UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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CHANGE HEALTHCARE INC.

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Howard Lance   Chairman of the Board	Neil de Crescenzo   President & Chief Executive Officer

“Fiscal year 2020 was an exceptional year for Change Healthcare as we made great strides across our business segments.”

Dear Fellow Stockholders,

On behalf of the Board of Directors and leadership of Change Healthcare, we thank you for your support during this pivotal year for Change Healthcare. As we reflect on our journey in building a leading independent healthcare technology company, we are immensely proud of our accomplishments, which are due to the hard work and innovation of our team members as they took advantage of opportunities and addressed challenges. In fiscal year 2020 we completed two key transactions: our initial public offering and the disposition by McKesson Corporation of all of its ownership interest in Change Healthcare to McKesson stockholders. With these important milestones reached, we are focused on accelerating growth and innovation. We are tremendously energized about the years ahead.

Long-Term Strategy and Value Creation

The Board is intently focused on overseeing Change Healthcare’s commitment to maximizing long-term value for our stockholders. By concentrating on our long-term objectives and leveraging our well established and scaled platform, a strong new business pipeline, a world-class innovation engine and deep customer and partner relationships, we are poised to accelerate growth and create lasting value for our stockholders, customers and employees alike.

Key Fiscal Year 2020 Accomplishments

Fiscal year 2020 was an exceptional year for Change Healthcare as we made great strides across our business segments. A few of the achievements that underpinned our strong results include the following:

We believe these and other accomplishments are a testament to the opportunity for our business and the talent of our team members.

Evolution of Board Composition

As we evolved as a company over the course of fiscal year 2020, we also evolved as a Board, welcoming two new independent directors since our initial public offering, Diana McKenzie and Nella Domenici, and re-welcoming Bansi Nagji as an independent director while expressing our gratitude to the McKesson affiliated directors who exited. The exceptional skills of each of our directors combined with their diverse experience, perspectives and attributes positions us well to effectively oversee Change Healthcare’s strategy, growth, business priorities and risks. We will continually assess the needs of our Board as we grow as a company, while continuing to demonstrate our commitment to ensuring diverse backgrounds are represented in our membership.

Commitment to Compliance and Security

Compliance and ethics are an integral part of who we are at Change Healthcare, as we view these areas as instrumental to our business success. Our company values define how we do business, with compliance being mandatory, not optional, as demonstrated by the investment we have made in our award-winning code of conduct training program. We appreciate the critical role that our solutions play in the healthcare ecosystem and recognize the responsibility that our customers have entrusted us with to safeguard our and their assets. The Board will continue to prioritize our oversight in this area to ensure that Change Healthcare executes with a keen focus on compliance and security.

An Update on Diversity & Inclusion

Our values at Change Healthcare, especially “Include All,” represent our position on bigotry, hatred, and inequality in every form – we do not tolerate it. When we see shocking actions that bring injustice into sharp focus, inaction is impossible. While we cannot solve injustice in our society solely through actions within our company, we are committed to keeping our work environment a safe and welcoming place for all of our team members.

COVID-19

Finally, we want to address the COVID-19 (coronavirus) situation that began to significantly impact the U.S. healthcare system late in our fiscal year 2020. Throughout our response to this global pandemic, the wellbeing of our employees, their families, our customers and our partners has been our top priority. The Board has closely monitored Change Healthcare’s business and response, receiving frequent updates and briefings from management and providing guidance. When this crisis began, we immediately recognized that our customers would rely on us more than ever. The Change Healthcare team worked around the clock to support our customers, collaborate with our partners and continue our tradition of innovation so we could navigate this challenging time together. This crisis has only strengthened our dedication to our vision of inspiring a better healthcare system. As our customers continue to grapple with the long-lasting consequences to the healthcare system, we are resolved to apply our customer-centric innovation model to developing new solutions to solve the rapidly evolving challenges the healthcare system is facing. Our innovation was illustrated in our recent announcements around providing ordering and testing networking services and clinical triage services for COVID-19, as well as our telehealth solution bundles.

