Table of Contents

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  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under § 240.14a-12

EVOLENT HEALTH, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 


Table of Contents

2022 PROXY STATEMENT

AND

NOTICE OF ANNUAL MEETING

OF STOCKHOLDERS

 

 

LOGO

 

 

Thursday, June 9, 2022

10:00 a.m., Eastern Time


Table of Contents

Dear Fellow Stockholders,

This year, I write you with three incredible reasons to celebrate. The first is to recognize that we are now more than a decade into growing a legacy of excellence. Ten years ago, Evolent was founded on a vision to help providers and health plans change the way healthcare is delivered and experienced. Since then, we have built a powerful complement of solutions—Evolent Care Partners, New Century Health and Evolent Health Services—that has concretized that vision and now serves 20 million lives on our platform. Now more than ever, Evolent is deeply committed to the movement in our communities toward higher quality care at lower costs.

Our latest annual results yield a second point of pride. In 2021, we sharpened our focus and multiplied our efforts to concentrate on the essentials of Evolent’s vision and mission. All of our three core solutions enjoyed very strong years as a result. The business grew Adjusted EBITDA substantially to $66.3 million1, and our non-divested assets ultimately produced a revenue increase of 36.7% over 20202. This is fuel for our fire as we continue the uptrend and target significant growth in 2022.

Third, I celebrate the fact that our growth in performance reflects our growth in capabilities and relationships. This past November alone, Evolent announced three new partnerships, bringing our total 2021 partner additions up to ten and substantially exceeding our target. We also grew our capabilities through the acquisition of Vital Decisions, which has enhanced our New Century Health offering and helps patients thoughtfully and purposefully live out their time in accordance with their own values, goals and preferences. Finally, I’m also very pleased that we grew the capabilities and perspectives on our Board by welcoming President and CEO of Blue Cross Blue Shield of North Carolina, Tunde Sotunde, MD, as our newest director.

Throughout this successful evolution, we have remained focused on furthering our relationships and dialogue with you, our investors. Our leadership team and I have continued to engage in enriching discussions with our stockholders throughout the year, and this past fall I again had the privilege of hearing directly many of your views on our strategy, leadership, governance, and approaches to sustainability. These conversations have been, and continue to be, a valued element of our success. I look forward to continuing these discussions with you, and deeply value the trust you place in us through your investment in Evolent.

As ever, I want to acknowledge with sincere appreciation the vitality and dedication of Evolenteers, our employees who make our work happen and who shape the culture of Evolent. Their efforts have allowed us to grow as a stronger, increasingly diverse and more inclusive company. These highly talented individuals have demonstrated a kind of resilience and grit that is the foundation of our performance both as a business, as an employer and as members of the communities that we serve. Simply put, we could not be prouder of who they are and what they represent.

It has been an honor to serve as your Lead Independent Director, and I look forward to continuing to serve in a new capacity as your independent Board Chair. As we make this transition, I also want to thank Frank Williams for his service as Chair and for his continued leadership and dedication to Evolent’s mission. On behalf of Evolent’s Board of Directors and executive team, thank you to our investors, partners and our workforce for continuing to make the Evolent vision of lower cost, higher quality care a growing reality.

Sincerely,

 

 

LOGO

Cheryl Scott

Lead Independent Director

Evolent Health, Inc.

 

(1) 

Non-GAAP measure, see Appendix A for definition and reconciliation to net loss attributable to common shareholders of Evolent Health, Inc. Net loss attributable to common shareholders of Evolent Health, Inc. was $37.6 million for the year ended December 31, 2021.

 

(2) 

Non-GAAP measure, see Appendix A for definition and reconciliation to total revenue. GAAP total revenue for the years ended December 31, 2021 and 2020 was $908.0 million and $924.6 million, respectively.


Table of Contents
  

LOGO

 

EVOLENT HEALTH, INC.        

800 N. Glebe Road, Suite 500        

Arlington, VA 22203        

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

to be held on June 9, 2022

 

LOGO   LOGO   LOGO

Date & Time:

Thursday,

June 9, 2022, 10:00 a.m., Eastern Time

 

Virtual Information:

https://web.lumiagm.com/209916247

password: evolent2022

 

Record Date:

April 14, 2022

Dear Stockholder:

You are invited to attend the 2022 annual meeting of stockholders (the “Annual Meeting”) of Evolent Health, Inc. (the “Company”), a Delaware corporation, which will be held on Thursday, June 9, 2022, at 10:00 a.m., Eastern Time. The Annual Meeting will be held for the following purposes:

 

1.

To elect seven Class I and Class III director nominees named in the proxy statement to serve on our Board of Directors;

 

2.

To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022; and

 

3.

To approve the compensation of our named executive officers for 2021 on an advisory basis.

In addition, stockholders may be asked to consider and vote upon any other matters that may properly be brought before the Annual Meeting and at any adjournments or postponements thereof.

In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our stakeholders, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. Stockholders will be able to attend, vote and submit questions (for a portion of, the meeting) from any location via the Internet at https://web.lumiagm.com/209916247. The password for the Annual Meeting is evolent2022. To participate (e.g., submit questions and/or vote), you will need the control number provided on your proxy card, voting instruction form or notice.

Any action may be taken on the foregoing matters at the Annual Meeting on the date specified above, or on any date or dates to which the Annual Meeting may be adjourned, or to which the Annual Meeting may be postponed.

Our Board of Directors has fixed the close of business on April 14, 2022, as the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournments or postponements thereof.

We make proxy materials available to our stockholders on the Internet. You can access proxy materials at http://ir.evolenthealth.com/financial-info/annual-reports-and-proxy-statements/default.aspx. You also may authorize your proxy via the Internet by following the instructions on that website. In order to authorize your proxy via the Internet you must have the stockholder identification number that appears on the enclosed proxy card.

By Order of our Board of Directors,

 

 

LOGO

Jonathan D. Weinberg

General Counsel and Secretary

Arlington, VA

April 29, 2022

 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on June 9, 2022

This proxy statement and our 2021 Annual Report to Stockholders are available at

http://ir.evolenthealth.com/financial-info/annual-reports-and-proxy-statements/default.aspx

You may request and receive a paper or email copy of our proxy materials relating to the Annual Meeting and any future stockholder meetings free of charge by emailing proxymaterials@evolenthealth.com, calling 1-844-246-2928, or visiting http://ir.evolenthealth.com/financial-info/annual-reports-and-proxy-statements/default.aspx

 


Table of Contents

TABLE OF CONTENTS

 

     Page  
PROXY STATEMENT HIGHLIGHTS      2  
Annual Meeting Information      2  
2021 Performance Highlights      2  
Governance Evolution      3  
Board Leadership      3  
2021 Compensation Program Highlights      4  

PROPOSAL 1:

ELECTION OF DIRECTORS

     6  
Other Directors Not Standing for Election at this Annual Meeting      12  

PROPOSAL 2:

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     14  
Fee Disclosure      14  
Pre-Approval Policies and Procedures of our Audit Committee      15  
AUDIT COMMITTEE REPORT      16  
CORPORATE GOVERNANCE AND BOARD STRUCTURE      17  
Corporate Governance Highlights      17  
Stockholder Engagement      18  
Board Leadership Structure      18  
Board of Directors Meetings and Committees      19  
Compensation Consultant      21  
Compensation Committee Interlocks and Insider Participation      22  
Code of Business Conduct and Ethics      23  
Corporate Governance Guidelines      23  
Executive Sessions of Non-Management Directors      23  
Corporate and Social Responsibility      24  
Board’s Role in Risk Oversight      25  
Director Independence      25  
     Page  
Communications with the Board      25  
Identification of Director Candidates      26  
Corporate Governance Policies Related to Compensation and Equity      26  
COMPENSATION DISCUSSION AND ANALYSIS      27  
COMPENSATION COMMITTEE REPORT      44  
COMPENSATION OF NAMED EXECUTIVE OFFICERS      45  
EQUITY COMPENSATION PLAN INFORMATION      51  
PAY RATIO      52  

PROPOSAL 3:

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION FOR 2021

     53  
DIRECTOR COMPENSATION      54  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      57  
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS      59  
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING      64  
OTHER MATTERS      68  
Solicitation of Proxies      68  
Stockholder Proposals      68  
Householding of Proxy Materials      68  
Other Matters      69  
APPENDIX A      A-1  
 


Table of Contents

 

                    

 

LOGO

 

EVOLENT HEALTH, INC.

800 N. Glebe Road, Suite 500

Arlington, VA 22203

PROXY STATEMENT

FOR OUR 2022 ANNUAL MEETING

OF STOCKHOLDERS

to be held on June 9, 2022

These proxy materials are being made available in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Evolent Health, Inc., a Delaware corporation, for use at our 2022 annual meeting of stockholders (the “Annual Meeting”) to be held on Thursday, June 9, 2022, at 10:00 a.m., Eastern Time, in a virtual meeting format only, via the Internet at https://web.lumiagm.com/209916247 (password “evolent2022”) or at any postponement or adjournment of the Annual Meeting. There is no physical location for the Annual Meeting. Stockholders will be able to view the Rules of Conduct for the Meeting at http://ir.evolenthealth.com/financial-info/annual-reports-andproxystatements/default.aspx, and submit questions, at https://web.lumiagm.com/209916247 (password “evolent2022”) on the day of the meeting, through the conclusion of the question and answer session that follows.

Distribution of this proxy statement and a proxy card to stockholders is scheduled to begin on or about April 29, 2022, which is also the date by which these materials will be posted. We encourage stockholder participation in the Annual Meeting, which we have designed to promote stockholder engagement. Stockholders will be permitted to ask questions on the ballot items during the meeting, and on other subjects in a question and answer session that will begin at the conclusion of the meeting. You will also be able to listen to the proceedings and cast your vote online.

As permitted by the rules of the Securities and Exchange Commission (the “SEC”), we are making this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 available to our stockholders electronically via the Internet at http://ir.evolenthealth.com/financial-info/annual-reports-and-proxy-statements/default.aspx. On or about April 29, 2022, we mailed to our stockholders a Notice of Internet Availability of Proxy Materials (“Internet Notice”), containing instructions on how to access this proxy statement and vote online. If you received an Internet Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them pursuant to the instructions provided in the Internet Notice. The Internet Notice instructs you on how to access and review all of the important information contained in this proxy statement.

References in this proxy statement to “we,” “us,” “our,” “ours,” and the “Company” refer to Evolent Health, Inc., unless the context otherwise requires.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    1  


Table of Contents

 

PROXY STATEMENT HIGHLIGHTS

This summary highlights selected information in this proxy statement — please review the entire document before voting.

Annual Meeting Information

 

 

Thursday, June 9, 2022, at 10:00 a.m., Eastern Time.

 

 

Via a live audio-only webcast at https://web.lumiagm.com/209916247 (password “evolent2022”). There is no physical location for the Annual Meeting.

 

 

The record date is April 14, 2022.

All of our Annual Meeting materials are available in one place at http://ir.evolenthealth.com/financial-info/annual-reports-and-proxy-statements/default.aspx. There, you can download electronic copies of our Annual Report and proxy statement.

 

 

Voting Items

       

 

Recommendation

 

Item 1

          

Election of directors

     Our seven continuing directors up for election bring a valuable mix of skills and qualifications to our Board of Directors       FOR

 

6 - 13

Item 2

          

Ratify the appointment of the Company’s independent registered public accounting firm for 2022

     Based on its recent evaluation, our Audit Committee believes that the retention of Deloitte & Touche LLP is in the best interests of the Company and its stockholders       FOR

 

14 - 15

Item 3

          

Say on pay—an advisory vote on the approval of the Company’s executive compensation

     Our executive compensation program reflects our commitment to paying for performance and reflects feedback received from stockholder outreach       FOR

 

53

2021 Performance Highlights

Below are selected highlights of our financial and operational performance in 2021:

 

Revenue

    

Lives on Platform1

    

Adjusted EBITDA2

$908.0 million

    

EHS Lives on Platform: 1.6 million

 

 

Clinical Solutions Lives on Platform: 18.4 million

    

$66.3 million

 

 

(1) 

As of December 31, 2021.

 

(2) 

Non-GAAP measure, see Appendix A for definition and reconciliation to net loss attributable to common shareholders of Evolent Health, Inc. Net loss attributable to common shareholders of Evolent Health, Inc. was $37.6 million for the year ended December 31, 2021.

 

2  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proxy Statement Highlights

 

Governance Evolution

We are committed to establishing and maintaining strong corporate governance practices that reflect high standards of ethics and integrity and promote long-term stockholder value. Since the beginning of 2020, the Board has continued to evolve our governance practices and has directly incorporated feedback from our stockholders into the decision-making process. Feedback from our investors was shared with our full Board and directly informed implementation of several key governance enhancements over the past two years:

 

  LOGO

Robust stock ownership guidelines for our executive officers and directors

 

  LOGO

Formal policies to ensure that Evolent considers diverse candidates when conducting Board and CEO succession planning

 

  LOGO

Removal of remaining supermajority vote requirements for charter and by-law amendments

 

  LOGO

Accelerated declassification of the Board

 

  LOGO

Market-standard proxy access by-law

 

  LOGO

Progress on workforce diversity and inclusion goals, including formalization of a Head of Diversity and Inclusion who focuses on Diversity, Inclusion and Corporate Responsibility

 

  LOGO

Independent Board Chair following Annual Meeting

Board Leadership

In August 2020, as part of the Company’s CEO succession planning process, the Board created a new leadership structure with a new Executive Chair, a continuing strong Lead Independent Director, a new separate Chief Executive Officer and continuing strong independent committee chairs. After careful consideration, the Board determined at that time that having separate CEO and Chair roles, with Mr. Blackley serving as CEO and Mr. Williams serving as Executive Chair, would be in the best interests of the Company and its stockholders. Effective January 2022, Mr. Williams transitioned into the role of non-executive Chair. As part of the Board’s long-term, deliberate approach to leadership succession planning, our current Lead Independent Director, Cheryl Scott, will be assuming the role of independent Board Chair immediately following the Annual Meeting.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    3  


Table of Contents

Proxy Statement Highlights

 

2021 Compensation Program Highlights

Our executive compensation program is designed to enable high performance and generate results that will create value for our stockholders. We structure compensation to pay for performance, reward our executives with equity in the Company in order to align their interests with the interests of our stockholders and allow our executives to share in our stockholders’ success, which we believe continues to drive a performance culture, sustains morale and attracts, motivates and retains top executive talent.

Compensation Mix (1)

 

CEO: Target Pay   Other NEOs: Target Pay
LOGO   LOGO

 

(1) 

Consists of 2021 base salary rate (as reported in the Salary column of the Summary Compensation Table), 2021 target annual incentive opportunity, long-term incentive awards granted in 2021 (as reported in the Stock Awards column of the Summary Compensation Table) and other compensation (as reported in the All Other Compensation column of the Summary Compensation Table).

Target and Realized CEO Compensation(1)

 

 

LOGO

 

 

(1)

The realized compensation levels shown include base salary paid in each year, bonuses paid in respect of each year, and payout of all long-term incentives that vested each year (i.e., the value at the time of vesting of RSUs and options in the first quarter of the year after the year in question). Data represents Chair and former CEO Frank Williams in 2019, and current CEO Seth Blackley for 2020 and 2021.

 

(2) 

In 2020, the Company’s stock price recovered, but the use of 3-year performance leveraged stock unit (“LSU”) grants in 2019 and 3-year and 3.5-year performance LSU grants in 2020, greatly impacted the value of our NEOs’ total actual compensation realized as compared to total target compensation.

 

(3) 

In 2021, the Company’s stock price continued to ascend, and 2019 LSUs paid out at 153.61% of target upon vesting on March 2, 2022.

 

4  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proxy Statement Highlights

 

The primary elements of our fiscal year 2021 executive compensation program are base salary, annual bonuses, equity incentive awards and employee benefits. Our Compensation Committee reviews and approves our executive compensation program, and maintains the discretion to adjust awards and amounts paid to our executive officers as it deems appropriate. We believe our named executive officers are compensated in a manner consistent with our strategy, evolving compensation best practices and alignment with stockholders’ interests.

Below is a more detailed summary of evolving best practices that we have implemented with respect to the compensation of our NEOs because we believe they support our compensation philosophy and are in the best interests of our Company and our stockholders.

 

What We Do   

 

   What We Don’t Do

LOGO   Strong emphasis on performance-based compensation, with a significant portion of NEO compensation tied to Company performance

 

LOGO   Introduced PSUs that may be earned based on Adjusted EBITDA and stock performance in 2021 to better align our pay with our Company’s sustained financial and operational performance

 

LOGO   Mix of compensation that emphasizes both short-term and long-term incentives

 

LOGO   Aggressive revenue and Adjusted EBITDA and other targets for short-term incentive payments generally, with rigorous individual financial and non-financial performance goals

 

LOGO   Market-aligned change in control and severance agreements for certain executives, with double trigger change in control acceleration provisions

 

LOGO   Benchmarking against a thoughtfully assembled and representative peer group

 

LOGO   Acceleration of equity in connection with a termination of employment conditioned upon a release of claims and compliance with restrictive covenants

 

LOGO   Compensation decisions for NEOs made by an independent compensation committee advised by independent compensation consultant

 

LOGO   Annual compensation program risk assessment

 

LOGO   Annual say-on-pay vote

 

LOGO   At will employment for NEOs

        

LOGO    No incentives that encourage excessive risk-taking

 

LOGO    No guaranteed incentive awards for executives

 

LOGO    No excise or other tax gross ups on change in control payments

 

LOGO    No perquisites for NEOs other than benefits generally available to our other employees

 

LOGO    No hedging, pledging or short sales of Company stock

 

LOGO    No “single-trigger” change in control acceleration of equity awards

 

LOGO    No dividend equivalent rights on unvested restricted stock units or options

 

LOGO    No supermajority voting rights

  
  
  
  
  
  
  
  
  
  
     

 

   

Evolent Health, Inc.

