James E. Davis
QUEST DIAGNOSTICSAbout James E. Davis
James E. Davis is Chairman, Chief Executive Officer and President of Quest Diagnostics (DGX), age 62, and has served as a director since 2022. He became CEO on November 1, 2022 and Chairman on April 1, 2023; he joined Quest in April 2013 and previously led General Diagnostics and Diagnostics Solutions, with earlier senior roles at GE Healthcare (MRI), GE Aviation, McKinsey & Company, and as Lead Director/CEO of InSightec . DGX reported 2024 net revenues of $9.9B, and long-term pay metrics tie to revenue CAGR, ROIC, and relative TSR; recent TSR was 11.8% (1-year 2024), -7.3% (3-year 2022–24), and 56.3% (5-year 2020–24) versus peer benchmarks .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Quest Diagnostics | EVP, General Diagnostics; SVP Diagnostics Solutions; CEO-Elect; CEO; Chairman | 2013–present | Refocused on diagnostic information services; led regional businesses and operations; ascended to CEO/Chair |
| InSightec | Lead Director, then CEO | 2012–2013 | Managed MRI-guided ultrasound ablation devices; executive leadership in medtech |
| GE Healthcare | VP & GM, MRI | 2007–2012 | Led MRI business globally; operations, strategy, international experience |
| GE Aviation | Leadership positions | Prior to 2007 | Operational and strategic initiatives in aviation |
| McKinsey & Company | Led strategic/operational improvement initiatives | Prior | Strategy and operations consulting expertise |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Quest Diagnostics Board | Director (employee) | 2022–present | Not independent; Executive Committee member |
| Other Public Company Boards | — | — | None disclosed |
Fixed Compensation
| Year | Salary ($) | Bonus ($) | All Other Compensation ($) | Notable Perquisites (subset) |
|---|---|---|---|---|
| 2024 | 1,250,000 | - | 260,258 | 401(k) match $17,250; SDCP match $81,904; ground transport $72,995; aircraft personal use $70,604; executive physical $3,850 |
| 2023 | 1,175,000 | - | 346,710 | Perquisites and matches per proxy |
| 2022 | 805,769 | - | 202,012 | Perquisites and matches per proxy |
Performance Compensation
- Program design: majority performance-based; CEO >90% variable. Long-term awards mix: 50% PSUs (3-year), 25% options (10-year, 3-year ratable vest), 25% RSUs (3-year ratable vest) .
- Annual incentive (SMIP) 2024 metrics and weights: Adjusted diluted EPS 40%, Revenue 40%, Non-financial goals (patient/employee/community) 20%; individual modifier capped at 10% (no modifications applied for NEOs) .
| Metric | Weight (%) | Threshold | Target | Max | 2024 Result | Weighted Payout Factor (%) |
|---|---|---|---|---|---|---|
| Adjusted Diluted EPS | 40 | $8.35 | $9.00 | $9.72 | $8.84 (excl. LifeLabs) | 29.6 |
| Revenue | 40 | $9,132MM | $9,512MM | $9,988MM | $9,631MM (excl. LifeLabs) | 46.8 |
| Non-financial goals | 20 | — | — | — | 115.9% (patient/employee), community at target | 20.2 |
| Total SMIP Payout | — | — | — | — | — | 96.6 |
| 2024 SMIP Payout Details | Target Incentive (% of Salary) | Actual Payment (% of Target) | Actual Payment (% of Salary) | Actual Payment ($) |
|---|---|---|---|---|
| James E. Davis | 150 | 96.6 | 144.9 | 1,811,250 |
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Adjustments: Committee adjusted EPS and revenue for restructuring, investments, amortization, tax effects, and excluded LifeLabs acquisition impact; without LifeLabs exclusion, payouts would have been 122.6% of target; without any adjustments, Davis payout would have been $1,676,250 (89.4% of target) .
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PSUs framework: 2024–2026 cycle metrics: Revenue growth 50%, Average ROIC 30%, Relative TSR vs S&P 500 Healthcare 20%; relative TSR payout curve disclosed (cap at 125% if negative TSR) . Historical PSU payouts: 2018–20: 195%, 2019–21: 200%, 2020–22: 196%, 2021–23: 186%, 2022–24: 157% of target .
| 2021–2023 PSU Performance (paid 2024) | Result | Weighted Payout Factor (%) |
|---|---|---|
| Base Revenue CAGR | 10.38% | 70.0 |
| Cumulative COVID-19 Revenue | $4,447MM | 30.0 |
| Average Adjusted ROIC | 13.17% | 60.0 |
| Relative TSR | 57th percentile | 25.5 |
| Total PSU Payout | — | 186 |
| 2024 Equity Grants (Grant Date: Feb 14, 2024) | Quantity | Price / Exercise | Grant Date Fair Value ($) | Vesting |
|---|---|---|---|---|
| PSUs (target) | 44,338 | Close $127.72 | 5,395,935 | Cliff vests after 3-year performance period; expected vest Feb 14, 2027 |
| Stock Options | 92,779 | Exercise $127.72; close $127.81 | 2,843,630 | 1/3 per year over 3 years; 10-year term |
| RSUs | 22,251 | Close $127.72 | 2,843,789 | 1/3 per year over 3 years |
- Retirement/termination vesting: Options/RSUs vest on death, disability, or retirement (with conditions); performance shares prorate on certain terminations; double-trigger acceleration on change-in-control if terminated without cause or for good reason, or if awards not assumed/substituted; Davis has certain 11/1/2022 RSUs/PSUs that do not vest upon retirement .
