Douglas E. Coltharp
Executive Vice President and Chief Financial Officer at EHC
Executive
About Douglas E. Coltharp
Douglas E. Coltharp, age 63, has served as Executive Vice President and Chief Financial Officer of Encompass Health (EHC) since May 6, 2010, following prior roles in investment banking/private equity and 11 years as CFO of Saks Incorporated; he currently serves on the board of Under Armour, Inc. . EHC’s executive pay program ties a majority of his compensation to performance via annual Adjusted EBITDA and a Quality/Strategic Objectives scorecard, and long-term PSUs with a three-year performance period and a relative TSR modifier; the company identifies Adjusted EBITDA, normalized EPS, and ROIC as the most important performance measures linking pay to performance . In 2024, EHC’s TSR value for a $100 investment reached 178.46 vs 126.92 for the peer group, while Adjusted EBITDA rose to $1,103.7 million and net income to $596.6 million, supporting strong incentive outcomes and reinforcing pay-for-performance alignment . The 2024 SMBP paid at 169.1% of target for Mr. Coltharp, driven by outperformance on Adjusted EBITDA and quality metrics, highlighting execution against financial and operational objectives .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Arlington Capital Advisors; Arlington Investment Partners, LLC | Partner | 2007–2010 | Boutique investment banking and private equity; senior leadership role prior to joining EHC |
| Saks Incorporated (and predecessor) | EVP & CFO | 1996–2007 | 11-year CFO tenure; public company finance leadership |
| Nations Bank, N.A. (and predecessors) | Various roles to SVP, Head of Southeast Corporate Banking | ~1986–1996 | Led corporate banking for southeast region in culminating role |
External Roles
| Organization | Role | Years |
|---|---|---|
| Under Armour, Inc. | Director | Current (as disclosed) |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 700,000 | 700,000 | 700,000 |
| Target Cash Incentive (% of Salary) | — | — | 85% |
- 2025 compensation changes for Coltharp: base salary increased to $750,000; SMBP target increased from 85% to 100% of base; LTIP target increased from 275% to 300% of base to better align with market and promote retention .
Performance Compensation
Annual Incentives (SMBP – 2024)
| Metric | Weighting | Target | Actual | % of Target Achieved | Payout | Vesting/Payment |
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 70% | $1,045,184,000 | $1,107,786,000 | 179.9% | Included in total | Cash paid Q1 2025; reflected as Non-Equity Incentive Plan Compensation |
| Quality/Strategic Objectives (composite) | 30% | Per scorecard thresholds | Weighted 144.0% combined | 144.0% | Included in total | Cash paid Q1 2025 |
| Total SMBP | — | — | — | — | 169.1% of target; $1,006,324 | Paid Q1 2025 |
Long-Term Incentives (2024 Structure and Grants)
| Component | Target Mix | Award Detail (2024) | Vesting | Performance Modifier |
|---|---|---|---|---|
| Stock Options | 20% | 14,735 options granted (exercise price $74.20; 10-year term) | 3 equal annual installments beginning 1st anniversary; immediate vest on change in control | |
| PSUs | 60% | 15,743 PSUs at target for 2024–2026 period | Earned over 3-year period; shares delivered subject to performance determination | Relative TSR modifier 0.75x–1.25x; capped at maximum |
| RSAs (time-based restricted stock) | 20% | 5,248 RSAs granted (Feb 2024) | 3 equal annual installments beginning 1st anniversary; immediate vest on change in control | |
| Dividends on RSAs/PSUs | — | Accrue and are delivered upon vesting; dividend rate $0.17/share since Oct 2024 | Upon vesting | — |
Equity Ownership & Alignment
Beneficial Ownership (as of Feb 13, 2025)
| Holder | Common Shares Beneficially Owned | Percent of Class |
|---|---|---|
| Douglas E. Coltharp | 489,159 (incl. 125,631 in irrevocable trust; 65,229 by spouse disclaimed; 239,739 issuable upon option exercise) | * (<1%) |
- Stock ownership guidelines: Executive Vice Presidents must hold equity equal to 3x annual base salary; all NEOs with five or more years of service have attained guideline levels; covered officers must retain at least 50% of after-tax shares from vest/exercise until they meet guidelines .
- Anti-hedging/pledging: EHC prohibits pledging of securities, short sales, and hedging/monetization transactions for executives and directors .
Outstanding Equity Awards (as of Dec 31, 2024) — Options
| Exercisable | Unexercisable | Exercise Price ($) | Expiration |
|---|---|---|---|
| 16,075 | — | 29.06 | 2/26/2026 |
| 55,194 | — | 32.94 | 10/28/2026 |
| 29,196 | — | 35.06 | 2/24/2027 |
| 24,831 | — | 44.67 | 3/1/2028 |
| 21,101 | — | 52.96 | 3/1/2029 |
| 24,825 | — | 63.56 | 3/2/2030 |
| 23,949 | — | 66.76 | 3/2/2031 |
| 18,246 | 9,125 | 55.13 | 3/1/2032 |
| 6,143 | 12,287 | 56.21 | 3/1/2033 |
| — | 14,735 | 74.20 | 3/1/2034 |
- Option vesting: 3 equal annual installments; special retention grant from October 28, 2016 vested fully on the third anniversary .