Proxy Statement 2022

    5  


Table of Contents

 

PROPOSAL 1:

ELECTION OF DIRECTORS

Our Board currently consists of ten members and is divided into three staggered classes of directors, as nearly equal in number as possible. The members of Class I and Class III are due to stand for election at the Annual Meeting.

On June 10, 2021, we amended our Second Amended and Restated Certificate of Incorporation to phase out the classified Board so that the Board will be fully declassified at the 2023 annual meeting of stockholders. Our Second Amended and Restated Certificate of Incorporation, as amended, provides that (1) the directors standing for election at the Annual Meeting (which includes directors elected to our Board in 2021 who have been nominated for re-election) will be elected for a one-year term expiring at the 2023 annual meeting of stockholders; and (2) beginning in 2023, and at each annual meeting of stockholders thereafter, all directors will be elected for a one-year term expiring at the next annual meeting of stockholders. Culminating in 2023, our Board will be fully declassified.

The Board currently consists of ten members – three directors in Class I and four directors in Class III, with terms expiring at the Annual Meeting, and three directors in Class II, with terms expiring at the 2023 annual meeting of stockholders. Upon unanimous recommendation by the Nominating and Corporate Governance Committee of the Board, the Board proposes that the following nominees, Seth Blackley, David Farner and Peter Grua, each a current Class I Director, and Craig Barbarosh, Kim Keck, Cheryl Scott and Frank Williams, each a current Class III Director, be elected for new terms as described above and until their successors are duly elected and qualified. Each of the nominees has consented to serve if elected. If any of them becomes unavailable to serve as a director, the Board may designate a substitute nominee. In that case, the persons named as proxy holders will vote for the substitute nominee designated by the Board. There is no limit on the number of terms a director may serve on our Board.

Pursuant to the stockholders agreement we entered with certain stockholders at the time of our initial public offering, for so long as University of Pittsburgh Medical Center (“UPMC”) owns at least 40% of the shares of common stock held by it upon the completion of our initial public offering, UPMC will be entitled to nominate two directors to serve on our Board. When UPMC owns less than 40% but at least 5% of the shares of common stock held by it upon the completion of our initial public offering, UPMC will be entitled to nominate one director to serve on our Board. UPMC owns more than 40% of the shares of our common stock it held upon the completion of our initial public offering as of the date of this proxy statement. Pursuant to these provisions, UPMC has designated Diane Holder and David Farner.

 

6  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proposal 1: Election of Directors

 

Director/Nominee Skills Matrix

 

             
  LOGO LOGO LOGO LOGO LOGO LOGO LOGO
             

Director/Nominee

Risk

Oversight/

Management

Experience

Healthcare
Industry

Experience

Financial
Expertise/

Literacy

Executive

Experience

Technology

Expertise

ESG

Expertise

Government/
Regulatory/
Public
Policy

Expertise

Craig Barbarosh*

LOGO

LOGO

LOGO

LOGO

Seth Blackley*

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

M. Bridget Duffy, MD

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

David Farner*

LOGO

LOGO

LOGO

LOGO

Peter Grua*

LOGO

LOGO

LOGO

LOGO

Diane Holder

LOGO

LOGO

LOGO

LOGO

LOGO

Kim Keck*

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

Cheryl Scott*

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

Tunde Sotunde, MD

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

Frank Williams*

LOGO

LOGO

LOGO

LOGO

LOGO

LOGO

 

*

Standing for election at the Annual Meeting

 

   

Evolent Health, Inc.

Proxy Statement 2022

    7  


Table of Contents

Proposal 1: Election of Directors

 

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE SEVEN DIRECTOR NOMINEES NAMED ABOVE.

 

Directors Standing for  Election

 

Election of Class I and Class III Directors  

 

LOGO

 

Independent Director

 

Partner, Katten Muchin Rosenman LLP

 

Director Since

December 2020

 

Other Public Boards

Landec Corporation

Nextgen Healthcare, Inc.

Sabra Health Care REIT, Inc.

 

Evolent Board Committees

•  Compensation, Strategy

 

Craig Barbarosh, Age 54

 

  Craig Barbarosh has been a partner at the law firm of Katten Muchin Rosenman since 2012. From 1999 until joining Katten, Mr. Barbarosh was a partner at another international law firm. Mr. Barbarosh currently serves as the Chairman of the Board of Directors for the Landec Corporation and has been an independent director there since October 2020. Mr. Barbarosh is also currently the Vice Chairman of the Board of Directors, Chairman of the Compensation Committee and a member of the Nominating and Governance Committee for Nextgen Healthcare, Inc. since 2009. He is also currently the Chair of the Audit Committee and a member of the Compensation Committee for Sabra Health Care REIT, Inc. He previously served as an independent director on the Boards of Directors of Aratana Therapeutics, Inc., BioPharmX, Inc., and Bazaarvoice, Inc. Mr. Barbarosh also served as the independent board observer for Payless Holdings, LLC and as an independent director for Ruby Tuesday, Inc. He holds his J.D. (with honors) from the University of the Pacific, McGeorge School of Law and earned his B.A. in Business Economics from the University of California at Santa Barbara.  

Qualifications:

We believe that Mr. Barbarosh is qualified to serve on our Board because of his healthcare industry knowledge and experience as a business leader and public company board member.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO

   

LOGO

 

Independent Director

 

President and Chief Executive Officer, Blue Cross Blue Shield Association

 

Director Since

January 2021

 

Other Public Boards

Oak Street Health, Inc.

 

Evolent Board Committees

•  Audit, Nominating and Corporate Governance

 

Kim Keck,  Age 58

 

 
 

Kim Keck has served as the President and CEO of Blue Cross Blue Shield Association since January 2021. From June 2016 to December 2020, Ms. Keck previously served as the President and Chief Executive Officer of Blue Cross Blue Shield of Rhode Island. Previously, Ms. Keck held several leadership roles at Aetna from 2001 to 2016, including Senior Vice President from 2010 to 2016. Ms. Keck serves on the Board of Directors of Oak Street Health and the Blue Cross Blue Shield Association. She received a B.A. in Mathematics from Boston College and an MBA in Finance from the University of Connecticut and is a Chartered Financial Analyst.

 

 

 

 

 

Qualifications:

We believe that Ms. Keck is qualified to serve on our Board because of her extensive experience in the healthcare industry, particularly within the health insurance payer community.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO    LOGO

 

Skills Key

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
  Risk Oversight   Healthcare   Finance   Executive   Technology   ESG   Govt/Regulatory

 

8  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proposal 1: Election of Directors

 

LOGO

 

Independent Director

 

Main Principal, McClintock Scott Group

 

Director Since

November 2015

 

Other Public Boards

Progyny, Inc.

 

Evolent Board Committees

•  Audit, Compensation, Nominating and Corporate Governance, Strategy

 

Cheryl Scott, Age 72

 

  Cheryl Scott has served as the Main Principal of the McClintock Scott Group since July 2017. From June 2006 to July 2017, Ms. Scott served as Senior Advisor to the Bill & Melinda Gates Foundation. Before joining the foundation, Ms. Scott served for eight years as President and Chief Executive Officer of Group Health Cooperative. She previously served as that organization’s Executive Vice President and Chief Operating Officer. Ms. Scott currently serves on a variety of private and not-for-profit boards. She serves on the Board of Directors of Progyny, Inc., and was a member of the board of directors of Recreational Equipment Incorporated (REI) from 2005 to 2018. Ms. Scott received her bachelor’s degree in communications and master’s degree in health management from the University of Washington.  

Qualifications:

We believe that Ms. Scott is qualified to serve on our Board because of her extensive career in healthcare, leadership and corporate governance, including as the Chief Executive Officer of Group Health Cooperative.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

   

LOGO

 

Non-Independent Director

 

Chair and Former CEO,

Evolent Health, Inc.

 

Director Since

August 2011

 

Other Public Boards

None

 

Evolent Board Committees

None

 

Frank Williams, Age 55

 

 
  Frank Williams, our co-founder, has served as our non-executive Chair since January 2022, served as our Executive Chair from October 2020 until becoming our non-executive Chair, and served as our Chief Executive Officer from August 2011 until becoming Executive Chair. He served as the Chief Executive Officer of The Advisory Board from 2001 to 2008. Mr. Williams was a member of the board of directors of The Advisory Board, a public company, from 2001 to 2015. Prior to joining The Advisory Board, Mr. Williams served as President of MedAmerica OnCall from March 1999 to early 2001, President of Vivra Orthopedics from 1995 to 1999, and as a management consultant for Bain & Co. from June 1988 to June 1990. Mr. Williams holds a Bachelor of Arts degree in Political Economies of Industrial Societies from the University of California, Berkeley, and a Master of Business Administration from Harvard Business School.  

Qualifications:

We believe that Mr. Williams is qualified to serve on our Board because of his extensive knowledge and experience in all aspects of our business and his extensive experience in the healthcare and consulting services fields, including as Chief Executive Officer of The Advisory Board.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

 

 

 

Skills Key

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
  Risk Oversight   Healthcare   Finance   Executive   Technology   ESG   Govt/Regulatory

 

   

Evolent Health, Inc.

Proxy Statement 2022

    9  


Table of Contents

Proposal 1: Election of Directors

 

LOGO

 

Non-Independent Director

 

Chief Executive Officer. Evolent Health, Inc.

 

Director Since

April 2018

 

Other Public Boards

None

 

Evolent Board Committees

None

 

Seth Blackley, Age 43

 

 
  Seth Blackley, our co-founder, has served as our Chief Executive Officer since October 2020, and served as our President from August 2011 until his promotion. Prior to co-founding the Company, Mr. Blackley was the Executive Director of Corporate Development and Strategic Planning at The Advisory Board from June 2007 to August 2011. From 2014 to 2016, Mr. Blackley served on the board of directors of Advanced Practice Strategies. Mr. Blackley began his career as an analyst in the Washington, D.C. office of McKinsey & Company. Mr. Blackley holds a Bachelor of Arts degree in business from The University of North Carolina at Chapel Hill, and a Master of Business Administration from Harvard Business School.  

Qualifications:

We believe that Mr. Blackley is qualified to serve on our Board because of his extensive experience in finance, strategy and operations, especially in the field of healthcare, and his extensive knowledge in all aspects of our business.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

   

LOGO

 

Non-Independent Director

 

EVP and Chief Strategic and Transformation Officer, UPMC

 

Director Since

September 2014

 

Other Public Boards

None

 

Evolent Board Committees

None

 

David Farner, Age 58

 

 

David Farner has been with UPMC for more than 30 years, holding various senior leadership positions for the last 25 years, including interim Chief Financial Officer. Since 2010, Mr. Farner has served as Executive Vice President and Chief Strategic and Transformation Officer of UPMC. Prior to UPMC, Mr. Farner worked as an auditor at Arthur Anderson & Company. Mr. Farner holds a Bachelor of Science in computer information systems from Westminster College.

 

 

 

 

 

Qualifications:

We believe that Mr. Farner is qualified to serve on our Board because of his extensive career in healthcare and finance, including various roles at UPMC, a large integrated health delivery systems.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO

 

 

Skills Key

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
  Risk Oversight   Healthcare   Finance   Executive   Technology   ESG   Govt/Regulatory

 

10  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proposal 1: Election of Directors

 

LOGO

 

Independent Director

 

Managing Partner, HLM Venture Partners

 

Director Since

January 2020

 

Other Public Boards

None

 

Evolent Board Committees

•  Compensation, Strategy

 

Peter Grua, Age 67

 

 
  Peter Grua is currently a Managing Partner at HLM Venture Partners (“HLM”), a venture capital investment firm, where his investment activities focus on health services, medical technologies and health care information technologies. Prior to joining HLM, Mr. Grua was a Managing Director at Alex Brown & Sons, an investment banking firm, where he directed research in health care services and managed care. Mr. Grua was previously a director at The Advisory Board Company and Welltower Inc. (formerly Health Care REIT, Inc.), and currently serves as a director at numerous companies including Innovacare Health, Inc., MeQuilibrium, Oceans Healthcare LLC, Ampersand Health, LLC, OnShift, Inc. and Linkwell Health, Inc. Mr. Grua holds a bachelor’s degree from Bowdoin College and a master’s degree in business administration from the Columbia University Graduate School of Business.  

Qualifications:

We believe Mr. Grua is qualified to serve on our Board because of his extensive industry experience, including as an investment professional.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO

 

 

Skills Key

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
  Risk Oversight   Healthcare   Finance   Executive   Technology   ESG   Govt/Regulatory

 

   

Evolent Health, Inc.

Proxy Statement 2022

    11  


Table of Contents

Proposal 1: Election of Directors

 

Other Directors Not Standing for Election at this Annual Meeting

Directors who will continue to serve after the Annual Meeting are:

 

 

Class II Directors with Terms Expiring at the 2023 Annual Meeting  

 

LOGO

 

Independent Director

 

Chief Medical Officer,

Vocera, now part of Stryker

 

Director Since

September 2017

 

Other Public Boards

None

 

Evolent Board Committees

•  Compliance and Regulatory Affairs, Nominating and Corporate Governance

 

M. Bridget Duffy, MD, Age 63

 

 

M. Bridget Duffy, MD has served as the Chief Medical Officer at Vocera, now part of Stryker since January 2013. Prior to her appointment at Vocera, Dr. Duffy co-founded and served as Chief Executive Officer of ExperiaHealth from November 2010 to December 2012. Dr. Duffy also served as the Chief Experience Officer at the Cleveland Clinic. Dr. Duffy holds a Bachelor of Science degree from the University of Minnesota and received her doctorate in medicine from the University of Minnesota. She completed her residency in internal medicine at Abbott Northwestern Hospital in Minneapolis, Minnesota.

 

 

 

 

 

Qualifications:

We believe Dr. Duffy is qualified to serve on our Board because of her extensive experience in healthcare, including as Chief Medical Officer of Vocera.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO

 

 

LOGO

 

Non-Independent Director

 

EVP, UPMC

 

Director Since

August 2011

 

Other Public Boards

None

 

Evolent Board Committees

•  Compliance and Regulatory Affairs, Strategy

 

Diane Holder, Age 72

 

  Diane Holder has been an Executive Vice President of UPMC since 2007, President of the UPMC Insurance Services Division and President and CEO of UPMC Health Plan since 2004. Ms. Holder holds a Bachelor of Arts in psychology from the University of Michigan and a Master of Science in social work from Columbia University.  

Qualifications:

We believe that Ms. Holder is qualified to serve on our Board because of her extensive career in healthcare, including as CEO of UPMC Health Plan, part of UPMC, a large integrated health delivery systems.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

 

 

 

 

Skills Key

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
  Risk Oversight   Healthcare   Finance   Executive   Technology   ESG   Govt/Regulatory

 

 

12  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proposal 1: Election of Directors

 

LOGO

 

Independent Director

 

President and Chief Executive Officer, Blue Cross Blue Shield of North Carolina

 

Director Since

October 2021

 

Other Public Boards

None

 

Evolent Board Committees

•  Audit, Compliance and Regulatory Affairs

 

Tunde Sotunde, MD, Age 56

 

  Tunde Sotunde, MD has served on our Board since October 2021. Since June 2020, Dr. Sotunde has served as the President and Chief Executive Officer of Blue Cross Blue Shield of North Carolina. Dr. Sotunde has held leadership roles as a physician, educator and health plan executive, building an accomplished record of implementing innovative health care delivery models and improving quality of care. Prior to joining Blue Cross Blue Shield of North Carolina, from 2013 to 2020 he served in various roles at Anthem, including as the president overseeing Anthem’s Medicaid and related state government business across 23 states and the District of Columbia from 2018 to 2020. A pediatrician, he has served in chief medical officer and other leadership roles in payer and provider organizations at key divisions of Cigna, UnitedHealthcare and The Little Clinic (acquired by The Kroger Co. in 2010). Dr. Sotunde is a graduate of University of Ibadan College of Medicine in Nigeria and Howard University’s Hospital Residency Program in Pediatrics. He completed his Executive MBA at the University of Memphis and completed a Health Care Management Executive course at the Wharton School of Business.  

Qualifications:

We believe that Dr. Sotunde is qualified to serve on our Board because of his extensive career in healthcare, including as President and CEO of Blue Cross Blue Shield of North Carolina.

 

Skills:

 

LOGO    LOGO    LOGO    LOGO    LOGO

 

LOGO    LOGO

 

 

 

Skills Key

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO
  Risk Oversight   Healthcare   Finance   Executive   Technology   ESG   Govt/Regulatory

 

   

Evolent Health, Inc.

Proxy Statement 2022

    13  


Table of Contents

PROPOSAL 2:

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board has appointed the accounting firm of Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm to audit the Company’s consolidated financial statements as of and for the fiscal year ended December 31, 2021 and its internal control over financial reporting as of December 31, 2021.

Stockholder ratification of the appointment of Deloitte is not required by law, the New York Stock Exchange (“NYSE”) or the Company’s organizational documents. However, as a matter of good corporate governance, the Board has elected to submit the appointment of Deloitte to the stockholders for ratification at the Annual Meeting. Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee believes that such a change would be in the best interest of the Company and its stockholders. If stockholders do not ratify the appointment of Deloitte, the Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of an independent registered public accounting firm. Deloitte is considered by our management to be well-qualified. Deloitte has advised us that neither it nor any member thereof has any financial interest, direct or indirect, in the Company or any of our subsidiaries in any capacity.

A representative of Deloitte will be present at the Annual Meeting, will be given the opportunity to make a statement at the Annual Meeting if he or she so desires and will be available to respond to appropriate questions.

