James Hearty
DAVITAAbout James Hearty
James O. Hearty, 56, is DaVita’s Chief Compliance Officer (enterprise CCO since March 2018), previously serving as SVP and CCO – Kidney Care (Sep 2015–Mar 2018) and VP, Associate General Counsel (Feb 2012–Aug 2015). Before DaVita, he spent 14 years at the U.S. Department of Justice as a prosecutor and trial attorney, ultimately serving as Deputy Chief of the criminal division in the U.S. Attorney’s Office for the District of Colorado . Company performance context: in 2024 DaVita’s stock appreciated 43%, operating income grew 30%, adjusted operating income grew 21%, and diluted EPS and adjusted diluted EPS rose 45% and 26%, respectively . Say‑on‑pay support was ~95% at the 2024 annual meeting, reflecting broad investor alignment with the executive pay program .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| DaVita Inc. | Chief Compliance Officer (enterprise) | Since Mar 2018 | Leads enterprise healthcare regulatory compliance program and culture; executive oversight of compliance risk and controls . |
| DaVita Kidney Care | SVP & Chief Compliance Officer – Kidney Care | Sep 2015–Mar 2018 | Built and oversaw Kidney Care compliance; integrated compliance across operations . |
| DaVita Inc. | VP, Associate General Counsel | Feb 2012–Aug 2015 | Legal leadership supporting compliance and regulatory functions . |
| U.S. Department of Justice | Prosecutor and trial attorney; Deputy Chief, criminal division (U.S. Attorney’s Office, District of Colorado) | 14 years | Led prosecutions and criminal enforcement; deep regulatory and legal expertise relevant to healthcare compliance . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Urban Peak (Denver nonprofit) | Board Member | Not disclosed | Governance role supporting youth services; community and governance experience . |
Fixed Compensation
| Metric (Hearty) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $500,000 | $500,000 | $600,000 (+20% YoY) |
| Target Bonus ($) | $— | $— | $450,000 |
| Target Bonus (% of Salary) | — | — | 75% |
Performance Compensation
Short-Term Incentive (STI) – 2024
| Component | Weight | Criteria Range | Actual Performance | Eligible Payout Achieved |
|---|---|---|---|---|
| Adjusted Operating Income | 50.0% | $1,790–$2,052mm (Target $1,902mm) | $2,053mm | 200.0% |
| Adjusted Free Cash Flow | 20.0% | $908–$1,171mm (Target $1,021mm) | $1,220mm | 200.0% |
| Home modalities penetration (Q4 2024) | 7.5% | 15.40%–16.75% (Target 15.75%) | 15.63% | 76.0% |
| CKCC patient contact composite | 7.5% | 40.0%–65.0% (Target 60.0%) | 63.10% | 162.0% |
| Teammate engagement | 3.0% | 76.0%–84.0% (Target 80.0%) | 83.97% | 199.3% |
| Water savings projects | 3.0% | 50–100mm gallons (Target 75mm) | 75mm | 100.0% |
| Custom strategic objectives (Hearty) | 9.0% | 0%–200% | NEO-specific | 200.0% |
| Hearty STI Outcome | Value |
|---|---|
| Weighted Eligible Payout Achieved | 184.8% |
| Target Incentive Opportunity ($) | $450,000 |
| Total Eligible and Actual STI Award ($) | $831,724 |
Notes: STI adjustments applied for center closure charges, FX gains (AOI), Change Healthcare outage (FCF), and Hurricane Helene PD supply disruption (home modalities), per pre-established plan design .
Long-Term Incentives (LTI)
Program design: 60% PSUs (75% Adjusted EPS, 25% Relative TSR vs S&P Health Care Services Select Industry Index), 40% RSUs; PSU payout 0%–200%; RSUs back‑loaded vesting (50% on each of the 3rd and 4th anniversaries) .
| Grant (Hearty) | Type | Grant Date | Target / Max | Vesting / Expiration | Grant Date Fair Value ($) |
|---|---|---|---|---|---|
| 2024 LTI | PSUs | 3/15/2024 | 3,732 / 7,464 | 100% on 3/15/2027, subject to performance | $592,119 |
| 2024 LTI | RSUs | 3/15/2024 | 2,488 | 50% on 3/15/2027 and 50% on 3/15/2028 | $339,985 |
Relevant historical PSU outcomes affecting vesting:
- 2021 PSUs: 2024 Adjusted EPS achieved at 74% of target; Relative TSR 2024 vesting 70%, 2025 vesting 136% .
- 2022 PSUs: 2024 Adjusted EPS 69%; Relative TSR 2025 vesting 149% .
