HEALTHCARE SERVICES GROUP INC
HCSG DEF 14A Report ended April 14, 2025
HEALTHCARE SERVICES GROUP INC
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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee paid previously with preliminary materials.
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Notice of Annual Meeting &
Proxy Statement |
2025
Our People,
Our Purpose.
1
HEALTHCARE SERVICES GROUP
| PROXY STATEMENT 2025
A Letter to Shareholders
I am pleased to share an update on the progress and achievements of
Healthcare Services Group, Inc. over the past year. Reflecting on 2024, we
celebrate strong operational performance, continued growth, and, most
importantly, the dedicated people who make it all possible.
Since our founding, we built a reputation for excellence, driven by the passion
"Our success is built on
the strength of our
people. Their ability to
rise to challenge and
embrace innovative
solutions has been
pivotal in helping us not
only sustain, but improve
our operations and
establish the foundation
for significant future
growth."
and dedication of our people. This past year, our teams continued to
demonstrate resilience, adaptability, and a deep commitment to fulfilling our
Vision, ensuring we maintained exceptional service standards despite the
challenges posed by the industry. From navigating supply chain disruptions to
addressing shifts in the labor market and adapting to evolving regulations, our
workforce has remained steadfast in their commitment to our shared purpose
of serving communities and improving lives. We’ve seen our teams excel in
delivering the highest quality service, constantly striving for excellence in every
task, whether enhancing cleanliness, improving dining experiences, or
supporting the well-being of those we serve.
Operationally, we achieved significant efficiencies that bolstered both service
quality and financial performance. Key investments in training programs,
technology, and workforce development have enhanced our teams’
capabilities, ensuring they have the resources and skills to thrive in a constantly
evolving industry.
As we look ahead, we focus on empowering our people to drive HCSG’s
continued success. The increasing demand for long-term care services
presents new opportunities for growth, and our greatest advantage is the expertise and dedication of our
workforce. We remain committed to delivering sustainable growth and strong financial performance while
prioritizing the well-being of our teams and the communities we serve.
On behalf of the 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 on Tuesday, May
27, 2025.
Ted Wahl
President & Chief Executive Officer
Healthcare Services Group, Inc.
2
HEALTHCARE SERVICES GROUP
| PROXY STATEMENT 2025
Notice of Annual Meeting of Shareholders
We cordially invite you to attend the Annual Meeting of Shareholders to be held at 10:00 a.m. Eastern
time on Tuesday, May 27, 2025, at Courtyard Philadelphia Bensalem, 3280 Tillman Drive, Bensalem, PA
19020.
2025
Proposals
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Proposal
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Detail
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Recommendation
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Page
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1
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To elect nine directors to the Board of Directors
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FOR
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2
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To consider an advisory vote on a non-binding resolution to
approve the compensation of our named executive officers
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FOR
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3
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To approve and ratify Grant Thornton LLP as the independent
registered public accounting firm for the fiscal year ending
December 31, 2025
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FOR
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We will also take action upon any other business as may properly come before the
2025
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
March 31, 2025
(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
72,916,000
shares of our
Common Stock.
Each share of Common Stock entitles the holder thereof to one vote. We will provide this Notice, the
accompanying Proxy Statement, our 2024 Annual Report on Form 10-K and the form of proxy card, or the
Notice of Internet Availability of Proxy Materials, beginning on or about
April 14, 2025
.
Shareholders can submit their proxy vote online at
www.proxyvote.com
, by phone by calling 1 (800)
690-6903, by marking, signing, and dating your proxy card and returning in the postage-paid envelope
provided, or by attending the 2025 Meeting and voting in person.
The proxy statement and annual report to shareholders are available online at
www.proxyvote.com.
.
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 14, 2025
By Order of the Board of Directors,
Jason J. Bundick
EVP, General Counsel, Chief Compliance Officer & Corporate Secretary
3
HEALTHCARE SERVICES GROUP
| PROXY STATEMENT 2025
TABLE OF CONTENTS
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Executive Compensation
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4
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
People:
Driving Our Legacy
of Excellence
5
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Attracting
Talent
with
Purpose
Our people are the heart of our mission. Every day, their dedication,
skills, and compassion define the care and service we provide. As we
celebrate
nearly
fifty
years of excellence, we recognize that our
success is built on attracting, developing, and empowering
individuals committed to making a difference in the lives of residents
and their communities.
Strategic Talent Acquisition and Development
Bringing the right people into our organization is the first step in
creating meaningful service experiences. We actively seek individuals
who share our passion for care and service, using innovative
recruiting strategies to build a workforce that reflects the varied
communities we serve.
Nationwide Recruitment
Our innovative recruiting strategies
are designed to reach out to
passionate individuals from every
corner of the country. We believe
that different perspectives and
experiences enrich our
organization and drive creativity
and success. Through
targeted
outreach initiatives, partnerships
with educational institutions, and
the use of advanced technology,
we ensure we attract individuals
who possess the necessary skills
and align with our core values. Our
recruitment efforts focus on
building relationships and
understanding the unique
motivations of candidates,
allowing us to identify those who
will thrive in our dynamic
environment.
Supportive Benefits and Career Pathways
We offer a comprehensive array of benefits to enhance and support the welfare and health of our
associates and their families and overall quality of life. Additionally, we provide clear career pathways
that empower employees to set and achieve their professional goals. This holistic approach ensures
stability and security and fosters a culture of growth and advancement, motivating our employees to
excel in their roles.
Fostering a Community of Engagement
At the heart of our organization is a steadfast commitment to cultivating an inclusive and supportive
workplace community where every team member feels valued and respected, fostering an
atmosphere that encourages open communication and collaboration. By implementing mentorship
programs, regular feedback sessions, and team-building activities, we empower our employees to
share their ideas and contribute meaningfully to the organization. This engagement ultimately
strengthens our workforce and enhancing our overall organizational effectiveness.
6
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Professional growth is a continuous journey, and we are deeply
Investing
in Our
Future
Leaders
committed to guiding our employees every step of the way. We
provide a robust framework of structured programs, mentorship
opportunities, and continuing education to equip our teams with the
skills, knowledge, and confidence needed to excel and lead. Our
investment in our people is an investment in the future of our
organization and the quality of services we deliver.
Leadership Empowerment Apprenticeship Program (LEAP)
LEAP is a cornerstone of our leadership development strategy. This
intensive 12-month program is designed to cultivate essential
management skills within our dining and environmental services
departments. Through a blend of hands-on experience, targeted
training, and mentorship, LEAP participants develop the
competencies necessary to effectively lead teams and drive
operational excellence.
Read Cristian Alvarado’s story. From associate to LEAP
participant
to
managing
his
very
own
dining
department.
District Manager Development Program
The District Manager (DM) Development Program underscores
HCSG's unwavering commitment to the professional advancement
of our District Managers, a pivotal role within our organizational
structure. This comprehensive program integrates Director-led
mentorship, instructor-led training, and interactive competency
demonstrations, providing a structured and supportive pathway for
career progression. Key learning objectives include leadership,
regulatory compliance, customer and resident experience, financial
performance, and systems implementation. Through thoughtfully
designed Learning Journeys, participants cultivate essential
leadership qualities and gain valuable insights into key organizational
systems, fostering confidence and readiness for their roles. The
program culminates in the DM Capstone Experience at our Bensalem
office, further enhancing leadership skills and facilitating valuable
networking opportunities with peers and departmental leaders. We
are dedicated to continuously refining and expanding this program
by collaborating with experienced DMs and industry experts to
develop additional content that further strengthens leadership
capabilities across our organization.
Certification & Continuing Education Opportunities
As an organization that has served the long-term care industry for
almost five decades, we continually invest in a state-of-the-art
learning management system and develop comprehensive training
programs, including microlearning modules, to support our dining,
environmental, and nutrition services clients. We also offer access to
learning resources that empower our employees to expand their
knowledge, acquire new skills, and pursue their professional goals, ultimately contributing to their
success and the success of HCSG.
