Mark J. Tarr
Encompass HealthAbout Mark J. Tarr
Mark J. Tarr is President and Chief Executive Officer of Encompass Health, serving since December 29, 2016; age 63; and a member of the Board of Directors. He has 30+ years in inpatient rehabilitation operations, previously EVP of Operations (2007–2016, designated COO in 2011) and earlier leadership of regional and hospital operations. He also serves on the board of Protective Life Corp. Five-year shareholder returns outperformed peers (Company TSR: 178.46 vs S&P Health Care Services index: 126.92), supported by revenue growth and EBITDA expansion, with 2024 Adjusted EBITDA at $1,103.7 million and robust operational execution .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Encompass Health | President & Chief Executive Officer; Director | 2016–present | Strategic, financial and operational leadership of the largest U.S. inpatient rehab operator |
| Encompass Health | EVP Operations; designated Chief Operating Officer | 2007–2016; COO designation 2011 | Scaled operations; volume growth; quality-of-care initiatives |
| Encompass Health Inpatient Division | President | 2004–2007 | Division leadership across network; operational performance |
| Encompass Health | SVP Inpatient Operations (TX, LA, AR, OK, KS) | 1997–2004 | Regional scaling, clinician staffing, throughput improvements |
| Encompass Health Nashville Rehab Hospital | Director of Operations (80-bed) | 1994–1997 | Facility operations and quality programs |
| Encompass Health Vero Beach Rehab Hospital | CEO/Administrator (70-bed) | 1992–1994 | Facility leadership; patient outcomes focus |
External Roles
| Organization | Role | Years |
|---|---|---|
| Protective Life Corp. | Director | Not disclosed (current) |
Fixed Compensation
Multi-year CEO compensation (Summary Compensation Table):
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 1,050,000 | 1,050,000 | 1,050,000 |
| Stock Awards (RSAs/PSUs grant-date fair value) | 4,357,861 | 4,453,885 | 4,856,982 |
| Option Awards (grant-date fair value) | 1,055,281 | 951,957 | 1,085,288 |
| Non-Equity Incentive (Annual Bonus) | 1,180,721 | 2,313,612 | 2,131,038 |
| All Other Compensation | 92,106 | 66,922 | 178,621 (incl. $75,050 personal aircraft) |
| Total | 7,735,969 | 8,836,376 | 9,301,929 |
Additional 2025 program adjustments: base salary to $1,100,000; SMBP target to 135%; LTIP target to $6,000,000 .
Performance Compensation
Annual incentive structure (SMBP, 2024):
| Metric | Weight | Threshold | Target | Maximum | Actual | Achievement vs Target |
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 70% | $966.8mm | $1,045.2mm | $1,123.6mm | $1,107.8mm | 179.9% |
| Quality/Strategic Scorecard (weighted sub-metrics) | 30% | Hospital-level thresholds | 70% hospitals meet/beat goals | 80% hospitals meet/beat goals | Combined weighted 144.0% | 144.0% |
| CEO Total SMBP Payout | — | — | — | Cap 200% | $2,131,038 | 169.1% of target |
Long-term incentives (2024 grants):
| Instrument | Grant specifics | Vesting/Term | Performance |
|---|---|---|---|
| PSUs | 44,365 target units | 3-year performance period (2024–2026); dividends accrue and pay on vest | Metrics: Normalized EPS (60%) and ROIC (40%); relative TSR modifier 0.75–1.25 vs S&P Health Care Services + S&P 1500 cohort |
| RSAs | 14,789 shares | 3-year ratable vesting; dividends accrued, paid on vest | Time-based retention |
| Options | 41,524; strike $74.20; term 10 years | 3-year ratable vesting; expires 3/1/2034 | Equity value linked to stock price |
Recent PSU results (2023 PSU cycle measured through 12/31/2024; TSR modifier applies through 12/31/2025):
| Metric | Target | Actual | Achievement | Weight | Weighted Achievement |
|---|---|---|---|---|---|
| EPS | $6.56 | $8.11 | 194.5% | 60% | 116.7% |
| ROIC | 9.39% | 11.03% | 200.0% | 40% | 80.0% |
| Combined | — | — | 196.7% | 100% | 196.7% (subject to TSR modifier) |
Pay mix and at-risk design: CEO target TDC $7,735,000 with 72.4% performance-based and ~70% long-term .
Clawback policy: applies to current/former executive officers; mandatory recoupment for certain restatements and misconduct; NYSE-compliant . Anti-hedging and anti-pledging policy: prohibits hedging and pledging for officers/directors .
Equity Ownership & Alignment
- Beneficial ownership: 961,549 common shares for Tarr, including 439,060 issuable upon exercise of options . Shares outstanding: 100,709,106 as of Feb 13, 2025 . Ownership ≈ 0.95% of outstanding (calculated from cited values) .
- Unvested grants at 12/31/2024 and unearned PSUs:
| Category | Quantity | Market/Value Basis |
|---|---|---|
| Unvested RSAs | 74,711 + 6,528 + 11,217 + 14,789 shares (various grants) | $92.35 per share closing price; $6,899,561 + $602,861 + $1,035,890 + $1,365,764 |
| Unearned PSUs | 100,946 + 88,730 shares (multi cycles) | $9,322,363 + $8,194,215 |
| Unexercisable Options | 24,504 (55.13, exp. 3/1/2032); 32,999 (56.21, exp. 3/1/2033); 41,524 (74.20, exp. 3/1/2034) | Strike prices/expires as noted |
- Ownership guidelines: CEO required to hold equity equal to 5x base salary; officers must retain 50% of net shares until compliance achieved; all NEOs with ≥5 years have attained levels . Insider policy prohibits hedging/pledging of company stock .
