and dating your proxy card and returning in the postage-paid envelope provided. | You can vote your shares by attending the 2024 Annual Meeting and voting in person. |
The proxy statement and annual report to shareholders are available under “2024 Investor Materials” at
www.proxydocs.com/hcsg. Whether or not you expect to attend the Annual Meeting, shareholders can sign and
promptly mail the enclosed proxy in order that your shares may be voted for you. A return envelope is provided for
your convenience.
April 26, 2024
By Order of the Board of Directors,
Jason J. Bundick
General Counsel, Chief Compliance Officer & Corporate Secretary
2024 PROXY STATEMENT 2
TABLE OF CONTENTS
Executive Compensation | |
2024 PROXY STATEMENT 3
2024 PROXY STATEMENT 4
PEOPLE
SERVING
EXPERIENCE
Whether we’re talking about dining, environmental, or clinical services,
HCSG’s qualified and professional people are the difference.
With almost fifty years experience and 35,000 employees strong, HCSG
effectively serves healthcare communities’ dining, environmental, and nutrition
needs.
2024 PROXY STATEMENT 5
our people are
the difference.
Our Management Training Programs offer
comprehensive guidance to aspiring account
managers and district managers on how to effectively
oversee partner accounts.
Our curriculum covers crucial areas such as business
operations, human resources management, financial
and budgetary management, and client relations,
equipping individuals with the necessary skills to thrive
in managerial roles.
Additionally, our training delves into understanding and
upholding HCSG's values, ensuring alignment with the
organization's overarching goals and principles.
HCSG is committed to providing unparalleled
opportunities for career growth and advancement,
ensuring our people are equipped with the skills and
values necessary to excel in their roles.
In addition to the programs described above, HCSG
also has an Employee Engagement and
Recognition Program, including Going Beyond
Awards, recognition pins for company tenure and
military service and the implementation of retention
and referral bonuses.
people.
serving.
experience.
Our people are at the very core of everything that we do.
Supporting our diverse team of individuals drives us to improve and provide developmental opportunities for every
team member continuously. We aim to have an engaged workforce and encourage them to reach their full potential.
Our promotions-from-within philosophy opens the door to a stimulating and robust career with HCSG.
The Leadership Empowerment Apprenticeship Program (LEAP)
is one of the first healthcare management apprenticeships registered with
the US Department of Labor (DOL) for dining and environmental services.
The 12-month program is uniquely designed to educate field-level
employees on essential skills within dining or environmental services to
prepare them for management opportunities within HCSG.
2024 PROXY STATEMENT 6
people.
serving.
experience.
2024 PROXY STATEMENT 7
Diversity & Inclusion
HCSG is proud to be an equal opportunity
employer committed to all employees and
applicants regardless of race, color,
religion, sex, national origin, age, disability,
genetics, ethnicity, pregnancy status,
gender identity, sexual orientation, marital
status, political opinions or affiliations,
veteran status, or other legally protected
classes. HCSG also complies with
applicable state and local laws and federal
law requirements that govern
nondiscrimination in every location where
we operate.
We are committed to fostering and
supporting a vibrant company culture that
encourages employees to bring their
authentic and best selves to serve our
resident and client communities. We
believe all employees, regardless of
position, age, race, religion, beliefs,
socioeconomic background, or gender,
should work in an environment where they
are safe, respected, and treated fairly, with
their viewpoints, thoughts, and ideas
encouraged and embraced.
All of our employees must complete
annual diversity training. Our Chief
Compliance Officer has executive
responsibility for our commitment to
fostering a safe and inclusive workplace
and, along with our ESG Committee,
provides ultimate oversight over our
compliance with EEO regulations.
Celebrating and Creating
Diversity Among Our Teams
As of December 31, 2023, our
workforce consisted of:
69%62%
womenBIPOC
Black,
Indigenous,
or people of color
Field-based management positions:
60%50%
womenBIPOC
Top quartile of compensation:
63%50%
womenBIPOC
serving
is our
purpose.
2024 PROXY STATEMENT 8
Serving is woven into our fabric at HCSG.
It’s what our people do every day.
It’s what our people are doing right now in
thousands of facilities across the country.
We believe in the greater good and are
committed to serving the communities in
which we all live.
people.
serving.
experience.
2024 PROXY STATEMENT 9
Environmental Services
Maintaining a home-like environment is of the utmost
importance for residents in healthcare communities. The
HCSG team’s expertise in housekeeping and laundry
programs allows us to support client and administrator
partners in providing exceptional living experiences and
environments.
Dining Services
The kitchen is the heart of every home. This is also true
for healthcare communities. HCSG dining team members
thoughtfully source ingredients and carefully craft meals
that appeal to diverse palates and regional preferences.
HCSG’s enhanced focus on service ensures a
consistently exceptional dining experience.
Nutrition Services
As one of the largest employers of Registered Dietitians in
the healthcare industry, HCSG promotes nutrition as the
foundation for healthful living. Collaborating with our
dining service team members, HCSG develops people-
centered practices that support residents' nutritional
preferences and needs.
people.
serving.
experience.
We are committed to minimizing our environmental impact. Consistent with our Environmental, Health, and Safety Policy,
the Company seeks innovative ways to reduce the impact our services have on the environment and to minimize our use
of natural resources and generation of waste. In addition, we take action to utilize chemicals and supplies that are safer
for the environment, for our employees, and for those we serve.
The ESG Committee of the Board oversees and monitors the Company’s enterprise-wide approach to environmental
management and sustainability. All relevant employees receive environmental safety and compliance training depending
on their roles.
In managing and reporting on our environmental impact, we are guided by feedback from our stakeholders and third-party
frameworks, including the Sustainability Accounting Standards Board (“SASB”) Professional & Commercial Services
standard and the Task Force on Climate-Related Financial Disclosures (“TCFD”). Our most recent sustainability report can
be found at https://www.hcsgcorp.com/social-impact/.
Our initiatives to reduce our environmental footprint include:
2024 PROXY STATEMENT 10
•Leveraging chemicals and supplies with an array of
environmental certifications, such as Green Seal, UL
ECOLOGO, USDA Certified Biobased Products, and
Green Guard Gold
•Use of concentrated chemicals, which reduce water
use and transportation loads, resulting in reduced fuel
consumption and lower emissions
•Utilizing paper products that are 99% ECOLOGO
certified, 50% compostable, Green Seal Certified and
have up to 90% recycled content
•Leveraging technology for improved outcomes, such
as electrostatic sprayers that offer eco-friendly,
touchless application for effective, even coverage of
chemicals while reducing cross-contamination
•Utilizing proprietary food production software and
menu design to minimize food waste
•Leveraging locally sourced produce, bakery goods,
and dairy products, as available
•Minimizing drop shipments of food products to
reduce fuel consumption and resulting emissions
•Ensuring major suppliers are committed to
environmental management and sustainability
initiatives
•Fitting office space with window tinting and motion-
detection and energy-efficient LED lighting fixtures
to reduce energy consumption
•Implementing a robust recycling program and the
installation of filtered-water stations at our office to
reduce the impact and usage of disposable
products.
Responsible Supply Chain
Our commitment to “Fostering Fulfillment In Our Communities” extends to our supply chain. Our supply-chain
management program is led by our Chief Administrative Officer, along with our SVP of Finance and Strategic Sourcing
in charge of implementation. The ESG Committee provides Board oversight of our responsible supply chain efforts.
To ensure significant suppliers are aligned with our sustainability objectives, we employ a process to evaluate our
national and larger regional providers through obtaining and reviewing ESG-related reports, such as sustainability and
certification reports. We use a procurement system that helps us to monitor supplier compliance across our range of
standards and requirements, and we regularly communicate with major suppliers regarding environmental and
sustainability issues, whether those issues are acute or broad, industry-wide issues.
exceptional
experiences,
impeccable
services
2024 PROXY STATEMENT 11
Creating experiences for residents is our calling.
Through the strength of our people and the services we provide, HCSG
is in a unique position to positively impact their lives.
Our holistic approach enables us to go beyond traditional expectations
and deliver joy to residents and their families.
people.
serving.
experience.
2024 PROXY STATEMENT 12
HCSG is dedicated to enhancing residents'
lives through exceptional environmental,
dining, and nutrition services.
Our housekeeping and laundry services
maintain clean, organized living spaces,
fostering comfort and well-being. A clean
and safe environment promotes physical
health and instills a sense of dignity and
pride, transforming routine tasks into
meaningful moments that enrich residents'
lives.
Dining services provide meals that are more
than just sustenance— they are
opportunities for socialization and
enjoyment. By offering appealing and
nutritious meals, we create moments of
comfort and connection, fostering a sense of
community among residents. These
experiences nurture both the body and spirit,
contributing to residents' overall well-being
and sense of belonging within their
community.
Our commitment to creating memorable
experiences transcends basic needs,
focusing on enriching residents' lives
holistically. Through meticulous attention to
detail and personalized care, our services
provide physical comfort and emotional and
psychological fulfillment. By treating each
interaction as an opportunity to make a
positive impact, we elevate the quality of life
for nursing home residents, fostering lasting
memories that bring joy and fulfillment to
their daily lives.
people.
serving.
experience.
In our pursuit of Fostering Fulfillment in Communities, we recognize the crucial role of a
dedicated and inspired team, wholeheartedly committed to making positive contributions to
every community we serve, nurturing happiness and satisfaction in people’s lives.
2024 PROXY STATEMENT 13
For the third consecutive year, HCSG has been recognized as one of the
Most Trustworthy Companies in America. This recognition highlights our
commitment to providing exceptional services to our partner facilities.
We are proud to have been recognized as one of America’s Greatest
Workplaces for Diversity in 2024. HCSG is committed to fostering and
supporting a vibrant company culture that encourages employees to bring
their authentic and best selves to serve our resident and client communities.
Named as one of America's greatest workplaces in 2023, this recognition
highlights our commitment to organizational stability and growth through
productivity, career development, and a positive work- life balance where
team members feel respected and valued.
Our commitment to job advancement and career growth at HCSG is
unmatched. That’s why we were especially proud to receive the honor
of one of America’s Greatest Workplaces for Job Starters in 2023.
HCSG prides itself on going above and beyond for active and veteran
military members and their families. From our nationwide opportunities
to our pledge to support the hiring of service members and their
spouses, we take pride in having America’s heroes on our team.
directors,
officers &
corporate
governance
2024 PROXY STATEMENT
2024 PROXY STATEMENT 14
Election of Directors. (Proposal No. 1)
At the Annual Meeting, nine directors of the Company are to be elected, each to hold office for a term of
one year. All nominees currently serve as Directors. Unless authority is specifically withheld,
management proxies will be voted FOR the election of the nominees named in Directors, Officers &
Corporate Governance below to serve as directors until the next annual meeting of shareholders and until
their successors have been chosen and qualified. Should any nominee not be a candidate at the time of
the Annual Meeting (a situation which is not now anticipated), proxies will be voted in favor of the
remaining nominees and may also be voted for substitute nominees. If a quorum is present, the
candidate or candidates receiving the highest number of votes will be elected. Brokers that do not receive
shareholder instructions are not entitled to vote for the election of directors because an uncontested
election is considered a “non-routine” matter. Hence, shareholders who hold their shares through
brokerage accounts and who would like to vote in favor of the director nominees will need to instruct their
brokerage firm to vote for the Company’s nominees.
The Board of Directors recommend a vote “FOR” all nominees.
Vote Required
Pursuant to Pennsylvania law, the Company has plurality voting in uncontested elections of directors.
Pursuant to Pennsylvania law, in an uncontested election of directors the affirmative vote of a plurality of
the shares of Common Stock entitled to vote and present in person or by proxy at the Annual Meeting is
required to elect a director.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 15
Healthcare Services Group, Inc. Board of Directors
The Company operates within a comprehensive plan of corporate governance for the purpose of defining
responsibilities, setting high standards of professional and personal conduct and assuring compliance with such
responsibilities and standards. The Company regularly monitors developments in the area of corporate governance.
These include corporate governance standards and disclosure requirements resulting from the Sarbanes-Oxley Act
of 2002 (“Sarbanes-Oxley”). In addition, the Nasdaq Stock Market LLC (“Nasdaq”) also has corporate governance
and listing requirements. Our corporate governance policies are available on our website at http://
investor.hcsgcorp.com/governance.
Board of Directors.
The business of the Company is managed under the direction of the Board. The Board meets on a regularly
scheduled basis during the Company’s fiscal year to review significant developments affecting the Company and to
act on matters requiring Board approval. It also holds special meetings when an important matter requires Board
action between scheduled meetings and also acts by unanimous written consent when necessary and appropriate.
The Board met four times during the fiscal year ended December 31, 2023 and took one action by unanimous
written consent. During 2023, each member of the Board attended or participated in 75% or more of the aggregate
of (i) the total number of meetings of the Board held during 2023, and (ii) the total number of meetings held by each
committee of the Board on which such member served during 2023. We do not have a policy with regard to
attendance by directors at annual meetings of shareholders. Three directors attended the 2023 Annual Meeting of
Shareholders.
2024 Director Nominees.
Ms. Casey is a retired Clinical Nursing Coordinator (CNC) of Endoscopy at Huntingdon
Valley Surgery Center, an AAAHC accredited healthcare facility, where Ms. Casey worked
for more than five years before her retirement in 2018. Previously, Ms. Casey was
employed at Holy Redeemer Health Systems in various surgical nursing and
management positions.
Skills, Experience, & Qualifications:
Committees: Chairwoman of the Nominating, Compensation and Stock Option
Committee (“NCSO Committee”)
Ms. Castagnino has been an Information Specialist at United Spinal Association, a
national 501(c)(3) non-profit membership organization dedicated to enhancing the quality
of life of all people living with spinal cord injuries and disorders (SCI/D), for more than the
past five years. Previously, Ms. Castagnino was an international consultant for Lazos
Profesionales Asociación Civil and the Inter-American Development Bank.
Skills, Experience, & Qualifications:
Committees: Environmental, Social & Governance Committee (“ESG Committee”)
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 16
DANIELA
CASTAGNINO
Age: 49
Director Since: 2018
DIANE S. CASEY
Age: 70
Director Since: 2011
2024 Director Nominees.
Mr. Frome has been Counsel to the law firm of Olshan Frome Wolosky LLP since 2018
and previously was a partner at such firm for more than five years assisting clients with in
a broad range of capital-raising transactions, IPO's and private placements.
Skills, Experience, & Qualifications:
Committees: None
Ms. Grant has been the Managing Partner and President of Chatham Financial since
2022. Ms. Grant also serves as a board member of Chatham Financial. Ms. Grant’s
previous roles at Chatham Financial include Chief Operating Officer, Managing Director in
the Global Real Estate practice and co-head of Chatham’s European business from 2017
to 2022. Ms. Grant has concentrated on risk management strategies for Real Estate
Investment Trusts (REITs), specializing in interest rate and foreign currency hedging.
Prior to joining Chatham, Ms. Grant worked at Booz Allen Hamilton in the Capital Asset
Management group.
Skills, Experience, & Qualifications:
Committees: Audit Committee
Mr. McFadden has been the Principal of Global Circulation Services, a provider of
marketing and advertising services to media and publishing companies since 2008. Mr.
McFadden previously worked at the McGraw-Hill Companies (parent company of
Standard and Poor's) where he held management positions within their global circulation,
sales and outsourcing services departments for approximately 15 years.