Welcome to the Change Healthcare Family

Fiscal year 2020 was a pivotal year for Change Healthcare. We are using our momentum, and especially our ability to be agile and innovate, to accelerate our growth.

Thank you for joining us as a Change Healthcare stockholder, your continued support and the opportunity to serve Change Healthcare on your behalf. We look forward to your partnership on this journey together.

By Internet Using Your Computer Go to www.proxyvote.com and follow the instructions		By telephone Call 1-800-690-6903		By mail Sign, date and return your proxy card in the postage-paid envelope		Attend the Annual Meeting Vote electronically during the meeting at www.virtualshareholdermeeting. com/CHNG2020

Table of Contents

Change Healthcare • 2020 Proxy Statement        4

		Proxy Summary
		This summary highlights certain information contained in this proxy statement and does not contain all of the information that you should consider in voting your shares. We encourage you to read the entire proxy statement and our annual report before voting.

 

Meeting Information

 

Meeting Date		Time		Location		Record Date
Wednesday, September 2, 2020		11:00 am EDT		www.virtualshareholdermeeting. com/CHNG2020		July 7, 2020

 

Stockholder Voting Matters

 

Proposal			Your Board’s Recommendation
Proposal 1.	Election of 10 Directors		FOR EACH NOMINEE		Page 13
Proposal 2.	Advisory Vote to Approve Executive Compensation (Say-on-Pay)		FOR		Page 26
Proposal 3.	Advisory Vote on the Frequency of Say-on-Pay Vote		ONE YEAR		Page 49
Proposal 4.	Ratification of the Appointment of Deloitte and Touche LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal 2021		FOR		Page 50

 

Change Healthcare • 2020 Proxy Statement        5

Director Nominees

 

Our Board recommends that you vote FOR each of the director nominees named below for terms that expire at the 2021 Annual Meeting. Additional information about each nominee’s background and experience can be found beginning on page 13.

 

Neil E. de Crescenzo, 59		Howard L. Lance, 64		Nella Domenici, 59		Nicholas L. Kuhar, 34
President & Chief Executive Officer Change Healthcare Inc. Director Since: 2017 Other Public Boards: 0		Independent   Former President & Chief Executive Officer, Maxar Technologies Inc. Director Since: 2017 Other Public Boards: 1		Independent   Former Chief Financial Officer & Operating Committee Member, Bridgewater Associates, LP Director Since: 2020 Other Public Boards: 1 Committees: Audit, Compliance		Independent   Principal, Blackstone Group Inc. Director Since: 2019 Other Public Boards: 0 Committees: Compensation, Nominating & Corporate Governance
Diana McKenzie, 55		Bansi Nagji, 55		Philip M. Pead, 67
Independent   Former Global Chief Information Officer, Workday Inc. Director Since: 2019 Other Public Boards: 2 Committees: Audit, Compliance		Independent   President, Healthcare GoodRx, Inc. Director Since: 2017 Other Public Boards: 0 Committees: Compensation, Nominating & Corporate Governance		Independent   Managing Partner, Beacon Point Partners, LLC Director Since: 2017 Other Public Boards: 0 Committees: Audit, Compliance
Phillip W. Roe, 59		Neil P. Simpkins, 54		Robert J. Zollars, 63
Independent   Senior Advisor, Martin Ventures, LLC Director Since: 2017 Other Public Boards: 0 Committees: Audit, Compliance		Independent   Senior Managing Director, Blackstone Group Inc. Director Since: 2017 Other Public Boards: 1 Committees: Compensation, Nominating & Corporate Governance		Independent   Senior Advisor, Frazier Healthcare Partners LLC Director Since: 2017 Other Public Boards: 1 Committees: Compensation, Nominating & Corporate Governance

 

Change Healthcare • 2020 Proxy Statement        7

Executive Compensation Highlights

 

In fiscal year 2020, the majority of our named executive officers’ target direct compensation was at-risk based on the Company’s performance:

 

CEO Target Compensation Mix		Other NEOs Target Compensation Mix

 

In our first year as a public company, we adopted several compensation and governance policies to support our pay-for-performance philosophy and align the interest of management with our stockholders, including stock ownership guidelines for our executives and directors, anti-hedging and anti-pledging policies, and a clawback policy. Additional detail and discussion is provided in our Compensation Discussion and Analysis beginning on page 27.