7
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Fostering a Supportive Culture
We firmly believe that when our employees feel genuinely valued and supported, they are not just enabled, but
empowered to perform
their
best
work
and
contribute
their
unique
talents
to
our
shared
mission.
We
are
proud
of our workforce and are dedicated to building an organization that truly represents the communities
we serve. This shared mission with our workforce is
the
bedrock
of
our
culture,
driving
innovation,
fostering
creativity,
and
ensuring
a
wide
range of perspectives are considered in all that we do.
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Celebrating Excellence Through
Recognition Programs
Our robust recognition programs
spotlight outstanding service,
exceptional contributions, and
those who
go beyond
.
These programs not only provide
well-deserved recognition but
also play a significant role in
reinforcing our values, ensuring
that everyone in our organization
is aligned and committed to our
mission. We believe that
recognizing our employees'
efforts is crucial to maintaining a
positive and motivating work
environment.
Cultivating a Culture of Belonging
We strive to create a culture of belonging where every employee feels seen, heard, and valued. This
culture fosters teamwork, collaboration, and innovation at every level of our organization. Employees
who feel a strong sense of belonging are more likely to be engaged, motivated, and committed to our
shared goals. By fostering an inclusive environment, we empower our teams to bring their whole selves
to work, leading to greater creativity and better outcomes for our residents and communities.
Prioritizing Holistic Well-being Initiatives
The well-being of our employees is a top priority at HCSG. We offer a range of holistic well-being
initiatives designed to support our team members' mental, physical, and financial health. These
initiatives include programs that promote stress management, physical fitness, and financial literacy.
We recognize that a healthy and supported workforce is not just productive and engaged but also
cared for and valued. We are committed to providing the resources and support our employees need
to thrive personally and professionally.
8
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Serving:
Building Stronger
Communities
9
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Strengthening Communities
Through Service
Our roles extend beyond the walls of the healthcare facilities we serve. The dedication and care
provided by our teams have a profound and lasting effect on the broader community. Our employees
are not just service providers but an integral thread in the social fabric of each community, weaving
connections and fostering a sense of belonging. Their daily interactions with residents and families
create a ripple effect, enhancing the overall quality of life and well-being of the community.
Skilled professionals elevating the standard of care
Our commitment to continuous training ensures that our teams possess the expertise to deliver
accurate and quality service. This translates to enhanced resident satisfaction, improved health
outcomes, and a reputation for excellence that benefits the entire community.
Creating environments where residents feel truly at home
When our employees are empowered and engaged, they cultivate spaces of warmth, comfort, and
Heartfelt Connections that make meaningful differences
every day
Beyond the operational details, personal connections and
acts of kindness truly define our impact. We celebrate the
countless stories of employees who go the extra mile,
offering a listening ear, a helping hand, and a warm smile.
These moments of genuine connection strengthen the bonds
within our communities and leave a lasting impression on
residents and their families.
A Rose Blooms in Davison, MI: Kristi Vella's Story
One beautiful example of this commitment to compassion
comes from Kristi Vella, a Light Housekeeper in Davison, MI.
Kristi, an avid knitter, decided to use her talent to bring joy to
the residents of her community. She lovingly knitted individual
roses for each resident, a small gesture that spoke volumes
about her care and dedication. Kristi's story exemplifies how
our employees
go beyond
, transforming their roles into
opportunities to create moments that spark joy.
belonging. They transform facilities into vibrant communities where residents feel valued, respected,
and genuinely at home, leading to a richer quality of life for all.
10
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Experience:
Creating Memorable
Moments
11
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Elevating Everyday Moments for Residents
The resident experience is composed of countless small moments
woven together. Every meal served, every meticulously cleaned
space, and every genuine conversation contributes to the daily life
of those we serve. We believe in
going beyond
the basic provision
of services. Our mission is to craft moments that truly matter and
bring joy, comfort, and a sense of belonging. We are dedicated to
transforming routine tasks into opportunities to enhance the
quality of life for our residents.
Culinary Delights and Social Connections
Meals are more than just nourishment and are
opportunities for celebration and connection. Our
themed dining experiences and special meal events
are designed to delight the senses, spark
conversations, and create a sense of community. From
festive holiday feasts to culturally diverse culinary
journeys, we ensure that dining is an enjoyable and
memorable part of each resident's day. We understand
the power of a shared meal to bring people together
and create lasting memories.
Ensuring Comfort, Cleanliness, and a Sense of Home
Our dedicated housekeeping teams play a crucial role
in enhancing the well-being of our residents to create
a comfortable, welcoming, and safe environment that
feels like home. Their attention to detail and friendly
and respectful demeanor contribute significantly to
our residents' happiness and satisfaction. A clean and
orderly space is essential for physical and mental well-
being, and our teams take pride in providing this vital
service.
Fostering Connection, Community, and Purpose in
the Workplace
We believe a strong sense of connection and
community enhances the employee experience. Our
engagement programs are designed to support and
inspire our teams, providing personal and professional
growth opportunities. From team-building activities
and leadership workshops to peer recognition
programs and career development initiatives, we
create an environment where employees feel valued,
supported, and empowered. These initiatives
strengthen teamwork, encourage collaboration, and
foster a culture where everyone can thrive.
Elevating
Everyday
Moments
Directors, Officers &
Corporate Governance
Proxy Statement
|
2025
13
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
The Board of Directors recommends 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.
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, with the exception of Thomas G. Whalen. 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.
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 investor.hcsgcorp.com/governance.
The business of the Company is managed under the direction of its Board of Directors (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, 2024
and took one action by unanimous written consent.
During
2024
, 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
2024
, and (ii) the total number of meetings held
by each committee of the Board on which such member served during
2024
. We do not have a policy
with regard to attendance by directors at annual meetings of shareholders.
Three
directors attended
the
2024
Annual Meeting of Shareholders.
14
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
DIANE S. CASEY
|
Age:
71
|
Director Since: 2011
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.
Committees:
Chairwoman of the Nominating, Compensation and Stock Option
Committee (“NCSO Committee”)
Skills, Experience, & Qualifications:
Industry, Operational
DANIELA CASTAGNINO
|
Age:
50
|
Director Since: 2018
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 ten years. Previously, Ms. Castagnino was an international
consultant for Lazos P
rofesionales Asociación Civil and the Inter-American
Development Bank.
Committees:
Environmental, Social & Governance Committee (“ESG Committee”)
Skills, Experience, & Qualifications:
Industry, Operational
LAURA GRANT
|
Age:
45
|
Director Since: 2020
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.
Committees:
Audit Committee
Skills, Experience, & Qualifications:
Operational, Executive, Financial, Real Estate
JOHN J. MCFADDEN
|
Age:
63
|
Director Since: 2012
Si
nce 2008, Mr. McFadden has been the Principal of Global Circulation Services, a
provider of marketing and advertising services to media and publishing companies.
He previously worked at McGraw-Hill Companies (the 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.
Committees:
NCSO Committee
Skills, Experience, & Qualifications:
Operational, Executive
15
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
DINO D. OTTAVIANO
|
Age:
77
|
Director Since: 2007
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.
Committees:
Audit Committee
Skills, Experience, & Qualifications:
Operational, Executive, Financial
KURT SIMMONS, JR., CPA
|
Age:
43
|
Director Since: 2021
Mr. Simmons, Jr. has been an audit partner at WithumSmith+Brown, PC since 2021.
Prior to that, he was a partner at Citrin Cooperman & Company LLP from 2017 to
2021. His expertise includes audit and consulting services related to Sarbanes-Oxley
404, technical accounting, and due diligence for domestic and international
clients. He is a former member of the National Association of Black Accountants,
has served on the New Jersey Technology Advisory Council board, and is currently
a member of the Association for
Corporate Growth
.