Equity Ownership & Alignment
| Beneficial Ownership (as of Mar 7, 2025) | Shares Owned | Options Exercisable within 60 days | Total | RSUs (not counted as beneficial ownership) |
|---|---|---|---|---|
| James E. Davis | 114,036 | 360,417 | 474,453 | 52,778 |
- Ownership guidelines: CEO required minimum holding = 6x base salary; executives must retain 50% of net shares until compliant; as of April 1, 2025, all currently employed NEOs are compliant . Hedging/pledging prohibited; directors and executive officers are barred from pledging shares, margin accounts, and hedging instruments .
- Insider trading arrangements: Davis adopted a Rule 10b5-1 plan on Aug 26, 2025 to sell up to 95,093 shares through Dec 4, 2026, including shares from options/RSUs/PSUs that vest; actual sales net of tax withholding . Outstanding common shares were 111,242,362 as of Oct 15, 2025 (context) .
Employment Terms
- No employment agreement: “None of our named executive officers has an employment agreement.” .
- Severance plan: Without change in control (qualifying termination), Schedule A participants receive 2x salary + 2x target annual incentive; Schedule B 1x; medical/life insurance continued up to 18 months (A) or 12 months (B); outplacement; lump sum of prior-year company matches; non-compete and non-solicit covenants apply .
| Potential Payments (Termination Dec 31, 2024 assumptions; stock $150.86) | Cash ($) | Accelerated PSUs ($) | Accelerated Options ($) | Accelerated RSUs ($) | Other Benefits ($) | Total ($) |
|---|---|---|---|---|---|---|
| Involuntary not for cause (no change-in-control) | 6,250,000 | 13,699,144 | — | — | 190,000 | 20,139,144 |
| Good reason/involuntary in connection with change-in-control | 9,375,000 | 26,776,625 | 2,851,709 | 7,712,416 | 190,000 | 46,905,750 |
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Definitions: “Cause” includes willful failure, illegal conduct/misconduct, reputational harm, obstruction, felony, securities law liability; “Good reason” includes material adverse change in duties/compensation, relocation, plan discontinuation, failure to obtain successor assumption; change in control defined similarly to equity awards; amounts subject to 280G cutback if excise tax would reduce net after-tax benefits .
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Clawbacks: Policies in place tied to financial reporting misconduct; risk controls include capped payouts and balanced metrics .
Board Governance
- Roles: Combined Chair and CEO (James E. Davis); Board designated a Lead Independent Director (Timothy M. Ring) with robust responsibilities; nine of ten nominees independent; executive sessions for independent directors; annual elections; majority voting .
- Committee service: Davis serves on the Executive Committee; he is not independent .
- Attendance: Directors encouraged to attend annual meeting; all directors then in office attended the 2024 annual stockholders meeting .
- Dual-role implications: Combined Chair/CEO can raise independence concerns; mitigated by Lead Independent Director structure and established governance practices .
Director Compensation
- Employee director policy: Davis received no additional compensation for serving as director in 2024 . Non-employee director retainers and RSU grants are disclosed separately and not applicable to Davis .
Compensation Peer Group and Say-on-Pay
- Peer group (14 companies): Agilent, Baxter, BD, Boston Scientific, DaVita, Henry Schein, Hologic, Illumina, LabCorp, Owens & Minor, Revvity, Stryker, Tenet, Zimmer Biomet .
- Say-on-Pay: 2024 approval ~89% of votes cast; ongoing investor outreach and Pearl Meyer advising program changes (e.g., 2025 SMIP: EPS 45%, Revenues 35%, Operational Scorecard 20%; revenue payout cap if EPS targets not met) .
Track Record, Value Creation, and Execution Risk
- Strategic actions under Davis: 2024 acquisitions of outreach lab businesses (Allina, OhioHealth, University Hospitals) and LifeLabs in Canada ($2.2B aggregate purchase price); emphasis on Advanced Diagnostics, AI-enabled operations, and hospital partnerships .
- Risk factors: Regulatory shifts (FDA LDT policy), reimbursement pressures (PAMA), competitive dynamics, utilization changes, and indebtedness ($6.2B debt as of Dec 31, 2024) .
Investment Implications
- Alignment: CEO’s equity-heavy pay mix, stringent ownership guidelines (6x salary) and no employment contract signal alignment and flexibility; PSU metrics (Revenue CAGR, ROIC, relative TSR) link pay to profitable growth and capital efficiency .
- Retention and selling pressure: Significant outstanding equity and a sizable double-trigger CIC package enhance retention; adoption of a 10b5-1 plan for up to 95,093 shares through Dec 2026 may indicate planned liquidity events, though sales will be net of tax withholdings .
- Governance: Combined Chair/CEO is partially offset by Lead Independent Director and strong governance practices; say-on-pay support (89%) suggests investor acceptance of pay design, but monitoring of 2025 SMIP changes (EPS emphasis and caps) is warranted for payout sensitivity .
- Performance drivers: Continued integration of LifeLabs and hospital outreach acquisitions, execution on Advanced Diagnostics and AI productivity, and navigating reimbursement/FDA dynamics will be key catalysts for TSR and incentive outcomes .