L. Heath Sampson

About L. Heath Sampson

L. Heath Sampson is President & Chief Executive Officer and a director of ModivCare (MODV). He became interim CEO on July 27, 2022, was confirmed as CEO on November 1, 2022, and previously served as CFO from February 26, 2021 to September 5, 2023 . Age 54; education: BBA in Accounting and Master of Accountancy from the University of Denver . Under his leadership, 2024 was challenging but revenues were maintained versus 2023 amid Medicaid redeterminations and Medicare Advantage reimbursement pressure; net losses in 2023–2024 were driven by goodwill impairments . The company cites a 38% five-year Adjusted EBITDA CAGR through 2023, and in 2024 shifted PRSU metrics to 60% relative TSR and 40% EBITDA to better tie pay to performance .

Past Roles

External Roles

• No current external public-company directorships disclosed beyond ModivCare (Director since 2022) .

Fixed Compensation

Notes: Sampson’s base salary was increased to $800,000 in February 2024 .

Performance Compensation

• Short‑Term Incentive (STI) design and outcome:
  • 2023: 50% Compensation Adjusted EBITDA and 50% individual goals; payout at 50% of target .
  • 2024: 75% Compensation Adjusted EBITDA and 25% individual goals; payout at 0% of target (Compensation Adjusted EBITDA ≈ $123M) .

• Long‑Term Incentive (LTI) structure:
  • 2024 grants: 60% PRSUs and 40% RSUs; PRSUs: 60% relative TSR (market condition) + 40% EBITDA (performance condition), 3‑year cliff vest; RSUs vest in roughly equal thirds over 3 years .
  • 2023 grants: PRSUs tied to Adjusted EBITDA (and revenue on some awards) plus RSUs; 3‑year PRSU cliff vesting, RSUs vest ratably .

• 2024 equity valuation at max: PRSU maximum fair value estimate for Sampson $2,154,075 .

Equity Ownership & Alignment

• Beneficial ownership: 32,744 shares; <1% of outstanding .
• Vested vs unvested (as of record/12‑31‑2024):
  • Options exercisable: 17,154 shares .
  • Unvested: 20,318 RSUs; 526 options; 47,454 PRSUs (all vesting >60 days post record date) .
• Outstanding awards (12/31/2024 snapshot and strikes):
  • Options: 9,368 @ $128.26 (exp. 2/26/2026); 4,489 ex/2,244 unex @ $110.07 (exp. 2/8/2027); 1,053 ex/526 unex @ $85.99 (exp. 11/21/2027) .
  • RSUs/PRSUs unvested counts for 2022–2024 grants detailed in table (market value using $11.84 close on 12/31/2024) .
  • Given strikes ($85.99–$128.26) and $11.84 12/31/2024 close, options had no intrinsic value at year‑end 2024 .
• Ownership guidelines: CEO required holding = 5x base salary; policy requires holding all compensatory shares until met (allows tax‑withholding sales) . None of the NEOs met required holding level as of 12/31/2024 .
• Hedging/pledging: Prohibited for directors and officers (anti‑hedging and anti‑pledging policies) .

Employment Terms

• CEO base salary: $800,000 effective 2024; STI target 100% of salary in 2024; LTI delivered primarily via RSUs/PRSUs (see above) .
• Severance: Offer letter/severance policy provides up to 12 months of base salary on termination without cause or resignation for good reason, subject to release; one‑year post‑employment non‑compete and non‑solicit, plus NDA and non‑disparagement .
• Change‑in‑control (CIC): “Double‑trigger” equity vesting (no single‑trigger), no excise tax gross‑ups; clawback compliant with Nasdaq Rule 10D‑1 .
• Clawback: 3‑year lookback for incentive pay upon restatement; recovery via repayment/offset/cancellation as applicable .

Board Governance

• Role: CEO and director (not independent); director since 2022 .
• Chair/CEO separation: Chair is independent (Leslie V. Norwalk); Board affirms separation of roles .
• Independence: All directors other than CEO are independent under Nasdaq rules .
• Committees: All chaired by independent directors; CEO not listed as a member of standing committees .
• Attendance: In 2024, Board held 24 meetings; all directors attended ≥75% of Board/committee meetings .