Committees:
Audit Committee Chairman, ESG Committee
Skills, Experience, & Qualifications:
Executive, Financial
JUDE VISCONTO
|
Age:
51
|
Director Since: 2015
Mr. Visconto has been the principal of American Property Holdings, a real estate
investment firm focused on acquiring, developing, and managing multi-family/
senior housing and commercial assets for more than five years. Mr. Visconto is an
active member of the real estate community and participates in various 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.
Committees:
Board Chairman, ESG Committee Chairman
Skills, Experience, & Qualifications:
Industry, Operational, Financial, Real Estate
THEODORE WAHL
|
Age:
51
|
Director Since: 2011
M
r. Wahl h
as 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.
Committees:
None
Skills, Experience, & Qualifications:
Industry, Operational, Executive, Financial
16
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
THOMAS G. WHALEN
|
Age:
51
|
Director Since: N/A
Mr. Whalen has been a Senior Managing Director and Co-head of the Financial
Restructuring Group at Griffin Financial since 2012. Griffin Financial Group, part of an
affiliated group of multidisciplinary professional services firms collectively known as
The Stevens & Lee Companies, serve clients across several industries including
Healthcare and Real Estate. Mr. Whalen's
transactional expertise includes, among
other things, M&A advisory, complex restructurings and recapitalizations, refinancing
and capital raises. Mr. Whalen has also practiced as a bankruptcy lawyer at Stevens
& Lee since 2000
, where he has provided clients with important insights into the
interplay of law and commercial finance. Tom is a member of the American Bar
Association, the American Bankruptcy Institute and the Turnaround Management
Association.
Committees:
None
Skills, Experience, & Qualifications:
Industry, Executive, Financial, Real Estate
Individual Board Skills Matrix
The diverse skills and experiences of our directors equip the Board to effectively advance shareholder
interests. Although the NCSO Committee has not set specific minimum qualifications for directors, it
evaluates various criteria for their suitability. Our directors are expected to uphold the highest
professional and personal ethics, demonstrate a commitment to enhancing shareholder value, and
possess the time and insight necessary for their roles. The matrix below highlights the individual
strengths each nominee brings to the Board, but the absence of an “X” does not imply a lack of
contribution in that area.
|
Board
Member
|
Industry
|
Operational
|
Executive
|
Financial
|
Real Estate
|
Independent
|
|
Casey
|
X
|
X
|
X
|
|||
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Castagnino
|
X
|
X
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X
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|||
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Grant
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X
|
X
|
X
|
X
|
X
|
|
|
McFadden
|
X
|
X
|
X
|
|||
|
Ottaviano
|
X
|
X
|
X
|
X
|
||
|
Simmons
|
X
|
X
|
X
|
|||
|
Visconto
|
X
|
X
|
X
|
X
|
X
|
|
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Wahl
|
X
|
X
|
X
|
X
|
||
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Whalen
|
X
|
X
|
X
|
X
|
X
|
17
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
•
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.
•
Mr. Visconto and Ms. Grant have real estate experience as a Principal of American Property Holdings
and President 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. Simmons, Jr.'s experience as a certified public accountant provides him with extensive financial
and accounting expertise obtained from over twenty 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.
•
Mr. Whalen has extensive experience managing legal matters in the healthcare industry across a
number of disciplines as part of his tenure with Griffin Financial Group. Mr. Whalen has specific
experience assisting companies with reorganizations and restructurings which have occurred and
may continue to occur within the healthcare industry.
Mr. Whalen additionally has executive
experience through his role as a Managing Director and previously led the Real Estate Groups at
Griffin.
18
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
D
irector Independence
In accordance with the listing requirements of Nasdaq, a majority of the current members of the
Company’s
Board and the Company's nominees to the Board are
independent, namely: Diane S. Casey,
Daniela Castagnino, Laura Grant, John J. McFadden, Dino D. Ottaviano, Kurt Simmons, Jr., Jude Visconto
and Thomas G. Whalen. Accordingly, if the Board Nominees are elected, a majority of the members of
the Company’s Board will continue to be independent.
Mr. Whalen is a member of Griffin Financial Group, a member of
The Stevens & Lee Companies,
which
has been retained by the Company during the last fiscal year. Fees charged to the Company by Griffin
Financial Group and The Stevens & Lee Companies for services provided during the fiscal year ended
December 31, 2024 were $1,964,839. Additionally, the fees paid by the Company did not exceed 5% of
such firm’s total revenues. Accordingly, Mr. Whalen is an independent director as such term is defined
by Rule 5605(a)(2) of the NASDAQ listing standards.
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
2024
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;
19
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
•
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;
•
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
2024
. The report of the Audit Committee for the
fiscal year ended December 31,
2024
is included herein under “Audit Committee Report” below.
20
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
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
four
times during fiscal year
2024
.
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.
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.
21
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
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, 2024
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
one
time during fiscal year
2024
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.
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 in the form
of Deferred Stock Units (“DSUs”). Each DSU award vests in one year from the grant date.
22
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
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 Amended Omnibus Incentive Plan (the "2020
Plan")).
Directors may elect to receive their retainers in the form of fully vested 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. During
2023
, Ms. Grant and Messrs.
Frome
and Simmons Jr. made the election to receive their
2024
Board of Directors retainer in the form of DSUs.
Ms. Grant and Mr. Frome additionally elected to receive their shares 90 days following their separation
of service from the Board.
Directors’ Compensation
A director who is also an employee is not separately compensation for their service as a director. Our
non-employee directors received the following aggregate amounts of compensation for the year
ended
December 31, 2024
:
|
Name
|
Fees Earned or Paid
in Cash
|
Deferred Stock Unit
Awards
1
|
Total
|
|||
|
Diane S. Casey
2
|
$
15,000
|
$
40,001
|
$
55,001
|
|||
|
Daniela Castagnino
3
|
$
10,000
|
$
40,001
|
$
50,001
|
|||
|
Robert L. Frome
4
|
$
—
|
$
50,029
|
$
50,029
|
|||
|
Laura Grant
5
|
$
—
|
$
70,015
|
$
70,015
|
|||
|
John J. McFadden
6
|
$
15,000
|
$
40,001
|
$
55,001
|
|||
|
Dino D. Ottaviano
7
|
$
30,000
|
$
40,001
|
$
70,001
|
|||
|
Kurt Simmons, Jr.
8
|
$
—
|
$
100,007
|
$
100,007
|
|||
|
Jude Visconto
9
|
$
60,000
|
$
40,001
|
$
100,001
|
|||
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
2024
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.
Ms. Casey had vested options to purchase
26,004
shares of Common Stock as of
December 31, 2024
.
3.
Ms. Castagnino had vested options to purchase
9,002
shares of Common Stock as of
December 31, 2024
.
4.
Mr. Frome had vested options to purchase
29,006
shares of Common Stock as of
December 31, 2024
.
5.
Ms. Grant had vested options to purchase
4,001
shares of Common Stock as of
December 31, 2024
.
6.
Mr. McFadden had vested options to purchase
29,006
shares of Common Stock as of
December 31, 2024
.
7.
Mr. Ottaviano had vested options to purchase
29,006
shares of Common Stock as of
December 31, 2024
.
8.
Mr. Simmons, Jr. had
no
vested options as of
December 31, 2024
.
9.
Mr. Visconto had vested options to purchase
24,005
shares of Common Stock as of
December 31, 2024
.
23
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
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 and Insider Trading Policy
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
.
In addition, we have an insider trading policy governing the purchase, sale and other dispositions of
our securities (the “Insider Trading Policy”) that applies to all of the Company’s directors, officers,
employees and other covered persons identified within the Insider Trading Policy. We believe that the
Insider Trading Policy is reasonably designed to promote compliance with applicable U.S. federal
securities laws, rules and regulations, as well as Nasdaq listing standards applicable to the Company,
relating to insider trading.
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.
The Board delegates 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 internal audit function, the cybersecurity risk program, and
the 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.
24
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
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. Mr. Bundick 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.
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 have experienced
a cybersecurity incident in the past, are at risk in the future of suffering 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, 2024
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.