 

Alignment of Interests between Executives and Stockholders

 

What We Do			What We Don’t Do
	Tie a significant portion of executive pay to corporate performance goals			Provide excise tax golden parachute gross-ups
	Require significant stock ownership for executives and directors			Permit hedging or pledging of our securities
	Tie incentive compensation to a clawback policy that covers financial restatements and misconduct			Encourage excessive or inappropriate risk-taking through our compensation programs
	Use an independent compensation consultant			Permit repricing of underwater stock options without stockholder approval

 

Change Healthcare • 2020 Proxy Statement        9

Corporate Responsibility

As we mature as a public company, we are committed to continuing to evolve our environmental, social and governance (“ESG”) practices, which we believe naturally align with our business strategy and risk management efforts, and increasing our public disclosure of our ESG efforts.

Our Corporate Purpose

At Change Healthcare, we are inspiring a better healthcare system, and are driven by our vision, values, and code of conduct, which can be found at http://ir.changehealthcare.com. We accomplish this purpose by providing innovative data and analytics-driven solutions to improve clinical, financial and patient outcomes. Our values—Pursue Purpose, Be Agile, Champion Innovation, Include All, and Earn Trust—define how we conduct business, and drive us forward with the belief that we can make a difference. As part of our corporate purpose, we believe a socially responsible approach to operating our business is in the best interests of our stockholders, customers, employees, suppliers, and communities.

Key Focus Areas

A few of our key focus areas that support our commitment to ESG, include the following, each of which are overseen by our Board of Directors.

Data Privacy

Living our Motto: Privacy Is Everybody’s Business

As one of the largest administrative, financial and clinical healthcare networks in the United States, we are committed to responsible collection, processing, disclosure and protection of patient data.

We continuously monitor our Privacy Risk Management Framework across all levels and functions of the Change Healthcare organization through trained personnel. Our Enterprise Privacy Office has operationalized global privacy compliance with privacy automation tools that streamline management of program processes.

We utilize an integrated privacy impact assessment process for review of new and updated products and applications, as well as automated data privacy incident monitoring and reporting, risk scoring and decision-support to protect and safeguard our customers’ data.

Cybersecurity

We have a robust Information Security program that covers a range of cybersecurity activities with a primary objective of maintaining the confidentiality, integrity and availability of information under our care, while also meeting regulatory, compliance and customer requirements. Our cybersecurity program consists of a cross functional, risk-based approach to cybersecurity, including global 24 hours-a-day, 7 days-a-week cyber threat detection and alerting and remediation technologies to ensure that the risk of a cybersecurity breach is mitigated and that there is a clear response plan in the event of a breach.

Change Healthcare employees are engaged through annual code of conduct privacy and security training, role-based training, communication of targeted policies and job aids, and frequent outreach through various internal platforms.

Human Capital Management and Corporate Culture Highlights

Our culture is based on innovation, compliance and integrity with Leadership DNA driving our workforce’s behavior and supporting our values.

Change Healthcare • 2020 Proxy Statement        10

We aim to attract, develop, and retain our team members using the human capital management and corporate culture practices summarized below.