A majority of all of the votes cast at the Annual Meeting at which a quorum is present in person (by virtual attendance) or represented by proxy is required for the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2022. We will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence or absence of a quorum. Abstentions will have no effect on this proposal. Because the ratification of the appointment of the independent auditor is considered a “routine” matter, there will be no broker non-votes with respect to this proposal.

Fee Disclosure

The following is a summary of the fees billed to us by Deloitte for professional services rendered for the fiscal years ended December 31, 2021 and 2020.

 

 

2021

2020

Audit Fees

$

1,804,750

$

2,738,600

Audit-Related Fees

 

446,742

 

Tax Fees

 

372,177

 

1,030,830

All Other Fees

 

 

Total

$

2,623,669

$

3,769,430

Audit Fees

“Audit Fees” include fees associated with professional services rendered for the audit of the financial statements and services that are normally provided by Deloitte in connection with statutory and regulatory filings or engagements. For example, audit fees include fees for professional services rendered in connection with quarterly and annual reports, the issuance of consents by Deloitte to be named in our registration statements and to the use of their audit report in the registration statements and the issuance of an attestation of management’s report on internal controls over financial reporting.

 

14  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm

 

Audit-Related Fees

“Audit-Related Fees” refers to fees for assurance services in connection with our securities offerings, as well as related services associated with transactions and proposed transactions (including acquisitions and securities offerings) and permissible internal control services for the SOC 2 reports and management assertion.

Tax Fees

“Tax Fees” refers to fees and related expenses for professional services for tax compliance, tax advice and tax planning.

All Other Fees

“All Other Fees” refers to fees and related expenses for products and services other than services described above, including fees to the independent registered public accounting firm or its affiliates for annual subscriptions to online accounting and tax research software applications and data.

Our Audit Committee considered whether the provision by Deloitte of any services that would be required to be described under “All Other Fees” would have been compatible with maintaining Deloitte’s independence from both management and the Company.

Pre-Approval Policies and Procedures of our Audit Committee

Consistent with SEC policies regarding auditor independence and the Audit Committee’s charter, the Audit Committee is directly responsible for the appointment, compensation, retention, removal and oversight of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. Our Audit Committee must pre-approve all audit, non-audit and any other services to be provided by the independent registered public accounting firm. All of the fees billed by Deloitte for the professional services rendered for us for the fiscal years ended December  31, 2021 and 2020, were pre-approved by our Audit Committee.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    15  


Table of Contents

 

AUDIT COMMITTEE REPORT

Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, (the “Securities Act”) or the Securities Exchange Act of 1934 (the “Exchange Act”), that might incorporate this proxy statement or future filing with the SEC, in whole or in part, the following report shall not be deemed incorporated by reference into any such filing.

The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee. Our management is responsible for the preparation, presentation and integrity of our financial statements, the application of accounting and financial reporting principles and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements, expressing an opinion as to their conformity with accounting principles generally accepted in the United States and auditing management’s assessment of the effectiveness of internal control over financial reporting.

The undersigned members of the Audit Committee of the Board of Directors of Evolent Health, Inc. submit this report in connection with the committee’s review of the financial reports for the fiscal year ended December 31, 2021 as follows:

 

1.

the Audit Committee has reviewed and discussed with management the audited financial statements and internal control over financial reporting of Evolent Health, Inc. for the fiscal year ended December 31, 2021;

 

2.

the Audit Committee has discussed with representatives of Deloitte the matters required to be discussed with them pursuant to Auditing Standard No. 1301, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board; and

 

3.

the Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte’s communications with the Audit Committee concerning independence, and has discussed with Deloitte its independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements of Evolent Health, Inc. be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the SEC.

Submitted by the Audit Committee

Kim Keck (Chair)

Cheryl Scott

Tunde Sotunde, MD

 

16  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

 

CORPORATE GOVERNANCE AND BOARD STRUCTURE

Corporate Governance Highlights

The Board continues to evaluate the Company’s corporate governance policies and practices to ensure that the right mix of directors are represented in our boardroom to best serve our stockholders by ensuring effective oversight of our strategy and management.

 

Board Composition    Board Performance    

• Formal policy to ensure that Evolent considers diverse candidates for Board and CEO succession

 

• Independent Board Chair following Annual Meeting

 

• All NYSE-required Board committees consist solely of independent members

 

• Independent committee chairs

 

• Executive sessionsof independent directors at each meeting

 

• Board and committees may engage outside advisers independently of management

 

  

• Oversight of key human capital issues, including diversity and inclusion and executive succession planning

 

• Annual Board, committee and director evaluations

 

• Commitment to continuing director education

 

• Oversight of key risk areas and certain aspects of risk management efforts

Policies, Programs and Guidelines    Stockholder Rights    

• Robust stock ownership guidelines for executives and directors

 

• Compensation clawback policy

 

• Comprehensive Code of Conduct and Business Ethics

 

• Prohibition on hedging and pledging for any officers or directors

  

• Board to be fully declassified at 2023 annual meeting

 

• No supermajority vote requirements

 

• Market standard proxy access by-law

 

• Directors elected by majority voting except in contested elections

 

• No stockholder rights plan or “poison pill”

We are committed to operating our business under strong and accountable corporate governance practices. Our committee charters, code of business conduct and ethics and corporate governance guidelines are available on our website at www.evolenthealth.com. Any stockholder also may request them in print, without charge, by contacting our Secretary at Evolent Health, Inc., 800 N. Glebe Road, Suite 500, Arlington, VA 22203.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    17  


Table of Contents

Corporate Governance and Board Structure

 

Stockholder Engagement

Our Board recognizes the importance of regular, two-way dialogue with our investors. Feedback from Evolent’s stockholders is integral to the Board’s decision-making process and accordingly, in 2021, we contacted stockholders representing approximately 71% of Evolent’s outstanding shares to conduct governance-related engagement. We met with stockholders representing approximately 29% of outstanding shares, and Board members also participated in select engagements, which allows for a direct line of communication with our Board.

During these discussions, our Board and management team gained valuable input from our investors on matters including Evolent’s corporate governance practices, executive compensation program, progress on diversity and inclusion and approach to ESG. Feedback from our investors was shared with our full Board and directly informed incremental Board refreshment over the past year, including the addition of Tunde Sotunde, MD as our newest Board member. Other key governance enhancements informed by investor feedback in recent years include:

 

  LOGO

Robust stock ownership guidelines for our executive officers and directors

 

  LOGO

Formal policies to ensure that Evolent considers diverse candidates when conducting Board and CEO succession planning

 

  LOGO

Removal of remaining supermajority vote requirements for charter and by-law amendments

 

  LOGO

Accelerated declassification of the Board

 

  LOGO

Market-standard proxy access by-law

 

  LOGO

Progress on workforce diversity and inclusion goals, including formalization of a Head of Diversity and Inclusion who focuses on Diversity, Inclusion and Corporate Responsibility

 

  LOGO

Independent Board Chair following Annual Meeting

Governance-related outreach is incremental to, and often interlaced with, Evolent’s normal-course Investor Relations program in which stockholders typically comprising a large majority of our shares are engaged during road shows and conferences. We value each of the conversations we have with our investors, and recognize the specific value of our discussions centered on corporate governance, especially as we continue to enhance our governance practices. We look forward to facilitating ongoing dialogue with our investors in 2022 and beyond.

Board Leadership Structure

As part of our ongoing commitment to strong and accountable corporate governance practices, the Nominating and Corporate Governance Committee regularly reviews the leadership structure of the Board, taking into account the Company and its needs, market practices, board skills and experiences, investor feedback and corporate governance perspectives, among other things. The Board believes it is in the best interests of the Company and its stockholders for the Board to have flexibility in determining the Board leadership structure of the Company based on these factors.

In August 2020, as part of the Company’s CEO succession planning process, the Board created a new leadership structure with a new Executive Chair, a continuing strong Lead Independent Director, a new separate Chief Executive Officer and continuing strong independent committee chairs. After careful consideration, the Board determined at that time that having separate CEO and Chair roles, with Mr. Blackley serving as CEO and Mr. Williams serving as Executive Chair, would be in the best interests of the Company and its stockholders. Effective January 2022, Mr. Williams transitioned into the role of non-executive Chair, and as part of the Board’s long-term, deliberate approach to leadership succession planning, our current Lead Independent Director, Cheryl Scott, will be assuming the role of independent Board Chair immediately following the Annual Meeting.

The Board believes that having a strong independent Chair and independent committee chairs provides an effective balance between strong company leadership and independent oversight. The Board is committed to continuously evaluating this structure to ensure that it promotes effective governance.

 

18  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Corporate Governance and Board Structure

 

Board of Directors Meetings and Committees

The Board met ten times during 2021. Each incumbent member of the Board attended 75% or more of the meetings of the Board and of the committees on which he or she served that were held during the period for which he or she was a director or committee member, respectively. We do not have a policy on director attendance at our Annual Meeting. Mr. Williams, Mr. Blackley and Ms. Scott attended our 2021 annual meeting of stockholders.

Committees of our Board include the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Compliance and Regulatory Affairs Committee and the Strategy Committee. The principal functions of each of these committees are briefly described below. The Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are fully independent under the applicable NYSE listing standards and rules of the SEC. The current charters for each of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and Compliance and Regulatory Affairs Committee are available on our website at www.evolenthealth.com.

 

Director

          Audit             Compensation     Nominating and
Corporate
Governance
  Compliance and
Regulatory
Affairs
  Strategy

Craig Barbarosh

   

X

     

X*(1)

Seth Blackley

         

M. Bridget Duffy, MD

     

X*

 

X

 

David Farner

         

Peter Grua

   

X*

     

X*(1)

Diane Holder

       

X*

 

X

Kim Keck

 

X*

   

X

   

Cheryl Scott†

 

X

 

X

 

X

   

X

Tunde Sotunde, MD

 

X

     

X

 

Frank Williams

         

Number of 2021 Meetings

 

4

 

5

 

5

 

4

 

5

 

x = Current Committee Member

* = Chair

† = Lead Independent Director

(1) 

Messrs. Barbarosh and Grua serve as Co-Chairs of the Strategy Committee

 

   

Evolent Health, Inc.

Proxy Statement 2022

    19  


Table of Contents

Corporate Governance and Board Structure

 

Audit Committee

  

Members:

Kim Keck (Chair)

Cheryl Scott

Tunde Sotunde, MD

 

Meetings in 2021: Four

 

The Board has determined that Kim Keck qualifies as an “audit committee financial expert”, as such term is defined in the rules of the SEC, and that Kim Keck, Cheryl Scott and Tunde Sotunde, MD meet the standards of independence required by SEC rules and NYSE listing standards applicable to members of audit committees; the Company’s Audit Committee is fully independent.

  

The Audit Committee responsibilities:

 

• Oversees the quality and integrity of our financial statements and accounting practices;

 

• Selects and appoints an independent registered public accounting firm, such appointment to be ratified by stockholders at our Annual Meeting;

 

• Pre-approves all services to be provided to us by our independent registered public accounting firm;

 

• Reviews and evaluates the qualification, performance, fees and independence of our registered public accounting firm;

 

• Reviews with our independent registered public accounting firm and our management the plan and scope of the accounting firm’s proposed annual financial audit and quarterly review, including the procedures to be utilized;

 

• Reviews with our independent registered public accounting firm and our management the accounting firm’s significant findings and recommendations upon the completion of the annual financial audit and quarterly reviews;

 

• Oversees our internal audit function;

 

• Reviews our annual and interim financial statements, the report of our independent registered public accounting firm on our annual financial statements, Management’s Report on Internal Control over Financial Reporting and the disclosures under Management’s Discussion and Analysis of Financial Condition and Results of Operations in our periodic reports and other filings with the SEC;

 

• Meets with our independent registered public accounting firm and our management regarding our internal controls, critical accounting policies and practices and other matters;

 

• Discusses earnings releases and reports to rating agencies with our management;

 

• Assists our Board in the oversight of our financial structure, financial condition and capital strategy;

 

• Administers our policy governing related party transactions; and

 

• Oversees our compliance program, response to regulatory actions involving financial, accounting and internal control matters, internal controls and risk assessment policies.

 

20  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Corporate Governance and Board Structure

 

Compensation Committee

  

Members:

Peter Grua (Chair)

Craig Barbarosh

Cheryl Scott

 

Meetings in 2021: Five

 

The Board has determined that all members of the Compensation Committee meet the standards of independence required by SEC rules and NYSE listing standards applicable to service on compensation committees; the Company’s Compensation Committee is fully independent.

  

The Compensation Committee responsibilities:

 

• Sets and reviews our general policy regarding executive compensation;

 

• Determines the compensation (including salary, bonus, equity-based grants and any other long-term cash compensation) of our chief executive officer and our other executive officers;

 

• Oversees our disclosure regarding executive compensation;

 

• Administers our executive bonus and equity-based incentive plans;

 

• Reviews and makes recommendations to our Board with respect to non-employee director compensation; and

 

• Assesses the independence of compensation consultants, legal counsel and other advisors to the Compensation Committee and hires, approves the fees and oversees the work of, and terminates the services of such advisors.

 

Except as prohibited by law, applicable regulations of the NYSE, our charter or our third amended and restated by-laws, the compensation committee may delegate its responsibilities to subcommittees or individuals.

Compensation Consultant

As a good governance practice, in 2021 the Compensation Committee conducted a process to review our compensation consultant. The Compensation Committee reviewed proposals and interviewed potential candidates. The Compensation Committee made the decision to retain Exequity LLP (“Exequity”) as the advising compensation consultant to the Compensation Committee.

The Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable. In accordance with this authority, the Compensation Committee has directly engaged Exequity as its independent compensation consultant to provide it with objective and expert analyses, advice and information with respect to executive compensation. All executive compensation services provided by Exequity were directed or approved by the Compensation Committee and Exequity reports directly to the Compensation Committee on this assignment. Exequity attended a portion of each of the Compensation Committee meetings during 2021. The Compensation Committee has concluded that no conflict of interest exists with Exequity with respect to the services it provided to the Compensation Committee during 2021. Exequity did not provide any services to the Company or its management other than services to the Compensation Committee and we do not currently expect Exequity to provide other services to the Company while serving as the Compensation Committee’s consultant.

In addition to Exequity, members of our human resources, legal and finance departments support the Compensation Committee in its work management by providing data, analysis and recommendations regarding the Company’s executive and director compensation practices and policies and individual pay recommendations.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    21  


Table of Contents

Corporate Governance and Board Structure

 

Compensation Committee Interlocks and Insider Participation

Craig Barbarosh, Michael D’Amato, Peter Grua and Cheryl Scott served on our Compensation Committee during 2021. None of the members of our Compensation Committee has at any time been an officer or employee of the Company. During 2021, none of our executive officers served as a member of the board of directors or a compensation committee of any entity for which a member of our Board or Compensation Committee served as an executive officer.

 

Nominating and Corporate Governance Committee

Members:

M. Bridget Duffy, MD (Chair)

Kim Keck

Cheryl Scott

 

Meetings in 2021: Five

 

The Board has determined that M. Bridget Duffy, MD, Kim Keck and Cheryl Scott meet the standards of independence required by SEC rules and NYSE listing standards; the Company’s Nominating and Corporate Governance Committee is fully independent.

  

The Nominating and Corporate Governance Committee responsibilities:

 

• Oversees our corporate governance practices;

 

• Reviews our charter, by-laws, committee charters, code of ethics and corporate governance guidelines, and provides recommendations to the Board regarding possible changes;

 

• Evaluates the composition, size, leadership structure and governance of our Board and its committees and makes recommendations regarding the appointment of directors to our committees;

 

• Considers stockholder nominees for election to our Board;

 

• Evaluates and recommends candidates for election to our Board;

 

• Oversees the CEO and management succession planning process;

 

• Reviews the Company’s human resources policies and programs;

 

• Leads the self-evaluation process of our Board and oversees the Board succession planning process;

 

• Oversees the Company’s stockholder engagement program; and

 

• Oversees and monitors general governance matters, including communications with stockholders and regulatory developments relating to corporate governance.

 

Compliance and Regulatory Affairs Committee

Members:

Diane Holder (Chair)

M. Bridget Duffy, MD

Tunde Sotunde, MD

 

Meetings in 2021: Four

  

The Compliance and Regulatory Affairs Committee responsibilities:

 

• Assists our Board in carrying out its responsibilities relating to regulatory compliance and ethics;

 

• Oversees our compliance program;

 

• Reviews and recommends for approval our code of business conduct and ethics and other risk oversight documentation;

 

• Oversees our response to regulatory actions, and data privacy and cybersecurity issues; and

 

• Reviews corrective measures for issues reported by our partners, our employees and our vendors.

 

Strategy Committee

Members:

Peter Grua (Co-Chair)

Craig Barbarosh (Co-Chair)

Diane Holder

Cheryl Scott

 

Meetings in 2021: Five

   The Strategy Committee was formed in January 2021 and makes recommendations to the Board with respect to value creation initiatives, including through improvements to the Company’s operations, financial performance, M&A divestitures and overall business strategy and direction.

 

22  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Corporate Governance and Board Structure

 

Code of Business Conduct and Ethics

Our Board has adopted a code of business conduct and ethics that applies to all of our directors, officers and other employees, including our principal executive officer, principal financial officer and principal accounting officer. Any waiver of the code for directors or executive officers and any amendment of the code may be made only by our Board. We intend to make disclosures of such waivers or amendments required by SEC rules and NYSE listing standards, if any, through publication on our website, www.evolenthealth.com.