25
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
Non-Director Executive Officers
Our non-director executive officers for the
2024
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
|
Senior Vice President, Controller & Chief Accounting
Officer
|
Age: 35
|
|
Mr. Brophy has served in his current role since August 2024. Mr. Brophy had
previously served as the Company’s VP, Principal Accounting Officer & Controller
from November 2021 to July 2024, Acting Principal Accounting Officer since
February 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 J. BUNDICK, ESQ.
|
Executive Vice President, Chief Compliance Officer,
General Counsel & Secretary
|
Age: 48
|
|
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: 47
|
|
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.
|
26
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Directors, Officers & Corporate Governance
|
PATRICK J. ORR, ESQ.
|
Executive Vice President & Chief Revenue Officer
|
Age: 50
|
|
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: 53
|
|
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.
|
|
VIKAS SINGH, MBA | Executive Vice President & Chief Financial Officer |
Age: 48
|
|
Mr. Singh has served in his current role since September 2024. Prior to joining the
Company, Mr. Singh was a Managing Director of Leveraged Finance & Capital
Markets at Bank of America Securities for more than five years. Prior to that Mr. Singh
worked in the Financial Sponsors Group at Credit Suisse and in the Asia-Pacific
Credit Card Group at Citibank. Mr. Singh began his career with GSK's Consumer
Healthcare Division and held roles in Sales Management and as National Brand
Manager within the marketing organization.
|
E
xecutive
Compensation
Proxy Statement |
2025
28
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
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
2024
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, Chief Financial Officer,
and our other three highest paid executive officers in
2024
), 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.
29
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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
2,600
facilities throughout the continental United States as of
December 31, 2024
. We believe we are the
largest provider of housekeeping and laundry management services to the long-term care industry in
the United States.
With
nearly 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
In
2024
, our Named Executive Officers (“NEOs”) were as
follows
:
THEODORE WAHL
President, Chief Executive
Officer & Director
ANDREW W. KUSH
Executive Vice President &
Chief Operating Officer
VIKAS SINGH, MBA
Executive Vice President &
Chief Financial Officer
ANDREW M. BROPHY, CPA
Senior Vice President,
Controller &
Chief Accounting Officer
PATRICK J. ORR, ESQ.
Executive Vice President &
Chief Revenue Officer
JOHN C. SHEA, CPA, MBA
Executive Vice President &
Chief Administrative Officer
We refer to our President and Chief Executive Officer and our Executive Vice Presidents as the Company’s
“Executive Management Team.”
30
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
2024
Business Highlights
2024 was a transitional year for HCSG which was marked by a shift from recovery from market
conditions
brought on by the COVID-19 pandemic
to renewed growth. Industry fundamentals continue
to improve which positions HCSG well going into the future. From an overall operational and financial
stewardship point of view, the Board and NCSO Committee believed that in
2024
, the Executive
Management Team performed well to capitalize on the improving market conditions and generate
positive momentum for the future.
Key
2024
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 while tirelessly supporting our
customers and ensuring the well-being of America’s most vulnerable;
•
Expanded leadership development programs and enhanced training initiatives to provide clear
career pathways, ensuring that HCSG continues to be a place where careers flourish.
•
Introduced new technologies and processes to engage with and support our employees in
delivering exceptional service and remaining at the forefront of industry-leading innovation.
•
Strengthened year-over-year financial performance by
increasing
revenues and net income as
well as delivering strong second half of the year operating cash flow and expect to carry such
positive momentum into 2025.
•
Successfully started over 500 new service agreements and over
150
facility ownership changes,
while maintaining an over
90%
customer retention rate.
•
Continued prioritizing opportunistic share repurchases, and have repurchased over
$23.0 million
since the February 2023 share repurchase authorization;
•
Further
reduced
workers' compensation claim scope resulting in
favorable
loss development
trends; and
•
Demonstrated continued financial discipline, while laying the foundation for further efficiency,
with return on assets of
4.9%
, return on equity of
7.9%
and return on invested capital of
9.7%
.
The Board and NCSO Committee did not make any adjustments to the executive compensation
framework in
2024
. 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
2024
was based on the same metrics used in
2023
as the metrics used in determining incentive awards
have proven to be resilient and relevant. The details below more fully describe our structure and
compensation paid in fiscal year
2024
.
Changes in Senior Management
On September 3, 2024, Mr. Singh became the Company’s Executive Vice President and Chief Financial
Officer, effective the same day. Mr. Brophy, who served as the Company’s Principal Financial &
Accounting Officer beginning in 2021, continues to serve in his role as Senior Vice President, Controller
and Chief Accounting Officer.
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.
31
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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.
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.
32
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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.
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.
33
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
Incorporating Shareholder Feedback
The NCSO Committee was pleased that approximately
91%
of votes cast at the
2024
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.
Mr. Wahl’s base salary as President and Chief Executive Officer for
2024
was approved by the NCSO on
December 13, 2023
and has remained unchanged since 2016. Mr. Wahl has not received an increase in
base salary for the last eight years. Mr. Singh's base salary reflects compensation for his period of
employment during 2024. Messrs. Kush and Shea's base salaries were also unchanged from
2023
. Mr.
Brophy's increase in base salary reflected the increased scope of his role, including his promotion to
SVP, Controller & Chief Accounting Officer in August 2024.
|
Named Executive Officer
|
2023
Base Salary
|
2024
Base Salary
|
Change
|
|||
|
Theodore Wahl
|
$
1,005,108
|
$
1,005,108
|
—
%
|
|||
|
Vikas Singh
1
|
$
—
|
$
153,846
|
—
%
|
|||
|
Andrew W. Kush
|
$
639,000
|
$
639,000
|
—
%
|
|||
|
John C. Shea
|
$
606,703
|
$
606,703
|
—
%
|
|||
|
Patrick J. Orr
|
$
579,407
|
$
580,147
|
0.1
%
|
|||
|
Andrew M. Brophy
|
$
221,481
|
$
239,918
|
8.3
%
|
1.
Mr. Singh’s 2024 Base Salary represents a prorated amount of his annual base salary from his start date with the Company in
September 2024 through the end of the Company's fiscal year.
34
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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 Chief 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
2024
was
$397,058
, equating to
40%
of base salary. Mr. Wahl elected to receive
35%
of this compensation, or
$138,966
, in the form of shares of Common Stock in early
2025
. The remaining balance of
$258,092
was
received in cash.
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
2024
performance:
|
Named Executive Officer
|
2024
Cash
Annual
Incentive
|
2024
Equity
Annual
Incentive
|
2024
Annual
Incentive (% of
salary)
|
|||
|
Theodore Wahl
|
$
258,092
|
$
138,966
|
40%
|
|||
|
Vikas Singh
|
$
8,334
|
$
—
|
5%
|
|||
|
Andrew W. Kush
|
$
162,503
|
$
—
|
25%
|
|||
|
John C. Shea
|
$
101,562
|
$
—
|
17%
|
|||
|
Patrick J. Orr
|
$
121,877
|
$
—
|
21%
|
|||
|
Andrew M. Brophy
1
|
$
64,575
|
$
—
|
27%
|
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.
35
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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
2024
to our NEOs:
|
Named Executive
Officer
|
Stock
Options (#)
|
Stock Option
Grant Date
Fair Value
1
|
Restricted
Stock Units
(#)
|
Restricted
Stock Units
Grant Date
Fair Value
1
|
Performance
Stock Units
(#)
|
Performance
Stock Units
Grant Date
Fair Value
2
|
Total Grant
Date Fair
Value
|
|||||||
|
Theodore Wahl
|
156,735
|
$
793,643
|
153,213
|
$
1,587,287
|
66,974
|
$
793,642
|
$
3,174,572
|
|||||||
|
Andrew W. Kush
|
31,944
|
$
161,752
|
31,226
|
$
323,501
|
13,650
|
$
161,753
|
$
647,005
|
|||||||
|
John C. Shea
|
32,453
|
$
164,329
|
31,724
|
$
328,661
|
13,868
|
$
164,336
|
$
657,325
|
|||||||
|
Patrick J. Orr
|
30,538
|
$
154,632
|
29,851
|
$
309,256
|
13,049
|
$
154,631
|
$
618,519
|
|||||||
|
Andrew M. Brophy
|
—
|
$
—
|
4,826
|
$
49,997
|
—
|
$
—
|
$
49,997
|
1.