Skills, Experience, & Qualifications:
Committees: NCSO Committee
Mr. Ottaviano is a retired Principal of D20 Marketing, Inc., a provider of internet
productivity tools founded in 2006. Previously, Mr. Ottaviano was employed for over 20
years with Transcontinental Direct (successor to Communication Concepts, Inc.), a
publicly held outsourcing printer, retiring in 2022 as Vice President of Business
Development.
Skills, Experience, & Qualifications:
Committees: Audit Committee
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 17
ROBERT L. FROME
Age: 86
Director Since: 1983
LAURA GRANT
Age: 44
Director Since: 2020
JOHN J. MCFADDEN
Age: 62
Director Since: 2012
DINO D. OTTAVIANO
Age: 76
Director Since: 2007
2024 Director Nominees.
Mr. Simmons, Jr. has been an audit partner at WithumSmith+Brown, PC (“Withum”), a
public accounting firm registered with the Public Company Accounting Oversight Board
(“PCAOB”), since 2021. Prior to joining Withum, Mr. Simmons, Jr. was a partner at Citrin
Cooperman & Company LLP from 2017-2021. Mr. Simmons, Jr.'s experience includes
audit and consulting services regarding Sarbanes-Oxley 404 integrated audits, technical
accounting and due diligence for domestic and international clients. Mr. Simmons, Jr. is a
past member of the National Association of Black Accountants and previously served on
the board of the New Jersey Technology Advisory Council. Mr. Simmons, Jr. is currently a
member of the Association for Corporate Growth.
Skills, Experience, & Qualifications:
Committees: Audit Committee Chairman, ESG Committee
Mr. Visconto has been a Principal of American Property Holdings, a real estate
investment firm focused on the acquisition, development and management of multi-
family/senior housing and commercial assets for more than the past five years. Mr.
Visconto is an active member of the real estate community and participates in a variety of
industry-related associations including The American Senior Housing Association, The
Association of the National Investment Center for Senior Housing and Care and The
National Association of Realtors.
Skills, Experience, & Qualifications:
Committees: Board Chairman, ESG Committee Chairman
Mr. Wahl has been the President and Chief Executive Officer of the Company since May
2015. Mr. Wahl joined the Company in 2004. Prior to his appointment to President and
Chief Executive Officer, Mr. Wahl served as President and Chief Operating Officer,
Executive Vice President & Chief Operating Officer, Vice President of Finance, Regional
Manager, Regional Sales Director, District Manager and Facility Manager. Prior to joining
the Company, Mr. Wahl was a Senior Manager with EY’s Transaction Advisory Group.
Skills, Experience, & Qualifications:
Committees: None
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 18
KURT SIMMONS, JR.,
CPA
Age: 40
Director Since: 2021
JUDE VISCONTO
Age: 50
Director Since: 2015
THEODORE WAHL
Age: 50
Director Since: 2011
Individual Board Skills Matrix
We believe that the collective skills, experiences and qualifications of our directors provide our Board with the
expertise and experience necessary to advance the interests of our shareholders. While the NCSO Committee has
not established any specific, minimum qualifications that must be met by each of our directors, it uses a variety of
criteria to evaluate the qualifications and skills necessary for each member of the Board. In addition to the individual
attributes of each of our current directors described below, we believe that our directors should have the highest
professional and personal ethics and values, consistent with our longstanding values and standards. Each director
is expected to exhibit commitment to enhancing shareholder value, have sufficient time to carry out their duties and
be able to provide insight and practical wisdom based on their experience. The below matrix highlights the individual
strengths and focuses that each nominee may contribute to the Board as a whole. The absence of an “X” for a
particular expertise or experience does not indicate that the director in question is unable to contribute to the
decision-making process in that area.
•Mr. Wahl, Ms. Casey and Ms. Castagnino have extensive experience in the healthcare services industry. Their
operational experience, in addition to Mr. Wahl’s financial expertise, enables them to provide guidance with
respect to our operations. Also, since Ms. Casey and Ms. Castagnino have not been employees of the Company
and have served their careers in patient care and advocacy, respectively, we believe they bring a patient care
perspective to the Company. For instance, Ms. Casey and Ms. Castagnino may provide a deeper understanding
of the impact new developments related to the healthcare services industry have on patient-related issues which
they can bring forward to the attention of Company management as appropriate. Also, they each have a keen
understanding of the positive impact that our services can have on the vulnerable population that we serve.
Additionally, Ms. Castagnino’s experience with non-governmental and not-for-profit institutions provides valuable
insight into a customer segment that supports the Company’s growth strategy.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 19
•Mr. Visconto and Ms. Grant have real estate experience as a Principal of American Property Holdings and
Managing Partner of Chatham Financial, respectively. Mr. Visconto has specific experience in the acquisition,
development and management of multi-family, senior housing and commercial assets. Mr. Visconto also has
extensive experience with licensed operators, management companies and property owners, all of which align
with our customer base. Among other qualifications, Ms. Grant has extensive experience with risk management
strategies specific to REITs and the REITs industry as well as financial expertise in the areas of capital and asset
management.
•Mr. Frome has extensive legal experience. In addition, Mr. Frome has also served as a member of the board of
directors of other public companies and has extensive corporate finance experience, Securities and Exchange
Commission (“SEC”) compliance experience and mergers and acquisitions experience, which aids his service to
the Board. Furthermore, Mr. Frome also has extensive executive experience as he had served as the managing
partner of Olshan Frome Wolosky LLP.
•Mr. Simmons, Jr.'s experience as a certified public accountant provides him with extensive financial and
accounting expertise obtained from over fifteen years in public accounting. Mr. Simmons, Jr. qualifies as an audit
committee financial expert under SEC guidelines, and he brings executive experience to the Board as he serves
as a partner at a PCAOB registered accounting firm.
•Mr. McFadden has sales and marketing experience both as a Principal of his consulting company and through
his experience at the McGraw Hill Companies that provide him with an understanding of a large public
company’s operations as well as the compliance obligations of a public company. Mr. Ottaviano, through his
experience as a top-level marketing and operations executive for many years for two different companies, one of
which was a public company, has a comprehensive understanding of business operations, including business
development, and the compliance obligations of public companies.
Board Diversity Matrix* | ||
(As of April 26, 2024) | ||
Total Number of Directors | 9 | |
Female | Male | |
Part I: Gender Identity | ||
Directors | 3 | 6 |
Part II: Demographic Background | ||
African American | — | 1 |
Hispanic or Latinx | 1 | — |
White | 2 | 5 |
*As of April 26, 2024. There have been no changes to this information since the publication of the Board
Diversity Matrix dated as of April 28, 2023, which is posted on our website.
Director Independence
In accordance with the listing requirements of Nasdaq, a majority of the current members of the Company’s Board
are independent, namely: Diane S. Casey, Daniela Castagnino, Robert L. Frome, Laura Grant, John J. McFadden,
Dino D. Ottaviano, Kurt Simmons, Jr. and Jude Visconto. Accordingly, if such members are re-elected, a majority of
the members of the Company’s Board will continue to be independent.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 20
Board Committees
The Board has established an Audit Committee, an ESG Committee and an NCSO Committee to devote attention to
specific subjects and to assist in the discharge of its responsibilities. The Board’s practice is to limit membership of
each of its committees to independent directors and to designate any director who has been employed by the
Company within the past 5 years as non-independent for this purpose. The Board has also adopted a written
charter for each of the Audit Committee, ESG Committee and the NCSO Committee. Each written charter is
available on our website at https://investor.hcsgcorp.com/governance. The functions of those committees, their
current members and the number of meetings held during 2023 are described below:
Audit Committee.
The primary responsibilities of the Audit Committee, as described in the Amended and Restated Audit Committee
Charter include:
•appointment, compensation and oversight of the Company’s Independent Registered Public Accounting
Firm, who report directly to the Audit Committee, including (i) prior review of the Independent Registered
Public Accounting Firm’s plan for the annual audit, (ii) pre-approval of both audit and non-audit services to
be provided by the Independent Registered Public Accounting Firm and (iii) annual assessment of the
qualifications, performance and independence of the Independent Registered Public Accounting Firm;
•overseeing and monitoring the Company’s accounting and financial reporting processes and internal control
system, audits of the Company’s financial statements and the quality and integrity of the financial reports
and other financial information issued by the Company;
•providing an open avenue of communication among the Independent Registered Public Accounting Firm
and financial and other senior management and the Board;
•reviewing with management and, where applicable, the Independent Registered Public Accounting Firm,
prior to release, required annual, quarterly and interim filings by the Company with the SEC and the type
and presentation of information to be included in earnings press releases;
•reviewing material issues, and any analysis by management or the Independent Registered Public
Accounting Firm, concerning accounting principles, financial statement presentation, certain risk
management issues, such as the adequacy of the Company’s internal controls and significant financial
reporting issues and judgments and the effect of regulatory and accounting initiatives on the Company’s
financial statements;
•reviewing with the Company’s legal counsel any legal matters that could have a significant effect on the
Company’s financial statements, compliance with applicable laws and regulations and inquiries from
regulators or other governmental agencies;
•reviewing and approving all related party transactions between the Company and any director, executive
officer, other employee or family member;
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 21
Board Committees
Audit Committee.
•reviewing and overseeing compliance with the Company’s Code of Ethics and Business Conduct;
•establishing procedures regarding the receipt, retention and treatment of, and the anonymous submission
by employees of the Company of, complaints regarding the Company’s accounting, internal controls or
auditing matters; and
•reporting Audit Committee activities to the full Board and issuing annual reports to be included in the
Company’s Proxy Statement.
If elected, each of Ms. Grant and Messrs. Ottaviano and Simmons, Jr. are independent directors as such term is
defined by Rule 5605(a)(2) of the Nasdaq listing standards and Rule 10A-3 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Mr. Simmons, Jr. has been designated as an “audit committee financial expert”
and he satisfies the attributes required of an audit committee financial expert pursuant to Section 407 of Sarbanes-
Oxley.
The Audit Committee met five times during fiscal year 2023. The report of the Audit Committee for the fiscal year
ended December 31, 2023 is included herein under “Audit Committee Report” below.
Environmental, Social & Governance Committee.
The ESG Committee assists the Board by:
•overseeing and monitoring the Company’s enterprise-wide approach to environmental issues, social
responsibility and governance considerations;
•reviewing, evaluating and providing guidance to management with respect to social, employment,
governance, diversity and inclusion, environmental and other matters of interest to the Company and its
stakeholders;
•monitoring the Company’s progress towards achieving sustainability goals and objectives; and
•providing guidance on business conduct, ethics and other Code of Ethics and Business Conduct matters as
the same relate to the subject matter being overseen by the ESG Committee.
If elected, each of Ms. Castagnino and Messrs. Simmons, Jr. and Visconto are independent directors as such term
is defined by Rule 5605(a)(2) of the Nasdaq listing standards. The ESG Committee met two times during fiscal year
2023.
Nominating, Compensation and Stock Option Committee.
The NCSO Committee assists the Board by:
•developing and recommending to the Board a set of effective corporate governance policies and
procedures applicable to the Company;
•identifying, reviewing and evaluating individuals qualified to become Board members and recommending
that the Board select director nominees for each annual meeting of the Company’s shareholders;
•discharging the Board’s responsibilities relating to the compensation of Company executives; and
•administering the Company’s equity-based compensation plans.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 22
Board Committees
Nominating, Compensation and Stock Option Committee.
The NCSO Committee has identified certain qualifications it believes an individual should possess before it
recommends such person as a nominee for election to the Board. The NCSO Committee believes that nominees for
Director should possess the highest personal and professional ethics, integrity, values and judgment and be
committed to representing the long-term interests of the Company’s shareholders. While the NCSO Committee
does not have a formal policy with respect to considering diversity in identifying nominees for directors, the NCSO
Committee believes that diversity is an important factor in assessing potential board members along with the
particular qualifications and experience required to meet the needs of the Board. Furthermore, as part of the NCSO
Committee’s review of board composition, the NCSO Committee considers diversity of experience and background
in an effort to foster a strong and effective board. The NCSO Committee seeks to ensure that the composition of the
Board at all times adheres to the independence requirements of the Nasdaq listing standards and reflects a range of
talents, skills, and expertise, particularly in the areas of management, leadership, and experience in the Company’s
and related industries, sufficient to provide sound and prudent guidance with respect to the operations and interests
of the Company. Although the NCSO Committee has not established a formal process for identifying and evaluating
nominees for Director, the NCSO Committee uses multiple sources for identifying and evaluating nominees for
Director, including referrals from current Directors and shareholders.
The NCSO Committee has not adopted a policy or process by which shareholders may make recommendations to
the NCSO Committee of candidates to be considered by this NCSO Committee for nomination for election as
Directors. The NCSO Committee has determined that it is not appropriate to have such a policy because such
recommendations may be informally submitted to and considered by the NCSO Committee under its Charter.
Shareholders may make such recommendations by giving written notice to Healthcare Services Group, Inc., 3220
Tillman Drive, Suite 300, Bensalem, PA 19020, Attention: Corporate Secretary either by personal delivery or by
United States mail.
The report of the NCSO Committee regarding executive compensation for the fiscal year ended December 31, 2023
is included herein under the “Nominating, Compensation and Stock Option Committee Report” below.
If elected, each of Ms. Casey and Mr. McFadden are independent directors as such term is defined by Rule
5605(a)(2) of the Nasdaq listing standards. The NCSO Committee met two times during fiscal year 2023 and also
acts by unanimous written consent when necessary and appropriate.
Board Leadership
Jude Visconto was appointed Chairman of the Board of Directors in 2017 and has served as an independent
director since 2015. The Board believes that Mr. Visconto’s financial background and management experience are
qualifications for the role of Chairman of the Board. In addition, Mr. Visconto’s operational experience brings
additional perspective to the Board as the Company grows and provides continued operational excellence.
If Mr. Visconto is re-elected to the Board, it is the intention of the Board that he continue to serve as Chairman of the
Board. As Chairman of the Board, Mr. Visconto’s duties include: (i) approving agendas, schedules and supporting
information provided to the Board; (ii) ensuring the Board has full, timely and relevant information to support its
decision-making requirements; (iii) performing the duties of the Chairman at Board meetings; (iv) consulting on the
effectiveness of Board committees; (v) at his sole discretion, when necessary and appropriate, calling meetings of
the Board’s non-employee directors; (vi) consulting as to the timeliness of the flow of information from the Company
that is necessary for the directors to effectively perform their duties; (vii) serving as principal liaison between the
non-employee, independent directors and the President and Chief Executive Officer; (viii) if requested by
shareholders, being available for consultation and direct communication; and (ix) other duties requested by the
Board. In addition, Mr. Visconto presides at executive sessions of the Board without the presence of management.
We believe that including an independent chairman in our Board structure enhances the effectiveness of our Board.
This structure strengthens our corporate governance by promoting active engagement, objectivity, independence
and oversight of management.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 23
Kurt Simmons, Jr. was appointed Chairman of the Audit Committee in 2022 and has served as an independent
director since 2021. In the absence of the Chairman of the Board, the Chairman of the Audit Committee will assume
the interim responsibilities of the Chairman of the Board.
Directors' Fees
The Company pays each non-employee director a quarterly retainer. The Chairman of the Board and Chairman of
the Audit Committee each receive a quarterly retainer of $15,000. Non-chair members of the Audit Committee
receive a quarterly retainer of $7,500. Members of the NCSO Committee receive a quarterly retainer of $3,750.
