Michael L. Costa
About Michael L. Costa
Michael L. Costa is Sabra Health Care REIT’s Chief Financial Officer, Secretary and Executive Vice President (CFO since January 2022), and Sabra’s Principal Accounting Officer since January 2021; he previously served as Chief Accounting Officer (2021), EVP–Finance (2017–2021), VP–Finance & Controller (2016–2017), and Controller (2010–2016) . He is 46, holds an M.S. in Accounting (University of Virginia) and a B.S. in Accounting (California State University, Fullerton), and is a Certified Public Accountant and licensed California real estate broker . During his CFO tenure, Sabra’s adjusted normalized FFO per share reached $1.4777 in 2024 (max bonus payout year) while cumulative TSR (value of $100) improved from 74.54 in 2022 to 123.36 in 2024 .
Sabra financial trajectory (annual):
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($) | 400,586,000 | 376,266,000 | 381,495,000 |
| EBITDA ($) | 323,000,000 | 395,888,000* | 421,187,000* |
| Net Income ($) | (77,605,000)* | 13,756,000 | 126,712,000 |
| Cash from Operations ($) | 315,733,000 | 300,571,000 | 310,541,000 |
| EBITDA Margin % | 60.72%* | 61.41%* | 59.94%* |
| Values with * retrieved from S&P Global. |
Stock performance (value of initial fixed $100 investment):
| Year | SBRA TSR ($100 basis) |
|---|---|
| 2022 | 74.54 |
| 2023 | 94.05 |
| 2024 | 123.36 |
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Sabra Health Care REIT | Controller | 2010–2016 | Built and led accounting function since Sabra’s inception . |
| Sabra Health Care REIT | VP–Finance & Controller | 2016–2017 | Expanded finance leadership ahead of EVP elevation . |
| Sabra Health Care REIT | EVP–Finance | 2017–2021 | Oversaw finance; key management contributor . |
| Sabra Health Care REIT | Chief Accounting Officer (Principal Accounting Officer) | 2021 | Elevated responsibilities; PAO designation . |
| Sabra Health Care REIT | CFO, Secretary, EVP | 2022–present | Executive finance leadership, capital allocation, and board committee participation . |
| KBS Realty Advisors | Finance/Real Estate | Pre-2010 | Commercial real estate finance experience . |
| Ernst & Young (Real Estate Assurance) | Assurance | Pre-2010 | Real estate assurance/audit experience . |
External Roles
- No public company board positions or external directorships disclosed for Costa in Sabra’s filings .
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 450,000 | 510,000 | 585,000 |
| Target Bonus (% of Salary) | 100% | 100% | 100% |
| Actual Annual Bonus ($) | 336,960 | 1,020,000 | 1,170,000 |
- 2024 target bonus remained 100% of salary; payout funded at 200% based on adjusted normalized FFO per share exceeding the maximum goal (actual $1.4777 vs goal $1.4227; maximum at $1.4654) .
- Compensation Committee raised Costa’s base salary 14.7% for 2024 and 10.3% for 2025, reflecting market and performance adjustments since his 2022 CFO appointment .
Performance Compensation
Annual incentive – 2024
| Metric | Weighting | Target | Max | Actual | Payout | Vesting |
|---|---|---|---|---|---|---|
| Adjusted normalized FFO per share | 100% of bonus | $1.4227 | $1.4654 | $1.4777 | 200% of target | Cash bonus paid (plan terms) |
Long-term equity – 2024 annual grants (grant date 12/27/2024)
| Award type | Metric | Weight in LT mix | Units granted | Grant-date fair value ($) |
|---|---|---|---|---|
| Time-Based Units | Service vest (4 equal annual tranches 2025–2028) | ~35% of total | 37,477 | 595,135 |
| FFO Units | Adjusted normalized FFO/share measured in 2027; 0–200% payout; threshold 90.96%, target 100%, max 109.04% | ~20% of total | 21,416 (target) | 340,086 |
| TSR Units | Relative TSR vs 57-REIT peer set; threshold 25th pct (45%), target 55th pct (100%), max 80th pct (200%); capped at 100% if absolute TSR negative | ~45% of total | 39,191 (target) | 775,982 |
Design features and recent outcomes:
- Mandatory deferral: all NEO long-term awards must be deferred for five calendar years post-grant, plus a one-year post-vesting holding period; dividend equivalents reinvested in units subject to same vesting conditions .
- Clawback: incentive compensation subject to SEC/Nasdaq-compliant recoupment upon accounting restatement .
- Cycle outcomes: 2021 FFO Units forfeited (below threshold), while 2021 TSR Units paid 200% at 99th percentile relative TSR, evidencing rigorous goals and pay-for-performance alignment .
Equity Ownership & Alignment
Beneficial ownership and guidelines:
| Item | Detail |
|---|---|
| Beneficially owned SBRA shares | 128,033; <1% of outstanding |
| Stock ownership policy | 5× base salary for executives; in compliance; 50% net shares retention until compliance |
| Anti-hedging/anti-pledging | Hedging, short sales, and pledging prohibited; none pledged by executives |
| Deferred vested units (balance) | $2,533,612 aggregate balance at 12/31/2024 (nonqualified deferred comp) |
Outstanding awards and vesting schedule (as of 12/31/2024; $17.32 close used for market values):
| Type | Vesting date(s) | Units | Market value ($) |
|---|---|---|---|
| Time-Based Units | 12/31/2025 | 7,986 | 138,318 |
| Time-Based Units | 12/31/2025, 12/31/2026 | 20,623 | 357,190 |
| Time-Based Units | 12/31/2025, 12/31/2026, 12/31/2027 | 29,485 | 510,680 |
| Time-Based Units | 12/31/2025–12/31/2028 | 37,477 | 649,102 |
| FFO Units (threshold display) | 12/31/2025 | 7,775 | 134,663 |
| TSR Units (max display) | 12/31/2025 | 80,236 | 1,389,688 |
| FFO Units (threshold display) | 12/31/2026 | 7,413 | 128,393 |
| TSR Units (max display) | 12/31/2026 | 86,274 | 1,494,266 |
| FFO Units (threshold display) | 12/31/2027 | 7,067 | 122,400 |
| TSR Units (max display) | 12/31/2027 | 78,382 | 1,357,576 |
- Costa had 102,465 shares acquired on vesting in 2024 (value $1,768,024), with significant amounts deferred per policy .