All options and RSU awards granted vest and are exercisable ratably over a five-year period on each yearly anniversary of
the grant date of the award.
2.
PSUs vest upon certification by the Board in
2027
, provided that the performance targets, based on relative Total
Shareholder Return (“TSR”), are met for the three-year period ended
December 31, 2026
.
3.
Mr. Singh did not receive any stock options, RSUs or PSUs during the year ended
December 31, 2024
.
PSUs
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
concluded on December 31, 2024.
36
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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
2024
,
2023
and
2022
, the NCSO Committee granted options to purchase an aggregate of
approximately
252,000
,
181,000
and
282,000
shares of Common Stock, respectively, to our NEOs. In
January
2024
,
2023
and
2022
, the NCSO Committee granted
RSUs of an aggregate of approximately
251,000
,
176,000
, and
129,000
shares, respectively, to our NEOs. In January
2024
,
2023
and
2022
, the NCSO
Committee granted PSUs
of an aggregate of approximately
108,000
,
73,000
and
54,000
shares,
respectively, to the Executive Management Team. See the table entitled Grant of Plan-Based Awards
included in this Proxy Statement for more information on the
2024
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
177,000
shares are available for future grant
at December 31,
2024
. As of December 31,
2024
, and since the initiation of the SERP, the Company’s 25%
match has resulted in approximately
836,000
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,
2024
,
approximately
362,000
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.
37
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive 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
1,691,000
shares available for future grant at December 31,
2024
. 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 (the last
day of the offering period).
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 3
year (for PSUs) or 5 year (for RSUs and stock options) 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 the
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.
38
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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 common
stock
with a value of at least
two times their base salary.
Stock ownership includes shares owned outright, RSUs 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,
2024
.
|
Executive Management Team
|
Ownership
Requirement
(% of salary)
|
Ownership as of
December 31, 2024
(% of salary)
|
||
|
Theodore Wahl
|
600%
|
838%
|
||
|
Vikas Singh
|
200%
|
—%
|
||
|
Andrew W. Kush
|
200%
|
204%
|
||
|
John C. Shea
|
200%
|
231%
|
||
|
Patrick J. Orr
|
200%
|
168%
|
||
|
Jason J. Bundick
|
200%
|
221%
|
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,
2024
, all
members of the Executive Management Team have remained in compliance with the guidelines.
Change of Control
The Company’s 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
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, where 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.
39
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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.
Application of the Clawback Policy
The NCSO Committee determined that there was no erroneously awarded compensation attributable
to accounting restatements during 2024; therefore, no amount was pursued from any current or
former executive officers.
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.
Equity Award Grant Practices
Management team on the
first or second business day of the applicable fiscal year
. As described in
further detail above in the "Elements of Compensation" section, long-term equity incentive awards
include a combination of stock options, RSUs, and PSUs. The NCSO Committee is responsible for
approving these grants.
There are no option awards granted to non-Executive Management
employees, except for the Chief Communications Officer.
The NCSO Committee holds meetings each
year to determine the long-term equity incentive awards to be granted to the Executive Management
information into account when determining the timing and terms of equity awards in 2024. The timing
of the grants is in accordance with the yearly compensation cycle, with grants starting in the
Eligible employees, including the Executive Management team, may voluntarily enroll in the ESPP and
purchase shares at a discount via payroll deductions. The ESPP is offered once a year. There were no
option awards granted within four business days prior or one business day after the release of material
nonpublic information.
The Company does not time the disclosure of material nonpublic information for the purpose of
affecting the value of executive compensation. The grants are made following an annual,
40
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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
Awards
1
|
Option
Awards
2
|
Non-Equity
Incentive Plan
Compensation
3
|
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation
4
|
Total
|
||||||||
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||
|
Theodore Wahl
|
2024
|
1,005,108
|
2,526,539
|
793,643
|
258,092
|
50,377
|
49,887
|
4,683,646
|
||||||||
|
President & Chief
Executive Officer &
Director
|
2023
|
1,005,108
|
2,431,170
|
762,697
|
258,648
|
55,080
|
47,207
|
4,559,910
|
||||||||
|
2022
|
1,005,108
|
2,214,062
|
737,227
|
338,115
|
74,042
|
45,709
|
4,414,263
|
|||||||||
|
Vikas Singh
5
|
2024
|
153,846
|
—
|
—
|
8,334
|
—
|
3,294
|
165,474
|
||||||||
|
Executive Vice
President & Chief
Financial Officer
|
||||||||||||||||
|
Andrew W. Kush
|
2024
|
639,000
|
485,254
|
161,752
|
162,503
|
29,627
|
40,028
|
1,518,164
|
||||||||
|
Executive Vice
President & Chief
Operating Officer
|
2023
|
639,000
|
454,332
|
151,444
|
144,163
|
25,968
|
37,525
|
1,452,432
|
||||||||
|
2022
|
639,000
|
451,708
|
150,114
|
90,164
|
31,097
|
35,064
|
1,397,147
|
|||||||||
|
John C. Shea
|
2024
|
606,703
|
492,996
|
164,329
|
101,562
|
26,298
|
32,606
|
1,424,494
|
||||||||
|
Executive Vice
President & Chief
Administrative Officer
|
2023
|
606,703
|
454,332
|
151,444
|
90,100
|
24,012
|
33,426
|
1,360,017
|
||||||||
|
2022
|
606,703
|
452,706
|
150,114
|
56,353
|
27,219
|
31,619
|
1,324,714
|
|||||||||
|
Patrick J. Orr
|
2024
|
580,147
|
471,878
|
154,632
|
121,877
|
21,601
|
25,772
|
1,375,907
|
||||||||
|
Executive Vice
President & Chief
Revenue Officer
|
2023
|
579,407
|
347,371
|
114,536
|
108,122
|
21,780
|
22,335
|
1,193,551
|
||||||||
|
2022
|
541,007
|
323,232
|
106,953
|
56,353
|
15,424
|
18,931
|
1,061,900
|
|||||||||
|
Andrew M. Brophy
|
2024
|
239,918
|
49,997
|
—
|
64,575
|
10,733
|
11,416
|
376,639
|
||||||||
|
Senior Vice President,
Controller, & Chief
Accounting Officer
|
2023
|
221,481
|
49,996
|
—
|
64,575
|
10,212
|
10,817
|
357,081
|
||||||||
|
2022
|
210,716
|
49,992
|
—
|
61,500
|
9,429
|
13,222
|
344,859
|
|||||||||
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, RSU
s, PSU
s, 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, 2024
. For PSUs granted in
2024
, the
grant date fair value reported is based upon the probable outcome of performance at the grant date. 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.
|
Fiscal
2024
Grants of Performance Awards
6
|
|||
|
Probable Outcome ($)
|
Highest Outcome ($)
|
||
|
Theodore Wahl
|
$
793,642
|
$
1,190,463
|
|
|
Andrew W. Kush
|
$
161,753
|
$
242,629
|
|
|
John C. Shea
|
$
164,336
|
$
246,504
|
|
|
Patrick J. Orr
|
$
154,631
|
$
231,946
|
|
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 o
f the Notes to the Financial Statements in our Annual Report on Form 10-
K for the year ended
December 31, 2024
. Refer also to the Compensation Discussion and Analysis for further information.
41
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
3.
Amounts shown in this column represent annual performance-based cash payments under the annual incentive program,
Executive Compensation
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 insurance
premiums.
5.
On September 3, 2024, Mr. Singh became the Company’s Executive Vice President and Chief Financial Officer, effective the
same day. Mr. Brophy, who served as the Company’s Principal Financial & Accounting Officer beginning in 2021, continues to
serve in his role as Senior Vice President, Controller and Chief Accounting Officer..