Directors who do not sit on either of these committees receive a quarterly retainer of $2,500. In addition to these
director fees our directors also receive equity awards. Directors may also elect to receive their retainers in the form
of fully vested Deferred Stock Units (“DSUs”) with a grant date fair value equivalent to their respective quarterly
payment in lieu of cash. The number of DSUs granted to these directors is determined based on the stock price on
the award date and approximates the cash value the directors would otherwise receive for their retainer. DSUs
issued in lieu of cash for retainers vest immediately. During 2023, Messrs. Frome and Simmons Jr. made the
election to receive their retainer in the form of DSUs for their 2023 Board of Directors retainer.
Directors’ Compensation.
A director who is also an employee is not separately compensated for their service as a director. Our non-employee
directors received the following aggregate amounts of compensation for the year ended December 31, 2023:
Name | Fees Earned or Paid in Cash | Deferred Stock Unit Awards 1,2 | Total | |||
Diane S. Casey 3 | $15,000 | $40,002 | $55,002 | |||
Daniela Castagnino 4 | $10,000 | $40,002 | $50,002 | |||
Robert L. Frome 5 | $— | $50,033 | $50,033 | |||
Laura Grant 6 | $30,000 | $40,002 | $70,002 | |||
John J. McFadden 7 | $15,000 | $40,002 | $55,002 | |||
Dino D. Ottaviano 8 | $30,000 | $40,002 | $70,002 | |||
Kurt Simmons, Jr. 9 | $— | $100,028 | $100,028 | |||
Jude Visconto 10 | $60,000 | $40,002 | $100,002 | |||
1.The amounts in this column do not reflect compensation actually received by the Director, nor do they reflect the actual value that will be
recognized by the Director. Instead, the amounts represent the expense to be recognized for financial statement reporting purposes with
respect to the grant date fair value of the 2023 Deferred Stock Unit (“DSU”) awards made to each Director. In accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, the fair value of the awards was estimated
using the share price on the date of grant.
2.Each DSU award vests in one year from the grant date. Once vested, the recipient shall be entitled to receive a lump sum payment of a
number of shares equal to the total number of DSUs issued to such recipient upon the first to occur of (i) the five year anniversary of the
date of grant, (ii) the recipient’s death, disability or separation of service from the Board, or (iii) a change of control (as defined by the 2020
Plan).
3.Ms. Casey had vested options to purchase 26,004 shares of Common Stock as of December 31, 2023.
4.Ms. Castagnino had vested options to purchase 7,002 shares of Common Stock as of December 31, 2023.
5.Mr. Frome had vested options to purchase 32,007 shares of Common Stock as of December 31, 2023.
6.Ms. Grant had vested options to purchase 3,001 shares of Common Stock as of December 31, 2023.
7.Mr. McFadden had vested options to purchase 32,007 shares of Common Stock as of December 31, 2023.
8.Mr. Ottaviano had vested options to purchase 32,007 shares of Common Stock as of December 31, 2023.
9.Mr. Simmons, Jr. had no vested options as of December 31, 2023.
10.Mr. Visconto had vested options to purchase 22,005 shares of Common Stock as of December 31, 2023.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 24
Annual Evaluation
Our Board conducts an annual evaluation in order to determine whether it and its committees are functioning
effectively. As part of this annual self-evaluation, the Board evaluates whether the current leadership structure
continues to be optimal for the Company and our shareholders.
Code of Ethics and Business Conduct
We have adopted a Code of Ethics and Business Conduct for directors, officers and employees of the Company.
Our Code of Ethics and Business Conduct is intended to ensure compliance with all laws and regulations affecting
our ability to provide quality services to our clients and abiding by principles of integrity, honor and concern for
others. It is intended to promote honest and ethical conduct and full and accurate reporting of compliance matters.
Our Code of Ethics and Business Conduct covers topics including health and safety, conflicts of interest,
inappropriate workplace behavior, use of customer property and others. All company personnel are required to
complete annual ethics and compliance training. A copy of the Code of Ethics and Business Conduct is posted on
our website at www.hcsg.com.
Board's Role in Risk Oversight
Our Board is responsible for overseeing the Company’s risk management process. The Board focuses on the
Company’s general risk management strategy, including the most significant risks facing the Company, and ensures
that appropriate risk mitigation strategies are implemented by management. The Board monitors particular risk
management matters in connection with its general oversight and approval of corporate matters. In addition, the
Company maintains an Ethics and Compliance Hotline accessible to all employees and an Incident Management
Policy that requires that any reports or allegations related to (i) accounting, internal accounting controls or auditing
matters, (ii) questionable accounting or auditing matters, (iii) fraud, and (iv) violations of the Company’s Code of
Ethics and Business Conduct be thoroughly investigated (with consultation with the Audit Committee, as
appropriate), and that the Chief Compliance Officer provide reporting of compliance activity to the Audit Committee
on a quarterly basis, providing a high-level summary and analysis of the compliance activity for the period.
The Board has delegated to the Audit Committee oversight of certain aspects of the Company’s risk management
process. Among its duties, the Audit Committee oversees the Company’s compliance with legal and regulatory
requirements, the Company's internal audit function, the Company's cybersecurity risk program, and the Company’s
system of disclosure controls and system of internal financial, accounting and legal compliance controls. The Board
receives a quarterly update from the Audit Committee, which includes a review of items addressed during prior
quarters. Our NCSO and ESG Committees also consider and address risk as they perform their committee
responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a
material risk.
The Company’s management is responsible for day-to-day risk management under the direction of Jason J.
Bundick, the Company’s Executive Vice President, Chief Compliance Officer, General Counsel and Secretary. The
Chief Compliance Officer provides quarterly reports regarding the Company’s enterprise risk management process
and relevant legal and regulatory compliance issues to the Board of Directors. This oversight includes identifying,
evaluating and addressing potential risks that may exist at the enterprise, strategic, financial, operational,
environmental, social and governance, compliance and reporting levels. The Company conducts an annual review
of the Company’s disclosure controls and procedures, code of ethics and billing and sales compliance. To the extent
deemed necessary, the Company revises such procedures and policies. We believe the division of risk
management responsibilities described above is an effective approach for addressing the risks facing the Company
and that our Board leadership structure supports this approach.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 25
Cybersecurity
The Audit Committee oversees the Company's cybersecurity risk mitigation efforts, and management is responsible
for implementing the cybersecurity risk prevention program. The program includes ongoing employee education and
procedures for cybersecurity incident prevention, detection and response. The Audit Committee reports to the full
Board as appropriate, including when a matter rises to the level of a material risk. The Company retains a third-party
consulting firm specializing in cybersecurity which assesses the Company's cyber-related risk exposure and
provides recommendations for management to mitigate against such risks. Management provides quarterly updates
on cybersecurity matters to the Audit Committee. Despite these efforts, we are at risk from data breaches and
system disruptions, and we cannot provide any assurances that such events and impacts will not be material in the
future. For more information on the Company's risks and risk mitigation efforts regarding cybersecurity refer to Item
1A and Item 1C in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the
SEC.
Communications from Shareholders
The Board has established a process for shareholders to send communications to the Board. Shareholders may
send communications to the Board generally or to a specific director at any time by writing to: Healthcare Services
Group, Inc., 3220 Tillman Drive, Suite 300, Bensalem, PA 19020, Attention: Corporate Secretary. The Company
reviews all messages received and forwards any message that reasonably appears to be a communication from a
shareholder about a matter of shareholder interest that is intended for communication to the Board.
Communications are sent as soon as practicable to the director to whom they are addressed, or if addressed to the
Board generally, to the chairwoman of the NCSO Committee. Because other appropriate avenues of communication
exist for matters that are not of shareholder interest, such as general business complaints or employee grievances,
communications that do not relate to matters of shareholder interest are not forwarded to the Board.
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 26
Non-Director Executive Officers
Our non-director executive officers for the 2023 fiscal year are listed below. For biographical information relating to
Mr. Wahl, please refer to the Company’s Board nominees section of this Proxy Statement.
ANDREW M. BROPHY, CPA |
Vice President, Controller & Principal Accounting Officer |
Age: 34 |
Mr. Brophy has served in his current role since December 2021. Mr. Brophy had previously served as the Company’s Acting Principal Accounting Officer from February through November 2021, Director of Accounting since November 2020 and SEC Reporting Manager since January 2018. Prior to joining the Company, Mr. Brophy was a senior consultant with Centri Business Consulting. |
JASON BUNDICK, ESQ. |
Executive Vice President, Chief Compliance Officer, General Counsel & Secretary |
Age: 47 |
Mr. Bundick has served in his current role since December 2013. Mr. Bundick joined the Company in 2012 as Corporate Counsel. Prior to joining the Company, Mr. Bundick was an attorney with the law firm of Drinker Biddle & Reath LLP for more than five years. |
ANDREW W. KUSH |
Executive Vice President & Chief Operating Officer |
Age: 46 |
Mr. Kush has served in his current role since February 2020. Mr. Kush had previously served as Executive Vice President and Chief Administrative Officer since June 2017, and as Senior Vice President of Human Resources & Risk Management from 2013 to 2017. Mr. Kush joined the Company in 2010 as the Vice President of Human Resources. Prior to joining the Company, Mr. Kush was a Vice President of Risk Management with PNC Financial Services Group, Inc. |
PATRICK J. ORR, ESQ. |
Executive Vice President & Chief Revenue Officer |
Age: 49 |
Mr. Orr has served in his current role since January 2021. Mr. Orr joined the Company in 2014 as Senior Vice President of Financial Services. Prior to joining the Company, Mr. Orr was a partner at the law firm of Klestadt & Winters, LLP. |
JOHN C. SHEA, CPA, MBA |
Executive Vice President & Chief Administrative Officer |
Age: 52 |
Mr. Shea has served in his current role since September 2021. Mr. Shea had previously served as Chief Financial Officer, Secretary, Vice President of Finance, and Chief Accounting Officer. Mr. Shea joined the Company in 2009 as the Director of Regulatory Reporting. Prior to joining the Company, Mr. Shea was a Senior Manager with Ernst & Young’s Transaction Advisory Services. |
DIRECTORS, OFFICERS & CORPORATE GOVERNANCE
2024 PROXY STATEMENT 27
executive
compensation
2024 PROXY STATEMENT
2024 PROXY STATEMENT 28
EXECUTIVE COMPENSATION
Advisory Vote on Executive Compensation. (Proposal No. 2)
The Board of Directors recognizes the significant interest of shareholders in executive compensation matters.
Pursuant to amendments to Section 14A of the Exchange Act and the shareholder vote on the frequency of the
advisory vote on executive compensation at our 2023 Annual Meeting of Shareholders, we are providing our
shareholders with an annual opportunity to cast an advisory vote (commonly referred to as “say-on-pay”) to approve
the compensation of our Named Executive Officers.
We are asking our shareholders to provide advisory approval of the compensation of our Named Executive Officers
(which consist of our President and Chief Executive Officer, the Principal Accounting Officer and our other three
highest paid executive officers in 2023), as such compensation is disclosed in the Compensation Discussion and
Analysis, compensation tables and narrative discussion set forth below in this Proxy Statement. Our executive
compensation programs are designed to enable us to attract, motivate and retain executive talent, who are critical to
our success. Our compensation philosophy and framework have resulted in compensation for our President and
Chief Executive Officer and Executive Vice Presidents of the Company that is tied to the Company’s financial results
and the other performance factors described in the section of this Proxy Statement entitled Compensation
Discussion and Analysis below. These programs focus on rewarding the types of performance that increase
shareholder value, link executive compensation to the Company’s long-term strategic objectives and align interests
of the President and Chief Executive Officer and Executive Vice Presidents of the Company with those of our
shareholders. The Company believes that its executive compensation programs, which emphasize long-term equity
awards and variable compensation, satisfy these goals. A substantial portion of the total compensation paid to the
President and Chief Executive Officer and Executive Vice Presidents of the Company is intended to be variable and
delivered on a pay-for-performance basis. The Company believes that the compensation paid to the NEO who is not
an Executive Vice President is appropriate based on the scope of his responsibilities and takes into account
competitive market compensation paid by companies in our industry.
Our Board of Directors believes that the information provided above and within the “Executive Compensation”
section of this Proxy Statement demonstrates that our executive compensation program was designed appropriately
and is working to ensure that management’s interests are aligned with our shareholders’ interests and support long-
term value creation.
The Board of Directors recommend a vote “FOR” the adoption of the following non-binding resolution:
RESOLVED, that the shareholders of the Company approve, on an advisory basis, the compensation of the
Company’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, compensation
tables and narrative discussion set forth in this Proxy Statement.
This say-on-pay vote is advisory, and therefore not binding on the Company, the NCSO Committee or our Board of
Directors.
Vote Required
Approval of Proposal No. 2 requires the affirmative vote of the holders of a majority of the votes cast at the Annual
Meeting in person or by proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes, will not
have the same legal effect as an “against” vote and will not be counted in determining whether the proposal has
received the required shareholder vote.
2024 PROXY STATEMENT 29
Compensation, Discussion & Analysis
Healthcare Services Group, Inc. provides management, administrative and operating expertise and services to the
housekeeping, laundry, linen, facility maintenance and dietary service departments of healthcare facilities, including
nursing homes, retirement complexes, rehabilitation centers and hospitals located throughout the United States. We
provide such services to approximately 2,700 facilities throughout the continental United States as of December 31,
2023. We believe we are the largest provider of housekeeping and laundry management services to the long-term
care industry in the United States.
With almost 50 years of industry experience, HCSG aims to deliver improved operational, regulatory, and financial
outcomes. We seek to achieve this by designing and implementing the most efficient systems, holding our teams
accountable, measuring and reporting our results and designing quality assurance programs to continually assess
and improve our programs. We pursue excellence via an ever-evolving and expanding focus on training and the
development of team members at every level. At all times, we are guided by our Company Purpose of Fostering
Fulfillment in Communities.
Our Named Executive Officers.
We refer to our President and Chief Executive Officer, the Principal Accounting Officer (who also serves as the
Principal Financial Officer) and our three most highly compensated executive officers who were serving as
executive officers at the end of our latest fiscal year as our Named Executive Officers (“NEOs”). In 2023, our NEOs
were as follows:
We refer to our President and Chief Executive Officer and our Executive Vice Presidents as the Company’s
“Executive Management Team.” Jason J. Bundick, Executive Vice President, Chief Compliance Officer, General
Counsel & Secretary is also a member of the Executive Management Team but is not an NEO as defined above.
2023 Business Highlights.
While the crisis brought on by the COVID-19 pandemic showed some signs of abatement during 2023, our clients in
the long-term and post-acute care industry continued to dedicate significant financial and other resources to protect
their residents, employees and visitors from COVID-19 and remained challenged by on-going occupancy pressures,
inflationary cost pressures, labor shortages and unprecedented wage growth resulting from the pandemic and its
aftermath. Notwithstanding the industry challenges, from an overall operational and financial stewardship point of
view, the Board and NCSO Committee believed that in 2023, the Executive Management Team performed well in a
challenging environment involving high levels of industry stress and difficult market conditions.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 30
JOHN C. SHEA,
CPA, MBA
Executive Vice
President &
Chief Administrative
Officer
THEODORE WAHL
President,
Chief Executive
Officer & Director
ANDREW W. KUSH
Executive Vice
President &
Chief Operating
Officer
PATRICK J. ORR,
ESQ.
Executive Vice
President &
Chief Revenue
Officer
ANDREW M.