Equity Ownership & Alignment
Beneficial Ownership and Section 16
| Item | Details |
|---|---|
| Shares beneficially owned (Hearty) | 19,119 (includes 2,491 SSARs exercisable as of 3/31/2025) |
| Late filing note | One Form 4 for Hearty (exercise and hold of SSARs) was inadvertently filed late due to administrative error |
Outstanding Equity Awards (Hearty) as of 12/31/2024
| Grant Date | Instrument | Status | Units | Price | Vest/Expiry | Value |
|---|---|---|---|---|---|---|
| 3/15/2020 | SSARs | Exercisable | 4,609 | $75.95 | Expires 3/15/2025 | — |
| 3/15/2021 | SSARs | Exercisable / Unexercisable | 2,937 / 2,938 | $108.93 | Expires 3/15/2026 | — |
| 3/15/2022 | SSARs | Unexercisable | 5,784 | $110.63 | Expires 3/15/2027 | — |
| 3/15/2021 | RSUs | Unvested | 735 | — | Back‑loaded per plan | $109,919 |
| 3/15/2021 | PSUs | Unearned | 1,100 | — | Per performance schedule | $164,505 |
| 3/15/2022 | RSUs | Unvested | 1,446 | — | Back‑loaded per plan | $216,249 |
| 3/15/2022 | PSUs | Unearned | 2,169 | — | Per performance schedule | $324,374 |
| 3/15/2023 | RSUs | Unvested | 7,365 | — | Back‑loaded per plan | $1,101,436 |
| 3/15/2023 | PSUs | Unearned | 22,094 | — | Per performance schedule | $3,304,158 |
| 3/15/2024 | RSUs | Unvested | 2,488 | — | 50% 2027 / 50% 2028 | $372,080 |
| 3/15/2024 | PSUs | Unearned | 7,464 | — | 100% on 3/15/2027 | $1,116,241 |
Exercise/vesting activity (2024):
- Hearty exercised 29,826 SSARs, realizing $3,575,383; and had 5,619 shares vest from stock awards, realizing $765,410 .
Ownership Policy, Hedging/Pledging
- Management stock ownership guideline for Hearty: 3x base salary; compliant as of 12/31/2024 .
- Hedging is prohibited; pledging is prohibited for directors, executive officers, and teammates VP+ .
Employment Terms
| Provision | Details |
|---|---|
| Severance Plan | If terminated by the Company for any reason other than death, disability or material cause, Hearty is entitled to benefits under DaVita’s Severance Plan (base salary continuation for one year, reduced dollar-for-dollar by compensation from another employer during the severance period) . |
| Change-of-control (COC) | Double-trigger equity acceleration: upon COC plus qualifying termination within 24 months, stock awards vest; PSU metrics convert to Relative TSR with payout based on TSR rank using 30-day pre‑COC average price . |
| Estimated COC economics | Resignation for good reason or Company termination without cause after COC: stock awards value $6,639,571; SSARs value $344,455; total value $6,984,026 (excluding salary/bonus, which for Hearty are shown as $— under COC in table) . |
| Retirement eligibility (Rule of 65) | As of 12/31/2024, Hearty is retirement‑eligible; upon qualifying retirement, RSUs/PSUs continue vesting per original schedule and PSUs settle based on actual performance; SSARs remain exercisable per normal schedule . |
| Clawbacks | Two policies: Dodd‑Frank (3‑year lookback for restatement) and a misconduct policy allowing recoupment of up to three years of incentive comp, including time‑based equity awards . |
| Hedging/Pledging | Hedging prohibited; pledging prohibited for executives and VP+ . |
| Tax gross‑ups | No change‑of‑control tax gross‑ups in employment agreements . |
Compensation Summary (Multi‑Year)
| Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2024 | 569,231 | 932,104 | — | 831,724 | 3,840 | 2,336,899 |
| 2023 | 500,000 | 1,481,445 | — | 748,100 | 3,840 | 2,733,385 |
| 2022 | 500,000 | 689,414 | 203,219 | 264,446 | 3,840 | 1,660,919 |
Performance Compensation Design Details
| Metric | Weighting | Target | Vesting |
|---|---|---|---|
| PSUs – Adjusted EPS | 75% (2024 LTI) | 2024–2026 cumulative: $28.66–$31.21; target $29.74 | 100% on 3/15/2027; 0%–200% payout |
| PSUs – Relative TSR | 25% (2024 LTI) | 10th–90th percentile vs S&P Health Care Services Select Industry Index; target 55th | 100% on 3/15/2027; capped at target if TSR negative |
Investment Implications
- Pay-for-performance alignment: Hearty’s 2024 STI paid at 184.8% of target, anchored to AOI and FCF with rigorous strategic metrics; LTI emphasizes cumulative Adjusted EPS and Relative TSR, reinforcing multi‑year value creation .
- Insider supply/vesting overhang: Back‑loaded RSUs from 2023–2024 vest in 2027–2028; PSUs vest in 2027 subject to performance; SSARs expiring in 2025–2027 may prompt exercises around expiry. Hearty exercised 29,826 SSARs in 2024, realizing $3.58m, which can occasionally create trading volume around exercise/vesting dates .
- Retention and alignment: Retirement eligibility (Rule of 65) supports orderly transitions with continued vesting, reducing forced sales; strict hedging/pledging prohibitions and 3x salary ownership guidelines enhance alignment; strong say‑on‑pay support indicates low governance friction risk .
- COC economics: Double‑trigger acceleration with Relative TSR conversion implies meaningful equity realization ($6.64m stock award value under COC termination), a standard but material incentive shaping executive behavior in M&A scenarios .