Andrew W. Kush
HEALTHCARE SERVICES GROUPAbout Andrew W. Kush
Executive Vice President & Chief Operating Officer (COO) of Healthcare Services Group, Inc. since February 2020; age 47; at HCSG since 2010. Prior roles include EVP & Chief Administrative Officer (2017–2020) and Senior VP, Human Resources & Risk Management (2013–2017); prior to HCSG, VP of Risk Management at PNC Financial Services Group, Inc. . Compensation is tied to (1) company income before taxes for annual cash incentives and (2) relative TSR for PSUs; equity awards (options/RSUs/PSUs) feature long-dated vesting, a clawback policy, and double-trigger change-in-control protection, with no employment agreements or golden parachute severance .
Company performance context (Pay vs Performance disclosure):
- Income before income taxes: $52.9M (2024) vs $53.1M (2023) .
- Net income: $39.5M (2024) vs $38.4M (2023) .
- TSR value of $100 investment: $54 (2024), $48 (2023), $56 (2022), $78 (2021), $120 (2020) .
- The 2022 PSU tranche (performance period ending 2024) paid at ~51.2% of target on a relative TSR percentile of 25.6 (below median), indicating performance-based moderation of equity payouts .
HCSG multi-year fundamentals (S&P Global; see disclaimer):
| Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Revenues ($) | 1,641,959,000* | 1,690,176,000* | 1,671,389,000* | 1,715,682,000* |
| EBITDA ($) | 65,724,999.99999999* | 62,183,000* | 55,918,000* | 51,815,000* |
| Net Income ($) | 48,543,000* | 34,243,000* | 38,386,000* | 39,471,000* |
Values retrieved from S&P Global.*
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| HCSG | EVP & Chief Operating Officer | Feb 2020–present | Company-wide operations and execution during post-COVID recovery and growth initiatives . |
| HCSG | EVP & Chief Administrative Officer | 2017–2020 | Enterprise admin and support functions; leadership pipeline and capability building . |
| HCSG | SVP, HR & Risk Management | 2013–2017 | Workforce, risk, and compliance infrastructure to support scale . |
| HCSG | VP, Human Resources | 2010–2013 | Talent strategy and HR systems . |
| PNC Financial Services Group, Inc. | VP, Risk Management | Pre-2010 | Financial and operational risk expertise applicable to multi-site services . |
External Roles
- None disclosed in the proxy (no current public company directorships identified) .
Fixed Compensation
| Component | 2023 | 2024 | Notes |
|---|---|---|---|
| Base salary | $639,000 | $639,000 | Unchanged YoY. |
| Benefits/perquisites | — | Company medical/dental/vision; life/disability insurance; company fleet vehicle | Consistent with other executive officers. |
| Deferred comp (SERP) | — | Exec contributions $120,225; Company match $30,062; 12/31/24 balance $1,371,270 | 25% match (up to 15% deferral) paid in stock; 3-year vesting on company match . |
Performance Compensation
Annual Incentive (Cash; 2024 outcomes)
| Named Executive Officer | Metric | Target | Actual | Payout (% of salary) | Payout ($) | Notes |
|---|---|---|---|---|---|---|
| Andrew W. Kush (COO) | Company income before income taxes (quarterly formula for EVPs) | Not disclosed | Not disclosed | 25% | $162,503 | EVP outcomes validated vs operational achievements (growth, retention, cash flow) . |
Additional design features:
- CEO cash bonus capped at 2x base salary; EVP cash bonuses can be adjusted for operational KPIs (growth in facilities, profitability, client retention/satisfaction) .
- No employment agreements; no special severance (“golden parachute”) packages .
Long-Term Equity Incentives (2024 grants)
| Instrument | Grant date | Shares (#) | Grant-date fair value ($) | Vesting schedule | Key terms |
|---|---|---|---|---|---|
| Stock Options | 1/3/2024 | 31,944 | 161,752 | 20% annually over 5 years starting 1st anniversary | Exercise price $10.36; expires 1/3/2034 . |
| RSUs | 1/3/2024 | 31,226 | 323,501 | 20% annually over 5 years starting 1st anniversary | Time-vested; fosters retention. |
| PSUs (Relative TSR) | 1/3/2024 | 13,650 | 161,753 (probable) | Cliff vest in 2027 upon certification | 3-yr performance (2024–2026) vs S&P MidCap 400; payout: <25th%=0%; 25th%=50%; 50th%=100%; ≥75th%=150% (interpolated) . |
2022 PSU vesting result (ended 12/31/2024) indicates relative TSR percentile of 25.6 with 51.2% of target earned (moderated payout) .
Equity Ownership & Alignment
| Item | Detail | Evidence |
|---|---|---|
| Beneficial ownership | 166,357 shares; <1% of outstanding | |
| Composition of beneficial ownership | Includes currently exercisable options (incentive: 17,253; non-qualified: 86,808) and 14,824 SERP credited shares (unissued) | |
| Unvested awards at 12/31/2024 | RSUs: 31,226 ($362,846); PSUs: 13,220 ($175,165) market value at $11.62; plus multiple unvested option tranches | |
| Stock ownership guidelines | Requirement: 200% of salary; Kush at 204% as of 12/31/2024 (in compliance) | |
| Hedging/pledging | Hedging prohibited; insider trading blackouts in place; no pledging disclosure noted | |
| Near-term selling pressure | 2024 options are in-the-money (stock $11.62 vs $10.36 strike at 12/31/24) but unvested; 2024 RSUs vest 20% annually beginning 1/3/2025, creating staggered liquidity windows |
Outstanding options context (12/31/24 stock $11.62):
- Older option grants (exercise prices $13.72–$52.06) are out-of-the-money; 2024 grant ($10.36) is in-the-money but unvested, reducing near-term exercise-driven selling .