6.
Messrs
. Singh and Brophy did not receive performance stock unit awards for the year ended
December 31, 2024
.
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, 2024
, to each of the NEOs.
|
Grant
Date
|
Date
Award
Approved
|
Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards
1
|
Estimated Future
Payouts Under Equity
Incentive Plan Awards
(#)
2
|
All Other
Stock
Awards:
Number
of Shares of
Stock or
Units
|
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
3
|
Target (#)
|
Thres-
hold
|
Target
|
Maxi-
mum
|
(#)
|
(#)
|
($/sh)
|
($)
|
||||||||||||
|
Theodore Wahl
|
1/3/2024
|
12/13/2023
|
—
|
33,487
|
66,974
|
100,461
|
153,213
|
156,735
|
$
10.36
|
$
3,174,572
|
||||||||||
|
12/31/2024
|
12/13/2023
|
13,110
|
—
|
—
|
—
|
—
|
—
|
$
10.60
|
$
138,966
|
|||||||||||
|
Andrew W. Kush
|
1/3/2024
|
12/13/2023
|
—
|
6,825
|
13,650
|
20,475
|
31,226
|
31,944
|
$
10.36
|
$
647,005
|
||||||||||
|
John C. Shea
|
1/3/2024
|
12/13/2023
|
—
|
6,934
|
13,868
|
20,802
|
31,724
|
32,453
|
$
10.36
|
$
657,325
|
||||||||||
|
Patrick J. Orr
|
1/3/2024
|
12/13/2023
|
—
|
6,525
|
13,049
|
19,574
|
29,851
|
30,538
|
$
10.36
|
$
618,519
|
||||||||||
|
Andrew M.
Brophy
|
1/3/2024
|
12/13/2023
|
—
|
—
|
—
|
—
|
4,826
|
—
|
$
10.36
|
$
49,997
|
||||||||||
1.
Represents the shares received during
2025
as a result of Mr. Wahl’s election to receive a portion of his
2024
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
PSU
s were granted under the 2020 Plan and vest upon certification by the Board in
2027
, provided that the
performance targets, based on Relative TSR, are met for the three-year periods ended
December 31, 2026
.
3.
Mr. Singh had no plan-based awards granted during the year ended
December 31, 2024
.
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, 2024
. 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
156,735
shares of Common Stock,
153,213
RSUs and
66,974
PSUs. Mr. Shea received stock options to purchase
32,453
shares of Common
Stock,
31,724
RSUs and
13,868
PSUs. Mr. Kush received stock options to purchase
31,944
shares of
Common Stock,
31,226
RSUs and
13,650
PSUs. Mr. Orr received stock options to purchase
30,538
shares of
Common Stock,
29,851
RSUs and PSUs of
13,049
. Mr. Brophy received
4,826
RSUs. These stock options and
RSUs vest over five years while PSUs 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
. Mr. Singh’s compensation
reflects payment for his services provided for his period of employment during 2024.
42
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
Outstanding Equity Awards at
December 31, 2024
T
he following table summarizes the outstanding equity awards of each of the NEOs as of
December 31,
2024
:
|
Option Awards
|
Stock Awards
|
|||||||||||||||||
|
Name
1
|
Grant
Date
2
|
Vested,
Exercisable
|
Unvested
|
Option
Exercise
Price
|
Option
Expiration
Date
|
Unvested
3
|
Market
Value of
Unvested
4
|
Unvested
Equity
Incentive
Plan
Awards
5
|
Market
Value of
Equity
Incentive
Plan
Awards
5
|
|||||||||
|
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
|
50,000
|
—
|
$
40.49
|
1/4/2029
|
—
|
$
—
|
—
|
$
—
|
||||||||||
|
1/3/2020
|
40,000
|
10,000
|
$
24.43
|
1/3/2030
|
15,546
|
$
180,645
|
—
|
$
—
|
||||||||||
|
1/4/2021
|
61,915
|
41,278
|
$
28.37
|
1/4/2031
|
20,049
|
$
232,969
|
—
|
$
—
|
||||||||||
|
1/4/2022
|
72,633
|
108,950
|
$
18.10
|
1/4/2032
|
48,877
|
$
567,951
|
35,106
|
$
150,254
|
||||||||||
|
2/24/2023
|
23,360
|
93,439
|
$
13.72
|
2/24/2033
|
88,952
|
$
1,033,622
|
47,075
|
$
378,012
|
||||||||||
|
1/3/2024
|
—
|
156,735
|
$
10.36
|
1/3/2034
|
153,213
|
$
1,780,335
|
66,974
|
$
887,406
|
||||||||||
|
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
|
10,000
|
—
|
$
40.49
|
1/4/2029
|
—
|
$
—
|
—
|
$
—
|
||||||||||
|
1/3/2020
|
14,178
|
3,543
|
$
24.43
|
1/3/2030
|
2,817
|
$
32,734
|
—
|
$
—
|
||||||||||
|
1/4/2021
|
12,366
|
8,244
|
$
28.37
|
1/4/2031
|
4,004
|
$
46,526
|
—
|
$
—
|
||||||||||
|
1/4/2022
|
14,790
|
22,184
|
$
18.10
|
1/4/2032
|
9,952
|
$
115,642
|
7,148
|
$
30,593
|
||||||||||
|
2/24/2023
|
4,638
|
18,554
|
$
13.72
|
2/24/2033
|
17,662
|
$
205,232
|
9,347
|
$
75,056
|
||||||||||
|
1/3/2024
|
—
|
31,944
|
$
10.36
|
1/3/2034
|
31,226
|
$
362,846
|
13,220
|
$
175,165
|
||||||||||
|
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
|
10,000
|
—
|
$
40.49
|
1/4/2029
|
—
|
$
—
|
—
|
$
—
|
||||||||||
|
1/3/2020
|
14,178
|
3,543
|
$
24.43
|
1/3/2030
|
2,817
|
$
32,734
|
—
|
$
—
|
||||||||||
|
1/4/2021
|
12,366
|
8,244
|
$
28.37
|
1/4/2031
|
4,004
|
$
46,526
|
—
|
$
—
|
||||||||||
|
1/4/2022
|
14,790
|
22,184
|
$
18.10
|
1/4/2032
|
9,952
|
$
115,642
|
7,148
|
$
30,593
|
||||||||||
|
2/24/2023
|
4,638
|
18,554
|
$
13.72
|
2/24/2033
|
17,662
|
$
205,232
|
9,347
|
$
75,056
|
||||||||||
|
1/3/2024
|
—
|
32,453
|
$
10.36
|
1/3/2034
|
31,724
|
$
368,633
|
13,431
|
$
177,961
|
||||||||||
|
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
|
5,000
|
—
|
$
40.49
|
1/3/2030
|
—
|
$
—
|
—
|
$
—
|
||||||||||
|
1/3/2020
|
6,819
|
1,704
|
$
24.43
|
1/4/2031
|
1,289
|
$
14,978
|
—
|
$
—
|
||||||||||
|
1/4/2021
|
9,254
|
6,167
|
$
28.37
|
1/4/2032
|
2,996
|
$
34,814
|
—
|
$
—
|
||||||||||
|
1/4/2022
|
10,537
|
15,806
|
$
18.10
|
1/4/2032
|
7,091
|
$
82,397
|
5,093
|
$
21,798
|
||||||||||
|
2/24/2023
|
3,508
|
14,032
|
$
13.72
|
2/24/2033
|
13,358
|
$
155,220
|
7,069
|
$
56,764
|
||||||||||
|
1/3/2024
|
—
|
30,538
|
$
10.36
|
1/3/2034
|
29,851
|
$
346,869
|
12,638
|
$
167,454
|
||||||||||
43
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
|
Option Awards
|
Stock Awards
|
|||||||||||||||||
|
Name
1
|
Grant
Date
2
|
Vested,
Exercisable
|
Unvested
|
Option
Exercise
Price
|
Option
Expiration
Date
|
Unvested
3
|
Market
Value of
Unvested
4
|
Unvested
Equity
Incentive
Plan
Awards
5
|
Market
Value of
Equity
Incentive
Plan
Awards
5
|
|||||||||
|
Andrew M.
