Robert Ortenzio
SELECT MEDICAL HOLDINGSAbout Robert A. Ortenzio
Robert A. Ortenzio is Executive Chairman and Co‑Founder of Select Medical (SEM), serving as Executive Chairman since January 1, 2014 and Director since 2005; he was SEM’s CEO from 2005–2013 and previously held senior roles at Horizon/CMS Healthcare, Continental Medical Systems (co‑founder), and Rehab Hospital Services Corporation . He is age 67 and currently also chairs the board of Concentra Group Holdings Parent, Inc. . SEM’s pay‑versus‑performance disclosures show cumulative TSR of $131.60 on a $100 investment from 12/31/2020 to 12/31/2024 versus $84.80 for the S&P Health Care Services Select Industry Index, and EPS of $1.66 in 2024 (company‑reported metrics) . SEM reported revenues of $4,609.2M*, $4,825.98M*, and $5,187.11M* for FY 2022–2024 and EBITDA of $248.46M*, $402.93M*, and $411.18M* for the same periods, indicating multi‑year growth momentum.*
- Values retrieved from S&P Global.*
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Select Medical Holdings | Executive Chairman & Co‑Founder | 2014–present | Leads board oversight and investor/regulatory engagement; separates CEO and Chair roles to promote information flow and strategy alignment . |
| Select Medical Holdings | Chief Executive Officer | 2005–2013 | Oversaw company growth, joint ventures, and development initiatives . |
| Select Medical Corporation | President & CEO | Sep 2001–Jan 2005 | Led operations prior to SEM holding company era . |
| Select Medical Corporation | President & COO | Feb 1997–Sep 2001 | Senior operating leadership post co‑founding . |
| Horizon/CMS Healthcare | EVP & Director | Jul 1995–Jul 1996 | Executive role at diversified healthcare operator . |
| Continental Medical Systems | Co‑Founder; CEO/President/COO | 1986–1996 | Built and ran post‑acute platform; multiple C‑suite roles . |
| Rehab Hospital Services Corp. | Vice President | Pre‑1986 | Specialty rehab platform experience . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Concentra Group Holdings Parent, Inc. | Chairman, Director | Current | Chairs board; owns ~6.4% of Concentra post spin‑off; intercompany separation agreements in place . |
| Concentra Group Holdings, LLC | Director | Current | Continued oversight of former SEM segment . |
Fixed Compensation
| Component | 2024 | 2023 | 2022 |
|---|---|---|---|
| Base Salary ($) | 995,000 | 995,000 | 995,000 |
| Target Bonus (% of salary) | 100% | 100% (plan historically) | 100% (plan historically) |
| Max Bonus (% of salary) | 250% | 250% (plan historically) | 250% (plan historically) |
| Actual Bonus ($) | 2,487,500 (payout 250% of target) | 1,890,500 | — |
| Total Compensation ($) | 10,343,119 | 10,771,792 | 8,838,325 |
| All Other Compensation ($) | 335,519 | 406,292 | 415,825 |
All Other Compensation (2024) detail:
- 401(k) match: $5,175
- Personal aircraft use: $41,677
- Dividends on unvested restricted stock: $282,916
- Physical exam reimbursement: $5,751
Performance Compensation
| Metric | Target | Actual | Payout | Vesting/Notes |
|---|---|---|---|---|
| Adjusted EPS | $1.88 (target), $2.07 (max) | $2.28 (adjusted for debt extinguishment, spin‑off costs and equity impact) | 250% of target for all NEOs | Cash bonus under Amended & Restated Executive Bonus Plan; payout per matrix |
| Return on Equity | 16.40% (target), 17.22% (max) | 19.1% (adjusted) | 250% of target | Cash bonus per matrix |
| Equity Awards (time‑based RS) | 230,000 shares granted 4/30/2024 | N/A | N/A | Vests in 3 equal tranches on 4/30/2025–2027; pro‑rata acceleration for death/disability/CoC . One‑third of unvested awards accelerated on 11/5/2024 due to Concentra spin‑off; recipients also received 0.806971 Concentra shares per SEM RS share, unrestricted . |
Compensation governance:
- Ownership guidelines: Executive Chairman required ≥3x salary; all NEOs in compliance as of 12/31/2024 .
- Anti‑hedging policy prohibits hedging transactions .