Employment Terms
| Term | Costa detail |
|---|---|
| Agreement term/renewal | 3-year initial; auto-renews for 3 years on each anniversary unless notice; new CFO agreement signed January 2022 . |
| Severance (no CIC) | 1.5× (base salary + 3-year average actual bonus); prorated bonus based on actual performance; up to 18 months health benefits; double-trigger not applicable . |
| Severance (with CIC) | 2.0× multiple; prorated target bonus (100%); up to 24 months health benefits; double-trigger required . |
| Equity acceleration | Double-trigger: service RSUs and target FFO Units accelerate; TSR Units accelerate to earned based on actual performance in CIC scenarios; full vest on death/disability (target for FFO/TSR; all time-based) . |
| Tax gross-ups | None; 280G cut-back applies if beneficial . |
| Clawback | SEC/Nasdaq-compliant clawback policy for incentive comp . |
| Restrictive covenants | Confidentiality; non-solicit of employees/customers for 1 year post-termination; mutual non-disparagement . |
| Committee interaction | CFO regularly attends Board committee meetings when not in executive session . |
Potential payouts illustration (as of 12/31/2024):
| Scenario | Cash severance ($) | Equity acceleration ($) | Health benefits ($) | Total ($) |
|---|---|---|---|---|
| Death/Disability | — | 5,812,298 | — | 5,812,298 |
| Involuntary termination (no CIC) | 2,228,856 | — | 47,544 | 2,276,400 |
| Involuntary termination in connection with CIC | 2,971,808 | 5,812,298 | 63,391 | 8,847,497 |
Compensation Structure Analysis
- Pay mix: Substantial at-risk pay with 65% of equity awards performance-based (TSR Units ~70% of performance mix), a stringent five-year deferral and one-year post-vesting hold creating durable alignment and dampening near-term selling pressure .
- Annual incentive rigor: 2024 FFO/share target exceeded maximum, paying 200%—but prior 2021 FFO Units were forfeited while TSR paid at 200% (99th percentile), demonstrating asymmetric outcomes across metrics and true performance sensitivity .
- Governance: No excise tax gross-ups; robust anti-hedging/anti-pledging; clawback policy; strong ownership requirements (5× salary) with compliance—reducing misalignment risks .
- Peer benchmarking: Compensation referenced to ~50th percentile peer group, with 2024 target total direct compensation above median given high Company performance; 2024 say-on-pay approval 94.6% indicates broad shareholder support .
Say-on-Pay & Peer Group
| Item | Detail |
|---|---|
| 2024 say-on-pay support | 94.6% of votes cast |
| Compensation philosophy | Reference 50th percentile peer median for target total direct comp, adjusted for performance and experience . |
| 2024 comp peer group | 20 REITs including CareTrust REIT, Healthpeak Properties, Omega Healthcare Investors, W. P. Carey, etc. (adds: Essential Properties, Safehold, Terreno; removes Spirit Realty due to acquisition) . |
| TSR comparison peer set | 57 U.S. REITs across healthcare, industrial, office ≥$100M market cap (used for TSR Units) . |
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited; none pledged—positive alignment signal .
- Clawback: In place and compliant—reduces restatement risk exposure .
- Option repricing: None disclosed; no option awards outstanding for Costa (all $0 in option columns) .
- Related party transactions: None involving Costa; only a CIO consulting agreement disclosed (Nevo-Hacohen) .
- Say-on-pay: Strong approval history—low governance friction risk .
Expertise & Qualifications
- Technical: CPA; extensive real estate finance and accounting; EY real estate assurance; KBS Realty Advisors experience .
- Industry tenure: At Sabra since inception (2010) with progressive finance leadership culminating in CFO role .
Performance & Track Record
- TSR: 99th percentile relative TSR for 2021–2024 performance cycle; 2024 year saw TSR value at $123.36 per $100 invested (vs $94.05 in 2023, $74.54 in 2022) .
- FFO/share: 2024 adjusted normalized FFO/share $1.4777, exceeding maximum bonus threshold .
- Liquidity and capital: 2024 year-end liquidity cited at ~$980 million company-wide; management commentary indicates strengthened balance sheet and portfolio quality .
Investment Implications
- Alignment and retention: Five-year deferral plus one-year hold materially mitigates near-term selling pressure, supporting long-term alignment; ownership policy (5× salary) and anti-pledging enhance signal quality .
- Performance sensitivity: Bonus anchored to FFO/share with rigorous thresholds; equity tilted toward relative TSR—prior-cycle divergence (TSR max vs FFO forfeiture) underscores metric balance and potential volatility in realized pay .
- Change-in-control economics: Double-trigger acceleration and 2.0× severance multiple under CIC offer retention but manageable shareholder protection (no tax gross-ups) .
- Governance durability: Strong say-on-pay approval and independent compensation oversight reduce policy risk; peer benchmarking at ~50th percentile helps contain pay inflation .
Values with * retrieved from S&P Global.