Michael Malatesta
SELECT MEDICAL HOLDINGSAbout Michael Malatesta
Michael F. Malatesta is Select Medical’s Chief Financial Officer, appointed effective October 1, 2023, and serves as the company’s principal financial officer . His 2024 pay-for-performance was tied to earnings per share (EPS) and return on equity (ROE) targets; for 2024 the Compensation Committee used adjusted EPS and ROE to determine payouts, leading to a 250% of target bonus outcome for all NEOs including the CFO . Company performance in 2024 included net income of $296.7 million, GAAP EPS of $1.66, and cumulative TSR of $131.60 on a $100 investment, with peer TSR of $84.80 . His base annual salary was increased to $585,000 effective January 1, 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Select Medical Holdings Corporation | Chief Financial Officer (Principal Financial Officer) | 2023–present | Oversees finance and accounting; NEO incentive plans linked to EPS and ROE . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Not disclosed in available proxy materials | — | — | — |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $534,363 | $583,090 |
| Base Annual Salary set ($) | — | $585,000 (effective 1/1/2024) |
| All Other Compensation ($) | $49,902 | $71,857 |
| Total Cash (Salary + Other) ($) | $584,265 | $654,947 |
Performance Compensation
| Metric | Target | Actual | Payout Basis | CFO Target Bonus | CFO Actual Bonus |
|---|---|---|---|---|---|
| EPS (Adjusted) | $1.88 | $2.28 | EPS/ROE matrix | 80% of base salary | $1,170,000 |
| ROE (Adjusted) | 16.40% | 19.1% | EPS/ROE matrix | Max 200% of target | 250% of target achieved |
Notes:
- Committee established target and maximum EPS of $1.88 and $2.07 and ROE of 16.40% and 17.22% for 2024; adjusted EPS and ROE achieved were $2.28 and 19.1%, respectively, resulting in 250% of target bonus payouts .
Equity Awards (Grants and Vesting)
| Grant Date | Shares Granted | Grant Date Fair Value ($) | Vesting Terms |
|---|---|---|---|
| Apr 30, 2024 | 75,000 | $2,127,750 | Cliff vest in full on Apr 30, 2027; pro-rata vesting on death/disability; subject to accelerated vesting rules . |
| Nov 1, 2023 | 25,000 | $564,000 | Cliff vest on Nov 1, 2027; pro-rata vesting on death/disability/CoC . |
| Nov 1, 2022 | 25,000 | — | Cliff vest on Nov 1, 2026; pro-rata vesting on death/disability/CoC . |
| Nov 1, 2021 | 25,000 | — | Cliff vest on Nov 1, 2025; pro-rata vesting on death/disability/CoC . |
| Oct 27, 2020 | 20,000 | — | Vested Oct 27, 2024 . |
Special Event – Concentra Spin-off (2024):
- One-third of unvested SEM restricted stock awards accelerated on Nov 5, 2024; holders received 0.806971 Concentra shares per unvested SEM share, free of restrictions, in connection with the distribution on Nov 25, 2024 .
Vesting Schedule and Outstanding Unvested Equity (as of Dec 31, 2024)
| Award | Unvested Shares | Vest Date | Market Value ($) |
|---|---|---|---|
| RS grant 4/30/2024 | 50,000 | Apr 30, 2027 | $942,500 (at $18.85) |
| RS grant 11/1/2023 | 16,667 | Nov 1, 2027 | $314,173 (at $18.85) |
| RS grant 11/1/2022 | 16,667 | Nov 1, 2026 | $314,173 (at $18.85) |
| RS grant 11/1/2021 | 16,667 | Nov 1, 2025 | $314,173 (at $18.85) |
Total unvested shares: 100,001 .
Vesting in 2024 (value realized on vesting dates):
- 69,999 shares vested for Malatesta across awards; values realized were based on prices $39.18 (Aug 1, 2024), $34.18 (Aug 3, 2024), $31.71 (Oct 27, 2024), and $37.21 (Nov 5, 2024 accelerated portion) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 170,414 SEM shares as of Feb 1, 2025; less than 1% of outstanding . |
| Vested vs Unvested | Unvested RS total 100,001 shares as of 12/31/2024 . |
| Ownership Guidelines | NEOs must hold stock worth ≥1.5x base salary; all NEOs in compliance as of Dec 31, 2024 . |
| Hedging/Pledging | Hedging prohibited by policy; sale of shares from option exercises or RS vesting restricted for one year, net of shares to cover taxes . |
Insider Transactions (indicative of tax withholding, not open-market selling):
- Form 4 filed Oct 28, 2024 (Malatesta) covering transactions around Oct 27 vesting .
- Form 4 filed Nov 7, 2024 (Malatesta) covering transactions around Nov 5 accelerated vesting .
- Form 4 filed Nov 4, 2025 (Malatesta) .
Employment Terms
| Term | Detail |
|---|---|
| Employment Status | At-will; compensation elements subject to annual review . |
| Change-in-Control Agreement | Lump-sum cash payment equal to base salary plus bonus for previous three years if terminated under specified CIC conditions (no excise tax gross-up for Malatesta) . |
| CIC Estimated Payouts (as of 12/31/2024) | Cash severance $3,410,399; equity vesting value $721,182; no tax gross-up . |
| Death/Disability (non-CIC) | Pro-rata vesting on RS; equity vesting value $721,182 . |
| Clawbacks | General recoupment policy (2015) and NYSE Rule 10D-1 clawback (effective 10/2/2023) covering erroneously awarded incentive compensation . |
Perquisites and Other:
- Primary perquisite is access to company aircraft in limited circumstances (personal emergency/bereavement with approval); dividends paid on unvested restricted stock are included in all other compensation .
Multi-Year Compensation (CFO)
| Metric | 2023 | 2024 |
|---|---|---|
| Salary ($) | $534,363 | $583,090 |
| Bonus ($) | $377,979 (discretionary) | — |
| Stock Awards ($) | $564,000 | $2,127,750 |
| Non-Equity Incentive ($) | — | $1,170,000 |
| All Other Compensation ($) | $49,902 | $71,857 |
| Total ($) | $1,526,244 | $3,952,697 |
Governance & Shareholder Feedback (Context)
- Say-on-pay approval: 2025 proxy references strong support at last meeting (106,777,980 for; 14,125,946 against) .
- Compensation committee did not engage a consultant in 2024; long-term equity uses time-based vesting due to regulatory volatility and to avoid option disincentives; no option awards in 2024 .
Investment Implications
- Pay-for-performance alignment: CFO’s variable pay is tightly linked to EPS and ROE targets via an objective matrix; 2024 adjusted results delivered above-target outcomes, resulting in a 250% bonus payout of target (80% of salary) .
- Retention and selling pressure: Significant unvested RS (~100k shares) with multi-year cliffs and one-year post-vesting sale restrictions (except for tax withholding) reduce near-term selling pressure, though 2024 accelerated vesting due to the Concentra spin-off generated Form 4 tax dispositions around Nov 5, 2024 .
- CIC economics: Change-in-control cash severance ($3.41m) plus vesting of RS ($0.72m) is meaningful but lacks excise tax gross-up, moderating shareholder-unfriendly features for the CFO relative to certain peers .
- Skin-in-the-game: Beneficial ownership of ~170k shares and compliance with stock ownership guidelines support alignment; dividends on unvested RS augment carry value .