Joan E. Herman
Director at EHC
Board
About Joan E. Herman
Independent director at Encompass Health (EHC) since January 25, 2013; age 71. President and CEO of Herman & Associates, LLC (healthcare and management consulting) since 2008. Former senior executive at Elevance Health (f/k/a Anthem/WellPoint) leading multiple divisions; earlier 16 years at Phoenix Life Insurance Co., culminating as SVP Strategic Development. Completed NACD Cyber-Risk Oversight Program and holds a CERT Certificate in Cybersecurity Oversight, bringing payer/regulatory and cyber-risk expertise to the board .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Elevance Health (f/k/a Anthem/WellPoint) | Senior management incl. President & CEO of two corporate divisions; Group President, Senior & Specialty Businesses | 1998–2008 | Experience with government reimbursement and state/federal healthcare/insurance regulators |
| Phoenix Life Insurance Company | Multiple senior roles; SVP Strategic Development | 16 years (dates not disclosed) | Strategy and insurance domain expertise |
External Roles
| Organization | Role | Start | Committees/Details |
|---|---|---|---|
| Ionis Pharmaceuticals, Inc. (Nasdaq: IONS) | Independent Director | 2019 | Member: Audit, Compensation, Compliance committees |
| Fifth Avenue Private Equity funds | Director | n/a | Board member noted in EHC bio |
Board Governance
| Attribute | Current (2025 Proxy) | Prior (2024 Proxy) | Notes |
|---|---|---|---|
| EHC Board Independence | 9 of 10 directors independent; independent non-executive chair | 9 of 10 independent; independent chair | Determined annually per NYSE; no material director-related relationships/transactions in 2024 |
| Committee Memberships – Joan E. Herman | Compensation & Human Capital; Compliance & Quality of Care (member) | Audit (member); Compliance & Quality of Care (Chair) | Shifted from Audit/Compliance Chair in 2024 to Compensation/Compliance member in 2025 |
| Attendance | All directors attended ≥75% of board/committee meetings in 2024; Board met 5x; committee meetings: Audit 9, Comp 6, Compliance 4, Nominating 5 | All directors attended ≥75% in 2023; Board met 5x | Indicates consistent engagement |
- Committee remits: Compensation & Human Capital oversees executive pay, succession, and human capital risks, advised by independent consultant (Pay Governance) . Compliance & Quality of Care oversees regulatory compliance, quality of care, and cyber risk management .
Fixed Compensation (Director)
| Year | Cash Retainer/Fees ($) | Chair/Other Fees ($) | Total Cash ($) |
|---|---|---|---|
| 2024 (paid/earned) | 111,676 | — | 111,676 |
- Director cash program effective May 2024: base annual retainer $110,000; chair fees: Board Chair $150,000; Audit $30,000; Compensation $20,000; Compliance & Quality $20,000; Nominating/Governance $20,000 .
Performance Compensation (Director Equity)
| Grant/Status | Units/Shares | Fair Value ($) | Vesting/Settlement | Notes |
|---|---|---|---|---|
| 2024 annual RSU grant | 1,978 | 165,005 | Fully vested upon grant; shares delivered after board departure | Dividend equivalents accrue as additional RSUs until settlement |
| RSUs held at 12/31/2024 (aggregate) | 45,022 | n/a | Settle after departure | Reflects cumulative director RSU program |
- Non-employee director equity is structured as fully vested RSUs with deferred settlement (strong alignment; no performance metrics for directors). Dividend equivalents accrue in RSUs and are delivered upon settlement .
- New 2025 Omnibus Plan caps non-employee director equity at $500,000 and cash at $500,000 per plan year (aggregate cap $1,000,000) .
Other Directorships & Interlocks
| Company | Sector/Relation to EHC | Interlock/Conflict Considerations |
|---|---|---|
| Ionis Pharmaceuticals (IONS) | RNA-targeted drug discovery/development (biotech) | No related-party transactions reported involving EHC directors in 2024; board independence confirmed. Low direct commercial overlap with EHC’s inpatient rehabilitation operations; ongoing monitoring appropriate |
Expertise & Qualifications
- Healthcare payer and regulatory expertise from Elevance leadership; insurance strategy from Phoenix Life .