Corporate Governance Guidelines

Our Board has adopted corporate governance guidelines that serve as a flexible framework within which our Board and its committees operate. These guidelines cover a number of areas, including the size and composition of the Board, Board membership criteria and director qualifications, director responsibilities, Board agenda, roles of the Chair of the Board, Chief Executive Officer and Lead Independent Director, meetings of independent directors, committee composition, Board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. In 2020, we amended our corporate governance guidelines to, among other important governance enhancements, adopt formal policies to ensure that Evolent considers diverse candidates when conducting Board and CEO succession planning.

Executive Sessions of Non-Management Directors

Our corporate governance guidelines provide that the independent directors serving on the Board should hold an executive session during each Board meeting. The executive sessions are chaired by our Chair (if independent) or our Lead Independent Director and facilitate candid discussion of the independent directors’ viewpoints regarding the performance of management and the Company.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    23  


Table of Contents

Corporate Governance and Board Structure

 

Corporate and Social Responsibility

We are committed to corporate and social responsibility, and work collaboratively with our stakeholders to promote environmental sustainability, data and privacy security and social responsibility in our business practices. Our Board oversees our corporate and social responsibility programs, and is committed to supporting our efforts to operate as a good corporate citizen. We recently formed a sustainability business resource group to harness the input from employees for future evolution of our efforts.

Pandemic Response

Our mission-driven, service-oriented culture continue to help us navigate the challenges of the COVID-19 pandemic. From the beginning of the pandemic, we were committed to the health and safety of our employees and their families. We implemented 100% work from home across our employee population, instituted work from home office set-up support, created additional mental health offerings and launched a number of holistic wellness initiatives. In 2021, we launched an employee crisis fund to support employees impacted by COVID and/or other personal situations. In addition, we planned to reopen some of our offices but continued support of employees through a voluntary hybrid office model.

Taking Care of Our People

Attention to the wellbeing of our employees is not a new phenomenon for us. We aim to attract and retain the highest caliber of health care talent and strive to cultivate a culture where employees are valued, celebrated and connected to our important mission. Part of that culture is structuring our compensation to annually incent and reward exceptional performance at all levels in the organization. As the business overachieved our financial performance, the Company was able to reward employees with special one-time bonuses and overfunding our annual bonus plan. Ensuring that our employees are compensated fairly and have the appropriate incentives in place to meet and exceed their potential is an integral part of our approach to human capital management.

We also believe that the continued development of our talent is important in continuing to maintain growth as a company as well as the growth of our individual talent. Training programs are available to all employees through our company portal that is managed by our learning and development team and includes a portal where employees can find on-demand learning opportunities in addition to live training sessions. In addition, we hosted an annual training day for all leaders and employees across the organization to engage in personal and professional development.

Diversity, Equity and Inclusion

We believe that Evolent is a stronger company with diverse employees and encourage hiring and retention practices that focus on top performing talent regardless of gender, national origin, ethnicity or other protected class. As part of our focus, we invested in a Head of Diversity, Equity and Inclusion to focus the organization on people, programs, and partnerships that support our evolving organization. In addition, we have organized additional training for leadership in diversity, equity and inclusion throughout the organization and in 2021, hosted our inaugural Day of Understanding to promote allyship and grew to 12 business resource groups (BRGs). We also, launched an internal leadership program that focuses on minority leaders across the organization.    

 

We are proud of our progress in cultivating a diverse and supportive workplace. In 2021, representation of female and minority leaders in the company increased by two points each, at managing director and above levels. As of December 31, 2021:

 

 

 

LOGO

50%

of Evolent’s managing directors

and above levels were women

 

       

  

 

LOGO

29%

of Evolent’s managing directors

and above levels were minorities

 

and we will continue to push for both inclusion and transparency. Evolent received a 100% score on the Human Rights Campaign’s Corporate Equality Index, which rates employers on their support and inclusion of LGBTQ+ employees. We also were named to the Parity.org Best Companies for Women to Advance List 2021 for creating a fair and equitable work environment for women.

Community Engagement

Evolent has fostered a mission-driven, service-oriented culture through embracing opportunities for our employees to give back to the community in which they live and work. Our formal program, Evolent Cares, promotes social improvement engagements to help the communities where employees live and work reach their fullest potential. By using time, talents, and finances, we are able to have a multiplier and positive effect on our mission to change the way health care is delivered. Despite the COVID-19 pandemic, in 2021, Evolent employees logged approximately 13,000 hours of community service, raised over $15,000 to support local causes connected to our mission and donated to over 30 local charities during our Season of Giving program.

 

24  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Corporate Governance and Board Structure

 

Board’s Role in Risk Oversight

 

Our Board plays an active role in overseeing management of our risks. The committees of our Board assist our full Board in risk oversight by addressing specific matters within the purview of each committee.     

Our Audit Committee focuses on financial compliance (i.e., accounting and financial reporting), as well as internal controls and any audit steps taken in light of material control deficiencies. Our Audit Committee discusses our major financial and other risk exposures and the steps that management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.

 

    
    

Our Compensation Committee focuses primarily on risks relating to executive compensation plans and policies.

 

    
    

Our Nominating and Corporate Governance Committee focuses on reputational and corporate governance risks relating to our company including the independence of our Board.

 

    
    

Our Compliance and Regulatory Affairs Committee focuses on our regulatory compliance and corporate ethics, as well as risks with respect of cybersecurity and privacy.

 

    

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

 

In response to the COVID-19 pandemic, the Company formed an Emergency Preparedness Team, led by the General Counsel and Chief Compliance Officer that focuses on maintaining our workforce in a manner that does not disrupt service delivery or operations. This team also assesses financial and operational impacts of the pandemic on the Company. These findings are reported on a quarterly basis to the Compliance & Regulatory Affairs Committee and the full Board.

 

Director Independence

Our corporate governance guidelines provide that our Board shall consist of such number of directors who are independent as is required and determined in accordance with applicable laws and regulations and requirements of the NYSE and SEC rules. The Board has determined affirmatively, based upon its review of all relevant facts and circumstances and after considering all applicable relationships of which the Board had knowledge, between or among the directors and the Company or our management (some of such relationships are described in the section of this proxy statement entitled “Certain Relationships and Related Party Transactions”), that each of the following directors and director nominees has no direct or indirect material relationship with us and is independent under the listing standards of the NYSE and SEC rules: Craig Barbarosh, M. Bridget Duffy, MD, Peter Grua, Kim Keck, Cheryl Scott and Tunde Sotunde, MD. In determining the independence of Tunde Sotunde, MD, who is the President and Chief Executive Officer of Blue Cross Blue Shield of North Carolina, one of our customers, our Board considered the relationship arising through the ordinary course of business between us and Blue Cross Blue Shield of North Carolina, but did not view the relationship as materially impacting its independence determination.

Communications with the Board

Stockholders and other interested parties who wish to communicate with our Board, our Lead Independent Director Cheryl Scott, our independent or non-management directors as a group, any of the committees or any of the individual non-employee directors may do so by sending a letter to the intended recipient, in the care of our Secretary, at Evolent Health, Inc., 800 N. Glebe Road, Suite 500, Arlington, VA 22203. Such correspondence will be relayed to the appropriate director or directors as appropriate.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    25  


Table of Contents

Corporate Governance and Board Structure

 

Stockholders may communicate with Mr. Williams and Mr. Blackley, the Board’s employee-directors, by sending a letter addressed to the intended recipient at Evolent Health, Inc., 800 N. Glebe Road, Suite 500, Arlington, VA 22203.

Identification of Director Candidates

On an annual basis, our Board conducts a formal board self-evaluation led by our Nominating and Corporate Governance Committee to determine targeted focus areas. Our Board continually assesses and evaluates its composition, taking into account, among other things, the experience, skills, background and diversity of its members. The Nominating and Corporate Governance Committee evaluates director candidates in accordance with the director membership criteria described in our corporate governance guidelines and our policy statement regarding director nominations. In addition, we are committed to including in any pool of director candidates for consideration highly qualified candidates who would bring gender, racial, and/or ethnic diversity to the Board if chosen. In addition to satisfying relevant independence standards and the requirements of Section 8 of the Clayton Act, the following are the minimum qualifications that candidates for the Board must possess:

 

 

Minimum of 21 years of age at the time they commence their term and will not be eligible for nomination or re-nomination to the Board if they are older than age 75;

 

 

Demonstrated reputation for integrity, judgment, acumen and high professional and personal ethics;

 

 

Financial literacy and significant experience at the policy-making level in business, government or the non-profit sector;

 

 

Time and ability to make a constructive contribution to the Board, and a clear commitment to fulfilling fiduciary duties and serving the interests of all the Company’s stockholders; and

 

 

An expectation of regularly attending meetings, staying informed about the Company and its businesses, participating in the discussions of the Board and its committees, complying with applicable Company policies, and taking an interest in the Company’s businesses and providing advice and counsel to the Chair and Chief Executive Officer.

The Nominating and Corporate Governance Committee reviews a candidate’s qualifications to serve as a member of our Board based on the skills and characteristics of the individual as well as the overall composition of our Board in light of the Company’s current and expected structure and business needs, regulatory requirements, the diversity of viewpoints represented on the Board and committee membership requirements. The Nominating and Corporate Governance Committee evaluates a candidate’s professional skills and background, experience at the policy-making level in the business, government or non-profit sectors or as a director of a widely-held public corporation, financial literacy, age, independence and past performance (in the case of incumbent candidates), along with qualities expected of all directors, including integrity, judgment, acumen, high professional and personal ethics, familiarity with our business and the time and ability to make a constructive contribution to our Board. The Nominating and Corporate Governance Committee believes it would be desirable for new candidates to contribute to the variety of viewpoints on the Board, which may be enhanced by a mix of different professional and personal backgrounds and experiences. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee considers and reviews all candidates in the same manner regardless of the source of the recommendation. Our third amended and restated by-laws provide that any stockholder of record entitled to vote for the election of directors at the applicable meeting of stockholders may nominate persons for election to our Board, if such stockholder complies with the applicable notice procedures, which are discussed under the heading “Other matters-Stockholder Proposals” in this proxy statement.

Corporate Governance Policies Related to Compensation and Equity

Please refer to the “Compensation Discussion and Analysis-Corporate Governance Policies” section of this proxy statement for discussion of our policies with respect to prohibiting derivative trading, hedging and pledging, clawback of compensation, stock ownership guidelines and the tax deductibility of compensation.

 

26  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

 

COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

This Compensation Discussion and Analysis (“CD&A”) focuses on the Company’s 2021 compensation programs, actions and outputs relative to the Company’s 2021 performance. These compensation decisions reflect the Compensation Committee’s application of the Company’s compensation philosophy, plan objectives and performance standards against financial and individual executive performance through the end of 2021. The Company experienced strong positivity to the stock price through 2021, due in part to Company performance as well as continued and global concerns about the COVID-19 pandemic. As described further in this CD&A, the Company’s executive compensation programs strongly align realized compensation outcomes with the Company’s stock price performance. In 2021, the Company introduced a new performance stock unit program to better align long-term compensation with cumulative Adjusted EBITDA and absolute total shareholder return goals over a three-year period. For 2022, the Company continued with a slightly refined approach to a performance stock unit program to continue to align long-term compensation with the performance metrics of cumulative Adjusted EBITDA, absolute total shareholder return and revenue growth over a three-year period.

Named Executive Officers (“NEOs”)

This CD&A describes the compensation of our NEOs named in the Summary Compensation Table for 2021:

Seth Blackley

Chief Executive Officer

John Johnson

Chief Financial Officer

Steve Tutewohl

Chief Operating Officer

Jonathan Weinberg

General Counsel

Aammaad Shams

Corporate Controller

2021 Highlights

Below are highlights of our performance in 2021, including revenue and Adjusted EBITDA, which were the financial performance metrics used for the Company’s 2021 Annual Executive Bonus Plan (the “2021 Bonus Plan”):

 

Revenue

    

Lives on Platform1

    

Adjusted EBITDA2

$908 million

    

20.0 million lives on platform composed of 1.6 million EHS lives and 18.4 million Clinical Solutions lives

    

$66.3 million

 

2021 Quarterly Adjusted EBITDA2
Q1     Q2     Q3     Q4
$14.9 million     $13.3 million     $13.8 million     $24.3 million

 

(1)

As of December 31, 2021.

 

(2) 

Non-GAAP measure, see Appendix A for definition and reconciliation to net loss attributable to common shareholders of Evolent Health, Inc. Net loss attributable to common shareholders of Evolent Health, Inc. was $(37.6) million for the year ended December 31, 2021 and $(9.8) million, $(9.1) million, $(13.1) million and $(5.6) million for the three months ended March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021, respectively.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    27  


Table of Contents

Compensation Discussion and Analysis

 

Strategy Overview

Evolent was founded in 2011 with a mission to change the health of the nation by changing the way health care is delivered, and that mission remains the same today in 2022.

Evolent provides services to risk-bearing entities, including healthcare payers (i.e., insurance companies and managed care organizations) and risk-bearing provider organizations. Evolent works with these clients to promote and facilitate clinical quality and administrative efficiency intended to bring net savings to the estimated $1 trillion in unnecessary overhead and redundant or unnecessary care that occurs each year.

We focus on this opportunity through a business focus on both clinical care solutions and administrative services. In Clinical Solutions, we focus on specialty care management, specifically within the large opportunities within oncology, and cardiology in addition to end-of-life solutions for health plans. We also focus on primary care, partnering with independent physicians to manage financial risk of patient populations on behalf of health plan clients.

Within Evolent Health Services, we provide a technology-enabled platform of full back-office turnkey services to health plans, as well as targeted solutions for risk adjustments for quality and care management.

Our differentiators include a long tenure of focus on value-based care, a large, diversified client roster of 44 operating partners across the United States, deep subject matter expertise and deep clinical knowledge and an outstanding reputation in our specialty areas of focus and an asset-light business model that is profitable, fast growing and characterized by minimal market penetration at the present time.

Year in Review

As of December 31, 2021, our 1-year TSR performance was 72.61%, reflective of our strong results in 2021. For the full year 2021, Evolent reported total revenue growth of approximately 36.7% (excluding revenue for divested assets)1 significantly ahead of our original outlook for the year. We exceeded our initial outlook for revenue and other key financial metrics because of strong organic growth, as we expanded new client relationships and the average value of those relationships, as well as enjoyed natural growth within our prior year of business as we added new lives and lines of business that had a positive impact on our pricing mix. In addition, newer service offerings (such as Evolent Care Partners) experienced significant growth as we recognized revenue earned through Medicare Shared Savings programs executed in 2020.

While the COVID-19 pandemic retreated then surged again during 2021, Evolent’s core focus on enabling value-based care programs, on behalf of our clients, helped healthcare organizations achieve some stability during a time of significant challenge, as fee for service business models were often significantly challenged during the two-year pandemic.

In addition to strong growth in revenue and various metrics for profitability, Evolent continued to demonstrate the considerable positive and relatively consistent cash flow characteristics of its portfolio. Cash on the balance sheet, net of regulated cash associated with the wind-down of our divested health plan assets, totaled $215.6 million2, an increase of $24.7 million compared to the third quarter of 2021. The cash flow generative capabilities of Evolent have allowed the Company to fund continued investments in people, technology and solutions. In addition, the Company had the flexibility and resources to deploy

 

28  

Evolent Health, Inc.

Proxy Statement 2022

   

 

 

(1) 

Non-GAAP measure, see Appendix A for definition and reconciliation to total revenue. GAAP total revenue for the year ended December 31, 2021 and 2020 was $908.0 million and $924.6 million, respectively

 

(2) 

Non-GAAP measure, see Appendix A for definition and reconciliation to cash and cash equivalents and investments of Evolent Health, Inc. GAAP cash and cash equivalents and investments as of December 31, 2021 and September 30, 2021 was $266.4 million and $252.6 million, respectively.


Table of Contents

Compensation Discussion and Analysis

 

growth capital to expand its portfolio through selective acquisitions. For example, on October 1, 2021, we completed the acquisition of Vital Decisions, a leading provider of technology-enabled advance care planning services. The addition of Vital Decisions’ specialized patient engagement services is intended to help enhance our solutions impact within our specialty care management services solution by improving patient care quality and by adding capabilities in patient engagement, telehealth and end-of-life management.

The Company’s strategy continues to be grounded in three core principles intended to benefit all stakeholders. These strategies are (1) driving strong organic growth in our core solutions; (2) expanding Adjusted EBITDA margins through operational excellence and performance on behalf of our partners; and (3) prudent capital allocation to drive growth.

Additional operational and clinical achievements across 2021 include:

 

 

Added ten new partner organizations, including several regional and national payers, accountable care organizations (“ACOs”) and independent provider groups.

 

 

During 2021, through the New Century Health specialty healthcare business, our platform helped manage 160,000 unique patients with oncologic and cardiovascular diagnoses.

 

 

Received a perfect 100 score on the Human Rights Campaign (“HRC”) Foundation’s Corporate Equality Index for 2021.

 

 

Named Kim A. Keck to its Board of Directors in January, 2021. Ms. Keck has more than 30 years’ experience in the health care industry and currently serves as President and Chief Executive Officer of the Blue Cross Blue Shield Association.

 

 

Named Tunde Sotunde, MD to its Board of Directors in October, 2021. Dr. Sotunde brings more than 20 years’ experience in the health care industry and currently serves as President and Chief Executive Officer of Blue Cross Blue Shield of North Carolina.

 

 

Entered a definitive agreement with Bright HealthCare, whereby True Health New Mexico, Inc., a wholly owned subsidiary of Evolent Health, was acquired by Bright Healthcare.

 

 

Was named to the Parity.org Best Companies for Women to Advance List 2021. This list recognizes organizations that have implemented a mix of exemplary benefits, policies and programs that ensure women have significant opportunities to advance their careers.

 

 

Appointed its first Vice President of Investor Relations to provide comprehensive and highly responsive relationship management capabilities for its growing equity analyst, institutional and retail investor constituencies.