- Insider selling pressure indicators: 2024 option exercises 44,976 shares ($2,306,414 realized); stock awards vested 78,723 shares ($5,399,285 realized) .
Employment Terms
| Provision | Terms |
|---|---|
| Employment start in current role | CEO since 12/29/2016 |
| Executive Severance Plan | CEO cash severance 3x base salary; benefit continuation 36 months; pro-rata vesting of time-based equity; performance awards evaluated for achievement; restrictive covenants required; no tax gross-ups |
| Change-in-Control Benefits Plan | Tier 1: 2.99x (highest base in prior 3 years + average actual annual incentives prior 3 years) + prorated annual incentive; 36 months benefit continuation; double-trigger equity vesting; options remain exercisable 3 years if terminated; Committee may cash out awards; no gross-ups |
| Potential payouts (as of 12/31/2024) | Severance w/o cause/good reason: $17,963,733 total; Disability/Death: $20,461,794; CoC termination: $32,247,408 |
| Retirement acceleration | “Good leaver” treatment allows full vesting on schedule; potential accelerated equity values if retirement-eligible (Tarr $21,436,400) |
| Clawback & insider trading | NYSE-compliant clawback; anti-hedging/pledging; short sales prohibited |
| Perquisites | Personal aircraft usage allowance ($75,050 2024; ~$100,000 estimated 2025); optional executive physicals; nonqualified 401(k) match; no pension plan |
Deferred compensation balances (NQ Plan, as of 12/31/2024):
| Item | Amount ($) |
|---|---|
| Executive contributions (last fiscal year) | 336,361 |
| Company match (last fiscal year) | 100,908 |
| Aggregate earnings (last fiscal year) | 592,036 |
| Aggregate balance at year-end | 6,462,009 |
Board Governance
- Role and independence: Tarr is CEO and a director (non-independent) on a board with an independent, non-executive Chairman (Greg D. Carmichael) and 9 of 10 directors independent; all standing committees are fully independent .
- Committee roles: Committee membership table shows Tarr not serving on Audit, Compensation & Human Capital, Compliance/Quality, or Nominating/Corporate Governance; committees chaired by independent directors . Independent sessions held at every regular meeting of the board and committees .
- Attendance: All directors attended at least 75% of meetings in 2024; board met 5 times .
- Director compensation: Tarr receives no additional compensation for board service .
- Dual-role implications: CEO + Director structure mitigated by independent Chairman, majority independent board and fully independent committees; majority voting and annual elections strengthen governance .
Director Compensation (for non-employee directors; context)
- Annual retainer increased to $110,000 (May 2024); committee chair fees $20–30k; Chairman fee $150,000; annual equity RSU ~$165,000; directors must hold awards until departure; ownership guideline $550,000 met by all >5 years .
Compensation Peer Group & Say-on-Pay
- Peer group methodology: Modified Russell 3000, healthcare services/facilities/managed care, revenue 40–300% of EHC; 2024 peer list includes Agilon health, DaVita, Select Medical, Surgery Partners, Option Care Health, Quest Diagnostics, Ensign Group, etc. Compensation targeted between 50th–75th percentiles; all NEO TDC within competitive range .
- Say-on-Pay: 2024 approval 98.0%; historically >93% approval; 2025 Annual Meeting say-on-pay passed (87,426,450 For; 2,187,504 Against; 342,779 Abstained) .
Performance & Track Record
Revenue and EBITDA trend:
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($USD Millions) | 3,566.3* | 4,014.9* | 4,348.6 | 4,801.2* | 5,373.2 |
| EBITDA ($USD Millions) | 733.4* | 879.0* | 873.8* | 1,005.7* | 1,174.5 |
Values with an asterisk were retrieved from S&P Global.
Business highlights: 2024 net operating revenues +11.9% YoY; same-store discharge growth +5.6%; six new hospitals (280 beds) and expansions (147 beds), with strong quality outcomes and reduced nurse turnover .
Vesting Schedules and Insider Selling Pressure
- 2024 vesting schedule: RSAs and options vest in equal annual installments over three years from grant; options priced post-10-K filing with 10-year term; PSUs earn based on 3-year EPS/ROIC with TSR modifier and pay dividends only upon vest .
- Option exercises and stock vesting (2024): 44,976 options exercised ($2.31m realized); 78,723 shares vested ($5.40m); visibility to vest/settle events informs potential selling pressure windows, though hedging/pledging prohibited .
Investment Implications
- Alignment: High proportion of performance-based pay (EPS, ROIC, TSR) and Adjusted EBITDA weighting, robust clawback and anti-hedging/pledging policies, and stringent ownership requirements signal strong pay-for-performance and alignment with shareholders .
- Retention risk: Substantial potential equity acceleration upon retirement (“good leaver”) and material CoC severance could influence retention/transition dynamics; double-trigger mitigates windfalls without termination; no tax gross-ups reduce shareholder-unfriendly costs .
- Trading signals: Known vesting and option exercise events can create supply overhangs; 2024 exercises/vestings were sizable; anti-pledging limits leverage risks. Watch PSU measurement periods and TSR modifiers (through Dec 2025) for incremental LTIP payout sensitivity .
- Governance quality: Independent Chair, majority independent board/committees, majority voting and annual elections mitigate dual-role concerns and support oversight of CEO compensation/performance .