Adam H. Schechter
LABCORP HOLDINGSAbout Adam H. Schechter
Adam H. Schechter is Chairman, President, and Chief Executive Officer of Labcorp (Labcorp Holdings Inc.), serving as CEO since November 2019, Chair since May 2020, and a director since April 2013; age 60; B.S. in biology from La Salle University (honorary Doctor of Humane Letters in 2021) . Under his leadership, Labcorp’s 2024 results included revenue of $13.0B, operating cash flow of $1.6B, free cash flow of $1.1B, diluted EPS of $8.84, and adjusted EPS of $14.57, with incentives paying near target (LBP at 99.5% of target; 2022–2024 performance shares earned at 114.2% with a 47th percentile relative TSR modifier) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Merck & Co., Inc. | President, Global Human Health; Executive Vice President; member of Merck’s executive committee | 2010–2018 | Led global sales/marketing/managed markets; deep pharma/healthcare expertise and stakeholder collaboration . |
| Merck & Co., Inc. | Special advisor to the CEO | Jan 2019–Jul 2019 | Senior advisory role to CEO prior to Labcorp CEO appointment . |
| Merck & Co., Inc. | President, Global Pharmaceutical Business | 2007–2010 | Leadership across product/business development globally . |
| Labcorp | Director | Apr 2013–present | Board oversight prior to and during CEO tenure . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| DaVita Inc. | Director (public company) | Current | Public board service . |
| American Clinical Laboratory Association | Vice Chair, Board of Directors | Current | Industry leadership . |
| Water.org | Board Member | Current | Non-profit governance . |
| National Alliance for Hispanic Health | Corporate Advisory Council | Current | Advisory role . |
Fixed Compensation
| Component | 2024 Detail | Source |
|---|---|---|
| Base Salary | Increased from $1,394,000 (Jan 1, 2024) to $1,435,000 effective June 16, 2024 | |
| Target Annual Bonus (LBP) | 150% of salary | |
| 2024 Actual Bonus Paid (LBP) | $2,113,816 (enterprise Business Performance Factor 99.5%, ESG Modifier 100%, Individual Modifier 100%) |
Performance Compensation
- Program design: 2024 LTI mix targeted at 60% performance shares (PSUs), 20% non-qualified stock options, 20% RSUs; overlapping three-year PSU cycles; annual LBP with enterprise and segment metrics plus ESG and individual modifiers .
2024 Annual Incentive (LBP) – Outcome
| Executive | Prorated Salary | Target Bonus % | Business Performance Factor Type | Business Performance Factor Payout % | ESG Modifier | Individual Modifier | Bonus Payout |
|---|---|---|---|---|---|---|---|
| Adam H. Schechter | $1,416,292 | 150% | Enterprise | 99.5% | 100.0% | 100.0% | $2,113,816 |
- 2024 LBP metrics included consolidated revenues, consolidated adjusted operating income, and segment-specific metrics; payouts for CEO and other NEOs tied to enterprise result at 99.5% .
2024–2026 PSU Design (granted Feb 6, 2024)
| Metric | Weighting | Threshold | Target | Superior | TSR Modifier |
|---|---|---|---|---|---|
| Three-year cumulative EPS | 70% | $44.25 | $48.25 | $52.25 | ±25% based on relative TSR vs peer group (bottom 25th percentile: −25%; 26th–75th: 0%; top 25th: +25%; overall cap 200%) . |
| Three-year cumulative Revenue | 30% | $38.4B | $40.1B | $41.8B | See TSR modifier . |
2022–2024 PSU Cycle – Earned
| Metric | Weighting | Threshold | Target | Superior | Result | Payout |
|---|---|---|---|---|---|---|
| Three-year cumulative EPS | 70% | $43.44 | $48.93 | $54.53 | $48.69 | Contributed to 114.2% total payout . |
| Three-year cumulative Revenue | 30% | $39.5B | $40.7B | $41.9B | $41.3B | See above . |
| Relative TSR Modifier | N/A | −25% | No adjustment | +25% | 47th percentile | No adjustment . |
2024 Equity Grants (CEO)
| Award Type | Grant Date | Quantity/Target | Exercise Price | Grant Date Fair Value |
|---|---|---|---|---|
| RSUs | 2/6/2024 | 13,380 units | — | $2,974,106 |
| PSUs | 2/6/2024 | Target 40,130 (Thr 20,065; Max 80,260) | — | $9,188,165 |
| Stock Options | 2/6/2024 | 41,400 options | $222.28 | $3,015,965 |
| LBP opportunity | 3/31/2024 | Threshold $1,065,129; Target $2,130,259; Max $4,260,518 | — | — |
Equity Ownership & Alignment
| Item | Detail | Source |
|---|---|---|
| Total beneficial ownership | 367,646 shares as of Mar 20, 2025 | |
| % of shares outstanding | Less than 1% of 83,668,573 shares outstanding | |
| Options exercisable within 60 days (included in ownership) | 248,995 for Mr. Schechter | |
| Executive stock ownership guidelines | CEO: 6x base salary; EVPs: 3x; all other executive officers: 1x | |
| Compliance status | Each NEO in compliance as of Dec 31, 2024 (meets level or holding requirement) | |
| Anti-pledging/hedging policy | Prohibits pledging, margin, short sales, options, and hedging (e.g., collars, swaps) |
Outstanding CEO Equity (selected as of 12/31/24)
| Instrument | Grant Date | Exercisable | Unexercisable | Exercise Price | Expiration | Source |
|---|---|---|---|---|---|---|
| Stock Options | 11/1/2019 | 27,661 | — | $149.31 | 10/31/2029 | |
| Stock Options | 11/1/2019 | 72,612 | — | $171.70 | 10/31/2029 | |
| Stock Options | 2/4/2020 | 50,862 | — | $163.63 | 2/3/2030 | |
| Stock Options | 2/2/2021 | 32,346 | — | $209.25 | 2/1/2031 | |
| Stock Options | 2/11/2022 | 20,893 | 10,449 | $247.68 | 2/10/2032 | |
| Stock Options | 2/7/2023 | 10,186 | 20,375 | $221.67 | 2/6/2033 | |
| Stock Options | 2/6/2024 | — | 41,400 | $222.28 | 2/5/2034 | |
| RSUs unvested (market value) | 2/11/2022; 2/7/2023; 2/6/2024 | — | 2,963; 6,499; 13,380 | — | — | |
| PSUs unearned (target cycles) | 2022; 2023; 2024 | — | 30,469; 58,470; 80,260 | — | — |
Implications: Substantial scheduled vesting (RSUs/PSUs) and option tranches may create periodic liquidity windows; pledging/hedging prohibitions and robust ownership guidelines mitigate alignment risk .
