Thomas Scully
SELECT MEDICAL HOLDINGSAbout Thomas A. Scully
Thomas A. Scully (age 67) is an independent director of Select Medical Holdings Corporation (SEM), serving since 2005 with his current term expiring in 2027 . He is a General Partner at Welsh, Carson, Anderson & Stowe (WCAS), Principal at Lincoln Policy Group, and previously Senior Counsel at Alston & Bird; he also served as Administrator of the Centers for Medicare & Medicaid Services (CMS) and as President & CEO of the Federation of American Hospitals, providing deep regulatory and health services expertise . The Board has determined Scully is independent under NYSE listing standards ; Board met five times in 2024 with all directors attending at least 75% of Board meetings and all committee meetings for which they were members .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Centers for Medicare & Medicaid Services (CMS) | Administrator | May 2001 – Jan 2004 | Led Medicare/Medicaid, SCHIP; regulatory oversight during major policy period |
| Federation of American Hospitals | President & CEO | Jan 1995 – May 2001 | Industry leadership, policy advocacy |
| Alston & Bird | Senior Counsel | 2004 – 2017 | Healthcare policy advisory; legal/regulatory expertise |
| Welsh, Carson, Anderson & Stowe | General Partner | 2004 – Present | Healthcare investment analysis; strategic governance perspective |
| Lincoln Policy Group | Principal | 2017 – Present | Policy advisory; government affairs |
External Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| InnovAge Holding Corp. | Director | Current | Governance experience (committee roles not disclosed) |
| Universal American Corp. | Director | 2008 – 2017 | Oversight in health insurance/services (committee roles not disclosed) |
Board Governance
- Committee memberships: Human Capital and Compensation Committee (member); Compensation Committee met five times in 2024 and is composed entirely of independent directors, chaired by Daniel J. Thomas .
- Independence: The Board determined Scully is independent; 8 of 10 directors are independent .
- Attendance and engagement: Board met five times in 2024; all directors attended at least 75% of Board meetings and all committee meetings of which they were members; all directors attended the 2024 annual meeting .
- Governance signals: Management proposed eliminating supermajority voting requirements (Proposal #2) after a prior stockholder vote; requires 66⅔% approval to adopt; Board recommends FOR . The Board submitted a Non-Employee Director Compensation Policy for stockholder approval, partly to resolve a stockholder demand on director pay levels . Stockholders supported say‑on‑pay with ~88% approval in April 2024, indicating investor confidence in compensation oversight .
Fixed Compensation
| Component | 2024 Amount | Notes |
|---|---|---|
| Fees Earned (Cash) | $88,000 | Received entirely in cash; no stock election for retainer |
| Stock Awards (Grant-Date Fair Value) | $283,700 | 10,000 restricted shares granted April 30, 2024; one-year vest |
| Total 2024 Director Compensation | $371,700 | Cash + equity grant value |
| 2024 Director Equity Grant Detail | Grant Date | Shares | Vesting | Grant-Date Value |
|---|---|---|---|---|
| Annual restricted stock | Apr 30, 2024 | 10,000 | Vests in full on first anniversary | $283,700 |
| 2025 Policy (Subject to Stockholder Approval) | Cash Retainer (Annual) | Equity Grant (Annual) |
|---|---|---|
| Non‑Employee Director Compensation Policy | $72,000 (paid $18,000 quarterly) | $200,000 in restricted stock; annual self‑executing awards post-approval |
- Meeting fee schedule (reference): Board attendance $3,000 in-person/$600 telephonic; committee attendance per policy varies by committee (Audit $4,000–$5,000 in-person; telephonic $2,000; other committees lower); additional chair attendance fees apply; directors may elect to receive quarterly retainer in stock; all directors reimbursed for expenses .
Performance Compensation
| Element | Structure | Metrics | Vesting/Terms |
|---|---|---|---|
| Annual Director Equity | Time-based RS Award | None (no performance metrics for directors disclosed) | One-year vest from grant; future policy grants equal $200,000 value; new director grants vest over five years (one-fifth annually) |
No director performance metrics (e.g., EPS/ROE) are tied to non-employee director compensation; metrics disclosed apply to executive bonuses, not directors .
Other Directorships & Interlocks
| Relationship | Details | Potential Governance Impact |
|---|---|---|
| Shared affiliation with WCAS | Scully is General Partner at WCAS; Lead Director Russell L. Carson co-founded WCAS and is a long‑standing general partner | Potential influence/interlock risk due to common private equity affiliation; Board affirms independence determination under NYSE rules |
| External board roles | InnovAge director (current); Universal American director (past) | Broader industry insights; monitor for conflicts with SEM stakeholders (no specific conflicts disclosed) |
Expertise & Qualifications
- Regulatory leadership: Former CMS Administrator; deep understanding of federal reimbursement, compliance, and healthcare payment policy .
- Healthcare operations and investment: Leadership roles at Federation of American Hospitals and WCAS; applied investment and operational expertise to healthcare companies .
- Policy and legal advisory: Principal at Lincoln Policy Group; former Senior Counsel at Alston & Bird; provides board with health policy and regulatory perspectives .
- Board affirms Scully provides “valuable insight into the regulatory regime and requirements of the healthcare industry” and applies investment and legal experience to healthcare issues .
Equity Ownership
| Item | Amount/Status |
|---|---|
| Beneficial ownership (Feb 1, 2025) | 89,389 shares; less than 1% of outstanding |
| Outstanding unvested director equity (12/31/2024) | 10,000 shares (Apr 30, 2024 grant) |
| Ownership guidelines | Directors must own ≥5× annual cash compensation (excluding meeting fees); all directors complied or had time remaining as of Dec 31, 2024 |
| Hedging/pledging | Company prohibits hedging of company securities; pledging status for directors not disclosed in proxy |
Governance Assessment
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Strengths:
- Independence and engagement: Scully is designated independent and participates on a key compensation committee that met five times in 2024, supporting oversight of pay and human capital .
- Relevant expertise: Regulatory (CMS), investment (WCAS), and policy experience add depth in reimbursement and governance matters .
- Ownership alignment: Holds meaningful SEM equity; board-level stock ownership guidelines enforced; anti‑hedging policy in place .
- Responsiveness signals: Board proposed eliminating supermajority requirements and sought stockholder approval of director pay policy following a stockholder demand, indicating attention to governance concerns .
-
Risks and RED FLAGS:
- Interlock/affiliation risk: Shared WCAS affiliation with Lead Director Carson could create perceived influence channels; continued monitoring of related-party and independence assessments recommended (Board affirms independence) .
- Long tenure: Director since 2005; while experience is valuable, long tenure can raise questions about fresh challenge to management; mitigated by independent status and committee work .
- Related-party environment: Material related-party leases and aircraft arrangements involve Executive Chairman Robert A. Ortenzio (not Scully), but underscore the need for strong independent oversight; company uses third‑party appraisals and non‑interested board approvals .
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Compensation alignment:
- Director pay mix: Cash plus time‑based equity; no performance conditions; equity enhances alignment but lacks performance gating; the new policy standardizes equity at $200,000 and cash at $72,000, clarifying future expectations and addressing stockholder concerns .
Overall, Scully’s regulatory and investment credentials strengthen board oversight in reimbursement and compensation. Key governance watchpoints are the WCAS interlock with the Lead Director and the company’s related-party transactions elsewhere in the boardroom, making continued scrutiny of independence safeguards and committee rigor prudent .