 

 

Completed the acquisition of Vital Decisions in October, 2021. Vital Decisions focuses on end-of-life care, specifically technology-enabled advance care planning. Vital is now fully integrated into our New Century Health business as we focus on delivering higher quality care and lowering costs at the difficult stage of illness known as end of life – an unfortunate but common outcome within oncology and cardiology acute and chronic care.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    29  


Table of Contents

Compensation Discussion and Analysis

 

Evolving Compensation Program Practices and Responsiveness to Stockholder Engagement

Our compensation programs are designed to focus our leaders on the key areas that drive the business forward and align with the short-term and long-term interests of our stockholders. The Compensation Committee considers many factors when determining our executive’s compensation plans, including financial results, progress on strategic priorities, market trends and stockholder feedback. In the last year, the Compensation Committee made a number of adjustments to our executive compensation program to align with evolving competitive and governance practices, address feedback from our stockholders, and strengthen the link of pay to performance. Changes made in 2020 and 2021 include:

 

 

Continued adjusting our peer group in response to our Company’s growth;

 

 

Introduced a new performance stock unit program for 2021. Under this program, shares can be earned based on cumulative Adjusted EBITDA and absolute total shareholder return goals over a three-year period.

Below is a more detailed summary of evolutions in our compensation practices that we have implemented with respect to the compensation of our NEOs because we believe they support our compensation philosophy and are in the best interests of our Company and our stockholders.

 

What We Do       What We Don’t Do

LOGO   Strong emphasis on performance-based compensation, with a significant portion of NEO compensation tied to Company performance

 

LOGO   Introduced PSUs that may be earned based on Adjusted EBITDA and stock price performance in 2021 to better align our pay with our Company’s sustained financial and operating performance

 

LOGO   Mix of compensation that emphasizes both short-term and long-term incentives

 

LOGO   Aggressive revenue and Adjusted EBITDA and other targets for short-term incentive payments generally, with rigorous individual financial and non-financial performance goals

 

LOGO   Market-aligned change in control and severance agreements for certain executives, with double trigger change in control acceleration provisions

 

LOGO   Benchmarking against a thoughtfully assembled and representative peer group

 

LOGO   Acceleration of equity in connection with a termination of employment conditioned upon a release of claims and compliance with restrictive covenants

 

LOGO   Compensation decisions for NEOs made by an independent compensation committee advised by independent compensation consultant

 

LOGO   Annual compensation program risk assessment

 

LOGO   Annual say-on-pay vote

 

LOGO   At will employment for NEOs

     

LOGO   No incentives that encourage excessive risk-taking

 

LOGO   No guaranteed incentive awards for executives

 

LOGO   No excise or other tax gross ups on change in control payments

 

LOGO   No perquisites for NEOs other than benefits generally available to our other employees

 

LOGO   No hedging, pledging or short sales of Company stock

 

LOGO   No “single-trigger” change in control acceleration of equity awards

 

LOGO   No dividend equivalent rights on unvested restricted stock units or options

 

30  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

Our 2021 Executive Compensation Program and Practices

The Compensation Committee believes that our executive compensation program is appropriately designed to advance stockholder interests through effective performance-based incentives with retention features. The primary components and associated purposes of our compensation program are as follows:

 

Category

    Core Component      Objective/Features
        

Salary

    Base Salary      Ongoing cash compensation based on the executive officer’s role and responsibilities, individual job performance and experience. We use base salary to provide the security of a competitive fixed cash payment for services rendered.
        

Short-Term Cash Incentives

    Annual Cash Incentives      For 2021, short-term incentive payments were determined taking into account financial and operational/strategic goals, and an individual leadership assessment.
        

Long-Term Equity Incentives

    Restricted Stock Units      Restricted stock units (“RSUs”) are used to provide a retentive element to our compensation program while still tying the value of the award to the performance of our stock. All RSUs granted as part of our long-term incentive plan in 2021 vest ratably in equal installments on each of the first four anniversaries of the grant date. The vesting schedule helps to ensure that executives are continuously tied to share price performance and thinking long-term.
        
        
    Performance Stock Units      Performance stock units (“PSUs”) are used to better align long-term compensation with sustained financial and operating performance, as measured by cumulative Adjusted EBITDA and absolute total shareholder return goals over a three-year period.
        

Other

    Miscellaneous      We provide other benefits that are competitive and consistent with the market. We offer general health and welfare benefits. Retirement benefits are generally limited to participation in a tax-qualified 401(k) plan, which includes a one-time discretionary Company match at the end of the calendar year.

Under our executive compensation program, performance-based incentive compensation comprises a substantial portion of target compensation, and our executive officers have a larger percentage of target compensation at-risk than is fixed relative to total compensation (90% for our CEO, including 75% performance-based compensation (not including time-vested equity), and 73% for our other NEOs combined). The Compensation Committee considers each component of compensation collectively with other components when establishing the various forms, components, and levels of compensation for our executive officers. In determining the appropriate mix of compensation elements for each executive officer, our compensation program seeks to provide a balance between the various components by rewarding performance through annual performance-based cash incentive compensation that encourages achieving and exceeding annual goals designed to advance our long-term growth strategy and also through long-term equity incentive compensation to align our executive officers’ interests with those of our stockholders.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    31  


Table of Contents

Compensation Discussion and Analysis

 

Compensation Mix(1)

 

CEO: Target Pay    Other NEOs: Target Pay
LOGO    LOGO

 

(1) 

Consists of 2021 base salary rate (as reported in the Salary column of the Summary Compensation Table), 2021 target annual incentive opportunity, long-term incentive awards granted in 2021 (as reported in the Stock Awards column of the Summary Compensation Table) and other compensation (as reported in the All Other Compensation column of the Summary Compensation Table).

Our pay-for-performance philosophy is further illustrated by comparing target total direct compensation to “realized” compensation for our CEO, after taking into account actual performance.

Target and Realized CEO Compensation(1)

 

 

LOGO

 

(1)

The realized compensation levels shown include base salary paid in each year, bonuses paid in respect of each year, and payout of all long-term incentives that vested each year (i.e., the value at the time of vesting of RSUs and options in the first quarter of the year after the year in question). Data represents Chair and former CEO Frank Williams in 2019, and current CEO Seth Blackley for 2020 and 2021.

 

(2)

In 2020, the Company’s stock price recovered from 2019, but the use of 3-year performance LSU grants in 2019 and 3-year and 3.5-year performance LSU grants in 2020, greatly impacted the value of our NEOs’ total actual compensation realized as compared to total target compensation.

 

(3)

In 2021, the Company’s stock price continued to ascend, and 2019 LSUs paid out at 153.61% of target upon vesting on March 2, 2022.

 

32  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

Objectives of our Executive Compensation Program

Our compensation philosophy for executive officers aims to provide incentives to achieve both short- and long-term business objectives, align the interests of both our executive officers and stockholders, and ensure that we can hire and retain talented individuals in a competitive marketplace.

Key objectives of our executive compensation program are as follows:

 

 

Attract and retain highly qualified and impactful executives;

 

 

Motivate executives to enhance our overall business performance and profitability through the successful execution of the Company’s focused short- and long-term business strategies;

 

 

Align the long-term interests of our executives and stockholders through the ownership of Company stock by executives and by rewarding stockholder value creation;

 

 

Deliver an externally competitive and transparent total compensation structure;

 

 

Reflect our pay-for-performance philosophy; and

 

 

Ensure that compensation opportunities are competitive with the market, and rewards are based on business outcomes.

Role of the Compensation Committee and the CEO

The Board has delegated to the Compensation Committee the responsibility of overseeing the administration of the Company’s compensation plans and the preparation of all reports and documents required by the rules and regulations of the SEC. The Compensation Committee annually reviews and approves the corporate goals and objectives upon which the executive compensation program is based. The Compensation Committee evaluates the CEO’s performance in light of these goals and objectives. Furthermore, the Compensation Committee reviews and makes recommendations to the Board with respect to any incentive compensation plans, including equity-based plans, to be adopted or submitted to the Company’s stockholders for approval.

The Compensation Committee meets at least quarterly throughout the year and may meet more often, as required to address ongoing events. In 2021, the Compensation Committee met five times. Meeting agendas are determined by the Chair of the Compensation Committee with the assistance of our CEO. Our CEO attended all five Compensation Committee meetings, and representatives from the Compensation Committee’s independent compensation consultant, Exequity, attended all five meetings. At the Compensation Committee meetings, our CEO made recommendations to the Compensation Committee regarding the annual base salary, annual cash incentive compensation and equity compensation of our NEOs (other than our CEO and Executive Chair).

Compensation Setting Process

The Compensation Committee makes compensation determinations for our CEO and Executive Chair after consideration of individual and Company performance for the year, along with an examination of external market data of our industry peer group, as described below under “Use of Peer Companies.”

The Compensation Committee makes compensation determinations for our NEOs other than our CEO and Executive Chair based on recommendations made by our CEO, taking into account each NEO’s individual performance (with an assessment of the individual’s accomplishments provided by our CEO) and Company performance, along with an examination of external market data of our industry peer group, as described below under “Use of Peer Companies.”

 

   

Evolent Health, Inc.

Proxy Statement 2022

    33  


Table of Contents

Compensation Discussion and Analysis

 

Role of the Independent Compensation Consultant

The Compensation Committee retained Exequity as its independent compensation consultant. The Compensation Committee assessed the independence of Exequity and whether its work raised any conflict of interest, taking into consideration the independence factors set forth in applicable SEC and New York Stock Exchange rules, and determined that Exequity is independent. Exequity took guidance from and reported directly to the Compensation Committee. Exequity advised the Compensation Committee on current and future trends and issues in executive compensation and on the competitiveness of the compensation structure and levels of our NEOs during 2021. At the request of the Compensation Committee, Exequity performed the following services, among others, to inform the Compensation Committee’s decisions regarding executive compensation for 2021:

 

 

Developed a peer group to provide context for the range of appropriate compensation for NEOs and compensation program designs;

 

 

Conducted a market review and analysis for our NEOs to determine whether their targeted total direct compensation opportunities were competitive with positions of a similar scope in similarly sized companies in similar industries;

 

 

Assisted in the development of short- and long-term incentive design;

 

 

Kept the Compensation Committee aware of executive and director compensation trends and developments;

 

 

Attended Compensation Committee meetings, as requested, to discuss these items.

All services performed for us by Exequity during 2021 were related to executive and non-employee director compensation.

Use of Peer Companies

The Compensation Committee reviewed the Company’s peer group to determine if revisions were needed for 2021 based on changes affecting either the Company or any of the peer group companies. Our process focused on reviewing companies within related industries to develop a peer group that balances industry focus and revenue size, among other considerations. This list was further refined based on business scope and the competitive market for talent.

Based on key metrics for the current peer group and guidance from Exequity, the Compensation Committee adjusted the peer group to better align the Company to the peer group median. In so doing, the Compensation Committee removed Medidata Solutions, Inc. as it was acquired by Dassault Systèmes SE in June 2019. In addition, the Compensation Committee removed Navigant Consulting, Inc. as it was acquired by Veritas Capital backed Guidehouse LLP in October 2019. The Compensation Committee did not replace these peer companies. All of the peer companies are publicly traded and demonstrate appropriate revenue size and industry focus or a level of complexity and business model similar to that of ours. At the time of the Compensation Committee’s review in September 2020, our market capitalization was at the peer group twenty-first percentile, and our revenues approximated the peer group 55th percentile, based on trailing twelve-month financial information available as of August 31, 2020. The 2021 peer group consisted of the following companies:

 

Allscripts Healthcare Solutions, Inc.

  

LHC Group, Inc

BioTelemetry Inc.

  

NextGen Healthcare, Inc.

CorVel Corporation

  

Omnicell, Inc.

HealthEquity, Inc.

  

Premier, Inc.

HMS Holdings Corp.

  

R1 RCM Inc.

Huron Consulting Group Inc.

  

Tivity Health, Inc.

Inovalon Holdings, Inc.

  

Veeva Systems Inc.

 

34  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

     Revenue
(TTM as of
8/31/20,
in millions)
    Revenue
(FY 2020,
in millions)
    Revenue
(FY 2021,
in millions)
    Market
Capitalization
(as of
8/31/20,
in millions)
    Market
Capitalization
(as of
12/31/20,
in millions)
    Market
Capitalization
(as of
12/31/21,
in millions)
 

Evolent Health, Inc.

  $ 943     $ 925     $ 908     $ 1,227     $ 1,351     $ 2,431  

Evolent Health, Inc. Percentile Rank

    55     67     58     21     18     35

Peer Group 75th Percentile

  $ 1,275     $ 1,271     $ 1,475     $ 3,954     $ 4,286     $ 4,849  

Peer Group Median

  $ 899     $ 747     $ 750     $ 2,072     $ 2,802     $ 3,692  

Peer Group 25th Percentile

  $ 627     $ 554     $ 620     $ 1,379     $ 1,897     $ 1,552  

Compensation data from public filings of companies in our peer group and from published surveys formed the basis of the competitive benchmarking analysis and pay mix comparison. The data provided a useful reference point in the Compensation Committee’s efforts to appropriately align target total executive compensation to that of our peers, which affords our NEOs the opportunity to earn above-target level of compensation for exceptional performance that could be expected to increase value for stockholders, while providing that they would earn less than targeted compensation if the Company’s performance failed to meet expectations.

In determining the structure of our executive compensation program, as well as the individual pay levels of our NEOs the Compensation Committee reviewed competitive market data provided by Exequity, which compared the various elements of compensation provided to our executive officers, relative to compensation paid to individuals holding similar positions at companies in our executive compensation peer group. Exequity worked with the Compensation Committee and Management to assess the data and review our compensation practices. The table below summarizes the relative positioning of target total compensation opportunities for our senior executives as of the time the Compensation Committee reviewed executive pay benchmarking in December 2020, prior to making pay decisions for 2021.

 

Target Pay vs. Peer Median by Elements of Program

 
     CEO      All other Sr.
Executives
Benchmarked
 

Base Salary

    (23.9)%        (9.8)%  

Target Bonus

    (32.8)%        (16.4)%  

Long-term Incentive

    (27.2)%        (37.8)%  

Given the relative positioning of our executive’ pay opportunities within our revised peer group and our executives’ progression in their roles, the Compensation Committee approved significant pay increases (particularly with respect to long-term incentive opportunities) to set target 2021 compensation at levels more comparable to then peer medians.

Say-on-Pay Vote and Compensation Actions Taken

In 2021, we received approximately 97.5% approval on our advisory vote to approve NEO compensation. We considered this in general as an affirmation that our stockholders support our executive compensation program. As detailed in the “Corporate Governance—Stockholder Engagement” section, we regularly engage in investor outreach to better understand our investors’ concerns and to solicit feedback on our governance practices, including our executive compensation program. Our Board and the Compensation Committee greatly value the benefits of maintaining a dialogue with our stockholders to understand their views on our executive compensation program and practices. The Compensation Committee intends to consider the outcome of say-on-pay votes and is devoted to consistently reviewing and enhancing our compensation programs.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    35  


Table of Contents

Compensation Discussion and Analysis

 

Elements of our Compensation Program

Base Salary

The Compensation Committee reviews NEO base salaries each year (or otherwise at the time of a new hire or promotion) and makes any adjustments it deems necessary. In setting base salaries, the Compensation Committee considers changes in responsibilities, individual performance, tenure in position, internal pay equity, Company performance, market data for individuals in similar positions and advice from our independent compensation consultant. The Compensation Committee gives no specific weighting to any one factor in setting the level of base salary. As part of the Compensation Committee’s annual review process, base salaries for Messrs. Blackley, Johnson and Shams were increased in January 2021 to better align their compensation versus the market median for comparable executives among our peers. Base salaries for Messrs. Tutewohl and Weinberg remained the same as compared to 2020 because the Compensation Committee determined that market conditions didn’t warrant any additional adjustments. Mr. Shams received an additional market salary adjustment of $25,700 in July 2021 as the Company continued to adjust his salary with market peers with similar role responsibilities.

 

Name

  2020 Base Salary     2021 Base Salary     $ Increase      Percentage
Increase
 

Seth Blackley

  $ 550,000     $ 600,000     $ 50,000        9%  

John Johnson

    350,000       375,000       25,000        7%  

Steve Tutewohl

    375,000       375,000               

Jonathan Weinberg

    390,000       390,000               

Aammaad Shams

    215,000       245,000       30,000        14%  

Annual Cash Incentive Plan

Under our annual performance-based short-term cash incentive plan, which we refer to as the 2021 Bonus Plan, we provide our NEOs with the opportunity to receive a variable, at-risk cash payment. Payments under the 2021 Bonus Plan to our NEOs are determined at the discretion of our Compensation Committee based, in the case of our NEOs other than Mr. Blackley, on recommendations made by Mr. Blackley, considering the executive’s performance as rated on a five-point scale against predetermined performance goals. There were no changes made to the 2021 Bonus Plan as a result of the COVID-19 pandemic.

Each of our NEO’s threshold bonus opportunities, which correspond to three out of five points (or a rating of “meets expectations”), target bonus opportunities, which correspond to four out of five points (or a rating of “exceeds expectations”) and maximum bonus opportunities, which correspond to five out of five points (or a rating of “exceptional performance”) under the 2021 Bonus Plan are set forth in the table below. Bonuses are not awarded in the event of overall performance below the threshold level. Threshold performance would result in payouts equal to 50% of annualized base salary for each of Messrs. Blackley and Tutewohl; 35% of annualized base salary for Messrs. Johnson and Weinberg; and 25% of annualized base salary for Mr. Shams. Because they are calculated based on annualized base salaries, bonus opportunities factor in mid-year salary adjustments.