BROPHY, CPA
Vice President,
Controller &
Principal Accounting
Officer
Compensation, Discussion & Analysis
2023 Business Highlights.
Key 2023 accomplishments included the following:
Guided by our Company Purpose of Fostering Fulfillment in Communities, our Managers and Associates
continued to lead and serve on the frontlines - through the pandemic, and most recent reduced workforce
availability, precipitous rise in inflation and supply chain challenges - while tirelessly supporting our customers
and ensuring the well-being of America’s most vulnerable;
Successfully transitioned nearly 330 facility ownership changes;
Achieved strong financial performance by improving our net income and cash flow from operations by
approximately 12% and 633%, respectively.
Successfully completed our service agreement modification initiative, adjusting for the extraordinary labor
inflation experienced during the second half of 2021 and improving our position to address future inflation on
labor on a more real-time basis;
Exited the fiscal year with cost of services in line with our historical target of 85% of revenues earned;
Further reduced workers' compensation claim scope resulting in favorable loss development trends; and
Demonstrated continued financial discipline and efficiency with return on assets of 4.9%, return on equity of
8.4% and return on invested capital of 10.4%.
The Board and NCSO Committee did not make any adjustments to the executive compensation framework in 2023.
The base salary of our CEO (which has been unchanged since 2016) and most other members of the Executive
Management Team remained unchanged. Incentive compensation for 2023 was based on the same metrics used in
2022 as the metrics used in determining incentive awards have proven to be resilient and relevant. The detail below
more fully describes our structure and compensation paid in fiscal year 2023.
Compensation Objectives.
NEO compensation is based on a combination of Company and individual contributions to our performance, along
with each NEO’s level and scope of responsibility. Our NCSO Committee believes that the compensation paid is
consistent with our overarching principle that the compensation plan for the Executive Management Team should be
closely aligned with Company performance on both a short-term and long-term basis to create value for
shareholders, and that such compensation should assist us in attracting and retaining high-level executive talent.
In establishing compensation for the Executive Management Team, the following are the objectives of the Company
and the NCSO Committee:
•Attract and retain individuals of superior ability and executive talent;
•Align executive compensation with our corporate strategies, business objectives and the long-term interests
of our shareholders; and
•Enhance the executive officers’ incentive to maximize shareholder value, as well as promote retention of key
personnel, by providing a portion of total compensation in the form of direct ownership in the Company
through equity compensation.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 31
Compensation, Discussion & Analysis
Compensation Objectives.
To support these objectives, the Company’s compensation program for the Executive Management Team has the
following characteristics:
What we do: | What we don’t do: | |||
o | Significant share ownership requirements for the CEO and Executive Vice Presidents | o | No employment agreements containing special severance payments such as golden parachutes | |
o | Double-trigger requirements for vesting of equity awards on a change in control | o | No hedging or engaging in derivative transactions related to Company shares | |
o | A cap on the annual incentive payout for the CEO | o | No gross-up payments to cover income taxes related to executive compensation | |
o | Majority of the Executive Management Team’s compensation is “at-risk” | o | No repricing or backdating of stock options | |
o | Operate a clawback policy that applies to “at-risk” variable compensation | o | No retirement programs that are specific to executive officers | |
o | Balance “at-risk” compensation across short-term and long-term time horizons | |||
o | Engagement of an independent compensation consultant | |||
Compensation Oversight.
Among its duties, the NCSO Committee is accountable for discharging the Board’s responsibilities relating to the
compensation of the Company’s NEOs. Accordingly, the NCSO Committee conducts an annual review of the
aggregate level of such compensation, as well as the mix of elements used to compensate the NEOs.
To achieve these objectives, our overall compensation program aims to pay our NEOs competitively, consistent with
our success and their contribution to that success. To accomplish these objectives we rely on programs that provide
compensation in the form of both cash and equity. Although our NCSO Committee has not adopted any formal
guidelines for allocating total compensation between cash and equity, the NCSO Committee considers the balance
between providing short-term and long-term incentives which are designed to help align the interests of
management with the interests of shareholders.
Determination of Compensation Awards.
The compensation of the President and Chief Executive Officer of the Company is determined by the NCSO
Committee. Such determination is based on a number of factors including:
•Consideration of the operating and financial performance of the Company, primarily its income before income
taxes;
•Attainment of a level of compensation designed to retain a superior executive in a highly competitive
environment; and
•Consideration of the individual’s overall contribution to the Company.
The NCSO Committee has also historically taken into account input from other independent members of our Board
in determining the compensation of the President and Chief Executive Officer. Compensation for the other NEOs is
recommended by the President and Chief Executive Officer and reviewed by the NCSO Committee, taking into
account the same factors described above.
The Company engages an independent compensation consultant as needed, who provides advice as requested in
areas such as peer group composition, market benchmarking and executive compensation policy design.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 32
Compensation, Discussion & Analysis
Review of Compensation
In reviewing compensation, publicly available data relating to the compensation practices and policies of other
companies within and outside our industry is collected to the extent it is available. For NEO compensation, our
review includes comparing to data analyzed from proxy filings from the below listed companies. For other Executive
Management Team members, compensation survey data is also used for companies with similar revenues to the
Company. The NCSO Committee believes that gathering information about the compensation practices of other
companies is an important part of our compensation-related decision-making process.
Given the challenge that there are no other U.S. publicly-traded companies specifically engaged only in the
Company’s business, which provides housekeeping and food services primarily to the healthcare industry and
overwhelmingly to the long-term care segment of the industry, our comparator group has been developed looking at
a broader cross-section of service industry companies. The NCSO Committee periodically reviews the peer group to
identify relevant companies for comparison. The following companies have been selected as reasonable
comparators for talent as they operate in similar industries, are of similar size and scope and/or have similar
employee bases. That group consists of the following:
o | ABM Industries Incorporated | o | CoreCivic, Inc. |
o | Amedisys, Inc. | o | J&J Snack Foods Corp. |
o | AMN Healthcare Services, Inc. | o | The Brink’s Company |
o | Chemed Corporation | o | Modivcare, Inc. |
o | Clean Harbors, Inc. | o | UniFirst Corporation |
Given the challenges noted above in identifying directly comparable companies, if and when collected, market data
is just one factor that the NCSO Committee considers in reaching decisions. Such other factors considered include
individual performance, the trends in Company performance relative to broader market indices, the industry in which
we operate, tax implications and achievements in the Company’s social and sustainability efforts.
Incorporating Shareholder Feedback.
The NCSO Committee was pleased that approximately 93% of votes cast at the 2023 Annual Meeting of
Shareholders approved, on an advisory basis, the compensation of the Company’s NEOs at such time. The NCSO
Committee considered that support in its efforts to align the Company’s executive compensation policies with long-
term shareholder interests. In particular, we believe that the voting outcome reaffirmed that changes we have made
over the past several years, which include introducing performance-based equity awards (in the form of
performance stock units, or “PSUs”), continue to be well received and effective.
The NCSO Committee will continue to monitor voting outcomes and feedback received from shareholders in
reviewing the compensation program of our NEOs.
Alignment of Pay and Performance.
The NCSO Committee believes that including a blend of stock options, restricted stock units (“RSUs”) and PSUs as
a significant component of compensation for our Executive Management Team has successfully aligned pay with
performance. This is evidenced through the fact that during the tenure of our current President and Chief Executive
Officer, the outcome under the annual incentive plan and value of equity awarded has generally trended in line with
operating performance.
Elements of Compensation.
Base Salary.Base salaries for our NEOs are established based on the scope of their responsibilities and
individual experience, taking into account competitive market compensation paid by companies in our industry for
each such position. Base salaries are reviewed annually and may be adjusted to take into account changes in
responsibilities, individual performance, experience, practices in our compensation comparator group and the state
of our industry more broadly.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 33
Compensation, Discussion & Analysis
Elements of Compensation.
Mr. Wahl’s base salary as President and Chief Executive Officer for 2023 was approved by the NCSO on
December 21, 2022 and has remained unchanged since 2016. Mr. Wahl has not received an increase in base
salary for the last eight years. Mr. Shea's and Mr. Kush's base salaries were also unchanged from 2022. Mr. Orr's
and Mr. Brophy's increases in base salary reflected the increased scope of their roles compared to previous years.
Named Executive Officer | 2022 Base Salary | 2023 Base Salary | Change | |||
Theodore Wahl | $1,005,108 | $1,005,108 | —% | |||
John C. Shea | $606,703 | $606,703 | —% | |||
Andrew W. Kush | $639,000 | $639,000 | —% | |||
Patrick J. Orr | $541,007 | $579,407 | 7.1% | |||
Andrew M. Brophy | $210,716 | $221,481 | 5.1% |
Annual Incentives.We structure our annual incentive program as incentive bonus payments to reward our
NEOs based on the Company’s performance and our evaluation of the individual executive’s contribution to that
performance. This allows the NEOs to receive a significant portion of their compensation based on the results that
they helped us to achieve.
The incentive bonuses paid to the members of the Executive Management Team are calculated as a percentage of
the Company’s income before income taxes. The CEO receives his bonus on an annual basis while the other
members of the Executive Team receive quarterly bonus payments. This approach reflects the importance of
income before income taxes in assessing our overall performance for those responsible for the Company’s
operational and financial success, providing line of sight to both top-line growth and the appropriate management of
costs. This performance-based compensation structure aligns with our strategic focus and Company Vision - To Be
THE Choice For Our Customers - resulting in retention of and growth in relationships through good customer
service, expansion of our services, effective execution in all that we do and cost management. Mr. Brophy is not a
member of the Executive Management Team and receives an annual discretionary bonus based on individual and
company performance.
For NEOs other than the President and Chief Executive Officer and Principal Accounting Officer, incentive
compensation can be modified up or down based on other aspects of quantifiable financial and operational
performance for which the executive officers are accountable. Examples of the performance taken into account
include growth in the number of facilities serviced, profitability, client retention and satisfaction and overall
management of their functional area. No discretion is applied in determining the total value of the annual incentive
earned by the President and Chief Executive Officer given his direct accountability to shareholders for our overall
financial performance.
For the President and Chief Executive Officer, the annual incentive payout is subject to an overall maximum of two
times base salary. The total annual incentive earned by Mr. Wahl for 2023 was $397,920, equating to 40% of base
salary. Mr. Wahl elected to receive 35% of this compensation, or $139,265, in the form of shares of Common Stock
in early 2024. The remaining balance of $258,655 was received in cash.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 34
Compensation, Discussion & Analysis
Elements of Compensation.
Annual incentive outcomes for the other members of the Executive Management Team were validated against the
operational performance achievements towards which they contributed. Accordingly the following payments were
approved for our NEOs with respect to 2023 performance:
Named Executive Officer | 2023 Cash Annual Incentive | 2023 Equity Annual Incentive | 2023 Annual Incentive (% of salary) | |||
Theodore Wahl | $258,655 | $139,265 | 40% | |||
John C. Shea | $90,100 | $— | 15% | |||
Andrew W. Kush | $144,163 | $— | 23% | |||
Patrick J. Orr | $108,122 | $— | 19% | |||
Andrew M. Brophy1 | $64,575 | $— | 29% |
1.Mr. Brophy’s incentive bonus is not tied to financial performance, but is instead discretionary and paid based on his success in his position
and contribution to his role.
Long-Term Equity Incentive Awards.The NCSO Committee is responsible for approving the population of
individuals who will be granted equity awards, the number of equity awards each individual will receive, the option
price per share (if applicable), the exercise period (if applicable) and vesting of each award. Guidelines for the
number of equity awards granted to each officer are determined using a procedure approved by the NCSO
Committee based upon several factors, including the officer’s salary level, individual contributions to the Company’s
performance and the value of the equity award at the time of grant. We grant equity awards at the fair market value
of the underlying stock on the date of grant.
Long-term equity incentive awards are currently granted to the Executive Management Team as a combination of
stock options, RSUs and PSUs. The NCSO Committee believes that the use of stock options, RSUs and PSUs
provides a clear incentive to the Executive Management Team to deliver long-term sustainable and profitable growth
which translates into value creation for our shareholders, in a responsible way. The vesting of RSUs is phased over
a period of five years, and the vesting of PSUs is three years, to reinforce this long-term focus and enhance
retention.
In making its decision to grant these awards, the NCSO Committee considered the competitive challenges to our
business and the resulting focus, efforts and expertise the Executive Management Team has expended to meet
these challenges and foster the growth and financial position of the Company. In determining award values the
NCSO Committee considers a range of factors that takes into account not just competitive market data, but also the
performance of the Company more generally and the contributions of individuals to our performance
accomplishments in the prior year.
The following awards were approved and granted during 2023 to our NEOs:
Named Executive Officer | Stock Options (#) | Stock Option Grant Date Fair Value1 | Restricted Stock Units (#) | Restricted Stock Units Grant Date Fair Value1 | Performance Stock Units (#) | Performance Stock Units Grant Date Fair Value2 | Total Grant Date Fair Value | |||||||
Theodore Wahl | 116,799 | $762,697 | 111,190 | $1,525,527 | 47,075 | $762,615 | $3,050,839 | |||||||
John C. Shea | 23,192 | $151,444 | 22,078 | $302,910 | 9,347 | $151,421 | $605,775 | |||||||
Andrew W. Kush | 23,192 | $151,444 | 22,078 | $302,910 | 9,347 | $151,421 | $605,775 | |||||||
Patrick J. Orr | 17,540 | $114,536 | 16,698 | $229,097 | 7,069 | $114,518 | $458,151 | |||||||
Andrew M. Brophy | — | $— | 3,644 | $49,996 | — | $— | $49,996 |
1.All options and restricted stock unit awards granted vest and are exercisable ratably over a five-year period on each yearly anniversary of
the grant date of the award.
2.Performance stock unit awards vest upon certification by the Board in 2026, provided that the performance targets, based on relative Total
Shareholder Return (“TSR”), are met for the three-year period ended December 31, 2025.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 35
Compensation, Discussion & Analysis
Elements of Compensation.
Performance stock units can be earned based on a three-year relative TSR performance relative to the S&P
MidCap 400 Index. The NCSO determined that this was an appropriate peer group given the absence of a
sufficiently large enough group of directly relevant peers for performance comparisons. The first award of
performance stock units was made in 2021 and the applicable three-year performance period concluded on
December 31, 2023. The performance period for the second award of performance stock units was made in 2022
and the applicable three-year performance period will conclude on December 31, 2024.
The table below represents the vesting conditions for performance stock unit awards:
HCSG TSR Percentile Ranking | Percentage of Target PSUs Earned | |
Less than the 25th percentile | —% | |
at the 25th percentile(1) | 50% | |
at the 50th percentile | 100% | |
At or above the 75th percentile | 150% |
(1) Performance between the 25th percentile and the 75th percentiles is interpolated.
In January 2023, 2022 and 2021, the NCSO Committee granted options to purchase an aggregate of approximately
181,000, 282,000 and 175,000 shares of Common Stock, respectively, to our NEOs. In January 2023, 2022 and
2021, the NCSO Committee granted restricted stock units of an aggregate of approximately 176,000, 129,000, and
86,000 shares, respectively, to our NEOs. In January 2023, 2022 and 2021, the NCSO Committee granted
performance stock units of an aggregate of approximately 73,000, 54,000 and 35,000 shares, to the Executive
Management Team. See the table entitled Grant of Plan-Based Awards included in this Proxy Statement for more
information on the 2023 grants. The NCSO Committee has also granted awards to other levels of Company
management and key employees creating a culture of ownership and to incentivize and encourage contributions
and performance results that drive long-term shareholder value.
Deferred Compensation Plan. The Company offers a Supplemental Executive Retirement Plan (“SERP”) for
executives and certain key employees. The SERP is not qualified under Section 401 of the Internal Revenue Code.