- Clawbacks: General Recoupment Policy (2015) and Rule 10D‑1 Compensation Recovery Policy (effective 10/2/2023) for restatements .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership (shares; %) | 8,952,033 shares; 6.94% of SEM outstanding (as of 2/1/2025) |
| Trust Holdings (included) | 1,279,000 shares in Descendants Trust; 280,415 shares each in April 2014 Trusts for Kevin, Bryan, Madeline; co‑trustee; disclaims beneficial ownership except fiduciary capacity |
| Stock Ownership Guidelines | Exec Chairman ≥3x base salary; all NEOs met guidelines as of 12/31/2024 |
| Post‑vesting sale restriction | 1‑year hold on shares received from option exercise or RS vesting (net of taxes/exercise price) |
| Anti‑hedging / pledging | Hedging prohibited; no pledging disclosure found in proxy . |
Outstanding Equity Awards at FY‑end (12/31/2024) – Unvested RS for Ortenzio:
| Grant Date | Unvested Shares (#) | Market Value ($) |
|---|---|---|
| 04/30/2024 | 153,333 | 2,890,327 |
| 08/01/2023 | 111,111 | 2,094,442 |
| 08/01/2022 | 55,555 | 1,047,212 |
Stock Vested in 2024:
| Shares Vested (#) | Value Realized ($) |
|---|---|
| 526,667 | 19,319,611 |
2024 Equity Grants (Grant-Date Fair Value):
| Grant Date | Shares Granted | Grant-Date Fair Value ($) |
|---|---|---|
| 04/30/2024 | 230,000 | 6,525,100 |
Employment Terms
| Provision | Key Terms |
|---|---|
| Agreement & Term | Employment agreement dated March 1, 2000; auto‑extends 1 year on each anniversary to maintain rolling 3‑year term; non‑renewal via advance notice . |
| Non‑compete | 25‑mile radius of SEM hospitals/clinics during employment and for 2 years post‑termination; 1‑year non‑solicit of SEM employees . |
| Termination (without cause / good reason, non‑CoC) | Immediate vesting of any unvested stock options outstanding (legacy), pro‑rated bonus for year of termination (based on actual performance), and installment payments equal to base salary remaining over the employment term (starting 6 months post‑termination; release required) . |
| Disability | Salary continuation via insurance at 50% of base salary for up to 10 years, subject to early termination if able to resume employment . |
| Change‑in‑Control (CoC) | Single‑trigger: if terminated without cause within 1 year post‑CoC, or resigns for any reason within 1 year post‑CoC, or terminated within 6 months pre‑CoC at request of a third party; pro‑rated bonus for year of termination, cash equal to base salary + bonus for previous 3 completed calendar years (paid in installments over remaining term; first payment at 7 months post‑termination), and immediate vesting of stock options (immediately prior to CoC) . |
| 280G Gross‑Up | Entitled to excise tax gross‑up on “excess parachute payments” under 280G/4999 (policy bars adding gross‑ups to new agreements) . |
| Estimated CoC payouts (12/31/2024) | Cash severance $7,363,000; pro‑rata bonus $2,487,500; equity vesting value $3,266,328; tax gross‑up estimated $0 for that scenario . |
Board Governance
- Roles and independence: SEM separates Executive Chairman (Robert A. Ortenzio) and CEO roles; eight of ten directors are NYSE‑independent; Russell L. Carson serves as Lead Independent Director .
- Committee structure (independent membership):
- Audit & Compliance: Ely (Chair), Davisson, Frist, Khanuja, Thomas; all independent; all are audit committee financial experts; 5 meetings in 2024 .
- Human Capital & Compensation: Thomas (Chair), Davisson, Scully; fully independent; 5 meetings in 2024 .
- Nominating, Governance & Sustainability: Tavenner (Chair), Ely, Carson; fully independent; 4 meetings in 2024 .
- Quality of Care & Patient Safety: Frist (Chair), Khanuja, Tavenner; 4 meetings in 2024 .
- Board activity/attendance: Board met five times in 2024; all directors attended ≥75% of board and applicable committee meetings; directors are expected to attend annual meetings and did so in 2024 .
- Executive participation in compensation: At the committee’s request, Ortenzio participated in comp committee meetings and recommended levels for other NEOs; committee makes final determinations .
Director Compensation (non‑employee directors, 2024):
| Cash Retainer (quarterly) | Board Meeting Fees | Committee Meeting Fees | Annual Equity |
|---|---|---|---|
| $18,000 (option to receive in stock) | $3,000 in‑person; $600 telephonic | Audit: $4,000–$5,000 in‑person/$2,000 tele; Nominating: $1,500–$2,000/$500; Compensation: $1,500–$2,000/$500; Quality: $2,500–$3,000/$1,000 | 10,000 RS shares granted 4/30/2024, 1‑year vest; 2025 policy proposes $200,000 annual RS . |
Say‑on‑pay results (most recent):
- 106,777,980 “For”, 14,125,946 “Against”, 42,832 abstentions; 2,545,553 broker non‑votes; program approved .