Brophy
|
1/4/2019
|
—
|
—
|
$
—
|
—
|
—
|
$
—
|
—
|
$
—
|
|||||||||
|
1/3/2020
|
—
|
—
|
$
—
|
—
|
123
|
$
1,429
|
—
|
$
—
|
||||||||||
|
1/4/2021
|
—
|
—
|
$
—
|
—
|
282
|
$
3,277
|
—
|
$
—
|
||||||||||
|
1/4/2022
|
—
|
—
|
$
—
|
—
|
1,657
|
$
19,254
|
—
|
$
—
|
||||||||||
|
2/24/2023
|
—
|
—
|
$
—
|
—
|
2,915
|
$
33,872
|
—
|
$
—
|
||||||||||
|
1/3/2024
|
—
|
—
|
$
—
|
—
|
4,826
|
$
56,078
|
—
|
$
—
|
||||||||||
1.
Mr. Singh had no equity awards outstanding at
December 31, 2024
.
2.
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.
3.
Unless otherwise noted herein, restricted stock awards and RSUs 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
RSUs will be issued upon vesting.
4.
Valued based on the closing price of a share of the Company’s Common Stock on
December 31, 2024
as reported on the
Nasdaq Global Select Market (
$11.62
).
5.
PSU awards were granted under the 2020 Plan and vest upon certification by the Board in
2025
,
2026
and
2027
provided that
the performance targets, based on Relative TSR, are met for the three-year periods ended
December 31, 2024
,
2025
and
2026
.
The awards are valued at fair market value as of
December 31, 2024
. 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
2023
and
2024
grants were valued at
$8.03
and
$13.25
per unit, respectively, based upon a Monte Carlo simulation used to
determine the probable outcome of the performance condition at
December 31, 2024
.
The 2022 grants are valued at the
closing price of a share of the Company's Common Stock on
December 31, 2024
as reported on the Nasdaq Global Select
Market ($11.62) multiplied by the vesting percentage of target awards (51.2%) based on the Company's Relative TSR percentile
rating of 25.6 for the performance period for that tranche of grants
.
Option Exercises and Stock Vested During
2024
The following table sets forth information concerning the option exercises and stock awards vested of
each of the NEOs
1
during the year ended
December 31, 2024
:
|
|
Stock Option Awards
|
Restricted Stock and Restricted
Stock Units
|
||||||
|
Number of
Shares
Acquired On
Exercise
|
Value Realized
on Exercise
|
Number of
Shares
Acquired On
Vesting
|
Value Realized
on Vesting
|
|||||
|
Name
|
(#)
|
($)
|
(#)
|
($)
|
||||
|
Theodore Wahl
|
—
|
$
—
|
72,603
|
$
791,382
|
||||
|
Andrew W. Kush
|
—
|
$
—
|
14,253
|
$
155,438
|
||||
|
John C. Shea
|
—
|
$
—
|
14,253
|
$
155,438
|
||||
|
Patrick J. Orr
|
—
|
$
—
|
9,261
|
$
101,894
|
||||
|
Andrew M. Brophy
|
—
|
$
—
|
1,570
|
$
17,593
|
||||
1.
Mr. Singh had no stock option awards exercised or stock units vested during the year ended
December 31, 2024
.
44
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
Non-Qualified Deferred Compensation
The following table sets forth information concerning the non-qualified deferred compensation of
each of the NEOs
1
during the year ended
December 31, 2024
, as well as the aggregate balance of non-
qualified deferred compensation as of
December 31, 2024
:
|
Name
|
Executive
Contributions
in Last FY
|
Registrant
Contributions
in Last FY
|
Withdrawals
|
Aggregate
Gains (Losses)
in Last FY
|
Aggregate
Balance at
Last FYE
|
|||||
|
Theodore Wahl
|
$
210,454
|
$
52,615
|
$
—
|
$
1,004,220
|
$
5,936,770
|
|||||
|
Andrew W. Kush
|
$
120,225
|
$
30,062
|
$
—
|
$
140,484
|
$
1,371,270
|
|||||
|
John C. Shea
|
$
106,240
|
$
26,564
|
$
—
|
$
309,095
|
$
2,228,957
|
|||||
|
Patrick J. Orr
|
$
119,344
|
$
26,331
|
$
—
|
$
98,017
|
$
848,334
|
|||||
|
Andrew M. Brophy
|
$
46,160
|
$
11,550
|
$
(32,249)
|
$
53,672
|
$
310,723
|
1.
Mr. Singh had no involvement in the non-qualified deferred compensation plan for the year ended
December 31, 2024
.
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, 2024
, we had over
35,000
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,
2024
using data from our payroll records for the month of December
2024
, which we then extrapolated
for the full year of
2024
. 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, 2024
was
$32,389
. For the year ended
December 31, 2024
,
the ratio of our President and Chief Executive Officer’s total annual compensation to that of our median
employee was approximately
145
: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.
45
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
Pay
Versus Performance
|
Year
|
Summary
Compensation
Table total for PEO
1
|
Compensation
Actually Paid
(“CAP”) to PEO
1, 2
|
Average Summary
Compensation Table
total for non-PEO
NEOs
4
|
Average CAP to
non-PEO NEOs
2, 4, 5
|
Value of initial fixed $100
investment based on:
|
Net income
7
(in thousands)
|
Income before
income taxes
7, 8
(in thousands)
|
|||||||||
|
Total
shareholder
return
6
|
Peer group
total
shareholder
return
6
|
|||||||||||||||
|
2024
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
$
|
||||||||
|
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
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
|
2024
|
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:
•
2024
:
John C. Shea, Andrew W. Kush, Patrick J. Orr,
Andrew M. Brophy, and Vikas Singh
•
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
46
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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
|
2024
|
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
group it uses for purposes of 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 provides details of how this is calculated.
actually paid 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, 2024
,
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.
47
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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.
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
2024
:
|
Company Selected Measures
|
|
|
|
|
used in our 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.
48
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
Description of CAP Versus Company Performance
for the PEO and the non-PEO Named Executive Officers to net income:
for the PEO and the non-PEO Named Executive Officers to income before income taxes:
49
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
for the PEO and the non-PEO Named Executive Officers to the TSR and peer group TSR:
*Value of initial fixed investment of $100.
50
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
Nominating, Compensation and Stock Option Committee Report
The compensation of the President and Chief Executive Officer of the Company is determined by the
NCSO 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 NCSO
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 NCSO Committee reviews major organizational and staffing matters.
With respect to director compensation, the NCSO 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 NCSO 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 NCSO Committee’s
charter provides that the NCSO Committee shall have the authority to obtain advice and seek
assistance from internal and external legal, accounting and other advisors.
The NCSO 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
51
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Executive Compensation
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,
2024
. No member of the NCSO Committee was a
member of the compensation committee of another entity during the fiscal year ended December 31,
2024
. 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,
2024
. There were no transactions between any
member of the NCSO Committee and the Company during the fiscal year ended December 31,
2024
requiring disclosure pursuant to Item 404 of Regulation S-K promulgated under the Exchange Act.
Audit
Matters
Proxy Statement |
2025
53
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Audit Matters
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, 2025
. 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,
2025
. 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, 2025
.
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.
54
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Audit Matters
Fees Paid to Auditors
The following table sets forth the fees billed by the Company’s independent registered public
accounting firm during fiscal years
2024
and
2023
:
|
2024
|
2023
|
||
|
Audit fees
1
|
$
1,285,000
|
$
1,305,000
|
|
|
Audit-related fees
|
—
|
—
|
|
|
Tax fees
|
—
|
—
|
|
|
All other fees
|
—
|
—
|
|
|
$
1,285,000
|
$
1,305,000
|
||
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.
