Stephen F. Flatt
NATIONAL HEALTHCAREAbout Stephen F. Flatt
Stephen F. “Steve” Flatt, 69, is Chief Executive Officer (since Jan 1, 2017) and an inside director of National HealthCare Corporation; he joined NHC in 2005 as SVP–Development and became President in 2009. He holds a B.A. from David Lipscomb College and an M.S. and Ph.D. from George Peabody College of Vanderbilt University . NHC’s pay-versus-performance disclosure shows total shareholder return of 145.07 for 2019–2024 (vs S&P Healthcare 146.89) and identifies Net Income and Adjusted Income Before Income Taxes as company-selected performance measures . Recent multi-year revenue and EBITDA trends are below.
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($USD) | 931,795,000* | 965,542,000* | 1,029,085,000* | 1,087,614,000* | 1,251,759,000* |
| EBITDA ($USD) | 56,507,000* | 37,307,000* | 57,763,000* | 93,262,000* | 122,435,000* |
Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic Impact / Notes |
|---|---|---|---|
| National HealthCare Corporation | CEO; Director | 2017–present | Inside director; CEO evaluated on overall company performance . |
| National HealthCare Corporation | President | 2009–2016 | Executive leadership prior to CEO appointment . |
| National HealthCare Corporation | SVP – Development | 2005–2008 | Joined NHC June 2005 . |
| Lipscomb University | President | 1997–2005 | Led the university prior to joining NHC . |
| Ezell Harding Christian School | President | Prior to 1997 | K–12 leadership experience . |
| Lipscomb University | VP, Financial Affairs & Institutional Planning | Prior period | Financial and planning leadership . |
External Roles
| Organization | Capacity | Years | Notes |
|---|---|---|---|
| Council for Post Acute Care (CPAC) | Co-Chair | Recent, prior | Industry leadership . |
| American Health Care Association (AHCA) | Board of Governors | Recent, prior | Industry policy/execution exposure . |
| Nashville Health Care Council | Board Member; Health Care Fellows (2013) | Prior | Regional healthcare ecosystem; 2013 fellow . |
| Community Foundation of Rutherford County | Director | Current | Community engagement . |
| Tennessee Business Leadership Council (TBLC) | Director | Current | State business leadership . |
| Recognition | “Health-Care Heroes,” Nashville Business Journal | 2013 | Recognition for healthcare leadership . |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 522,175 | 528,000 | 559,819 |
| All Other Compensation ($) | 12,927 | 13,425 | 19,284 (includes 401(k) and Key Employee Plan matches) |
| Pension | — | — | — (No pension plans offered) |
Additional notes:
- Deferrals (2024): $114,000 to Key Employee Plan; $8,622 to 401(k) .
- The company uses AON and peer proxy data for benchmarking; no fixed employment agreements; indemnification agreements in place .
Performance Compensation
NHC funds a management Bonus Pool equal to 5% of pre-tax earnings excluding unrealized gains/losses on marketable securities; for 2024 this pool was $5,264,459 (based on $105,289,176 pre-tax metric). CEO and NEO bonuses are 80% cash / 20% restricted stock, with RS vesting 1/3 on Jan 1 of each of the next three years .