Related Party Transactions and Interlocks
- NetJets Agreement: SEM pays Ortenzio for corporate use of aircraft leased via NetJets; Ortenzio received $128,090 in 2024 under the agreement (25 hours/year SEM usage during 60‑month term ending 6/30/2026) .
- Concentra separation: SEM completed Concentra IPO (7/26/2024) and spin‑off (11/25/2024); multiple intercompany agreements executed; Ortenzio and Director Daniel J. Thomas serve on Concentra’s board; Ortenzio owns ~6.4% of Concentra .
Performance & Track Record (Company context)
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Revenues ($USD) | 4,609.18M* | 4,825.98M* | 5,187.11M* |
| EBITDA ($USD) | 248.46M* | 402.93M* | 411.18M* |
- Revenue growth: +4.7% YoY (2022→2023); +7.5% YoY (2023→2024).
- EBITDA growth: +62.2% YoY (2022→2023); +2.0% YoY (2023→2024).
- Values retrieved from S&P Global.*
Risk Indicators & Red Flags
- Single‑trigger CoC for Executive Chairman (resign for any reason within 1 year post‑CoC) increases severance optionality; excise tax gross‑up eligibility appears in policy (estimated $0 in scenario table) .
- Time‑based RS over PSUs; board rationale cites regulatory variability and Medicare risk; increases retention but reduces direct performance linkage in equity .
- Accelerated vesting of unvested RS (one‑third) due to Concentra spin‑off increased immediate equity liquidity; recipients also received unrestricted Concentra shares per RS .
- Related party aircraft arrangement (NetJets) with payments to Executive Chairman indicates perquisite‑linked cash flow to insider .
- Robust clawbacks (Rule 10D‑1) and anti‑hedging policy mitigate misalignment risk .
- Post‑vesting mandatory 1‑year holding period reduces near‑term selling pressure from vested awards .
Compensation Structure Analysis
- Cash vs equity mix: 2024 saw sizable RS grant ($6.525M grant‑date value) and maximum bonus ($2.488M) alongside flat base salary ($995k), indicating strong at‑risk pay tied to EPS/ROE and time‑vest equity .
- Performance metrics continuity: EPS and ROE remain core drivers with disclosed target/max thresholds and matrix; committee retained historical approach without external consultant in 2024 .
- Governance mitigants: independent comp committee; ownership guidelines (3x salary) met; clawbacks and hedging ban .
Employment & Contracts (Retention/Transition)
| Item | Detail |
|---|---|
| Start in current role | Executive Chairman since 2014 |
| Contract renewal | Rolling 3‑year term auto‑extends annually; non‑renewal via notice |
| Non‑compete | 25‑mile radius, 2 years post‑departure; non‑solicit 1 year |
| Severance (non‑CoC) | Remaining term base salary + pro‑rated bonus; immediate vesting of legacy options; disability 50% salary up to 10 years . |
| Change‑in‑Control | Single‑trigger resignation permitted; 3‑year lookback base+bonus cash; option vesting; pro‑rated bonus; excise tax gross‑up eligibility . |
Investment Implications
- Alignment: Ortenzio’s 6.94% ownership, mandatory 1‑year post‑vest holding, and 3x salary ownership guideline indicate strong alignment; anti‑hedging and clawbacks further de‑risk compensation .
- Incentive design: Cash bonuses are formulaic on adjusted EPS and ROE with transparent targets and matrix; equity is time‑vest RS (no PSUs), favoring retention over direct TSR‑linked equity—scrutinize long‑term equity alignment amid regulatory variability .
- Liquidity and selling pressure: 2024 accelerated RS vesting and large vest counts increase potential liquidity, but the 1‑year hold materially tempers near‑term selling; monitor Form 4s post the hold period for signals .
- Change‑in‑control economics: Single‑trigger severance with 3‑year lookback base+bonus is generous (estimated $7.36M cash plus pro‑rated bonus and equity vesting as of 12/31/2024); excise tax gross‑up eligibility is shareholder‑unfriendly—factor into governance risk and M&A scenarios .
- Governance checks: Independent committees, lead independent director, and high board attendance support oversight; however, Executive Chairman participation in comp deliberations warrants continued monitoring for independence and process rigor .