Employment Terms
- No employment agreement; no special severance (“golden parachute”) .
- Change-in-control treatment: double-trigger equity vesting (CIC plus termination or good reason if awards assumed; vest if not assumed) .
- Clawback policy adopted per SEC/Nasdaq rules (applies to cash/equity “at-risk” comp); no recoveries during 2024 .
- Insider trading: black-out periods; anti-hedging policy in place .
- Perquisites: medical/dental/vision, life/disability, company fleet vehicle .
- Deferred compensation: SERP with 25% company match (to 15% deferrals) in stock; vesting over 3 years; 12/31/24 participant balance $1,371,270 for Kush .
Compensation Structure Notes (governance and benchmarking)
- Program emphasizes variable pay with long-term equity; independent comp consultant used; no option repricing/backdating; no tax gross-ups; no executive-only retirement programs .
- Annual say-on-pay support ~91% at 2024 meeting, signaling shareholder alignment .
- Comparator group includes route/outsourced services and healthcare services peers (e.g., ABM Industries, Amedisys, Clean Harbors, UniFirst, etc.) .
Performance & Track Record (select disclosures)
| Measure | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Value of $100 investment (TSR) | $120 | $78 | $56 | $48 | $54 |
| Peer group TSR ($100) | $114 | $142 | $123 | $144 | $164 |
| Net income ($000s) | 98,682 | 48,543 | 34,243 | 38,386 | 39,471 |
| Income before taxes ($000s) | 129,186 | 65,512 | 44,553 | 53,056 | 52,941 |
Additional 2024 operational highlights include revenue and net income growth YoY, over 500 new service agreements, >90% customer retention, and ongoing share repurchases (~$23M since Feb 2023 authorization) .
Risk Indicators & Red Flags
- Anti-hedging policy; clawback program live; no repricing or tax gross-ups .
- No related-party transactions disclosed for Kush; a separate related party concerns CEO’s brother-in-law compensation reviewed by Audit Committee .
- Section 16(a) compliance: one late Form 4 filing in Jan 2025 covering a phantom stock award for multiple officers including Kush (administrative timing issue) .
Performance Compensation – Detailed Instruments
PSU Design (Relative TSR vs S&P MidCap 400)
| TSR Percentile | Payout (% of Target) |
|---|---|
| <25th | 0% |
| 25th | 50% |
| 50th | 100% |
| ≥75th | 150% |
| Performance between points is interpolated; 2024 grants vest in 2027 upon Board certification . |
2024 Grant Mechanics – Anticipated Vesting Cadence
| Award | Grant date | Vest dates (illustrative) | Shares per tranche | Notes |
|---|---|---|---|---|
| RSUs (31,226) | 1/3/2024 | 1/3/2025–1/3/2029 (20%/yr) | ~6,245/yr | Time-based; value realization staggered . |
| Options (31,944 @ $10.36) | 1/3/2024 | 1/3/2025–1/3/2029 (20%/yr) | ~6,389/yr | 10-year term to 1/3/2034 . |
| PSUs (13,650 target) | 1/3/2024 | 2027 (cliff) | Performance-based | Earnout depends on 2024–2026 relative TSR . |
Note: Share counts per tranche reflect approximate 20% allocation; actual administrative rounding not specified in proxy.
Equity Ownership & Beneficial Interests – Breakdown at 12/31/2024
| Category | Amount/Status |
|---|---|
| Shares beneficially owned | 166,357 (<1% outstanding) |
| Options – currently exercisable | Incentive: 17,253; Non-qualified: 86,808 |
| Options – unvested | Multiple tranches outstanding (e.g., 2020–2024 grants), including 31,944 (2024) unvested . |
| RSUs – unvested | 31,226 ($362,846 at $11.62) . |
| PSUs – unvested | 13,220 ($175,165 at modeled fair value) . |
| SERP credited (unissued) | 14,824 shares . |
| Ownership guideline | Required 200% of salary; actual 204% (compliant) . |
Employment Terms
| Term | Status |
|---|---|
| Employment agreement | None (no NEO employment agreements) . |
| Severance/golden parachute | None (no special severance multiples) . |
| Change-in-control | Double-trigger vesting under 2020 Plan . |
| Clawback | Adopted per SEC/Nasdaq; no recoveries in 2024 . |
| Non-compete / non-solicit | Not disclosed. |
| Perquisites | Health/dental/vision; life/disability; company fleet vehicle . |
| Insider trading controls | Blackout periods; anti-hedging policy . |
Compensation Committee & Benchmarking
- Oversight by Nominating, Compensation & Stock Option (NCSO) Committee; uses independent consultant; considers market data and a comparator group spanning services and healthcare services (e.g., ABM Industries, AMN Healthcare, UniFirst) .
- Shareholder alignment: ~91% say-on-pay approval at 2024 meeting .
Investment Implications
- Alignment: High at-risk mix with multi-year vesting and relative TSR PSUs; compliance with 2x salary ownership guideline supports skin-in-the-game .
- Vesting/supply: RSUs and options vest 20% annually each January 3rd from 2025–2029; expect modest, predictable selling windows around these dates; legacy underwater options temper near-term exercise-related supply, while 2024 options become exercisable in tranches starting 2025 .
- Pay-for-performance: 2022 PSU outcome (~51.2% of target) reflects sub-median TSR (25.6th percentile), moderating realized equity pay during underperformance—reducing risk of misalignment .
- Retention: Five-year vesting for RSUs/options and SERP structure promote retention; absence of employment agreements reduces guaranteed severance exposure (lower shareholder risk) but could modestly elevate retention risk in a robust market for operating talent .
- Governance: Clawback and anti-hedging policies in place; one late Form 4 in Jan 2025 noted (administrative), but otherwise Section 16 compliance reported .