| Metric/Instrument | Weighting/Terms | Target | Actual/Payout | Vesting/Key Dates |
|---|---|---|---|---|
| Company Pre-tax Earnings (excl. unrealized securities) | 40% of CEO bonus tied to overall financial performance | Not disclosed | Pool funded at 5% of $105,289,176; CEO cash bonus $1,060,000 | RS portion vests 1/3 on 1/1/26, 1/1/27, 1/1/28; RS price basis $90.95 (2/8/24 close) |
| CEO Qualitative Objectives (quality, capital structure, internal control, Board/shareholder comms., succession, LT growth, overall financials, customer/investor satisfaction) | 60% of CEO bonus | Not disclosed | Incorporated into 2024 bonus allocation | Same RS vesting terms as above |
| 2024 Restricted Stock from Bonus | 20% of CEO’s earned bonus; 2,914 shares | — | Granted based on $90.95 price | Vests 1/1/26, 1/1/27, 1/1/28 |
| 2024 Stock Options | 15,000 options @ $94.10; granted 3/5/24; 5-year term | — | Grant-date fair value $243,420 | Vest ratably over 3 years; expire 3/5/2029 |
2025 plan: unchanged design; pool remains 5% of pre-tax (excl. unrealized), 80% cash / 20% RS; 2025 RS to be priced at $103.55 (2/13/25 close), vesting 1/3 on 1/1/27, 1/1/28, 1/1/29 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (3/14/25) | 72,313 shares; includes 5,269 restricted stock and 14,734 options; of these, 2,500 common shares are held in a margin account . |
| Ownership % of SO | ~0.47% (72,313 / 15,461,829 shares outstanding as of 3/14/25) . |
| Unexercised Options (12/31/24) | 15,000 (2024 grant @ $94.10, exp. 3/5/29); 10,000 (2023 grant @ $53.94, exp. 3/8/28); 4,734 (2022 grant @ $63.96, exp. 2/18/27); vest ratably over 3 years . |
| Unvested RS (12/31/24) | 5,384 unearned shares (vest schedule applies) . |
| 2024 Equity Vest/Exercise | 2,651 shares vested (RS); 2,496 options exercised ($248,283 value realized) . |
| Hedging/Pledging Policy | Hedging prohibited (2020 policy; reinforced 11/7/24 in Insider Trading Policy). Disclosure notes 2,500 S. Flatt shares in a margin account; CFO had 5,000 shares pledged. No explicit executive ownership guidelines disclosed . |
| Clawback | Compensation recoupment policy adopted 11/2/2023 . |
Employment Terms
| Provision | Status |
|---|---|
| Employment Agreement | None (no employment contracts with executive officers) . |
| Severance | No separate severance agreements disclosed; indemnification agreements in place . |
| Change-in-Control | 2020 Omnibus Equity Incentive Plan provides acceleration; estimated CoC value to CEO (as of 12/31/24) $2,000,585 for unvested options and RS . |
| Non-Compete/Non-Solicit | Not disclosed in proxy. |
| Deferred Compensation | Key Employee Plan (non-qualified) available; company matches 15% of contribution to the extent invested in NHC stock; CEO contributed $114,000 in 2024 . |
Board Governance (Director Service, Roles, Dual-Role Implications)
- Board service: Director term expires in 2025; nominated for re-election for a three-year term at the 2025 meeting .
- Independence: Board determined all directors except Mr. Flatt are independent; Board met 5 times in 2024, all directors attended at least 75% of meetings .
- Leadership structure: Separate CEO and non-executive Chair (Robert G. Adams); committees (Audit, Compensation, Nominating & Governance) are fully independent and separately chaired .
- Committee roles: As CEO and inside director, Mr. Flatt does not serve on independent committees .
- Director compensation: CEO receives no additional compensation for Board service .
Director Compensation (Board-level, not CEO pay)
| Element | 2024 Policy / Amount |
|---|---|
| Cash fees | $3,000 per scheduled meeting attended; additional annual chair fees: Audit Chair $8,000; Comp and Nominating Chairs $4,000 . |
| Equity | Annual 7,500-share option grant to non-employee directors, 1-year vest, 5-year term, strike = meeting day close . |
| Discretionary bonus to directors | $125,000 cash (used to exercise options or buy stock) for each non-employee director in 2024 . |
Compensation Structure Analysis (Signals)
- Cash vs equity mix: CEO’s 2024 pay included $1,060,000 cash bonus and RS portion (2,914 shares), plus annual stock options; mix continues to emphasize at-risk pay tied to company performance/qualitative goals .
- Plan stability: 2025 plan unchanged (pool formula and 80/20 cash/RS split), indicating continuity rather than loosening standards .
- Clawback and hedging restrictions: Strengthened governance via clawback (11/2/23) and insider trading/hedging policy update (11/7/24) .
Say-on-Pay & Shareholder Feedback
| Year/Item | Outcome |
|---|---|
| Say-on-pay (2024 meeting) | Approved by over 98% of votes cast . |
| Frequency | Annual say-on-pay votes beginning in 2024 . |
Performance & Track Record
| Measure | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Income ($) | 41,871,000 | 138,590,000 | 22,445,000 | 66,798,000 | 101,927,000 |
| Adjusted Income Before Taxes ($) | 76,270,000 | 163,404,000 | 45,505,000 | 75,304,000 | 105,289,000 |
| TSR (Indexed to $100 at 12/31/2019) | 79.20 | 83.43 | 75.58 | 121.89 | 145.07 |
Company notes 2024 audit fee increase was primarily due to work associated with the White Oak portfolio acquisition (execution activity under his tenure) .