- Cyber oversight credentials (NACD/CERT) – directly relevant to EHC’s cyber-risk oversight at the Compliance & Quality of Care Committee .
- Education: BS (Mathematics, Barnard/Columbia, summa cum laude), MS (Yale), MBA (Western New England) .
Equity Ownership
| Holder | Common Shares Beneficially Owned | % of Class | RSUs Held (12/31/2024) | Ownership Guidelines |
|---|---|---|---|---|
| Joan E. Herman | 46,105 | <1% | 45,022 | Directors to own ≥$550,000 within 5 years; as of 2/13/2025 all non-employee directors with ≥5 years’ service have attained the guideline |
- Hedging/pledging of company stock is prohibited for directors (alignment safeguard) .
- Directors’ Deferred Stock Investment Plan allows directors to defer cash fees into open-market EHC stock held in a rabbi trust; dividends are reinvested; shares are released after departure (long-term alignment). The plan’s activity is periodically reflected in quarterly disclosures (e.g., July purchases via the plan) .
Governance Assessment
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Strengths
- Long-tenured independent director with deep healthcare payer/regulatory expertise and cyber oversight credentials; sits on EHC’s Compensation & Human Capital and Compliance & Quality of Care Committees where her background is directly applicable .
- Strong engagement: board/committee attendance ≥75% in 2024; board maintains independent chair; all standing committees fully independent .
- High alignment: meaningful beneficial ownership (46,105 shares) plus substantial deferred RSUs (45,022); directors prohibited from hedging/pledging; all long-tenured directors meet $550k ownership guideline .
- Compensation risk mitigants: independent comp consultant (Pay Governance); robust clawback; no tax gross-ups; double-trigger CIC; director pay caps under 2025 plan .
-
Watch items
- Committee rotation: moved off Audit and Compliance Chair role in 2025 to member roles; ensure continuity of quality/cyber oversight given prior chair leadership .
- External board seat (Ionis) within EHC overboarding policy limits, but continue to monitor time commitments and any evolving relationships (no related-party transactions disclosed for 2024) .
Say-on-Pay & Shareholder Signals (context for board oversight)
| Item | 2025 Annual Meeting | 2024 Annual Meeting |
|---|---|---|
| Say-on-Pay (votes for/against/abstain) | 87,426,450 / 2,187,504 / 342,779 | 87,432,847 / 1,824,905 / 859,438 |
| Directors elected – Herman (for/against/abstain) | 88,463,822 / 1,451,610 / 41,301 | 87,893,645 / 1,379,530 / 844,015 |
| DEI Shareholder Proposal | n/a | Failed: 25,936,680 for / 63,282,592 against / 897,918 abstain |
- Company disclosure highlights historical strong say-on-pay support (>93% annually; 98.0% approval in 2024) .
Related-Party Transactions and Conflicts
- EHC reports no material director-related relationships, transactions, or contributions in 2024; annual independence review includes transactions, auditor/advisor relationships, and charitable contributions tied to directors or their immediate family members .
Director Compensation Mix (Detail)
| Component (2024) | Amount ($) |
|---|---|
| Fees Earned or Paid in Cash | 111,676 |
| Stock Awards (RSUs) | 165,005 |
| All Other Compensation (dividend equivalent RSUs) | 27,196 |
| Total | 303,877 |
| Each non-employee director received ~1,978 RSUs ($165,005 grant-date fair value); RSUs are fully vested and settle in shares after board service ends . |
Compliance Committee Analysis (Board-level)
- Composition includes independent directors with healthcare operations and compliance backgrounds; human capital/compensation oversight leverages Pay Governance (independent), with committee reporting and board-level reviews .
Board Effectiveness Summary
- Herman’s payer/regulatory depth and cyber oversight credentials align with EHC’s regulated inpatient rehab model and the board’s emphasis on quality, compliance, and workforce topics (which are embedded in executive incentives). Her equity-heavy, deferred-settlement compensation and ownership guideline compliance support shareholder alignment. No related-party flags identified; independence reaffirmed .