 

Name

  Threshold
(Meets Expectations)
    Target
(Exceeds Expectations)
     Maximum
(Exceptional Performance)
 

Seth Blackley

  $ 300,000     $ 600,000      $ 900,000  

John Johnson

    131,250       243,750        450,000  

Steve Tutewohl

    187,500       412,500        637,500  

Jonathan Weinberg

    136,500       224,250        312,000  

Aammaad Shams

    58,038       75,449        92,860  

 

36  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

Short-term incentive payments are based on the attainment of company-wide financial objectives, company-wide strategic and operational objectives and an individualized leadership assessment of each executive, each assessed with reference to the Compensation Committee’s five-point scale.

The Compensation Committee, in exercising its judgment and discretion to adjust an award up or down, then considers all facts and circumstances when evaluating performance, including changing market conditions and broad corporate strategic initiatives, along with overall responsibilities and contributions of the executives, in making final award determinations.

Company-Wide Financial Performance Objectives

We value the link between performance and payout. In establishing the 2021 Bonus Plan, the quantitative company-wide financial objectives against which our executives are measured included revenue and Adjusted EBITDA. The Compensation Committee utilized these quantitative company-wide performance objectives because it believes that they are key determinants of stockholder value and offer a comprehensive and clear measure of the Company’s performance.

In order to qualify for target payout under the 2021 Bonus Plan, our revenue was required to be at least $830 million and our Adjusted EBITDA was required to be at least $42 million. When setting targets under the 2021 Bonus Plan, the Compensation Committee took into account revenues that had been attributed to our divested health plan assets in prior years.

The table below sets forth the company-wide financial objectives and actual performance under the 2021 Bonus Plan.

 

Metric

  Target     Maximum            Actual     Committee Assessment

Revenue

    $    830 million       $       890 million       $       908 million    

Maximum - Exceptional  Performance

Adjusted EBITDA

    $42 million       $       50 million       $       66 million    

Maximum - Exceptional Performance

Company-Wide Strategic and Operational Performance

We believe that Company performance is best measured with reference to both financial and qualitative operational measures. The Compensation Committee establishes goals that it believes align with our evolving strategic vision and that were considered achievable, but not without rigorous effort.

The table below sets forth the company-wide strategic and operational objectives under the 2021 Bonus Plan.

 

Operational Goal

  Results   Committee
Assessment

Aligned Company Strategy

 

• Completed re-focusing of portfolio around three core solutions; Aligned strategies for each solution from Board through entire ELT and frontline staff

 

Maximum – Exceptional Performance

Achieve strong multi-year outlook

 

• Exceed annual growth target for 2021 by over 2x

 

• Set up strong outlook for 2023+

 

• Exceeded top end of targeted new customer announcements, setting up 2022 and 2023

 

Maximum – Exceptional Performance

Maintain a high performing organization

 

• Focus on leadership, diversity and a differentiated employee experience

 

• Closed 2021 with highest firmwide engagement score in history at 87%

 

• Closed 2021 with a firmwide diversity, equity and inclusion score of 92% exceeding our goal by 2%

 

Maximum – Exceptional Performance

 

 

   

Evolent Health, Inc.

Proxy Statement 2022

    37  


Table of Contents

Compensation Discussion and Analysis

 

Personal Leadership Assessment

The final component of the Compensation Committee’s review of executive performance under the 2021 Bonus Plan is an individualized personal leadership assessment of each NEO. The personal leadership assessment considered achievement by each NEO against pre-determined department leadership goals, changes in responsibility levels, and input obtained from other members of the Company’s senior management and included 360-degree feedback to consider what was accomplished and how it was accomplished. The Compensation Committee does not give specific weight to any one individual goal but leverages feedback to determine final assessment.

2021 Bonus Plan Payout Results

After evaluating how well each NEO performed his job, based on both qualitative and quantitative results, along with guidance from the CEO in the case of Messrs. Johnson, Tutewohl, Weinberg and Shams, our Compensation Committee determined, in its discretion, to award annual bonus to Messrs. Blackley, Johnson, Weinberg and Shams at “Maximum”. In addition, the Compensation Committee determined to pay Messrs. Blackley, Johnson, Weinberg, and Shams an incremental amount above the “Maximum” bonus to reflect the individual performance of each executive in positively impacting financial and operational outcomes. Specifically, the incremental amounts of bonus award were based on the following: Adjusted EBITDA was 47% above the Company’s original guidance, the revenue growth rate for 2021 was over 200% of target growth rates and new customers were well above target, setting up 2023 growth, and Evolent’s stock price increased by approximately 73% in 2021. An annual bonus was awarded to Mr. Tutewohl at a modified amount between “Target” and “Maximum.”

Each of these amounts is included in the “Bonus” column of the Summary Compensation Table in this proxy statement. The Compensation Committee’s review is not a formula-based process, but rather involves the exercise of discretion and judgment. This enables the Compensation Committee to differentiate among NEOs and emphasize the link between personal performance and compensation. All amounts earned under the 2021 Bonus Plan were paid to participants in the first quarter of 2022.

 

Name

  Threshold     Target     Maximum     Overall Committee
Assessment
   Bonus
Payout
 

Seth Blackley

  $ 300,000     $ 600,000     $ 900,000     Maximum    $ 1,125,000  

John Johnson

    131,250       243,750       450,000     Maximum      550,000  

Steve Tutewohl

    187,500       412,500       637,500     Above Target      430,000  

Jonathan Weinberg

    136,500       224,250       312,000     Maximum      317,500  

Aammaad Shams

    58,038       75,449       92,860     Maximum      100,347  

Long-Term Equity Compensation

As part of our annual equity award grants, in March 2021, our Compensation Committee approved the grant of equity-based awards under the Evolent Health, Inc. 2015 Omnibus Incentive Compensation Plan (as amended, the “2015 Plan”) to certain of our employees, including our NEOs, in the form of performance-based PSUs and time-based RSUs. The Compensation Committee determined the need to introduce a new type of PSU for long-term incentive (“LTI”) awards. To balance the LTI risk for Mr. Blackley, the Compensation Committee determined to award Mr. Blackley at approximately 80% PSU/20% RSU. In reintroducing a modest time-based equity component for Mr. Blackley for 2021, the Committee considered the strongly performance-weighted nature of his then-outstanding equity awards. Further, to continue to align to performance and financials for the other NEOs, the Compensation Committee awarded Mr. Johnson approximately 50% PSU/50% RSU and Messrs. Tutewohl and Weinberg approximately 30% PSU/70% RSU for the 2021 performance awards. Mr. Shams was not awarded any PSUs in 2021 but 100% RSUs. For our NEOs, 2021 grant amounts were determined and established to deliver the total target compensation opportunity within an acceptable range of the peer group median for each respective position. The Compensation Committee considers its long-term equity compensation program to be a key component of the executive officer compensation program in order to motivate and reward executive officers over the long term and further align the interests of our executives with those of our stockholders.

 

38  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

2021 Performance Stock Units

On March 1, 2021, Messrs. Blackley, Johnson, Tutewohl and Weinberg each received a grant of PSUs. The design of the PSUs serves to align management’s interests with those of long-term stockholders, incentivize decisions that promote appreciation of stockholder value and create retentive value over an established horizon. Given the criticality of Adjusted EBITDA as a performance indicator for the Company, the Compensation Committee believes that an evaluation of sustained Adjusted EBITDA performance is an appropriate complement to the annual evaluation of Adjusted EBITDA under the 2021 Bonus Plan. Further, since sustained Adjusted EBITDA performance was evaluated for the first time beginning in 2021 and since Company wished to emphasize both two-year and three-year sustained performance horizons, the Compensation Committee felt it appropriate to structure the performance such that 50% of each award is subject to a two-year performance period with cumulative Adjusted EBITDA goals approved for such period and the remaining 50% of each award is subject to a three-year performance period with cumulative Adjusted EBITDA goals approved for such period. Each performance period for the award commenced on January 1, 2021. Shares are earned based on sliding scales of performance above and below the performance goals. These sliding scales are anchored by threshold performance requirements for cumulative Adjusted EBITDA. If the specific threshold performance goal is not achieved during the applicable performance period, then no performance shares are earned. If 100% of the performance goal is achieved, the award is paid at target and if the maximum performance is achieved, then 200% of the targeted shares are earned. If the cumulative Adjusted EBITDA falls between tiers on the sliding scale, the actual cumulative Adjusted EBITDA payout percentage is determined by linear interpolation between the percentages on a straight-line basis. Shares earned based on two and three-year cumulative Adjusted EBITDA performance will be adjusted based on total shareholder return (“TSR”), which represents the cumulative stock price performance during the performance period. Shares earned will be adjusted +/- 10% depending on TSR performance over the applicable performance period.

Restricted Stock Units

On March 1, 2021, each of the NEOs received grants of equity awards in the form of time-based RSUs. The RSUs vest ratably on each of the first four anniversaries of the grant date, subject to the individual’s continued employment through such date. RSUs are fair value awards that fluctuate with the upward and downward movement of the Company’s stock price. These awards serve to align management’s interest with those of stockholders, while at the same time creating more stability by providing an incentive for holders of RSUs to remain with the Company even if our stock price declines after the grant date.

Grants of stock-based awards to our NEOs are generally made as part of the broad grant to other Company employees, which occurs annually, typically in the first quarter of the calendar year. The timing of annual grants generally is dictated by the timing of the completion of performance reviews and the timing of decisions regarding other forms of direct compensation. Stock-based awards are made under the terms of the Company’s 2015 Plan and, in the case of stock options, are granted with an exercise price equal to the closing price of our common stock on the grant date, as reported on the NYSE.

The following table summarizes total PSU and RSU awards to our NEOs made during 2021, as well as the grant date value. As shown in the Summary Compensation Table and Grants of Plan-Based Awards Table, grant date values increased considerably over 2020 grant date values, reflecting both superior Company performance as detailed previously on page 27, as well as below median positioning of target pay for all senior executives benchmarked including Mr. Blackley, as detailed previously on page 35. In reintroducing a modest time-based equity component (less than 20% of total grant date value of 2021 equity awards) for Mr. Blackley for 2021, the Committee considered the strongly performance-weighted nature of his then-outstanding equity awards.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    39  


Table of Contents

Compensation Discussion and Analysis

 

Name

     PSUs        RSUs        Grant Date Value(1)  

Seth Blackley

       187,463          46,866        $ 4,789,685  

John Johnson

       40,000          40,000          1,608,200  

Steve Tutewohl

       13,000          31,000          874,385  

Jonathan Weinberg

       10,500          25,000          705,483  

Aammaad Shams

                15,000          293,100  

 

(1) 

The amounts reported in this column represent the aggregate grant-date fair value of PSUs and RSUs granted during 2021 as computed in accordance with ASC 718. For a further discussion of the assumptions used in the calculation of these amounts, please see Note 14 of Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

For further information regarding our PSU and RSU awards, see the “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” and “Potential Payments Upon Termination or Change in Control” sections of this proxy statement.

Payout of 2019 Leveraged Stock Units

On March 1, 2019, Messrs. Blackley, Johnson and Weinberg each received a grant of performance-based LSUs equal to 100% of the targeted grant date value of 2019 long-term incentive awards, divided by the estimated fair value of the units, based on Monte-Carlo Simulation, on the grant date. The design of the LSUs served to align management’s interests with those of long-term stockholders, incent decisions that promoted appreciation of stockholder value and created retentive value over a three-year horizon. The LSUs vested based on the cumulative stock price performance during the period, as shown in the table below. The stock price hurdles required to earn shares represented significant premiums relative to the closing stock price on the date of grant of $13.29.

 

Performance Level    Cumulative Stock Price
Performance
  

Payout in Shares

as a % of Target Amount

 

Below Threshold

   < $17.68      0%  

Threshold

   $17.68      75%  

Target

   $19.94      100%  

Above Target

   $26.58      150%  

Maximum

   Equal to or greater than $39.87      200%  

Actual Performance

   $27.54      153.61%  

Based on this stock price performance, LSUs paid out as follows to current NEOs that participated in the plan:

 

Name

   Target Number of LSUs      Number of LSUs Earned  

Seth Blackley

     187,463        286,867  

John Johnson

     40,000        71,716  

Jonathan Weinberg

     10,500        53,789  

Potential Payments Upon Termination or Change in Control

On January 27, 2021, the Company entered into individual severance and change in control agreements pursuant to which, Messrs. Blackley, Johnson, Tutewohl and Weinberg (the “Covered Executives”) are eligible to receive certain payments and benefits in the event that they are terminated involuntarily by the Company without Cause or resign from their employment with the Company for Good Reason (as defined in the applicable agreement), either prior to or after a change in control of the Company. These

 

40  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

agreements were approved by the Board of Directors’ Compensation Committee in consultation with Exequity following a review of peer and industry plans and practices. The severance benefits vary depending on whether the qualifying termination occurs in connection with or within the 24-month period following a change in control of the Company (a “CIC Qualifying Termination”) or is not in connection with a change in control (a “Non-CIC Qualifying Termination”).

If a Covered Executive incurs a Non-CIC Qualifying Termination, timely executes a release of claims and complies with applicable restrictive covenants, he will be entitled to receive the following: (i) for twelve months following termination for Mr. Johnson, Mr. Tutewohl and Mr. Weinberg, and for eighteen months following termination for and Mr. Blackley (the “Non-CIC Severance Period”), cash payments equal to the Covered Executive’s base salary (1.5 times for Mr. Blackley) payable in ordinary payroll installments; (ii) a lump sum cash bonus for the fiscal year of termination based on (x) the Covered Executive’s target annual bonus in the case of a termination in the first six months of the fiscal year; or (y) actual performance in the case of a termination during the last six months of the fiscal year, in each case pro-rated based on the portion of the year elapsed prior to termination; (iii) for outstanding unvested time-vesting equity awards, additional service equal to the applicable Non-CIC Severance Period will be credited and for outstanding performance-based equity awards, the vesting will be determined at the end of the applicable performance period based on actual performance and pro-rated for the Covered Executive’s period of service during the performance period, including the Non-CIC Severance Period; and (iv) if the Covered Executive elects COBRA coverage under a group health plan of the Company, an amount that, after applicable taxes, is equal to the portion of the cost of coverage under the group health plan that is subsidized by the Company for active employees, for the applicable Non-CIC Severance Period or the period of COBRA coverage, if shorter.

If a Covered Executive incurs a CIC Qualifying Termination, timely executes a release of claims and complies with applicable restrictive covenants, he will be entitled to receive the following: (i) a cash lump sum equal to his then annual base salary plus his target bonus for the fiscal year of termination multiplied by 1.5 (multiplied by two for Mr. Blackley); (ii) a lump sum cash bonus for the fiscal year of termination based on (x) the Covered Executive’s target annual bonus in the case of a termination in the first six months of the fiscal year; or (y) actual performance in the case of a termination during the last six months of the fiscal year, in either case pro-rated based on the portion of the year elapsed prior to termination; (iii) outstanding unvested time-vesting equity awards will automatically vest in full, and any outstanding unvested performance-based equity awards will be deemed to have vested at the greater of target and actual performance through to the date of termination; and (iv) if the Covered Executive elects COBRA coverage under a group health plan of the Company, an amount that, after applicable taxes, is equal to the portion of the cost of coverage that is subsidized by the Company for active employees, for 18 months for each of Mr. Johnson, Mr. Tutewohl and Mr. Weinberg and for twenty-four months for Mr. Blackley, or for the period of COBRA coverage, if shorter.

Other Benefits

Our NEOs are entitled to employee benefits generally available to all full-time employees of the Company, including health and welfare benefits. In designing these offerings, the Company seeks to provide an overall level of benefits that is competitive with the level of benefits offered by similar companies in the markets in which it operates.

Retirement Plans

The Company maintains a qualified defined contribution retirement plan (the “Evolent Health 401(k) Plan”) to allow employees to save for retirement in a tax-efficient manner. The plan is broadly available to eligible employees and does not discriminate in favor of the NEOs or other members of senior management. All our NEOs are eligible to participate in the Evolent Health 401(k) Plan in the same manner as all U.S. employees.

Participants are eligible for a discretionary annual match on up to 4% of eligible pay, subject to IRS-qualified plan compensation limits and highly compensated threshold limits and may not receive

 

   

Evolent Health, Inc.

Proxy Statement 2022

    41  


Table of Contents

Compensation Discussion and Analysis

 

401(k) benefits in excess of these limits. None of the NEOs participate in any defined benefit pension plans, non-qualified deferred compensation plans or supplemental retirement or executive savings plans.

Corporate Governance Policies

Prohibition on Derivative Trading, Hedging and Pledging

Under our policies, no director, officer or employee may buy or sell puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of the Company’s securities at any time. We also have an anti-pledging policy whereby no director, officer or employee may pledge Company securities.

Clawback Policy

The Compensation Committee has adopted a clawback policy, pursuant to which we may recoup all or any portion of the value of any incentive compensation provided to any current or former executive officer in the event that our financial statements are restated due to material noncompliance with any financial reporting requirement under the securities laws. The clawback policy expressly applies to all incentive compensation awards made after April 17, 2020, including any bonus or short- or long-term incentive awards, in each case where the bonuses or awards are based in whole or in part on the achievement of financial results.

Stock Ownership Guidelines

To further align the long-term interests of our executives and our stockholders, in 2020, we adopted stock ownership guidelines applicable to our executive officers, certain other officers and directors. The guidelines require the relevant executives and directors to maintain the following beneficial ownership of shares of our common stock (measured in market value):

 

Group

  

Required ownership

Chief Executive Officer and Executive Chair

   6 times base salary

Other Executive Officers, EVPs, P&L CEOs and Presidents

   3 times base salary

Non-Employee Directors

   5 times cash retainer

Our executives and directors have five years from the effective date of their respective election, appointment or promotion, as the case may be, to satisfy these stock ownership guidelines. As of December 31, 2021, all NEOs have met or are on track to meet these stock ownership guidelines by their respective applicable dates.