Director & Say‑on‑Pay Context

• Say‑on‑pay approval: ~80% support at 2024 meeting for 2023 pay; ~99% support at 2023 meeting for 2022 pay .
• Compensation Committee and consultant: 2024 committee members (now chaired by Alec Cunningham) engaged Meridian Compensation Partners; independence affirmed; Meridian provides no other services except at committee direction .

Multi‑Year CEO Compensation Summary

Vesting Schedules and Overhang Indicators

• 2024 CEO RSUs: ~1/3 vests on 2/14/2025, 2/14/2026, 2/14/2027; PRSUs cliff vest 2/14/2027 (subject to EBITDA and rTSR conditions) .
• 2023 CEO RSUs: ~1/3 vests on 8/31/2024, 8/31/2025, 8/31/2026; PRSUs cliff vest 8/31/2026 .
• 2022/early‑2023 PRSUs: additional cliff vesting in 2026 subject to performance .

Implications for selling pressure:

• Near‑term RSU vests (Feb and Aug cycles) can create periodic tax‑related sales; required ownership guidelines and anti‑pledge/hedge decrease discretionary selling flexibility .
• All legacy options are deeply out‑of‑the‑money as of 12/31/2024, limiting option‑driven exercises/sales .

Performance & Track Record

• 2024 narrative: Revenue held roughly flat vs 2023, with NEMT utilization increases and PCS growth offset by Medicaid redetermination and client churn; 2024 net loss driven by goodwill impairment (also in 2023) .
• Strategic moves: Board formed a Strategic Alternatives Committee (April 2025) to oversee divestitures of Monitoring and Personal Care Services businesses and cost optimization, reflecting portfolio rationalization efforts under tighter credit covenants .
• Culture/compliance: Board governance policies include anti‑hedging/pledging, clawback, independent chair, and regular executive sessions .

Compensation Structure Analysis

• Cash vs equity mix: Equity a significant portion of total direct comp; 2024 equity FV ($1.685M) exceeded cash STI (0) and was comparable to salary, maintaining long‑term alignment despite short‑term miss .
• Metric shift: 2024 increased market alignment by weighting PRSUs 60% to rTSR and 40% to EBITDA vs 2023 EBITDA/Revenue design—harder external performance bar, potentially more volatile payouts .
• Risk safeguards: Double‑trigger CIC, no option repricing, no excise tax gross‑ups, robust clawback; anti‑hedging/pledging .
• Shareholder feedback: 2024 say‑on‑pay ~80% suggests acceptable but not overwhelming support, following a strong 2023 (99%); committee cites responsiveness and metric adjustments .

Related Party & Red Flags

• Related party: Coliseum Capital purchased/exchanged into second‑lien notes in March 2025 with fees reimbursed; stockholder approval obtained—heightened governance oversight warranted given large holder influence .
• Section 16 compliance: One late Form 4 for Sampson in 2024 (and certain other officers), noted by the company .
• Other red flags: No hedging/pledging; no option repricing; no tax gross‑ups disclosed .

Equity Ownership Detail (as of record dates)

Board Service and Dual‑Role Implications

• Sampson serves as CEO and director; however, board leadership is independent with a separate Chair (Norwalk), and all committees are independent‑chaired, mitigating CEO/chair power concentration and independence concerns .
• Board attendance and committee cadence indicate active oversight (24 Board meetings in 2024; committees met 6–7 times each) .

Investment Implications

• Pay‑for‑performance is functioning: 0% STI payout for 2024 amid underperformance signals discipline; 2024 PRSU design ties more value to rTSR vs peers, increasing alignment but potentially raising payout volatility .
• Selling pressure likely limited near‑term: RSU vests will create tax‑driven sales, but options are far out‑of‑the‑money and ownership guidelines require holding until thresholds are met; anti‑pledging reduces forced selling risk .
• Retention risk moderate: One‑year non‑compete/non‑solicit and 12‑month severance support continuity; however, ongoing strategic alternatives (divestiture processes) and creditor‑influenced oversight can elevate executive uncertainty and change‑in‑control scenario risk (double‑trigger terms apply) .
• Governance posture is shareholder‑friendly (independent chair, clawback, no gross‑ups, no option repricing), but large shareholder transactions (Coliseum) and board turnover through early 2025 warrant continued monitoring of governance dynamics and potential strategic outcomes .