The SERP allows participants to defer up to 25% of their earned income on a pre-tax basis and as of the last day of
each plan year, each participant will be credited with a 25% match of their earnings deferred (up to 15%) in the form
of the Company’s Common Stock based on the then-current market value. SERP participants fully vest in the
Company’s matching contribution three years from the first day of the initial year of participation. The income
deferred and the matching contributions are unsecured and subject to the claims of the Company’s general
creditors.
Under the SERP, we are authorized to issue up to 1,012,000 shares of our Common Stock to our employees.
Pursuant to such authorization, approximately 225,000 shares are available for future grant at December 31, 2023.
As of December 31, 2023, and since the initiation of the SERP, the Company’s 25% match has resulted in
approximately 787,000 shares of Common Stock being issued to the trustee. At the time of issuance, such shares
are accounted for at cost, as treasury stock. At December 31, 2023, approximately 322,000 of such shares are
vested and remain in the respective active participants’ accounts. Participants may not withdraw or sell such stock
until the termination of their employment.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 36
Compensation, Discussion & Analysis
Elements of Compensation.
Employee Stock Purchase Plan. We have an Employee Stock Purchase Plan (“ESPP”) for all eligible
employees. All full-time and certain part-time employees who have completed two years of continuous service with
us are eligible to participate. In 2021, the Board of Directors extended the ESPP for an additional five offerings
through 2026. Annual offerings commence and terminate on the respective year’s first and last calendar day. Under
the ESPP, we are authorized to issue up to 4,050,000 shares of our Common Stock to our employees. Pursuant to
such authorization, we have 1,779,000 shares available for future grant at December 31, 2023. Furthermore, under
the terms of the ESPP, eligible employees may contribute through payroll deductions up to $21,250 (85% of IRS
limitation) of their compensation toward the purchase of the Company’s Common Stock. No employee may
purchase Common Stock which exceeds $25,000 in fair market value (determined on the date of grant) for each
calendar year. The price per share is equal to the lower of 85% of the fair market price on the first day of the offering
period or 85% of the fair market price on the day of purchase.
Other Elements of Compensation and Perquisites.
Medical Insurance. We provide to each NEO and their respective spouses and children such health, dental and
optical insurance as we may from time to time make available to our management employees. This insurance
benefit requires an employee co-payment of the insurance premium.
Life and Disability Insurance. We provide to each NEO such disability and/or life insurance as we in our sole
discretion may from time to time make available to our other management employees.
Automobile Use. Members of the Executive Management Team are provided with the use of a Company fleet
vehicle.
Compensation Risk Assessment.
Our NCSO committee believes that our incentive compensation arrangements of the Company’s NEOs provide
incentives that do not encourage risk-taking beyond our ability to effectively identify and manage significant risks;
are compatible with effective internal controls and the risk management practices of our Company; and are
supported by the oversight and administration of the NCSO committee because (i) the annual long-term (equity-
based) compensation programs are subject to 5 year time-based vesting conditions and (ii) performance targets for
the annual short-term (cash bonus) compensation programs in place for the Executive Management Team, were
linked to overall corporate performance (percentage of the Company’s income before taxes). For the annual short-
term (cash bonus) compensation programs in place for our eligible home office and field operations leaders,
performance targets were linked to multiple performance measures including non-financial objectives (such as
recruiting and developing future management personnel, maintaining good relationships with clients and
employees, and compliance with operational reporting requirements), with reasonable caps and appropriate
controls to establish targets and validate actual performance against the targets before payouts were made.
Further, our Chief Compliance Officer reports to NCSO committee on at least an annual basis on matters relating to
employee compensation. In addition, our independent compensation consultant regularly reviews our executive
compensation program for the purpose of identifying potential sources of risk and reports its findings to the NCSO
committee.
Stock Ownership Guidelines.
Members of the Executive Management Team are expected to hold an amount of Company Common Stock with a
value that is at least equal to a specified multiple of their base salary. Newly appointed members of the Executive
Management Team must attain the guideline ownership within five years of the date that they become executive
officers. In accordance with this policy, the President and Chief Executive Officer is required to hold stock with a
value of at least six times his base salary, while the Company’s Executive Vice Presidents are each required to hold
stock with a value of at least two times their base salary.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 37
Compensation, Discussion & Analysis
Stock Ownership Guidelines.
Stock ownership includes shares owned outright, restricted stock units and stock equivalents held under deferred
compensation arrangements. Additionally, one-half of the guidelines may be met by vested, in-the-money stock
options held by the executive. If an executive does not meet the ownership requirement on the applicable
measurement date, the executive must retain all net shares from the exercise of stock options and the vesting of
restricted stock and restricted stock units until the minimum current ownership requirement is achieved. The
following table includes our Executive Management Team's requirements for the stock ownership guidelines and
current ownership as of December 31, 2023.
Executive Management Team | Ownership Requirement (% of salary) | Current Ownership (% of salary) | ||
Theodore Wahl | 600% | 610% | ||
John C. Shea | 200% | 158% | ||
Andrew W. Kush | 200% | 136% | ||
Patrick J. Orr | 200% | 109% | ||
Jason J. Bundick | 200% | 157% |
While certain members of the Executive Management Team do not have a current ownership percentage matching
or exceeding the minimum ownership requirement as of December 31, 2023, all members of the Executive
Management Team have remained in compliance with the guidelines.
Change of Control.
The Company’s 2020 Amended Omnibus Incentive Plan (the “2020 Plan”) includes a “double-trigger” approach to
vesting of stock awards upon a change in control, meaning vesting would occur if a change in control occurs and
the outstanding equity awards are not fully assumed, or where the outstanding equity awards are fully assumed by
the resulting entity and the participant is subsequently terminated or resigns for good reason. We believe a double-
trigger approach provides adequate employment protections and reduces, for the shareholders’ benefit, potential
transaction costs associated with the awards.
Clawback Policy.
Effective October 27, 2023 the Company adopted a clawback policy to align with listing rules adopted by Nasdaq as
required by the SEC. The policy applies to all executive officers (as defined under the applicable rules) and requires
the Company to seek to recoup certain incentive-based compensation, whether cash- or equity-based, from current
or former officers and in the event that the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company with any financial reporting requirement under the securities laws. The
Board of Directors has delegated the oversight of this policy to the NCSO Committee, which has the authority to
determine the necessity, exercise and implement the clawback of executive incentive-based compensation in the
event of a restatement of Company financial statements. In the event that recovery is required, the NCSO
Committee will review and recover reasonably promptly the applicable portion of incentive-based compensation
awarded to or earned by our officers during the three-year period prior to any restatement of the Company’s
financial results. Recovery will be required on a “no fault” basis, without regard to whether any misconduct occurred
and without regard to whether an executive officer was responsible for the erroneous financial statements.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 38
Compensation, Discussion & Analysis
Clawback Policy.
Application of the Clawback Policy
For the year ended December 31, 2023 , the Company was required to prepare an accounting restatement as a
result of a prior period error correction. The error was discovered during the year-end reporting process and was
related to the Company's estimate for accrued payroll, specifically accrued vacation. The Company concluded the
error was not material to the Company's previously reported consolidated financial statements or unaudited interim
condensed consolidated financial statements. More information related to the error correction can be found in the
Company's 2023 Form 10-K. The NSCO Committee determined that there was no erroneously awarded
compensation attributable to such accounting restatement; therefore, no amount was pursued from any current or
Stock Trading Black-Out Period and Anti-Hedging Policy.
Under the Company’s insider trading policy, officers, non-employee directors and key personnel may purchase or
sell our securities only during non “black-out periods”. “Black-out periods” begin at the close of trading on Monday of
the third week in the third month of each fiscal quarter and end at the close of the business day following the date of
each quarterly earnings announcement. Additionally, the Company has adopted a policy which prohibits our officers,
non-employee directors and key personnel from purchasing financial instruments (including prepaid variable forward
contracts, equity swaps, collars, and exchange funds), or otherwise engage in transactions, that hedge or offset, or
are designed to hedge or offset any decrease in the market value of our Common Stock.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 39
Summary Compensation Table
The following table sets forth certain information regarding compensation paid or accrued during the Company’s
prior three fiscal years, as applicable, for the Company’s NEOs.
Name and Principal Position | Salary | Stock Awards1 | Option Awards2 | Non-Equity Incentive Plan Compensation3 | Nonqualified Deferred Compensation Earnings | All Other Compensation4 | Total | |||||||||
Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||
Theodore Wahl | 2023 | 1,005,108 | 2,431,170 | 762,697 | 258,648 | 55,080 | 47,207 | 4,559,910 | ||||||||
President & Chief Executive Officer & Director | 2022 | 1,005,108 | 2,214,062 | 737,227 | 338,115 | 74,042 | 45,709 | 4,414,263 | ||||||||
2021 | 1,005,108 | 2,372,441 | 720,287 | 231,846 | 62,354 | 13,737 | 4,405,773 | |||||||||
Andrew W. Kush | 2023 | 639,000 | 454,332 | 151,444 | 144,163 | 25,968 | 37,525 | 1,452,432 | ||||||||
Executive Vice President & Chief Operating Officer | 2022 | 639,000 | 451,708 | 150,114 | 90,164 | 31,097 | 35,064 | 1,397,147 | ||||||||
2021 | 639,000 | 427,891 | 143,858 | 123,646 | 31,950 | 21,646 | 1,387,991 | |||||||||
John C. Shea | 2023 | 606,703 | 454,332 | 151,444 | 90,100 | 24,012 | 33,426 | 1,360,017 | ||||||||
Executive Vice President & Chief Administrative Officer | 2022 | 606,703 | 452,706 | 150,114 | 56,353 | 27,219 | 31,619 | 1,324,714 | ||||||||
2021 | 606,703 | 427,891 | 143,858 | 77,279 | 27,229 | 11,274 | 1,294,234 | |||||||||
Patrick J. Orr | 2023 | 579,407 | 347,371 | 114,536 | 108,122 | 21,780 | 22,335 | 1,193,551 | ||||||||
Executive Vice President & Chief Revenue Officer | 2022 | 541,007 | 323,232 | 106,953 | 56,353 | 15,424 | 18,931 | 1,061,900 | ||||||||
2021 | 506,250 | 324,458 | 107,639 | 77,279 | 19,670 | — | 1,035,296 | |||||||||
Andrew M. Brophy | 2023 | 221,481 | 49,996 | — | 64,575 | 10,212 | 10,817 | 357,081 | ||||||||
Vice President, Controller, & Principal Accounting Officer | 2022 | 210,716 | 49,992 | — | 61,500 | 9,429 | 13,222 | 344,859 | ||||||||
2021 | 183,100 | 20,001 | — | 68,005 | 5,227 | 11,274 | 287,607 | |||||||||
1.The total amounts in these columns do not reflect compensation actually received by the NEO, nor do they reflect the actual value that will be recognized by the
NEO. Instead, the amounts reflect the aggregate grant date fair value of restricted stock awards, restricted stock unit awards, performance stock unit awards,
incentive awards received in stock, and ESPP awards computed in accordance with FASB ASC Topic 718. A more detailed discussion of the assumptions used
in calculating these values may be found in Note 10 of the Notes to the Financial Statements in our Annual Report on Form 10-K for the year ended
December 31, 2023. For PSUs granted in 2023, the grant date fair value reported is based upon the probable outcome of performance at the grant date.
Fiscal 2023 Grants of Performance Awards | |||
Probable Outcome ($) | Highest Outcome ($) | ||
Theodore Wahl | $762,615 | $1,143,923 | |
John C. Shea | $151,421 | $227,132 | |
Andrew W. Kush | $151,421 | $227,132 | |
Patrick J. Orr | $114,518 | $171,777 | |
Andrew M. Brophy | N/A | N/A | |
The grant date fair value of performance awards with market-based conditions like relative total shareholder return is determined based on a Monte Carlo
simulation.
2.The total amounts in this column do not reflect compensation actually received by the NEO, nor do they reflect the actual value that will be recognized by the
NEO. Instead, the amounts reflect the aggregate grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718. A more
detailed discussion of the assumptions used in calculating these amounts may be found in Note 10 of the Notes to the Financial Statements in our Annual
Report on Form 10-K for the year ended December 31, 2023. Refer also to the Compensation Discussion and Analysis for further information.
3.Amounts shown in this column represent annual performance-based cash payments under the annual incentive program, as described in the Compensation
Discussion and Analysis. No future pay-outs will be made with respect to any of the plan-based awards under the plan.
4.Includes automobile allowance, vehicle lease, and contributions paid by the Company towards employee’s health and life insurance premiums.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 40
Grant of Plan-Based Awards
The following table sets forth information concerning grants of plan-based awards made by us during the year
ended December 31, 2023, to each of the NEOs.
Grant Date | Date Award Approved | Estimated Future Payouts Under Equity Incentive Plan Awards1 | Estimated Future Payouts Under Equity Incentive Plan Awards (#)2 | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Options Awards | Grant Date Fair Value of Stock and Option Awards | |||||||||||||
Name | Target (#) | Thres- hold | Target | Maxi- mum | (#) | (#) | ($/sh) | ($) | ||||||||||||
Theodore Wahl | 2/24/2023 | 12/21/2022 | — | 23,538 | 47,075 | 70,613 | 111,190 | 116,799 | $13.72 | $3,050,839 | ||||||||||
12/31/2023 | 12/21/2022 | 11,519 | — | — | $12.09 | $139,265 | ||||||||||||||
John C. Shea | 2/24/2023 | 12/21/2022 | — | 4,674 | 9,347 | 14,021 | 22,078 | 23,192 | $13.72 | $605,775 | ||||||||||
Andrew W. Kush | 2/24/2023 | 12/21/2022 | — | 4,674 | 9,347 | 14,021 | 22,078 | 23,192 | $13.72 | $605,775 | ||||||||||
Patrick J. Orr | 2/24/2023 | 12/21/2022 | — | 3,535 | 7,069 | 10,604 | 16,698 | 17,540 | $13.72 | $458,151 | ||||||||||
Andrew M. Brophy | 2/24/2023 | 12/21/2022 | — | — | — | — | 3,644 | — | $13.72 | $49,996 | ||||||||||
1.Represents the shares received during 2024 as a result of Mr. Wahl’s election to receive a portion of his 2023 performance-based compensation in Company
Common Stock. The grant date of such shares is reflected as the date in which the total amount of such performance-based compensation is earned by Mr.
Wahl.
2.These performance stock units were granted under the 2020 Plan and vest upon certification by the Board in 2026, provided that the performance targets,
based on Relative TSR, are met for the three-year periods ended December 31, 2025.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table.
The Company has no employment agreements with any of the NEOs. No previously granted options or other equity-
based awards were re-priced or otherwise materially modified during the fiscal year ended December 31, 2023. As
set forth above in the Compensation Discussion and Analysis, the Company believes that part of the compensation
for the NEOs should be in the form of long-term equity grants so as to align the interests of the NEOs with the
Company’s shareholders. In accordance with these objectives, Mr. Wahl received stock options to purchase
116,799 shares of Common Stock, 111,190 restricted stock units and 47,075 performance stock units. Messrs. Shea
and Kush each received stock options to purchase 23,192 shares of Common Stock, 22,078 restricted stock units
and 9,347 performance stock units. Mr. Orr received stock options to purchase 17,540 shares of Common Stock,
16,698 restricted stock units and performance stock units of 7,069. Mr. Brophy received 3,644 restricted stock units.