Risk Indicators & Red Flags
- Hedging prohibited; updated insider trading policy and blackout periods in place .
- Pledging/margin: Disclosure notes CEO holds 2,500 shares in a margin account; CFO has 5,000 shares pledged—monitor for potential collateral calls or perceived misalignment risk .
- Related party framework: Formal related-party review policy; significant leases and relationships with NHI disclosed; governance controls described .
Equity Vesting and Potential Selling Pressure
| Instrument | Quantity | Key Dates |
|---|---|---|
| 2024 RS from bonus | 2,914 shares | Vests 1/3 on 1/1/26, 1/3 on 1/1/27, 1/3 on 1/1/28 . |
| 2025 RS (prospective) | Amount = 20% of 2025 bonus priced at $103.55 (2/13/25) | Vests 1/3 on 1/1/27, 1/1/28, 1/1/29 . |
| 2024 Options | 15,000 @ $94.10 | Vest ratably over 3 years; expire 3/5/29 . |
| 2023 Options | 10,000 @ $53.94 | Vest ratably over 3 years; expire 3/8/28 . |
| 2022 Options | 4,734 @ $63.96 | Vest ratably over 3 years; expire 2/18/27 . |
| 2024 Exercises | 2,496 options exercised; $248,283 value realized | 2024 . |
Regular January 1 RS vest dates create recurring potential for Form 4 activity and trading windows, subject to blackout policy .
Compensation & Incentives (Detail)
| Item | 2024 Amount/Value |
|---|---|
| Base Salary | $559,819 . |
| Bonus (Cash) | $1,060,000 . |
| Bonus (RS portion) | 2,914 shares based on $90.95 price; 3-year vest . |
| Stock Options (Annual) | 15,000 @ $94.10; grant-date FV $243,420; 3-year vest; 5-year term . |
| Equity Outstanding (12/31/24) | Unvested RS 5,384; unexercised options 15,000/10,000/4,734 with strikes/expirations as above . |
| CoC Acceleration (12/31/24) | $2,000,585 estimated value if change in control event occurred . |
| Clawback | Adopted 11/2/23 . |
Equity Ownership & Alignment (Supplemental Data)
| Metric | Value |
|---|---|
| Shares Outstanding (3/14/25) | 15,461,829 . |
| CEO Beneficial Ownership | 72,313 shares (incl. 5,269 RS; 14,734 options; 2,500 shares in margin account) . |
| Directors & Officers as a Group | 2,314,144 shares (14.97%); includes 261,433 options and 19,394 RS . |
Compensation Committee & Peer Benchmarking
- Committee: Independent (Chair Emil E. Hassan; members Abernathy, LaRoche, Trail). Met Feb 8 and May 9, 2024; Feb 13, 2025 .
- Process: Reviews AON and SEC proxy benchmark data; CEO long-term incentives consider company performance, TSR, comparable CEO awards, and grant history .
- No consultant conflicts disclosed; historical approach emphasizes at-risk pay and broad Partner alignment .
Investment Implications
- Pay-for-performance alignment: The bonus pool formula (5% of adjusted pre-tax earnings) and 80/20 cash/RS split creates line-of-sight to profitability while building equity ownership; annual option grants add longer-dated leverage. Presence of a clawback and anti-hedging policy strengthens governance and reduces tail risk .
- Retention and selling pressure: Multi-year RS vesting and staggered option schedules promote retention but create predictable January vest events and potential Form 4 activity; CEO exercised 2,496 options in 2024, and RS vesting continues 2026–2029 based on recent grants .
- Alignment and risk flags: CEO holds 2,500 shares in a margin account (monitor collateral risk), while CFO has pledged shares; otherwise, hedging is prohibited and say-on-pay support is strong (98%+), lowering governance controversy risk .
- Change-of-control economics: Acceleration under the 2020 plan yields an estimated $2.0M vesting value for the CEO at 12/31/24, indicating meaningful alignment but also potential golden-parachute optics in a sale scenario .
- Performance backdrop: TSR recovery to 145.07 (2019–2024) and rising adjusted pre-tax income support incentive payouts; diligence on execution (e.g., White Oak portfolio integration signaled via audit fee drivers) remains key to sustained value creation .
Notes:
- All citations refer to NHC’s 2025 DEF 14A unless otherwise indicated.
- Financial trend table values marked with an asterisk were retrieved from S&P Global.