Policy with Respect to Tax Deductibility of Compensation

As part of its role, the Compensation Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Prior to 2018, Section 162(m) provided that we may not deduct compensation of more than $1,000,000 paid in any year to the CEO or any of the three other most highly compensated officers (excluding the Chief Financial Officer), unless the compensation qualified as “performance-based compensation” under Section 162(m). The Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, eliminated the exception for “performance-based” compensation under Section 162(m) with respect to compensation paid in fiscal year 2018 and in future years. As a result, compensation over $1,000,000 paid in fiscal 2020 by the Company to any NEO will be nondeductible under Section 162(m). In connection with granting incentive compensation to the NEOs, the Compensation Committee’s considers the implications under Section 162(m) while retaining flexibility to design programs that it believes are in the best interests of the Company and its stockholders and consistent with the objectives of our executive compensation programs, including the flexibility to authorize payments that might not be deductible, including payments under the 2021 Bonus Plan.

 

42  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation Discussion and Analysis

 

Compensation Program Risk Assessment

As part of its oversight role, the Compensation Committee considers the impact of our compensation program, policies and practices (both at the executive and below-executive levels), on the Company’s overall risk profile. Specifically, the Compensation Committee, with assistance from our CEO, reviews the compensation plans, incentive plan design, incentive payouts and factors that may affect the likelihood of excessive risk taking to determine whether they present a significant risk to the Company. We believe that our pay program provides an effective balance in cash and equity mix and short- and longer-term performance periods, and also allows for the Compensation Committee’s discretion. The Company also maintains policies to mitigate compensation-related risk such as vesting periods on equity, insider-trading prohibitions, and independent Compensation Committee oversight. Based on the Compensation Committee’s most recent review, the Compensation Committee determined that the risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    43  


Table of Contents

 

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the CD&A set forth above with management. Based on its review and discussion with management, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement.

Submitted by our Compensation Committee

Peter Grua, Chair

Craig Barbarosh

Cheryl Scott

This report shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

 

44  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

 

COMPENSATION OF NAMED EXECUTIVE OFFICERS

Summary Compensation Table

The following table sets forth information concerning the compensation earned by our chief executive officer, our chief financial officer and our three other most highly compensated executive officers, who we refer to as our NEOs, during our fiscal years ended December 31, 2021, December 31, 2020 and December 31, 2019, except in the case of Messrs. Tutewohl and Shams, who were not NEOs in 2019.

 

Name and Principal Position

  Year     Salary     Bonus    

Stock
Awards

(1)

    All Other
Compensation
(2)
    Total
Compensation
 

Seth Blackley

    2021       $600,000       $1,125,000       $4,789,685       $11,600       $6,526,285  

Chief Executive Officer (3)

    2020       437,500       700,000       2,823,800       11,400       3,972,700  
    2019       400,000       250,000       2,400,000       2,667       3,052,667  

John Johnson

    2021       375,000       550,000       1,608,200       11,600       2,544,800  

Chief Financial Officer

    2020       350,000       400,000       727,200       11,400       1,488,600  
    2019       287,500       150,000       600,000       1,667       1,039,167  

Steve Tutewohl

    2021       375,000       702,750       874,385       11,600       1,963,735  

Chief Operating Officer

    2020       375,000       702,750       363,600       11,400       1,452,750  

Jonathan Weinberg

    2021       390,000       317,500       705,483       11,600       1,424,583  

General Counsel

    2020       351,667       150,000       363,600       11,400       876,667  
    2019       350,000       300,000       450,000       2,333       1,102,233  

Aammaad Shams

    2021       232,150       100,347       293,100       9,286       634,883  

Corporate Controller

    2020       207,917       100,000             8,317       316,234  

 

(1) 

The amounts reported in this column represent the aggregate grant-date fair value of PSUs, RSUs and LSUs granted during 2021, 2020 and 2019, as computed in accordance with ASC 718. For a further discussion of the assumptions used in the calculation of the grant-date fair values for the RSUs and LSUs pursuant to ASC 718, see Note 14 of Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. For further discussion of PSUs and RSUs granted in 2021, see the section entitled “Long-Term Annual Equity Compensation” in the “Compensation Discussion & Analysis” section of this proxy statement and the discussion in the “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” section of this proxy statement.

 

(2) 

Amounts reported in this column represent a 401(k) matching contribution provided by the Company to each NEO. The discretionary 401(k) matching contributions are made to each participant in the 401(k) in an amount up to 4% of the participant’s annual base salary, subject to certain limitations, and vest over a three-year period. As permitted by SEC rules, the amounts shown do not include life insurance premiums for coverage offered through programs available on a nondiscriminatory basis to all employees of the Company.

 

(3) 

Mr. Blackley also serves as director of the Company but did not receive any compensation for his role as a director.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    45  


Table of Contents

Compensation of Named Executive Officers

 

Grants of Plan-Based Awards

The following table shows information with respect to each equity-based award granted to our NEOs during 2021:

 

                Estimated Future Payouts
Under Equity Incentive Plan
Awards
   

All other stock
Awards: Number
of Shares of
Common Stock
or Units

(2)

   

Grant Date Fair
Value of Stock
and Option
Awards

(3)

 

Name

  Grant
Date
    Approval
Date
   

Threshold

(1)

   

Target

(1)

   

Maximum

(1)

 

Seth Blackley

    3/1/2021       2/9/2021       93,732       187,463       374,926             $3,873,923  
    3/1/2021       2/9/2021                         46,866       915,762  

John Johnson

    3/1/2021       2/9/2021       20,000       40,000       80,000             826,600  
    3/1/2021       2/9/2021                         40,000       781,600  

Steve Tutewohl

    3/1/2021       2/9/2021       6,500       13,000       26,000             268,645  
    3/1/2021       2/9/2021                         31,000       605,740  

Jonathan Weinberg

    3/1/2021       2/9/2021       5,250       10,500       21,000             216,983  
    3/1/2021       2/9/2021                         25,000       488,500  

Aammaad Shams

    3/1/2021       2/9/2021                         15,000       293,100  

 

(1)

The threshold, target and maximums represent 50%, 100% and 200% of the number of PSUs potentially awarded, respectively.

 

(2) 

Reflects time-based RSUs granted under the 2015 Plan.

 

(3) 

The amounts reported in this column represent the aggregate grant-date fair value of PSUs and RSUs granted during 2021 as computed in accordance with ASC 718. For a further discussion of the assumptions used in the calculation of these amounts, please see Note 14 of Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

The following describes material features of the compensation disclosed in the Summary Compensation Table and the Grants of Plan-Based Awards table. Consistent with our policy, we have not entered into employment agreements with any of our NEOs. For further information on the material features of the 2021 Bonus Plan, see the section entitled “Annual Cash Incentive Plan” in the “Compensation Discussion & Analysis” section of this proxy statement.

Performance Stock Unit Awards, Leveraged Stock Unit Awards, Restricted Stock Unit Awards and Stock Options Under the 2015 Plan and 2011 Plan

As part of our annual equity award grants in March 2019, 2020 and 2021 our Compensation Committee approved the grant of equity-based awards under the 2015 Plan to certain of our employees, including our NEOs, in the form of RSUs, time-based stock options (2019 only), LSUs (2019 and 2020) and PSUs (2021 only). Our Compensation Committee approved an additional grant of LSUs to Mr. Blackley in June 2020. The RSUs and time-based stock options granted to our NEOs vest 25% on each of the first four anniversaries of the grant date. The LSUs granted to our NEOs vest, if at all, upon the third anniversary of the grant date (or, in the case of the LSUs awarded in June 2020, three years and six months after the grant date) with the final award determined based on the cumulative stock price performance during the period. The terms and conditions of the PSUs granted to our NEOs are described in the section entitled “2021 Performance Stock Units” in the “Compensation Discussion & Analysis” section of this proxy statement. The award agreements under the 2015 Plan contain restrictive covenants, including confidentiality, non-competition and non-solicitation obligations.

 

46  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation of Named Executive Officers

 

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the outstanding equity awards held by each of our NEOs as of December 31, 2021:

 

          Option Awards     Stock Awards  

Name

  Grant
Date
   

Number of
Securities
Underlying
Unexercized
Options -

Exercisable

    Number of
Securities
Underlying
Unexercised
Options -
Unexercisable
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
    Option
Exercise
Price
    Option
Expiration
Date
    Number
of Shares
or Units
of Stock
That
Have Not
Vested
    Market
Value of
Shares of
Units of
Stock
That
Have Not
Vested (1)
    Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
 

Seth Blackley

    4/1/2014       186,040                   3.84       4/1/2024                          
    2/1/2015       200,000                   6.87       2/1/2025                          
    3/1/2016       70,324                   10.27       3/1/2026                          
    3/1/2016       105,485                   10.27       3/1/2026                          
    2/1/2017       91,912                   18.25       2/1/2027                          
    2/1/2017                                                        
    2/1/2018       75,758       25,252  (2)            13.95       2/1/2028                          
    2/1/2018                                     21,505  (3)      595,043              
    3/1/2019                                     186,750  (5)      5,167,373              
    3/2/2020                                     180,000  (5)      4,980,600              
    6/4/2020                                     140,000  (5)      3,873,800              
    3/1/2021                                     187,463  (4)      5,187,101              
    3/1/2021                                     46,866  (3)      1,296,782              

Steve Tutewohl

    2/1/2018             6,313  (2)            13.95       2/1/2028                          
    2/1/2018                                     2,688  (3)      74,377              
    3/1/2019             10,776  (6)            13.29       3/1/2029                          
    3/1/2019                                     5,643  (3)      156,142              
    7/1/2019             18,702  (6)            7.83       7/1/2029                          
    7/1/2019                                     9,578  (3)      265,023              
    3/2/2020                                     30,000  (3)      830,100              
    3/1/2021                                     13,000  (4)      359,710              
    3/1/2021                                     31,000  (3)      857,770              

John Johnson

    5/1/2016       7,896                   12.22       5/1/2026                          
    2/1/2017       4,595                   18.25       2/1/2027                          
    2/1/2018       15,783       5,261  (2)            13.95       2/1/2028                          
    2/1/2018                                     2,240  (3)      61,981              
    3/1/2019                                     46,687  (5)      1,291,829              
    3/2/2020                                     60,000  (3)      1,660,200              
    3/1/2021                                     40,000  (4)      1,106,800              
    3/1/2021                                     40,000  (3)      1,106,800              

 

   

Evolent Health, Inc.

Proxy Statement 2022

    47  


Table of Contents

Compensation of Named Executive Officers

 

          Option Awards     Stock Awards  

Name

  Grant
Date
   

Number of
Securities
Underlying
Unexercized
Options -

Exercisable

    Number of
Securities
Underlying
Unexercised
Options -
Unexercisable
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
    Option
Exercise
Price
    Option
Expiration
Date
    Number
of Shares
or Units
of Stock
That
Have Not
Vested
    Market
Value of
Shares of
Units of
Stock
That
Have Not
Vested (1)
    Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
 

Jonathan Weinberg

    6/4/2015       16,887                   17.00       6/4/2025                          
    3/1/2016       14,335                   10.27       3/1/2026                          
    2/1/2017       12,255                   18.25       2/1/2027                          
    2/1/2018       18,940       6,313  (2)            13.95       2/1/2028                          
    2/1/2018                                     2,688  (3)      74,377              
    3/1/2019                                     35,016  (5)      968,893              
    3/2/2020                                     30,000  (3)      830,100              
    3/1/2021                                     10,500  (4)      290,535              
    3/1/2021                                     25,000  (3)      691,750              

Aammaad Shams

    3/1/2021                                     15,000  (3)      415,050              

 

(1)

The values reported in this column are based on the closing price of the Company’s Class A common stock on the NYSE on December 31, 2021 ($27.67).

 

(2) 

Unvested stock options granted under the 2015 Plan on February 1, 2018, vest on February 1, 2022, subject to the NEO’s continued employment through the applicable vesting date.

 

(3)

25% of each award of RSUs vests on each of the first four anniversaries of the grant date, subject to the NEO’s continued employment through the applicable vesting date.

 

(4) 

The terms of the PSU awards provide for 50% of the award to vest following a two year performance period and 50% of the award to vest following a three year performance period, with actual vesting based on cumulative Adjusted EBITDA goal achievement during the applicable performance period. Shares are earned based on a sliding scale of performance above and below the performance goal. The sliding scale is anchored by a minimum performance requirement of cumulative Adjusted EBITDA. If the minimum performance goal is not achieved, then no performance shares are earned. If 100% of the performance goal is achieved, then award is paid at target and if the maximum performance is achieved, then 200% of the targeted shares are earned. If the cumulative Adjusted EBITDA falls between tiers on the sliding scale, the actual cumulative Adjusted EBITDA payout percentage shall be determined by linear interpolation between the percentages on a straight-line basis. Shares earned by the two and three-year cumulative Adjusted EBITDA performance will be adjusted based on a respective TSR. Shares earned will be adjusted -10% if TSR performance is in the bottom quartile and will be adjusted +10% if TSR performance is in the upper quartile. TSR represents stock price appreciation over each of the two performance periods.

 

(5) 

The terms of the LSU awards provide for vesting, if at all, upon the third anniversary of the grant date (or, in the case of the June 4, 2020 grant to Mr. Blackley, upon the three and a half year anniversary) with the final award determined based on the cumulative stock price performance during the period. No vesting will occur in the event that our stock price does not experience cumulative growth of at least 33.3% from the grant date to the business day following third anniversary. Each of the grants is subject to share price-based vesting, as follows (i) if the stock price has increased by 33.3%, 75% of the shares will vest, (ii) if the stock price has increased by 50%, 100% of the shares will vest, (iii) if the stock price has increased by 100%, 150% of the shares will vest and (iv) if the stock price has increased by 200% or more, a maximum of 200% of the shares will vest, in each case, subject to the NEO’s continued employment through the applicable vesting date. The amount of shares presented above represents actual shares distributed on March 1, 2022.

 

(6) 

Unvested stock options granted under the 2015 Plan on March 1, 2019 and July 1, 2019 to Mr. Tutewohl vest ratably on each of February 1 and July 1, 2022, and 2023 subject to Mr. Tutewohl’s continued employment through the applicable vesting date.

 

48  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Compensation of Named Executive Officers

 

2021 Option Exercises and Stock Vested

The following table shows a summary of any stock option exercises and the vesting of RSUs with respect to our NEOs in 2021.

 

    Option Awards     Stock Awards  
   
Name   Number of Shares
Acquired on Exercise
    Value Realized
on Exercise (1)
    Number of Shares
Acquired on Vesting
    Value Realized on
Vesting (2)
 

Seth Blackley

    150,000       $2,168,267       31,779       $575,835  

John Johnson

                22,925       440,401  

Steve Tutewohl

    63,739       312,492       22,011       429,618  

Jonathan Weinberg

    73,431       863,185       14,057       267,213  

Aammaad Shams

                       

 

(1)

Calculated using the closing price of a share of our common stock on the exercise date, less the strike price of the option.

 

(2)

Calculated using the closing price of a share of our common stock on the vesting date.

Summary of Potential Payments Upon Termination or Change in Control

The following table shows the estimated value of benefits to our NEOs if their employment had been terminated under the various circumstances described below as of December 31, 2021, or upon the occurrence of a change in control. The amounts shown in the table exclude accrued but unpaid base salary, unreimbursed employment-related expenses, distributions under our 401(k) retirement plan (which plan is generally available to all of our employees) and the value of equity awards that were vested by their terms as of December 31, 2021.

 

     Without Cause /
For Good Reason
(No CIC)
    Without Cause / For Good
Reason (In Connection
with CIC)
 

Seth Blackley

   

Severance Pay (base salary and bonus components) (1)

    $  2,025,000       $  3,450,000  

Employer-Paid COBRA (2)

    28,900       38,533  

Value of Equity Award Acceleration (3)

    23,136,745       33,071,794  

TOTAL

    25,190,645       36,560,327  

John Johnson

   

Severance Pay (base salary and bonus components) (1)

    925,000       1,387,500  

Employer-Paid COBRA (2)

           

Value of Equity Award Acceleration (3)

    3,870,977       5,992,343  

TOTAL

    4,795,977       7,379,843  

Steve Tutewohl

   

Severance Pay (base salary and bonus components) (1)

    805,000       1,207,500  

Employer-Paid COBRA (2)

    19,266       28,900  

Value of Equity Award Acceleration (3)

    1,425,478       3,155,743  

TOTAL

    2,249,744       4,392,143  

Jonathan Weinberg

   

Severance Pay (base salary and bonus components) (1)

    707,500       1,061,250  

Employer-Paid COBRA (2)

    19,266       28,900  

Value of Equity Award Acceleration (3)

    2,341,083       3,461,718  

TOTAL

    3,067,849       4,551,868  

Aammaad Shams

   

Severance Pay (base salary and bonus components) (1)

           

Employer-Paid COBRA (2)

           

Value of Equity Award Acceleration (3)

    103,763       415,050  

TOTAL

    103,763       415,050  

 

   

Evolent Health, Inc.

Proxy Statement 2022

    49  


Table of Contents

Compensation of Named Executive Officers

 

 

(1) 

Amounts calculated based on the dollar value of the 2021 base salary and target bonus in effect immediately before the hypothetical termination of December 31, 2021 that would have been payable.

 

(2)

Amounts represent the dollar value of the incremental cost to the Company by providing continuing health, dental and vision coverage based on the individual’s selected coverage in effect immediately before the hypothetical termination of December 31, 2021.