These stock options and restricted stock units vest over five years while performance stock units vest over 3 years,
as an incentive to increase the long-term value of the Company and thereby increase the value of its Common
Stock.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 41
Outstanding Equity Awards at December 31, 2023
The following table summarizes the outstanding equity awards of each of the NEOs as of December 31, 2023:
Option Awards | Stock Awards | |||||||||||||||||
Name | Grant Date1 | Vested, Exercisable | Unvested | Option Exercise Price | Option Expiration Date | Unvested2 | Market Value of Unvested3 | Unvested Equity Incentive Plan Awards4 | Market Value of Equity Incentive Plan Awards4 | |||||||||
Theodore Wahl | 1/3/2014 | 15,000 | — | $28.02 | 1/3/2024 | — | $— | — | $— | |||||||||
1/5/2015 | 15,000 | — | $30.30 | 1/5/2025 | — | $— | — | $— | ||||||||||
1/4/2016 | 15,000 | — | $34.14 | 1/4/2026 | — | $— | — | $— | ||||||||||
1/4/2017 | 30,000 | — | $39.38 | 1/4/2027 | — | $— | — | $— | ||||||||||
1/4/2018 | 50,000 | — | $52.06 | 1/4/2028 | — | $— | — | $— | ||||||||||
1/4/2019 | 40,000 | 10,000 | $40.49 | 1/4/2029 | 8,500 | $88,145 | — | $— | ||||||||||
1/3/2020 | 30,000 | 20,000 | $24.43 | 1/3/2030 | 31,093 | $322,434 | — | $— | ||||||||||
1/4/2021 | 41,277 | 61,916 | $28.37 | 1/4/2031 | 30,074 | $311,867 | 20,597 | $— | ||||||||||
1/4/2022 | 36,317 | 145,266 | $18.10 | 1/4/2032 | 65,170 | $675,813 | 35,106 | $150,254 | ||||||||||
2/24/2023 | — | 116,799 | $13.72 | 2/24/2033 | 111,190 | $1,153,040 | 47,075 | $361,065 | ||||||||||
John C. Shea | 1/3/2014 | 6,250 | — | $28.02 | 1/3/2024 | — | $— | — | $— | |||||||||
1/5/2015 | 1,650 | — | $30.30 | 1/5/2025 | — | $— | — | $— | ||||||||||
1/4/2016 | 1,650 | — | $34.14 | 1/4/2026 | — | $— | — | $— | ||||||||||
1/4/2017 | 1,650 | — | $39.38 | 1/4/2027 | — | $— | — | $— | ||||||||||
1/4/2018 | 10,000 | — | $52.06 | 1/4/2028 | — | $— | — | $— | ||||||||||
1/4/2019 | 8,000 | 2,000 | $40.49 | 1/4/2029 | 1,700 | $17,629 | — | $— | ||||||||||
1/3/2020 | 10,634 | 7,087 | $24.43 | 1/3/2030 | 5,634 | $58,425 | — | $— | ||||||||||
1/4/2021 | 8,244 | 12,366 | $28.37 | 1/4/2031 | 6,006 | $62,282 | 4,168 | $— | ||||||||||
1/4/2022 | 7,395 | 29,579 | $18.10 | 1/4/2032 | 13,270 | $137,610 | 7,148 | $30,593 | ||||||||||
2/24/2023 | — | 23,192 | $13.72 | 2/24/2033 | 22,078 | $228,949 | 9,347 | $71,691 | ||||||||||
Andrew W. Kush | 1/3/2014 | 5,000 | — | $28.02 | 1/3/2024 | — | $— | — | $— | |||||||||
1/5/2015 | 5,000 | — | $30.30 | 1/5/2025 | — | $— | — | $— | ||||||||||
1/4/2016 | 6,000 | — | $34.14 | 1/4/2026 | — | $— | — | $— | ||||||||||
1/4/2017 | 6,000 | — | $39.38 | 1/4/2027 | — | $— | — | $— | ||||||||||
1/4/2018 | 10,000 | — | $52.06 | 1/4/2028 | — | $— | — | $— | ||||||||||
1/4/2019 | 8,000 | 2,000 | $40.49 | 1/4/2029 | 1,700 | $17,629 | — | $— | ||||||||||
1/3/2020 | 10,634 | 7,087 | $24.43 | 1/3/2030 | 5,634 | $58,425 | — | $— | ||||||||||
1/4/2021 | 8,244 | 12,366 | $28.37 | 1/4/2031 | 6,006 | $62,282 | 4,168 | $— | ||||||||||
1/4/2022 | 7,395 | 29,579 | $18.10 | 1/4/2032 | 13,270 | $137,610 | 7,148 | $30,593 | ||||||||||
2/24/2023 | — | 23,192 | $13.72 | 2/24/2033 | 22,078 | $228,949 | 9,347 | $71,691 | ||||||||||
Patrick J. Orr | 1/5/2015 | 2,000 | — | $30.30 | 1/4/2026 | — | $— | — | $— | |||||||||
1/4/2016 | 4,000 | — | $34.14 | 1/4/2027 | — | $— | — | $— | ||||||||||
1/4/2017 | 5,000 | — | $39.38 | 1/4/2028 | — | $— | — | $— | ||||||||||
1/4/2018 | 5,000 | — | $52.06 | 1/4/2029 | — | $— | — | $— | ||||||||||
1/4/2019 | 4,000 | 1,000 | $40.49 | 1/3/2030 | 770 | $7,985 | — | $— | ||||||||||
1/3/2020 | 5,115 | 3,408 | $24.43 | 1/4/2031 | 2,578 | $26,734 | — | $— | ||||||||||
1/4/2021 | 6,169 | 9,252 | $28.37 | 1/4/2032 | 4,494 | $46,603 | 3,078 | $— | ||||||||||
1/4/2022 | 5,269 | 21,074 | $18.10 | 1/4/2032 | 9,454 | $98,038 | 5,093 | $21,798 | ||||||||||
2/24/2023 | — | 17,540 | $13.72 | 2/24/2033 | 16,698 | $173,158 | 7,069 | $54,219 | ||||||||||
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 42
Option Awards | Stock Awards | |||||||||||||||||
Name | Grant Date1 | Vested, Exercisable | Unvested | Option Exercise Price | Option Expiration Date | Unvested2 | Market Value of Unvested3 | Unvested Equity Incentive Plan Awards4 | Market Value of Equity Incentive Plan Awards4 | |||||||||
Andrew M. Brophy | 1/4/2019 | — | — | $— | — | 24 | $249 | — | $— | |||||||||
1/3/2020 | — | — | $— | — | 246 | $2,551 | — | $— | ||||||||||
1/4/2021 | — | — | $— | — | 423 | $4,387 | — | $— | ||||||||||
1/4/2022 | — | — | $— | — | 2,210 | $22,918 | — | $— | ||||||||||
2/24/2023 | — | — | $— | — | 3,644 | $37,788 | — | $— | ||||||||||
1.Options and stock awards vest 20% per year on the anniversary of the grant date for each of the five years subsequent to the grant date.
2.Unless otherwise noted herein, restricted stock awards and restricted stock units vest at the rate of 20% annually, commencing on the first anniversary from the
grant date, subject to accelerated vesting upon certain terminations of employment following certain corporate transactions involving the Company. The shares
of Common Stock underlying the restricted stock awards and restricted stock units will be issued upon vesting.
3.Valued based on the closing price of a share of the Company’s Common Stock on December 31, 2023 as reported on the Nasdaq Global Select Market
($10.37).
4.Performance stock unit awards were granted under the 2020 Plan and vest upon certification by the Board in 2024, 2025 and 2026 provided that the
performance targets, based on Relative TSR, are met for the three-year periods ended December 31, 2023, 2024 and 2025. The awards are valued at fair
market value as of December 31, 2023. The number of outstanding unvested equity incentive plan awards is equal to the number of PSUs earned based on
achieving a performance target at the 50th percentile. The 2022 and 2023 grants were valued at $4.28 and $7.67 per unit, respectively, based upon a Monte
Carlo simulation used to determine the probable outcome of the performance condition at December 31, 2023. The 2021 grants had no value at December 31,
2023 since performance was below the 25th percentile and December 31, 2023 marked the end of the performance period for that tranche of grants.
Option Exercises and Stock Vested During 2023
The following table sets forth information concerning the option exercises and stock awards vested of each of the
NEOs during the year ended December 31, 2023:
Stock Option Awards | Restricted Stock and Restricted Stock Units | |||||||
Number of Shares Acquired On Exercise | Value Realized on Exercise | Number of Shares Acquired On Vesting | Value Realized on Vesting | |||||
Name | (#) | ($) | (#) | ($) | ||||
Theodore Wahl | — | $— | 56,365 | $711,910 | ||||
John C. Shea | — | $— | 11,038 | $139,455 | ||||
Andrew W. Kush | — | $— | 11,038 | $139,455 | ||||
Patrick J. Orr | — | $— | 6,121 | $77,382 | ||||
Andrew M. Brophy | — | $— | 841 | $10,642 | ||||
Non-Qualified Deferred Compensation
The following table sets forth information concerning the non-qualified deferred compensation of each of the NEOs
during the year ended December 31, 2023, as well as the aggregate balance of non-qualified deferred
compensation as of December 31, 2023:
Name | Executive Contributions in Last FY | Registrant Contributions in Last FY | Aggregate Gains (Losses) in Last FY | Aggregate Balance at Last FYE | ||||
Theodore Wahl | $201,483 | $50,371 | $636,929 | $4,669,481 | ||||
John C. Shea | $105,159 | $26,290 | $185,506 | $1,787,058 | ||||
Andrew W. Kush | $118,495 | $29,624 | $63,107 | $1,080,499 | ||||
Patrick J. Orr | $103,895 | $25,974 | $59,564 | $604,642 | ||||
Andrew M. Brophy | $42,908 | $10,727 | $29,202 | $231,590 |
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 43
Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is
providing the following information about the relationship of the annual total compensation of the Company’s
employees and the annual total compensation of the President and Chief Executive Officer. The CEO pay ratio
figures below are a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under
the Exchange Act.
At December 31, 2023, we had over 33,000 employees (full-time and part-time), all located in the United States.
We determined the total annual compensation for our employees for the year ended December 31, 2023 using data
from our payroll records for the month of December 2023, which we then extrapolated for the full year of 2023. The
components of total annual compensation for our employees are the same as those used to determine the total
compensation of our NEOs for the purposes of the SCT. We did not make any full-time equivalent adjustments for
part-time employees. The results were then ranked, excluding the President and Chief Executive Officer, from
lowest to highest, and the median employee was identified. We then compared the total annual compensation of the
median employee to that of the President and Chief Executive Officer. The total annual compensation of the median
employee for the year ended December 31, 2023 was $31,814. For the year ended December 31, 2023, the ratio of
our President and Chief Executive Officer’s total annual compensation to that of our median employee was
approximately 143:1.
The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s total
annual compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make
reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by
other companies may not be comparable to the pay ratio reported above, as other companies may have different
employment and compensation practices and may utilize different methodologies, exclusions, estimates and
assumptions in calculating their own pay ratios.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 44
Pay Versus Performance
Year | Summary Compensation Table total for PEO1 | Compensation Actually Paid (“CAP”) to PEO 1, 2, 3 | Average Summary Compensation Table total for non-PEO NEOs4 | Average CAP to non-PEO NEOs2, 4, 5 | Value of initial fixed $100 investment based on: | Net income7 (in thousands) | Income before income taxes7, 8 (in thousands) | |||||||||
Total shareholder return6 | Peer group total shareholder return6 | |||||||||||||||
2023 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
2022 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
2021 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
2020 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||
1.Our CEO, Theodore Wahl , is listed in the table as the principal executive officer (“PEO”) for each year.
2.Compensation actually paid is defined in Item 402(v)(2)(iii) of Regulation S-K. Reconciliation of the amounts included in the Summary
Compensation Table to compensation actually paid is provided in the “Narrative Disclosure to Pay Versus Performance Table” section
3.Below is the reconciliation of the Summary Compensation Table to Compensation Actually Paid for the PEO:
Reconciliation of Summary Compensation to CAP for Principal Executive Officer | 2023 | 2022 | 2021 | 2020 | |||||
Summary Compensation Table | $ | $ | $ | $ | |||||
Less: Equity awards included in Summary Compensation Table | ( | ( | ( | ( | |||||
Add: Year-end fair value of equity awards granted during current year that are outstanding and unvested at year- end | |||||||||
Add: Change in fair value of equity awards granted in prior years that are outstanding and unvested at year-end | ( | ( | ( | ||||||
Add: Change in fair value during current year of equity awards granted in prior years that vested in the current year | ( | ||||||||
Add: Fair value on vesting date for current year equity grants | |||||||||
Less: Fair value at end of prior year for any stock awards which were forfeited during current year | |||||||||
Add: Dollar value of any dividends, dividend equivalents, or other earnings paid on stock or option awards | |||||||||
Total Compensation Actually Paid (CAP): | $ | $ | $ | $ | |||||
4.The non-PEO NEOs included in the calculation for average summary compensation and compensation actually paid for each applicable
year are the following:
•2023: John C. Shea, Andrew W. Kush, Patrick J. Orr, and Andrew M. Brophy
•2022: John C. Shea, Andrew W. Kush, Patrick J. Orr, and Andrew M. Brophy
•2021: John C. Shea, Andrew W. Kush, Patrick J. Orr, Jason J. Bundick, and Andrew M. Brophy
•2020: John C. Shea, Michael E. McBryan (former Executive Vice President, Chief Revenue Officer & Director), Andrew W. Kush, and
Jason J. Bundick
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 45
Pay Versus Performance
5.Below is the reconciliation of the Summary Compensation Table to Compensation Actually Paid to the non-PEO NEOs:
Reconciliation of Summary Compensation to Average CAP for Non-Principal Executive Officer Named Executive Officers | 2023 | 2022 | 2021 | 2020 | ||||
Summary Compensation Table | $ | $ | $ | $ | ||||
Less: Equity awards included in Summary Compensation Table | ( | ( | ( | ( | ||||
Add: Year-end fair value of equity awards granted during current year that are outstanding and unvested at year-end | ||||||||
Add: Change in fair value of equity awards granted in prior years that are outstanding and unvested at year-end | ( | ( | ( | |||||
Add: Change in fair value during current year of equity awards granted in prior years that vested in the current year | ( | |||||||
Add: Fair value on vesting date for current year equity grants | ||||||||
Less: Fair value at end of prior year for any stock awards which were forfeited during current year | ||||||||
Add: Dollar value of any dividends, dividend equivalents, or other earnings paid on stock or option awards | ||||||||
Total Compensation Actually Paid (CAP): | $ | $ | $ | $ | ||||
6.Total shareholder return (TSR) is calculated based on the return of $100 invested four years prior to the applicable year-end date in stock or
Regulation S-K Item 201(e)(1)(ii), please see the Company’s Annual Report on Form 10-K filed with the SEC on February 16, 2024 for
further information (the “2023 Form 10-K”).
7.During the 2023 year-end financial reporting process, the Company identified a prior period accounting error for accrued payroll, and
specifically accrued vacation that was concluded not to be material to the Company's previously reported consolidated financial
statements.The Company corrected the errors by revising the Company's Consolidated Balance Sheets and Consolidated Statements of
Comprehensive Income for the years ended December 31, 2022 and 2021 in the 2023 Form 10-K. The amounts listed in the table above for
Net Income as well as Income Before Income Taxes are reflective of these corrections.