55
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Audit Matters
Audit Committee Report
The members of the Audit Committee from January 1,
2024
to December 31,
2024
were Messrs.
Ottaviano and Simmons, Jr. and Ms. Grant. Mr. Simmons, Jr. was the Chairman of the Audit Committee
throughout
2024
. The Audit Committee met
five
times during the fiscal year ended December 31,
2024
.
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,
2024
, 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,
2024
, 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,
2024
.
AUDIT COMMITTEE
Kurt Simmons, Jr., Chairman
Laura K. Grant
Dino D. Ottaviano
Stock Ownership
Information
Proxy Statement |
2025
57
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Stock Ownership Information
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of
March 31, 2025
, 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 Group
1
|
Amount and Nature
of Beneficial
Ownership
|
Percent of Class
2
|
||||
|
BlackRock, Inc.
3
|
12,561,855
|
4
|
17.2
%
|
|||
|
The Vanguard Group, Inc.
3
|
8,629,517
|
5
|
11.8
%
|
|||
|
Royce & Associates, LP.
3
|
4,449,396
|
6
|
6.1
%
|
|||
|
Mackenzie Financial Corp.
3
|
4,094,897
|
7
|
5.6
%
|
|||
|
Theodore Wahl
|
1,055,671
|
8
|
1.4
%
|
|||
|
Andrew W. Kush
|
166,357
|
10
|
-
|
22
|
||
|
John C. Shea
|
165,557
|
9
|
-
|
22
|
||
|
Patrick J. Orr
|
109,702
|
11
|
-
|
22
|
||
|
Robert L. Frome
|
55,823
|
12
|
-
|
22
|
||
|
Dino D. Ottaviano
|
39,640
|
13
|
-
|
22
|
||
|
John J. McFadden
|
39,206
|
14
|
-
|
22
|
||
|
Diane S. Casey
|
36,204
|
15
|
-
|
22
|
||
|
Jude Visconto
|
35,205
|
16
|
-
|
22
|
||
|
Kurt Simmons, Jr.
|
20,410
|
19
|
-
|
22
|
||
|
Daniela Castagnino
|
19,202
|
17
|
-
|
22
|
||
|
Laura Grant
|
16,829
|
18
|
-
|
22
|
||
|
Andrew M. Brophy
|
3,848
|
20
|
-
|
22
|
||
|
Directors and Executive Officers as a group (16 persons)
|
1,899,585
|
21
|
2.6
%
|
|||
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
72,916,000
shares of Common Stock outstanding at
March 31, 2025
.
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 Royce & Associates, LP. is
745 Fifth Avenue, New York, NY 10151
.
The address of Mackenzie Financial Corporation is
180 Queen Street West, Toronto, Ontario M5V 3K1
.
4.
According to Amendment No.
17
to Schedule 13G filed by BlackRock, Inc. on
November 8, 2024
, as of
September 30, 2024
, it
has total beneficial ownership of
12,561,855
shares. Such beneficial ownership includes sole voting power with respect to
12,252,596
shares, and sole dispositive power with respect to
12,561,855
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.
58
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Stock Ownership Information
6.
According to Amendment No. 2 to
Schedule 13G filed by Royce & Associates, LP on
October 15, 2024
, as of
September 30,
Stock Ownership Information
2024
, it has total beneficial ownership of
4,449,396
shares. Such beneficial ownership includes sole voting power with
respect to
4,449,396
shares and sole dispositive power with respect to
4,449,396
shares.
7.
According to Amendment No.
6
to Schedule 13G filed by Mackenzie Financial Corporation on
February 13, 2025
, as of
December 31, 2024
, it has total beneficial ownership of
4,094,897
shares. Such beneficial ownership includes sole voting
power with respect to
4,094,897
shares and sole dispositive power with respect to
4,094,897
shares.
8.
Theodore Wahl’s beneficial ownership includes incentive stock options to purchase
14,218
shares, and non-qualified stock
options to purchase
450,355
shares, all currently exercisable, and
38,383
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 children, respectively.
9.
Andrew W. Kush’s beneficial ownership includes incentive stock options to purchase
17,253
shares and non-qualified stock
options to purchase
86,808
shares, all currently exercisable, and
14,824
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
16,993
shares and non-qualified stock
options to purchase
78,470
shares, all currently exercisable, and
15,750
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
18,465
shares and non-qualified stock
options to purchase
47,726
shares, all currently exercisable, and
9,423
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
26,004
shares, all currently
exercisable.
16.
Jude Visconto’s beneficial ownership includes non-qualified stock options to purchase
25,005
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
20,410
deferred stock units.
20.
Andrew M. Brophy’s beneficial ownership includes
3,848
shares credited to Mr. Brophy’s account (but unissued) in
connection with the Company’s SERP.
21.
Includes
971,333
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. Vikas Singh and Thomas G. Whalen
do not have any beneficial ownership as of the reporting date. All stock options reflected in the security ownership table
are currently exercisable; also includes
86,639
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
.
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
2024
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,
2024
. In January 2025, one Form 4 reporting a
phantom stock award for each of Messrs. Shea, Wahl, Kush, Bundick, Orr, and Brophy were filed late.
General
Information
Proxy Statement |
2025
60
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
General Information
2025
Annual Meeting of Shareholders
|
Courtyard Philadelphia
|
May 27, 2025
|
|
|
3280 Tillman Drive, Bensalem,
Pennsylvania 19020
|
10:00 a.m. Eastern Daylight Time
|
Who may vote?
The Record Date for the Annual Meeting is
March 31, 2025
. 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,
March 31, 2025
. Each share of Common Stock is entitled to one vote. As
of
March 31, 2025
, we had
72,916,000
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.
61
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
General Information
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 and Proposal No. 3. 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 and Proposal No. 3 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 and
the advisory vote regarding executive compensation. 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 and 3 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.
62
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
General Information
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.
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.
Why did I receive a “Notice Regarding the Availability of Proxy Materials” instead of a full set of proxy
materials?
We are furnishing proxy materials to our stockholders primarily via “Notice and Access” delivery
pursuant to SEC rules. On April 14, 2025, we mailed to our stockholders (other than those who previously
requested a printed set) a “Notice Regarding the Availability of Proxy Materials” containing instructions
on how to access the proxy materials via the Internet. Utilizing this method of proxy delivery expedites
receipt of proxy materials by our stockholders, reduces the cost of producing and mailing the full set of
proxy materials and helps us contribute to sustainable practices. If you receive a Notice by mail, you
will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on
how to access the proxy materials and vote over the Internet. If you received a Notice by mail and
would like to receive paper copies of our proxy materials in the mail, you may follow the instruction in
the Notice for making this request. The Notice also contains instructions on how you may request to
receive an electronic copy of our proxy materials by email.
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
2026
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 15, 2025
(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
2026
annual meeting must submit the proposal to us no later than
December 15,
2025
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 28, 2026
(the 60th day prior to the first anniversary of the annual
meeting for the preceding year’s annual meeting).
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Additional
Information
Proxy Statement |
2025
64
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
Additional Information
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
2024
, Mr. McKee earned
total compensation for such service of approximately
$770,000
, consisting of
$364,000
in base salary,
$47,000
of incentive compensation,
$258,000
of stock awards,
$65,000
in option awards,
nothing
in non-
qualified deferred compensation earnings and
$36,000
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.
65
HEALTHCARE SERVICES GROUP
|
PROXY STATEMENT 2025
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, 2024
, filed on
February 14, 2025
, is incorporated by reference
to this Proxy Statement.
|
By Order of the Board of Directors,
|
|
JUDE VISCONTO
Chairman
|
|
Dated:
|
April 14, 2025
|
|
|
Bensalem, Pennsylvania
|
A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2024
, 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
.
TABLE OF CONTENTS
To elect nine directors to the Board of Directors FORTo consider an advisory vote on a non-binding resolution to approve the compensation of our named executive officers FORTo approve and ratify Grant Thornton LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025 FOR