Outstanding Equity Awards (as of Dec 31, 2024) — RSAs and PSUs
| Type | Unvested/Unearned Units (#) | Market/Payout Value ($) |
|---|---|---|
| RSAs (from 2022–2023 PSU attainment) | 27,820 | 2,569,177 |
| RSAs (Feb 2022 grant) | 2,432 | 224,595 |
| RSAs (Feb 2023 grant) | 4,177 | 385,746 |
| RSAs (Feb 2024 grant) | 5,248 | 484,653 |
| RSAs (Feb 2023 supplemental retention grant) | 31,321 | 2,892,494 |
| PSUs (unearned) | 37,588 | 3,471,252 |
| PSUs (unearned) | 31,486 | 2,907,732 |
- RSAs vesting cadence: 3 equal annual installments beginning on the first anniversary (Feb 2022, 2023, 2024 awards); supplemental retention grants vest fully on the third anniversary .
- PSUs vest based on 3-year performance (2024–2026) and relative TSR modifier; committee determines earned shares in change-in-control .
Retirement and Accelerated Vesting
| Scenario | Estimated Accelerated Equity Value ($) |
|---|---|
| Retirement eligibility (“good leaver”) | 9,707,967 |
Employment Terms
| Element | Key Terms |
|---|---|
| Employment agreements | Company had no employment agreements or other compensation arrangements in effect with NEOs in 2024 . |
| Severance (without cause/for good reason) | Lump sum $1,400,000; insurance continuation $33,468; accelerated equity $7,245,868; total $8,679,336 (assumes event on 12/31/2024) . |
| Disability or death | Accelerated equity $10,431,020; total $10,431,020 . |
| Change in control (double trigger) | Lump sum $5,665,545; insurance continuation $50,201; accelerated equity $10,864,162; total $16,579,908; CIC cash subject to “best payment method” to avoid 280G excise taxes; no tax gross-ups . |
| Clawback policy | Mandatory recoupment for exec officers covering prior 3 fiscal years upon financial restatement; discretionary recoupment for certain misconduct; administered by Compensation and Human Capital Committee . |
| Anti-hedging/pledging | Prohibits pledging, short sales, hedging/monetization (e.g., collars, forward sale contracts) . |
Performance & Track Record
Pay vs. Performance Metrics (Company-Level)
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| TSR – $100 initial value | 121.42 | 97.26 | 113.86 | 128.23 | 178.46 |
| Peer Group TSR – $100 initial value | 133.81 | 147.19 | 118.22 | 124.34 | 126.92 |
| Net Income ($mm) | 368.8 | 517.2 | 365.9 | 463.0 | 596.6 |
| Adjusted EBITDA ($mm) | 697.1 | 816.4 | 819.3 | 971.1 | 1,103.7 |
- Most important performance measures tying pay to outcomes: Adjusted EBITDA, normalized EPS, and ROIC .
- 2024 SMBP achievement: Adjusted EBITDA surpassed target ($1,107.786B vs $1,045.184B target) and quality objectives achieved 144% weighted, yielding 169.1% payout for NEOs including Mr. Coltharp .
Compensation & Incentives Detail
Multi-Year Compensation (Summary Compensation Table)
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 700,000 | 700,000 | 700,000 |
| Bonus ($) | — | — | — |
| Stock Awards ($) | 1,622,714 | 3,565,288 | 1,723,516 |
| Option Awards ($) | 392,936 | 354,450 | 385,120 |
| Non-Equity Incentive Plan ($) | 569,773 | 1,092,539 | 1,006,324 |
| All Other Compensation ($) | 48,375 | 38,093 | 53,776 |
| Total ($) | 3,333,798 | 5,750,370 | 3,868,736 |
Deferred Compensation (NQ Plan as of Dec 31, 2024)
| Item | Amount ($) |
|---|---|
| Executive Contributions in Last Fiscal Year | 268,881 |
| Registrant Contributions in Last Fiscal Year | 44,430 |
| Aggregate Earnings in Last Fiscal Year | 401,454 |
| Aggregate Balance at FY-End | 3,762,410 |
Equity Ownership Guidelines & Compliance
- Executive VP guideline: equity equal to 3x annual base salary; officers must retain at least 50% of after-tax shares from vest/exercise until guideline met; all NEOs with 5+ years have attained levels; directors have $550,000 guideline; hedging/pledging prohibited .
Employment Terms & Governance Provisions
- Double-trigger CIC required for cash benefits and accelerated vesting; no option/SAR repricing; minimum vesting periods; no dividends payable on awards prior to vest; awards subject to clawback; administered by independent committee .
- Company reduced CIC payments per “best payment method” to avoid 280G excise tax if beneficial post-tax; no tax gross-ups .
Investment Implications
- Compensation alignment: Coltharp’s pay is majority performance-based, with 2024 SMBP tied 70% to Adjusted EBITDA and 30% to quality/strategic metrics; strong 2024 achievement (169.1% payout) reflects execution on both financial and care quality levers .
- Retention and role elevation: 2025 increases to base, SMBP target (to 100% of base), and LTIP target (to 300% of base) signal expanded leadership scope and a proactive retention stance by the board/committee .
- Ownership and selling pressure: Significant unvested RSAs/PSUs with three-year schedules and a 50% post-vesting holding requirement mitigate near-term selling pressure; explicit anti-hedging/pledging policy reduces alignment risk, though predictable vesting cycles can create periodic supply around anniversaries and PSU settlements .
- Change-in-control economics: Double-trigger protections and substantial accelerated equity values (e.g., $10.864M equity acceleration under CIC) create meaningful event-linked payouts; absence of gross-ups and 280G “best payment method” are governance positives .
- Track record: Company-level TSR and Adjusted EBITDA growth over 2020–2024 underpin the pay-for-performance construct; continued emphasis on Adjusted EBITDA, normalized EPS, and ROIC as core metrics aligns incentives with shareholder value creation .