8.Our company-selected measure is Income before Income Taxes . Our Consolidated Statements of Comprehensive Income included on our
Form 10-K include details of how this is calculated.
are driven primarily on the determination of fair value used to calculate GAAP stock compensation expense and the
SEC definition in the compensation actually paid calculation and the timing of equity awards issued during the years
ended December 31, 2023, 2022, 2021, and 2020. For each of the periods included in the CAP table, we have
granted the vast majority of our equity awards to the NEOs, including the PEO, and other employees during the first
quarter of each fiscal year. Expense for GAAP purposes (which is included in the Summary Compensation Table)
for these grants is measured at fair value at the grant date using the current stock price and other inputs that are
determined at the grant date, which is then recorded as straight-line stock compensation expense over the vesting
period for each grant.
In the CAP calculation, the fair value of each equity award is revalued at the end of each fiscal year (instead of the
grant date) or upon vesting. For unvested RSUs, we calculated the fair value of outstanding units as the total
number of unvested shares times the year-end stock price. For unvested stock options, we calculated the fair value
of outstanding unvested options using an updated Black-Scholes model with inputs updated for each respective
year-end date. For unvested PSUs, we calculated the fair value of unvested units using an updated Monte-Carlo
model with inputs updated for each respective year-end date. Changes in fair value from the grant date, or the
previous year-end, to the end of each year in the table were primarily driven by changes in our stock price. No
changes were made to the valuation methods or models used in calculating the fair value as of year-end versus
each grant date, and no significant changes were made to assumptions used in the models. As equity awards are a
significant portion of the compensation package provided to our NEOs, our CAP may fluctuate significantly from
period to period based on changes in our stock price.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 46
Pay Versus Performance
Tabular List of Company Performance Measures
The following table lists the measures we believe are most important in linking compensation actually paid to
company performance during 2023:
Company Selected Measures |
executive compensation framework. Given total shareholder return is already included in the pay versus
performance table above, Company income before income taxes is identified as our company-selected measure.
Further details on how these performance measures are used in our incentive plans can be found in the
Compensation Discussion and Analysis section.
Description of CAP Versus Company Performance
and the non-PEO Named Executive Officers to net income:
and the non-PEO Named Executive Officers to income before income taxes:
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 47
Pay Versus Performance
and the non-PEO Named Executive Officers to the TSR and peer group TSR:
*Value of initial fixed investment of $100.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 48
Nominating, Compensation and Stock Option Committee Report
The compensation of the President and Chief Executive Officer of the Company is determined by the Nominating,
Compensation and Stock Option Committee. Such Committee’s determinations regarding such compensation are
based on a number of factors including, in order of importance:
•Consideration of the operating and financial performance of the Company, primarily its income before income
taxes;
•Attainment of a level of compensation designed to retain a superior executive in a highly competitive
environment; and
•Consideration of the individual’s overall contribution to the Company.
In consultation with the President and Chief Executive Officer, the NCSO Committee develops guidelines and
reviews the compensation and performance of the other executive officers of the Company, and sets the
compensation of the executive officers of the Company and/or any management fees paid by the Company for
executive services when needed. In addition, the Nominating, Compensation and Stock Option Committee makes
recommendations to the Board with respect to incentive-compensation plans and equity-based plans, establishes
criteria for the granting of options in accordance with such criteria and administers such plans. The Nominating,
Compensation and Stock Option Committee reviews major organizational and staffing matters. With respect to
director compensation, the Nominating, Compensation and Stock Option Committee designs a director
compensation package of a reasonable total value based on comparisons with similar firms and aligned with long-
term shareholder interests. Finally, the Nominating, Compensation and Stock Option Committee reviews director
compensation levels and practices, and may recommend, from time to time, changes in such compensation levels
and practices to the Board, with equity ownership in the Company encouraged. The Nominating, Compensation and
Stock Option Committee’s charter provides that the Nominating, Compensation and Stock Option Committee shall
have the authority to obtain advice and seek assistance from internal and external legal, accounting and other
advisors.
The Nominating, Compensation and Stock Option Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review
and discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be
included in this Proxy Statement.
NOMINATING, COMPENSATION AND STOCK OPTION COMMITTEE
Diane S. Casey, Chairwoman
John J. McFadden
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 49
Compensation Committee Interlocks and Insider Trading
No member of the NCSO was an officer or employee of the Company or any subsidiary of the Company during the
fiscal year ended December 31, 2023. No member of the NCSO Committee was a member of the compensation
committee of another entity during the fiscal year ended December 31, 2023. None of our executive officers was a
director or a member of the NCSO Committee of another entity during the fiscal year ended December 31, 2023.
There were no transactions between any member of the NCSO Committee and the Company during the fiscal year
ended December 31, 2023 requiring disclosure pursuant to Item 404 of Regulation S-K promulgated under the
Exchange Act.
EXECUTIVE COMPENSATION
2024 PROXY STATEMENT 50
audit
matters
2024 PROXY STATEMENT
2024 PROXY STATEMENT 51
Independent Registered Public Accounting Firm. (Proposal No. 3)
The accounting firm of Grant Thornton LLP was selected by the Audit Committee of the Board as the Independent
Registered Public Accounting Firm of the Company for the fiscal year ending December 31, 2024. Grant Thornton
LLP has no other relationship to the Company. The Board recommends the ratification of the selection of the firm of
Grant Thornton LLP to serve as the Independent Registered Public Accounting Firm of the Company for the year
ending December 31, 2024. A representative of Grant Thornton LLP, which has served as the Company’s
Independent Registered Public Accounting Firm since December 1992, will be present at the forthcoming
shareholders’ meeting with the opportunity to make a statement if so desired and such representative will be
available to respond to appropriate questions. The approval of the proposal to ratify the appointment of Grant
Thornton LLP requires the affirmative vote of a majority of the votes cast by all shareholders represented and
entitled to vote thereon. An abstention, therefore, will not have the same legal effect as an “against” vote and will not
be counted in determining whether the proposal has received the required shareholder vote. However, brokers that
do not receive instructions on this proposal are entitled to vote for the selection of the independent registered public
accounting firm.
Pre-Approval Policies and Procedures
The Audit Committee policies and procedures for the pre-approval of audit and non-audit services rendered by our
independent registered public accounting firm are reflected in the Audit Committee Charter. The Audit Committee
Charter provides that the Audit Committee shall review and pre-approve both audit and non-audit services to be
provided by the independent auditor. This duty may be delegated to one or more designated members of the
Committee with any such pre-approval reported to the Committee at its next regularly scheduled meeting. Approval
of non-audit services shall be disclosed to investors in periodic reports required by Section 13(a) of the Exchange
Act.
All services performed by our independent registered public accounting firm were pre-approved by the Audit
Committee.
The Board of Directors recommend a vote “FOR” the approval and ratification of the selection of Grant
Thornton LLP as the independent registered public accounting firm of the Company for its current fiscal
year ending December 31, 2024.
Vote Required
Approval of Proposal No. 3 requires the affirmative vote of the holders of a majority of the votes cast at the Annual
Meeting in person or by proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will not
have the same legal effect as an “against” vote and will not be counted in determining whether the proposal has
received the required shareholder vote.
AUDIT MATTERS
2024 PROXY STATEMENT 52
Fees Paid to Auditors
The following table sets forth the fees billed by the Company’s independent registered public accounting firm during
fiscal years 2023 and 2022:
2023 | 2022 | ||
Audit fees 1 | $1,305,000 | $1,158,000 | |
Audit-related fees | — | — | |
Tax fees | — | — | |
All other fees | — | — | |
$1,305,000 | $1,158,000 | ||
1.Audit fees billed by Grant Thornton LLP related to the audits of the Company’s annual financial statements and internal control over financial
reporting; the review of the Company’s financial statements included in the Quarterly Reports on Form 10-Q; review of documents filed with
the SEC; and reimbursement for direct out-of-pocket expenses.
AUDIT MATTERS
2024 PROXY STATEMENT 53
Audit Committee Report
The members of the Audit Committee from January 1, 2023 to December 31, 2023 were Messrs. Ottaviano and
Simmons, Jr. and Ms. Grant. Mr. Simmons, Jr. was the Chairman of the Audit Committee throughout 2023. The
Audit Committee met five times during the fiscal year ended December 31, 2023. The Audit Committee is
responsible for the appointment of the Independent Registered Public Accounting Firm for each fiscal year,
recommending the discharge of the Independent Registered Public Accounting Firm to the Board and confirming the
independence of the Independent Registered Public Accounting Firm. It is also responsible for: reviewing and
approving the scope of the planned audit, the results of the audit and the Independent Registered Public Accounting
Firm’s compensation for performing such audit; reviewing the Company’s audited financial statements; and
reviewing and approving the Company’s internal accounting controls and disclosure procedures, and discussing
such controls and procedures with the Independent Registered Public Accounting Firm.
A copy of the Company’s Amended and Restated Audit Committee Charter is available on the Company’s website at
www.hcsg.com.
The Company’s Independent Registered Public Accounting Firm is responsible for auditing the financial statements,
as well as auditing the Company’s internal controls over financial reporting. The activities of the Audit Committee are
in no way designed to supersede or to alter those traditional responsibilities. The Audit Committee’s role does not
provide any special assurances with regard to the Company’s financial statements, nor does it involve a
professional evaluation of the quality of the audits performed by the Independent Registered Public Accounting
Firm.
In connection with the audit of the Company’s financial statements for the year ended December 31, 2023, the Audit
Committee met with representatives from Grant Thornton LLP, the Company’s Independent Registered Public
Accounting Firm, and the Company’s internal auditors. The Audit Committee reviewed and discussed with Grant
Thornton LLP and the Company’s internal auditors, the Company’s financial management and financial structure, as
well as the matters relating to the audit required by the Public Company Accounting Oversight Board Auditing
Standards.
The Audit Committee and Grant Thornton LLP also discussed Grant Thornton LLP’s independence. In February
2024, the Audit Committee received from Grant Thornton LLP the written disclosures and the letter regarding Grant
Thornton LLP’s independence required by Public Company Accounting Oversight Board Rule 3526.
In addition, the Audit Committee reviewed and discussed with management the Company’s audited financial
statements for the fiscal year ended December 31, 2023, as well as management’s assessment of internal controls
over financial reporting.
Based upon the review and discussions described above, the Audit Committee recommended to the Board of
Directors, and the Board of Directors approved, that the Company’s financial statements audited by Grant Thornton
LLP, as well as the audit of the Company’s internal controls over financial reporting be included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
AUDIT COMMITTEE
Kurt Simmons, Jr., Chairman
Laura K. Grant
Dino D. Ottaviano
AUDIT MATTERS
2024 PROXY STATEMENT 54
amendment
to the
articles of
incorporation
2024 PROXY STATEMENT
2024 PROXY STATEMENT 55
Approval of an Amendment to Our Restated Articles of Incorporation to
Increase the Number of Authorized Shares of Common Stock from 100
Million to 300 Million. (Proposal No. 4)
Our Restated Articles of Incorporation (“Articles”) currently authorize the issuance of up to 100 million shares of
Common Stock. As of our record date, April 1, 2024, approximately 73.6 million shares were issued and
outstanding. Additionally, we have approximately 4.3 million shares total reserved for issuance under the 2020 Plan,
the Healthcare Services Group, Inc. Employee Stock Purchase Plan, and the Healthcare Services Group, Inc.
Amended and Restated Deferred Compensation Plan (collectively the “Equity Plans”). As of April 1, 2024, there are
2.6 million shares of our Common Stock issuable upon the exercise of stock options outstanding, 1.5 million shares
of our common stock issuable upon the vesting and settlement of restricted stock units outstanding and 0.3 million
shares of our common stock issuable upon the vesting and settlement of performance stock units outstanding.
Appendix A to this Proxy Statement includes the text of the proposed amendment to the Articles. The Board
believes that it is in the best interests of the Company and its shareholders to increase the number of authorized
shares of Common Stock available for issuance to 300 million in order to provide us with greater flexibility in
managing the Company and ensure the ability of the Board to respond efficiently and effectively to any corporate
needs that arise.
The primary purpose of the proposed amendment to increase our authorized Common Stock is to enable us to take
advantage of favorable market conditions and possible acquisition opportunities without the expense and delay
incidental to obtaining shareholder approval of an amendment to the Articles increasing the number of authorized
shares at the time of such action. We have no current plans, arrangements or understandings for the issuance of
our authorized shares Common Stock, except with respect to issuances pursuant to the Equity Plans.
The issuance of Common Stock may have the effect of discouraging or thwarting persons seeking to take control of
the Company through a tender offer, proxy fight or otherwise seeking to bring about removal of incumbent
management or a corporate transaction such as a merger. For example, the issuance of common stock in a public
or private sale, merger or in a similar transaction would increase the number of our outstanding shares, thereby
diluting the interest of a party seeking to take over the Company. The proposed amendment has not been made in
response to, and is not being presented to deter, any effort to obtain control of the Company and is not being
proposed as an anti-takeover measure. Existing shareholders do not have preemptive rights with respect to future
issuances of common stock by us and their interest in the Company could be diluted by such issuances with respect
to any of the following: earnings per share, voting, liquidation rights and book and market value.
The Board of Directors recommend a vote “FOR” the approval of an amendment to the Articles to increase the
number of authorized shares of common stock from 100 million to 300 million: RESOLVED, that the Restated
Articles of Incorporation of the Corporation is hereby amended by replacing “The aggregate number of shares of
capital stock which the Corporation shall have authority to issue is 100,000,000 shares of common stock with a par
value of $0.01 per share.” in Article 5 with: “The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is 300,000,000 shares of common stock with a par value of $0.01 per share.”
Except as set forth in these Articles of Amendment, the Articles remain in full force and effect.
The Board of Directors recommend a vote “FOR” the approval of an amendment to our Articles to increase
the number of authorized shares of common stock from 100 million to 300 million.
Vote Required
Approval of Proposal No. 4 requires the affirmative vote of the holders of a majority of the votes cast at the Annual
Meeting in person or by proxy and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will not
have the same legal effect as an “against” vote and will not be counted in determining whether the proposal has
received the required shareholder vote.
AMENDMENT TO THE ARTICLES OF INCORPORATION
2024 PROXY STATEMENT 56
stock
ownership
information
2024 PROXY STATEMENT
2024 PROXY STATEMENT 57
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of April 1, 2024, regarding the beneficial ownership of Common Stock
by each person or group known by the Company to own: (i) 5% or more of the outstanding shares of Common
Stock, (ii) each director and director nominees, (iii) the Named Executive Officers as defined in Item 402(a)(3) of
Regulation S-K and (iv) all current directors and executive officers of the Company as a group. The persons named
in the table have sole voting and investment power with respect to all shares of Common Stock owned by them,
unless otherwise noted.
Name and Beneficial Owner or Group1 | Amount and Nature of Beneficial Ownership | Percent of Class2 | ||||
BlackRock, Inc.3 | 13,511,293 | 4 | 18.3% | |||
The Vanguard Group, Inc.3 | 8,629,517 | 5 | 11.7% | |||
Mackenzie Financial Corp.3 | 4,120,921 | 6 | 5.6% | |||
Royce & Associates, LP.3 | 3,914,207 | 7 | 5.3% | |||
Theodore Wahl | 873,525 | 8 | 1.2% | |||
John C. Shea | 125,598 | 9 | - | 22 | ||
Andrew W. Kush | 125,186 | 10 | - | 22 | ||
Patrick J. Orr | 76,452 | 11 | - | 22 | ||
Robert L. Frome | 51,217 | 12 | - | 22 | ||
Dino D. Ottaviano | 35,912 | 13 | - | 22 | ||
John J. McFadden | 35,478 | 14 | - | 22 | ||
Diane S. Casey | 32,477 | 15 | - | 22 | ||
Jude Visconto | 30,477 | 16 | - | 22 | ||
Daniela Castagnino | 15,474 | 17 | - | 22 | ||
Kurt Simmons, Jr. | 11,428 | 19 | - | 22 | ||
Laura Grant | 10,473 | 18 | - | 22 | ||
Andrew M. Brophy | 2,854 | 20 | - | 22 | ||
Directors and Executive Officers as a group (14 persons) | 1,536,358 | 21 | 2.1% | |||
1.Unless otherwise indicated, the address of all persons is c/o Healthcare Services Group, Inc., 3220 Tillman Drive, Suite 300, Bensalem,
PA 19020.