Employment Terms
| Provision | Key terms | Source |
|---|---|---|
| Employment agreement | Commenced Nov 1, 2019; maintained through 2024 holding company reorganization with no term changes | |
| Base salary and bonus | Initial base $1,250,000; annual target bonus 150% of base (LBP) | |
| 2019 sign-on equity | One-time RSUs ($1M), NQOs ($1M), premium-priced NQOs ($2M at 115% of FMV); vesting over 3 years | |
| Severance (no cause / good reason) | 2x (base + average last three bonuses) paid in two tranches; 3x if within 36 months post-Change in Control (double trigger); up to 18 months COBRA reimbursement; vesting of unvested portion of Sign-On Grants | |
| Change-in-control vesting | Company provides only double-trigger CIC accelerated vesting provisions | |
| Clawback | Robust Incentive Compensation Recoupment Policy applies to cash- and equity-based incentive comp | |
| Tax gross-ups | None, including on severance/CIC | |
| Severance policy cap | Cash severance capped at 2.99x salary + target bonus under Company policy (CEO agreement includes defined 3x CIC term) |
Board Governance (CEO + Chair dual role)
- Dual role: Board determined combined Chair/CEO provides unified leadership given business complexity; structure balanced by a strong, elected Lead Independent Director (Dr. Garheng Kong) with clearly defined authorities over agendas, schedules, information flow, and executive sessions .
- Independence: 9 of 10 director nominees are independent; all Board committees are 100% independent .
- Executive sessions: Independent directors met five times in 2024; Lead Independent Director chaired .
- Board/committee attendance: 5 Board meetings in 2024; each director attended 100% of Board meetings and ≥88% of assigned committee meetings .
Company Performance Context (FY2024)
| Metric | FY2024 | Source |
|---|---|---|
| Revenue | $13.0 billion | |
| Diluted EPS (cont.) | $8.84 | |
| Adjusted EPS (cont.) | $14.57 | |
| Free Cash Flow | $1.10 billion |
Say-on-Pay Support
| Year | Approval % | Source |
|---|---|---|
| 2024 Annual Meeting | ~92% |
Compensation Structure Analysis (signals)
- Mix/at-risk tilt: ~76% of CEO 2024 target comp performance-based; LTI at 60% PSUs, 20% options, 20% RSUs encourages multi-year alignment and price appreciation .
- Metric rigor and stability: PSU metrics remain three-year cumulative EPS and revenue with a relative TSR modifier; 2024–2026 targets disclosed and capped at 200% payout, demonstrating structured goal-setting and external alignment via TSR .
- LBP governance: Enterprise-wide metrics with ESG and individual modifiers; payout capped at 200%; 2024 CEO payout at 99.5% suggests calibration near plan performance .
- Policy safeguards: No pledging/hedging; no tax gross-ups; double-trigger CIC; clawback in place; severance capped by policy (2.99x), with CEO’s CIC multiple explicitly disclosed (3x) .
- Peer benchmarking: Committee targets total pay generally around market median (within ~±15%), using FW Cook, indicating restraint against upward ratcheting; 2024 CEO LTI increased 18% for performance/competitiveness and separately recognized spin-off efforts (one-time) .
Risk Indicators & Red Flags
- Related-party transactions: None since Jan 1, 2024, per policy and Audit Committee review .
- Option repricing: Plan prohibits repricing; options priced at or above FMV, with minimum vesting; no liberal recycling .
- Pledging/hedging: Prohibited, reducing misalignment risks .
- Say-on-pay: Strong support (~92% in 2024), lowering governance friction risk .
Investment Implications
- Alignment: High at-risk pay, transparent PSU design (EPS/revenue with TSR modifier), robust ownership guidelines, and anti-pledging/hedging support strong pay-for-performance alignment .
- Retention/selling pressure: Significant unvested RSUs/PSUs and multi-tranche, long-dated options (including 2024 grant expiring 2034) create retention hooks but also future liquidity events around vesting; monitoring Form 4s around vest dates is prudent .
- Change-in-control economics: Double-trigger CIC and disclosed 3x CEO multiple (vs policy cap at 2.99x) are within market norms but material; quantify potential payout sensitivity to bonus history in downside scenarios .
- Execution track record: Near-target LBP payout for 2024 and 114.2% PSU payout for 2022–2024 (TSR at 47th percentile) indicate goals were reasonably calibrated and performance delivered amid portfolio actions and specialty testing expansion .