 

(3) 

The amounts indicated represent the intrinsic value of all unvested non-qualified stock options, market value of all unvested RSUs, unearned LSUs and unearned PSUs that would have vested upon Termination with Good Reason or Without Cause in both CIC and non-CIC situations as of December 31, 2021. The value of the 2019 LSUs are based upon actual shares issued upon their vesting in March 2022. The amounts were calculated based on the closing price of our common stock of $27.67 on December 31, 2021.

 

(4) 

Company’s NEOs are not entitled to any termination payments on single trigger change in control, death/disability, retirement or other termination without Cause or Good Reason.

Narrative to the Potential Payments Upon Termination or Change in Control Table

The material terms of the severance and change in control agreements for Messrs. Blackley, Johnson, Tutewohl and Weinberg are described under the heading “Executive Compensation—Compensation Discussion and Analysis—Severance and Change in Control Agreements for Executive Officers.”

The severance and change in control agreements for each of Messrs., Blackley, Johnson, Tutewohl and Weinberg operate with a “double trigger” in the event of a change in control, meaning severance payments do not occur unless the employment is involuntarily terminated (other than for Cause or Good Reason) within 24 months following a change in control, provided that each executive timely executes a release of claims and complies with applicable restrictive covenants.

“Cause” is defined in each separation and change in control agreement as (a) the executive’s failure to perform any of executive’s material duties to the Company, including, without limitation, a breach of the Company’s code of ethics, conflict of interest or employment policies; (b) the executive’s misappropriation of a material business opportunity of the Company, including securing or attempting to secure any personal profit in connection with any transaction entered into on behalf of the Company; (c) the executive’s misappropriation (or attempted misappropriation) of any Company funds or property; (d) the executive’s conviction of, indictment for (or its procedural equivalent), or entering of a guilty plea or plea of no contest with respect to (or its procedural equivalent), a felony or any other crime involving dishonesty or theft of property; (e) the executive’s commission of one or more acts of sexual harassment in violation of applicable federal, state or local laws; (f) the executive’s use of illegal drugs, abuse of controlled substances, or abuse or excessive use of alcohol, which (in the case of alcohol use) interferes with or affects executive’s responsibilities to the Company or which reflects negatively upon the integrity or reputation of the Company; or (g) the executive’s breach of the terms of the applicable severance and change in control agreement, any other employment agreement, any confidentiality agreement, non-competition agreement or non-solicitation agreement or any other material agreement between Executive and the Company, after giving effect to the notification provisions, if any, and the mechanisms to remedy or cure such breach as described in any such agreement.

“Good Reason” is defined in each separation and change in control agreement as the occurrence, without the executive’s written consent, of (a) a material reduction in executive’s annual base salary or target bonus, as the same may be increased from time to time; (b) the assignment of duties to executive inconsistent in any material respect with executive’s position, authority or responsibilities with the Company, or any other action or omission by the Company which results in a material diminution of such position, authority or responsibilities; (c) a relocation of executive’s principal work location by more than fifty (50) miles from such location as of immediately prior to the date of termination; (d) a material diminution of the authority, duties or responsibilities of the supervisor to whom executive reports; or (e) any material breach of the applicable separation and change in control agreement by the Company. Notice and cure provisions apply.

None of the severance and change in control agreements for Messrs. Blackley, Johnson, Tutewohl or Weinberg provide for the payment of any amounts or provision of any benefits upon death or due to disability.

 

50  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

 

EQUITY COMPENSATION PLAN INFORMATION

The following table shows certain information as of December 31, 2021, concerning our compensation plans under which equity securities of the Company are authorized to be issued.

 

Plan Category

 

Number of Securities
to Be Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights

(1) (a)

    Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights
(1) (b)
   

Number of Securities
Remaining
Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding
Securities Reflected
in Column

(a)) (2)

 

Equity compensation plans approved by security holders

    6,307,625       $9.15       5,769,190  

Equity compensation plans not approved by security holders

                 

Total

    6,307,625       $9.15       5,769,190  

 

(1) 

Equity compensation plans approved by stockholders which are included in column (a) are the 2011 Plan (which includes 1,348,100 shares to be issued upon exercise of outstanding options) and the 2015 Plan (which includes 2,087,270, 318,963 and 1,084,140 shares underlying outstanding RSUs, PSUs and LSUs, respectively, and 1,469,152 shares to be issued upon exercise of outstanding options). Because there is no exercise price associated with RSUs, PSUs and LSUs, these stock awards are not included in the weighted-average exercise price calculation presented in column (b). As of April 14, 2022, 4,380,032 shares remain available for future issuance under the 2015 Plan. As of April 14, 2022, there were 6,567,691 shares subject to outstanding awards under the 2015 Plan and 2011 Plan, of which 2,469,541, 520,000 and 797,860 shares of our Class A common stock were subject to outstanding RSUs, LSUs and PSUs, respectively, under the 2015 Plan, 1,452,190 shares of our Class A common stock were subject to outstanding stock options under the 2015 Plan with a weighted average exercise price of $16.69 and a weighted average remaining contractual term of 4.9 years, and 1,328,100 shares of our Class A common stock were subject to outstanding stock options under the 2011 Plan with a weighted average exercise price of $5.09 and a weighted average remaining contractual term of 2.2 years.

 

(2) 

Represents shares available for future issuance under the 2015 Plan. As of April 14, 2022, there were a total of 2,780,290 shares of our Class A common stock subject to outstanding stock options under both our 2011 Plan and 2015 Plan with a weighted average exercise price of $9.58 and a weighted average remaining contractual term of 3.6 years.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    51  


Table of Contents

 

PAY RATIO

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees (other than our CEO) and the annual total compensation of Seth Blackley our CEO.

As of December 31, 2021, which is the date we used to determine our employee population for purposes of identifying our median employee, we had 3,462 full-time and part-time employees, 2,395 of whom are located in the United States with the remaining 1,067 in Pune, India. We did not include independent contractors we retained during 2021.

For the median employee from our employee population, we combined all of the elements of such employee’s compensation for 2021 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K for determining total compensation in the Summary Compensation Table, except that the estimated value of health and welfare benefits under non-discriminatory benefit plans (estimated for the employee and such employee’s eligible dependents at $15,661) was also included in the calculation of the median employee’s total annual compensation for 2021 for purposes of this pay ratio disclosure, resulting in annual total compensation of $85,726.

The 2021 annual total compensation for our CEO, as reported in the Summary Compensation Table in this proxy statement, was $6,526,285. To maintain consistency between the annual total compensation of our CEO and the median employee, we added the estimated value of our CEO’s health and welfare benefits under non-discriminatory benefit plans (estimated for our CEO and our CEO’s eligible dependents at $20,058) to the amount reported in the Summary Compensation Table. This resulted in 2021 annual total compensation for our CEO for purposes of determining the pay ratio in the amount of $6,546,343. The 2021 median annual total compensation for all employees of our Company (other than our CEO), determined in accordance with the requirements for determining total compensation in the Summary Compensation Table (including the estimated value of health and welfare benefits), was $85,726. The ratio of our CEO’s annual total compensation to the median annual total compensation of all our employees (other than our CEO) for 2021 is 76.4 to 1. We believe this ratio represents a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

 

52  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

 

PROPOSAL 3:

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION FOR 2021

We are asking stockholders to approve an advisory resolution on the compensation of our NEOs as reported in this proxy statement, commonly referred to as the “say-on-pay” vote. Although the say-on-pay vote is advisory and therefore non-binding on us, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program. As described above in the “Compensation Discussion and Analysis” section of this proxy statement, the Compensation Committee has structured our executive compensation program to achieve the following key objectives:

 

 

Attract and retain highly qualified and productive executives.

 

 

Motivate executives to enhance our overall performance and profitability through the successful execution of the Company’s short- and long-term business strategies, with an emphasis on the long-term.

 

 

Align the long-term interests of our executives and stockholders through ownership of Evolent Health, Inc.’s Class A common stock by executives and by rewarding stockholder value creation.

 

 

Deliver an externally competitive and transparent total compensation structure.

 

 

Reflect our pay-for-performance philosophy.

 

 

Ensure that compensation opportunities are competitive.

We encourage stockholders to read the “Compensation Discussion and Analysis” section of this proxy statement, which provides an overview of our executive compensation policies and procedures, how they operate and are designed to achieve our pay-for-performance objectives and how they were applied for 2021. The Summary Compensation Table and other related compensation tables and narrative provide detailed information on the compensation of our NEOs. The Compensation Committee and the Board believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” section of this proxy statement are effective in achieving our goals and that the compensation of the NEOs reported in this proxy statement has contributed to our success.

In accordance with Section 14A of the Exchange Act and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on a non-binding advisory basis, the compensation of our NEOs as disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in this proxy statement.”

The next say-on-pay vote will occur at our 2023 annual meeting, and the next say-on-frequency vote will occur at our 2024 annual meeting.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NEOs FOR 2021 ON AN ADVISORY BASIS.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    53  


Table of Contents

 

DIRECTOR COMPENSATION

Our non-employee director compensation is designed to attract, retain and compensate highly-qualified directors by providing them with competitive compensation and an equity interest in our Company to align their interests with those of our stockholders.

Each of our non-employee directors received the following as compensation for services as a director during 2021: an annual cash retainer of $65,000 and an annual grant of RSUs with a grant-date fair value of $150,000. In addition, the chair of our Audit Committee received an additional annual cash retainer of $25,000, the chair of our Compensation Committee received an additional annual cash retainer of $20,000, and the chairs of our Compliance and Regulatory Affairs Committee, our Nominating and Corporate Governance Committee and our Strategy Committee received an additional annual cash retainer of $15,000. The members of our Audit Committee received an additional annual cash retainer of $10,000, the members of our Compensation Committee received an additional cash retainer of $7,500 and the members of our Compliance and Regulatory Affairs Committee, our Nominating and Corporate Governance Committee and our Strategy Committee received an additional cash retainer of $5,250. Our Lead Independent Director received an additional cash retainer of $25,000. Following the Annual Meeting, Mr. Williams in his role as Executive Chair received an equity grant of RSUs with a grant-date fair value of $150,000.The equity awards granted to our non-employee directors and Mr. Williams were made pursuant to the 2015 Plan (the terms of which are summarized below) and vest on the earlier of the first anniversary of grant and the date of the Company’s 2022 annual meeting subject generally to continued service through such date.

The Compensation Committee is responsible for reviewing at least every two years the compensation for non-employee directors and making recommendations to the Board for its approval. As part of its most recent review, the Compensation Committee received information on compensation provided to non-employee directors at a peer group of companies and recommended changes to our director compensation program, which were approved by the Board in February 2022 and will go into effect following the Annual Meeting. Going forward, our non-employee directors will receive an annual cash retainer of $75,000 and an annual grant of RSUs with a grant-date fair value of $160,000. In April 2022, the Board approved an annual cash retainer for the independent Board Chair of $90,000.

In addition to non-employee directors, the Compensation Committee reviewed compensation for the Chair role that Mr. Williams currently occupies. The Compensation Committee reviewed pay at a peer group of companies for this role and approved recommendations. These changes went into effect on January 1, 2022 which included adjusting base salary to $150,000 and an annual grant of RSUs with a grant-date fair value at $160,000 to be granted after the Annual Meeting.

The Company currently anticipates that its non-employee directors and Mr. Williams will receive annual equity grants on the date of the annual stockholder meeting and any future directors elected other than at the annual meeting will receive a grant upon joining our Board and thereafter on the same schedule as other directors.

 

54  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

Director Compensation

 

The table below details the compensation of our directors during 2021.

 

Director (1)

  Fees
Earned or
Paid in
Cash
   

Stock
Awards

(2)

    Option
Awards
    Non-Equity
Incentive Plan
Compensation
    Nonqualified
Deferred
Compensation
Earnings
    All Other
Compensation
    Total Director
Compensation
 

Craig Barbarosh (3)

    $104,938       $212,508       $—       $—       $—       $—       $317,446  

Michael D’Amato

    97,438       150,000                               247,438  

M. Bridget Duffy, MD

    82,250       150,000                               232,250  

David Farner

    65,000       150,000                               215,000  

Peter Grua

    106,250       150,000                               256,250  

Diane Holder

    87,438       150,000                               237,438  

Kim Keck (4)

    111,083       202,095                               313,178  

Cheryl Scott

    112,750       150,000                               262,750  

Tunde Sotunde, MD (5)

    14,054       26,269                               40,323  

Frank Williams (6)

          150,000                               150,000  

 

(1) 

As permitted by SEC Rules, Seth Blackley, Chief Executive Officer, is not included in this table because he is an employee of the Company and receives no additional compensation for service as a director. The compensation received by Mr. Blackley as an employee is shown in the Summary Compensation Table.

 

(2) 

Amounts in this column represent the grant date fair value of the RSU awards computed in accordance with FASB ASC Topic 718 and reflect an estimate of the grant date fair value of RSU grants made during the 2021 fiscal year, rather than amounts paid to or realized by the non-employee directors. The RSUs vest on the earlier of June 10, 2022, and the date of the Company’s 2022 annual meeting, subject in each case to continued service through the vesting date. See Note 14 of Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for a discussion of the assumptions used in valuation of the RSU awards.

 

(3) 

Craig Barbarosh received a cash retainer of $25,000 and stock awards of $62,508 upon his election to the Board in December 2020, representing a pro-rata portion of the $50,000 annual cash retainer and annual grant of RSUs with a grant date value of $125,000 paid to non-employee directors in respect of the period from his election to the Board until the payment of annual non-employee compensation in June 2021.

 

(4) 

Kim Keck received a cash retainer of $20,833 and stock awards of $52,095 upon her election to the Board in January 2021, representing a pro-rata portion of the $50,000 annual cash retainer and annual grant of RSUs with a grant date value of $125,000 paid to non-employee directors in respect of the period from her election to the Board until the payment of annual non-employee compensation in June 2021.

 

(5) 

Tunde Sotunde, MD received a cash retainer of $53,500 and stock awards of $100,005 upon his election to the Board in October 2021, representing a pro-rata portion of the $65,000 annual cash retainer, $10,000 annual audit committee member cash retainer, $5,250 annual compliance and regulatory affairs committee member retainer and annual grant of RSUs with a grant date value of $150,000 paid to non-employee directors in respect of the period from his election to the Board until the payment of annual non-employee compensation in June 2022. The amount presented in the table above represents the pro-rata portion from the date of his election through December 31, 2021.

 

(6) 

Frank Williams, Chair, is included in this table because he received an equity grant of RSUs with a grant-date fair value of $150,000. As an executive of the company, in 2021, Mr. Williams received a base salary of $400,000.

 

   

Evolent Health, Inc.

Proxy Statement 2022

    55  


Table of Contents

Director Compensation

 

The following table shows the aggregate number of outstanding equity awards held by each director (other than Mr. Blackley) at December 31, 2021.

 

Director

  RSUs Outstanding  

Craig Barbarosh

    7,785  

M. Bridget Duffy, MD

    7,785  

David Farner

    7,785  

Peter Grua

    7,785  

Diane Holder

    7,785  

Kim Keck

    7,785  

Cheryl Scott

    7,785  

Tunde Sotunde, MD

    3,405  

Frank Williams (1)

    7,785  

 

(1) 

In addition, Mr. Williams has 1,594,676 outstanding options and 480,978 unvested stock awards as of December 31, 2021.

Director RSUs under the 2015 Plan

As reported in the Director Compensation Table above, in 2021, we granted an award of RSUs to each of our non-employee directors and Mr. Williams. The RSUs cliff vest on the earlier of June 10, 2022, and the date of our 2022 annual meeting, subject to the director’s continued service through the vesting date.

Absent a Change in Control (as defined above in “-Restricted Stock Unit Awards and Stock Options under the 2015 Plan”), upon a termination of service with the Board for any reason prior to the vesting date, the director’s RSU award is forfeited. Under the terms of the 2015 Plan, any non-employee director unvested RSUs will vest upon termination of the director’s services without Cause (as defined above in “-Restricted Stock Unit Awards and Stock Options under the 2015 Plan”) on or within 12 months following a Change in Control. Mr. Williams’ RSUs will vest in accordance with the terms of his severance and change-in-control agreement with the Company.

Non-Employee Director Stock Ownership Guidelines

To further align the long-term interests of our executives and our stockholders, in 2020, we adopted stock ownership guidelines applicable to our directors. The guidelines require non-employee directors to maintain beneficial ownership of shares of our common stock at five times the annual cash retainer (measured in market value). Our directors have five years from the effective date of their respective election or appointment to satisfy these stock ownership guidelines.

 

56  

Evolent Health, Inc.

Proxy Statement 2022

   


Table of Contents

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our Class A common stock as of April 14, 2022, by:

 

 

each person whom we know to own beneficially more than 5% of our Class A common stock;

 

 

each of the directors and named executive officers individually; and

 

 

all directors and executive officers as a group.

As of April 14, 2022, there were 91,593,603 shares of our Class A common stock outstanding. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of our Class A common stock subject to options currently exercisable or exercisable within 60 days of April 14, 2022, or shares of our Class A common stock subject to unvested RSUs that will vest within 60 days of April 14, 2022, are deemed outstanding for calculating the percentage of outstanding shares of the person holding these options, but are not deemed outstanding for calculating the percentage of any other person. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of Class A common stock.

 

     Shares of Class A
Common Stock
Beneficially Owned
    Percentage of
Shares of Class A
Common Stock
Beneficially Owned
 

Named executive officers and directors

   

Frank Williams (1)

    2,310,550       2.5

Seth Blackley (2)

    1,032,891       1.1

Craig Barbarosh (3)

    11,634       *  

M. Bridget Duffy, MD (3)

    34,084       *  

David Farner (3) (4)

    61,527       *