2.Based on 73,645,000 shares of Common Stock outstanding at April 1, 2024.
3.The address of BlackRock, Inc. is 50 Hudson Yards, New York, NY 10001.
The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, PA 19355.
The address of Mackenzie Financial Corporation is 180 Queen Street West, Toronto, Ontario M5V 3K1.
The address of Royce & Associates, LP. is 745 Fifth Avenue, New York, NY 10151.
4.According to Amendment No. 16 to Schedule 13G filed by BlackRock, Inc. on January 19, 2024, as of December 31, 2023, it has total
beneficial ownership of 13,511,293 shares. Such beneficial ownership includes sole voting power with respect to 13,190,581 shares, and
sole dispositive power with respect to 13,511,293 shares.
5.According to Amendment No. 13 to Schedule 13G filed by The Vanguard Group, Inc. on February 13, 2024, as of December 31, 2023, it
has total beneficial ownership of 8,629,517 shares. Such beneficial ownership includes shared voting power with respect to 132,504
shares, sole dispositive power with respect to 8,419,967 shares and shared dispositive power with respect to 209,550 shares.
6.According to Amendment No. 5 to Schedule 13G filed by Mackenzie Financial Corporation on February 13, 2024, as of December 31,
2023, it has total beneficial ownership of 4,120,921 shares. Such beneficial ownership includes sole voting power with respect to
4,120,921 shares and sole dispositive power with respect to 4,120,921 shares.
7.According to Schedule 13G filed by Royce & Associates, LP on January 23, 2024, as of December 31, 2023, it has total beneficial
ownership of 3,914,207 shares. Such beneficial ownership includes sole voting power with respect to 3,914,207 shares and sole
dispositive power with respect to 3,914,207 shares.
STOCK OWNERSHIP INFORMATION
2024 PROXY STATEMENT 58
Security Ownership of Certain Beneficial Owners and Management
8.Theodore Wahl’s beneficial ownership includes incentive stock options to purchase 13,651 shares, and non-qualified stock options to
purchase 344,260 shares, all currently exercisable, and 33,855 shares credited to Mr. Wahl’s account (but unissued) in connection with
the Company’s SERP. Additionally, it includes 77,958 and 39,389 shares held by Mr. Wahl’s wife and minor children, respectively.
9.Andrew W. Kush’s beneficial ownership includes incentive stock options to purchase 17,886 shares and non-qualified stock options to
purchase 65,086 shares, all currently exercisable, and 12,237 shares credited to Mr. Kush’s account (but unissued) in connection with
the Company’s SERP.
10.John C. Shea’s beneficial ownership includes incentive stock options to purchase 14,626 shares and non-qualified stock options to
purchase 56,296 shares, all currently exercisable, and 13,464 shares credited to Mr. Shea’s account (but unissued) in connection with
the Company’s SERP.
11.Patrick J. Orr’s beneficial ownership includes incentive stock options to purchase 15,503 shares and non-qualified stock options to
purchase 31,815 shares, all currently exercisable, and 7,157 shares credited to Mr. Orr’s account (but unissued) in connection with the
Company’s SERP.
12.Robert L. Frome’s beneficial ownership includes non-qualified stock options to purchase 29,006 shares, all currently exercisable.
13.Dino D. Ottaviano’s beneficial ownership includes non-qualified stock options to purchase 29,006 shares, all currently exercisable.
14.John J. McFadden’s beneficial ownership includes non-qualified stock options to purchase 29,006 shares, all currently exercisable.
15.Diane S. Casey’s beneficial ownership includes non-qualified stock options to purchase 26,005 shares, all currently exercisable.
16.Jude Visconto’s beneficial ownership includes non-qualified stock options to purchase 24,005 shares, all currently exercisable.
17.Daniela Castagnino’s beneficial ownership includes non-qualified stock options to purchase 9,002 shares, all currently exercisable.
18.Laura Grant’s beneficial ownership includes non-qualified stock options to purchase 4,001 shares, all currently exercisable.
19.Kurt Simmons, Jr.s’ beneficial ownership includes 11,428 deferred stock units.
20.Andrew M. Brophy’s beneficial ownership includes 2,854 shares credited to Mr. Brophy’s account (but unissued) in connection with the
Company’s SERP.
21.Includes 783,667 shares underlying stock options granted to this group and the beneficial ownership of an executive officer who is not
considered an NEO for the purposes of this year's Proxy statement. All stock options reflected in the security ownership table are
currently exercisable; also includes 73,511 shares credited to the accounts of the executive officers (but unissued) in connection with the
Company’s SERP.
22.Less than 1% of the outstanding shares.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s Directors, executive officers and 10% shareholders to
file with the SEC and Nasdaq initial reports of ownership and reports of changes in ownership of the Company’s
Common Stock. Directors and executive officers are required to furnish the Company with copies of all
Section 16(a) reports which they file. In January 2024, one Form 4 reporting an equity grant and vesting of restricted
stock units and stock options to each of Messrs. Shea, Wahl, Kush, Bundick, Orr, and Brophy were filed four days
late. Based solely on a review of forms filed and on written representations from certain reporting persons that no
Form 5 was required to be filed, other than as indicated above, we believe our directors, executive officers and 10%
beneficial owners complied during fiscal year 2023 with all applicable Section 16(a) filing requirements in a timely
manner. The Company is not aware of any other delinquent Section 16(a) reports nor is it aware of any known
failures to file for the year ended December 31, 2023.
STOCK OWNERSHIP INFORMATION
2024 PROXY STATEMENT 59
general
information
2024 PROXY STATEMENT
2024 PROXY STATEMENT 60
2024 Annual Meeting of Shareholders
Courtyard Philadelphia | May 28, 2024 | |
3280 Tillman Drive, Bensalem, Pennsylvania 19020 | 10:00 a.m. Eastern Daylight Time |
Who may vote?
The Record Date for the Annual Meeting is April 1, 2024. Only shareholders of record as of the close of business on
this date are entitled to vote at the Annual Meeting. You are invited to vote on the proposals described in this Proxy
Statement because you were a Healthcare Services Group, Inc. shareholder on the Record Date, April 1, 2024.
Each share of Common Stock is entitled to one vote. As of April 1, 2024, we had 73,645,000 shares of Common
Stock outstanding and entitled to vote. There is no cumulative voting.
What constitutes a quorum?
In order to carry on the business of the Annual Meeting, we must have a quorum. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of our Common Stock is required to constitute a quorum
at the Annual Meeting.
How many votes are required to approve each proposal?
Election of Directors
The affirmative vote of a plurality of the shares of Common Stock entitled to vote and present in person or by proxy
at the Annual Meeting is required for the election to our Board of Directors of each of the nominees for director.
Shareholders do not have the right to cumulate their votes in the election of directors.
Approval of Executive Compensation
The affirmative vote of the holders of a majority of the votes cast at the Annual Meeting in person or by proxy and
entitled to vote will be deemed to have received the non-binding approval of Proposal No. 2. An abstention,
therefore, will not have the same legal effect as an “against” vote and will not be counted in determining whether the
proposal has received the required shareholder vote.
Ratification of Independent Registered Public Accounting Firm
The affirmative vote of the holders of a majority of the votes cast at the Annual Meeting in person or by proxy and
entitled to vote is required for approval of Proposal No. 3. An abstention, therefore, will not have the same legal
effect as an “against” vote and will not be counted in determining whether the proposal has received the required
shareholder vote.
Approval and Adoption of the Amendment to Increase Authorized Shares
With respect to Proposal No. 4, the affirmative vote of a majority of the votes cast in person or by proxy and entitled
to vote is required for the approval of Proposal No. 4. An abstention, therefore, will not have the same legal effect as
an “against” vote and will not be counted in determining whether the proposal has received the required shareholder
vote.
GENERAL INFORMATION
2024 PROXY STATEMENT 61
How are votes counted?
You may either vote ‘FOR’ or ‘WITHHOLD’ authority to vote for each nominee for election to the Board. You may
vote ‘FOR,’ ‘AGAINST’ or ‘ABSTAIN’ on Proposal No. 2, Proposal No. 3 and Proposal No. 4. Abstentions will be
counted as present for purposes of determining the existence of a quorum, but will have no effect on the vote of the
particular proposal. If you sign and submit a proxy card without voting instructions, your shares will be voted ‘FOR’
each director nominee, ‘FOR’ Proposal No. 2, Proposal No. 3 and Proposal No. 4 and ‘FOR’ or ‘AGAINST’ any other
proposal as recommended by the Board.
What is a broker non-vote?
If shareholders do not give their brokers instructions as to how to vote shares held in street name, the brokers have
discretionary authority to vote those shares on ‘routine’ matters, such as the ratification of the independent
registered public accounting firm, but not on ‘non-routine’ proposals, such as the election of directors, the advisory
vote regarding executive compensation and the amendment to the Restated Articles. As a result, if you hold your
shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any
proposal on which your broker does not have discretionary authority to vote. Shares held by brokers who do not
have discretionary authority to vote on a particular matter and who have not received voting instructions from their
customers will be counted as present for the purpose of determining whether there is a quorum at the Annual
Meeting, but will not be counted or deemed to be present in person or by proxy for the purpose of determining
whether our shareholders have approved that matter. As each of Proposals 2 through 4 require the affirmative
approval of a majority of the of the votes cast in person or by proxy and entitled to vote, broker non-votes will have
no effect, as such votes are not cast.
How to Vote
You may vote in person at the Annual Meeting or by proxy. We recommend that you vote by proxy even if you plan
to attend the Annual Meeting. You can always change your vote at the Annual Meeting.
How Proxies Work
Our Board is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the Annual
Meeting in the manner you direct.
Proxies submitted will be voted by the individuals named on the proxy card in the manner you indicate. If you give
us your proxy but do not specify how you want your shares voted, they will be voted in accordance with the Board’s
recommendations.
You may receive more than one proxy or voting card depending on how you hold your shares. If you hold shares
through someone else, such as a stockbroker, you may get materials from them asking how you want to vote. The
latest proxy card we receive from you will determine how we will vote your shares.
Revoking a Proxy
A proxy may be revoked by delivery of a written statement to the Secretary of the Company stating that the proxy is
revoked, by a subsequent proxy executed by the person executing the prior proxy and presented to the Annual
Meeting or by voting in person at the Annual Meeting.
Attending in Person
Only shareholders, their proxy holders and our invited guests may attend the Annual Meeting. For security
purposes, all persons attending the Annual Meeting must bring photo identification. If you wish to attend the Annual
Meeting in person but you hold your shares through someone else, such as a stockbroker, you must bring proof of
your ownership to the Annual Meeting. For example, you could bring an account statement showing that you owned
shares of the Company’s Common Stock as of the Record Date as acceptable proof of ownership.
GENERAL INFORMATION
2024 PROXY STATEMENT 62
Expenses; Proxy Solicitation
The Company is soliciting your vote at our Annual Meeting. All expenses in connection with this solicitation will be
borne by the Company. It is expected that solicitation will be made primarily by mail, but regular employees or
representatives of the Company may also solicit proxies by telephone, facsimile, email or in person, without
additional compensation, except for reimbursement of out-of-pocket expenses.
Deadline for Shareholder Proposals
Under our Third Amended and Restated By-laws, a shareholder who wishes to nominate an individual for election to
the Board of Directors directly at an annual meeting, or to propose any business to be considered at an annual
meeting, must deliver advance notice of such nomination or business to the Company. The shareholder must be a
shareholder as of the date the notice is delivered and at the time of the annual meeting and must be entitled to vote
at the meeting. The notice must be in writing and contain the information specified in our Third Amended and
Restated By-laws for a director nomination or other business. With respect to the 2025 annual meeting, such notice
must be delivered to, or mailed and received by, the Secretary of the Company at the principal executive offices at
3220 Tillman Drive, Suite 300, Bensalem, PA 19020 no later than the close of business on December 27, 2024 (the
120th day prior to the first anniversary of the mailing date of the proxy statement for the preceding year’s annual
meeting). Shareholders who desire to present a proposal to be included in our proxy statement for our 2025 annual
meeting must submit the proposal to us no later than December 27, 2024 and must otherwise comply with the
requirements of Rule 14a-8 of the Exchange Act. Any such proposal must be sent in writing to the Secretary of the
Company at the principal executive offices at 3220 Tillman Drive, Suite 300, Bensalem, PA 19020. In addition to the
notice and information requirements contained in our Third Amended and Restated By-laws, to comply with the
universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than our
nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no
later than March 31, 2025 (the 60th day prior to the first anniversary of the annual meeting for the preceding year’s
annual meeting).
GENERAL INFORMATION
2024 PROXY STATEMENT 63
additional
information
2024 PROXY STATEMENT
2024 PROXY STATEMENT 64
Certain Relationships and Transactions with Related Parties
The Company’s Audit Committee is responsible for reviewing and approving all related party transactions involving
the Company and any director, executive officer, other employee or family member thereof. The Audit Committee
does not have a formal written policy which sets forth its policies and procedures with respect to reviewing a related
party transaction. The Audit Committee, however, will not approve any transaction unless the transaction is on terms
comparable to those available to unaffiliated third parties and have terms reasonably expected to benefit the
Company.
Matthew J. McKee, MBA, the brother-in-law of Theodore Wahl, joined the Company in 2004 and is currently
employed by the Company as Chief Communications Officer. During 2023, Mr. McKee earned total compensation
for such service of approximately $719,000, consisting of $364,000 in base salary, $40,000 of incentive
compensation, $232,000 of stock awards, $58,000 in option awards, nothing in non-qualified deferred compensation
earnings and $26,000 of other compensation. The Audit Committee believes that the compensation paid to
Mr. McKee is comparable to the compensation the Company would pay to a non-relative employee in a similar
position.
Other Matters
So far as is now known, there is no business other than that described above to be presented for action by the
shareholders at the Annual Meeting, but it is intended that the proxies will be exercised upon any other matters and
proposals that may legally come before the Annual Meeting, or any adjournment or postponement thereof, in
accordance with the discretion of the persons named therein.
ADDITIONAL INFORMATION
2024 PROXY STATEMENT 65
Annual Report
The 2024 Annual Report to Shareholders, including financial statements, is available under “2024 Proxy Materials”
at www.proxydocs.com/HCSG. Certain information contained in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2023, filed on February 16, 2024, is incorporated by reference to this Proxy Statement.
By Order of the Board of Directors, |
JUDE VISCONTO Chairman |
Dated: | April 26, 2024 | |
Bensalem, Pennsylvania |
A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with
the Securities and Exchange Commission, may be obtained without charge by any shareholder of record on the
record date upon written request addressed to: Secretary, Healthcare Services Group, Inc., 3220 Tillman Drive,
Suite 300, Bensalem, PA 19020 or by visiting the Company’s website at www.hcsg.com.
ADDITIONAL INFORMATION
2024 PROXY STATEMENT 66