 

 

Human Capital Governance

 

Our Board has oversight and receives regular updates on topics related to human capital management and corporate culture, including:

	–	Privacy and information security
	–	Retention
	–	Enterprise compliance (including global Code of Conduct training)
	–	Investigations, employee engagement, and survey results
	–	Workforce health and safety

Our Speak Up! culture encourages employees to raise concerns, including through our 24 hours-a-day, 7 days-a-week Ethics Line

 

 

Total Rewards, Health & Wellness

 

	Our total well-being strategy focuses on health, wealth, community, and life
	We provide competitive salary, annual incentive awards, health and wellness and retirement benefits, paid volunteer days, stress and financial management, work/life balance resources, mental health resources, and Teladoc Health access

 

Learning & Development

 

	We invest in our employees’ success through Change Healthcare University
	Innovation, compliance, integrity, and education are an integral part of our culture and employee experience
	We help our employees expand their knowledge and gain foundational understanding through consistent education and training
	Our monthly communication program, Innovation @ Change, shows how we use innovations like artificial intelligence, our API Marketplace, and our Innovation Framework to enhance the skills and capabilities of our team members

 

 

Awards & Industry Recognition

 

	Our compliance training, “Integrity in Action,” has broken the mold with its use of state-of-the art learning theories, “Integrity Talk” Training videos, and social media-esque design. It has won 11 national recognitions, including the elite Brandon Hall Group Human Capital Excellence Gold Award
	We scored a 90 out of 100 on the Human Right’s Campaign’s Corporate Equality Index (for LGBTQ+ equality)

 

Community

 

	Through our Pursue Purpose value, we can improve a person’s life. Our workforce is dedicated to providing support and care to our communities, which is grounded in this value as we inspire a better healthcare system
	Our community giving takes many forms, including corporate partnerships, local partnerships, business resource groups, community giving awards, and volunteer days
	The Hands Across Change Healthcare Fund is our own 501(c)(3) dedicated to helping employees who are experiencing economic hardships
	In fiscal year 2020, our employees volunteered over 30,000 hours in the U.S. and Canada
	We are committing to donating to organizations we believe will make the biggest impact in advancing social justice
	We are introducing an employee matching gifts program to match employee donations annually

 

Environmental Sustainability

 

	We share a commitment that aims to consciously operate our business in a manner that aligns with environmentally sound best practices and reduces our carbon footprint and that of our customers
	Sustainability at Change, our employee-led environmental sustainability group, which emerged from our accelerated development program for early career hires, promotes key initiatives that address waste disposal, energy use, pollution, water scarcity and pollution, deforestation, and recycling
	We contribute to sustainable development and positively impact the achievement of global environmental objectives by:

 

	•	Contributing to sustainable energy use by operating with cloud-based solutions
	•	Mitigating climate change by operating with cloud-based solutions

 

	We expect our suppliers to share our commitment by responding to challenges posed by climate change which is outlined in our public Supplier Code of Conduct
	We exceed efficiency standards for our data center functionality, and we utilize continuous improvement models to excel in energy conservation
	Our primary data center is Energy Star compliant and we audit our power use and infrastructure to take advantage of programs that drive efficiency
	We meet and/or exceed equipment sanitation and e-waste disposal for all our data centers and remote sites
	We partner with sustainability partners to operate in environmentally responsible ways, including through our robust recycling programs, janitorial contracts, new construction, lighting efficiencies, new furniture buys, document storage and shredding, central storage and moving

Change Healthcare • 2020 Proxy Statement        11

Culture of Compliance

The people of Change Healthcare are the heart of compliance and must be the focus of our program.

		Diversity & Inclusion
		Our mission is simple – Different backgrounds, same values, one vision.

 

	We pursue our mission by:
	•	Creating and supporting a diverse workforce
	•	Developing a culturally competent organization
	•	Building an inclusive culture
	•	Empowering diverse product and solution technologies

	Four pillars of our diversity and inclusion include: People, Environment, Business, and Compliance
	Our annual Diversity & Inclusion report updates our team members on our D&I efforts, human capital statistics, and employee engagement
	We prioritize diversity and inclusion training for our employees, including Unconscious Bias Training
	Our Vice President of Talent Management and Diversity & Inclusion helps drive our initiatives to foster a diverse and inclusive work environment
	Our Business Resource Groups consists of: Pride (LGBTQ+) at Change, African American Voices for Change, Asian Professionals at Change, Young Professionals Making Change, Women for Change, Disability @ Change, Veterans for Change

 

Opportunity to Take Action

 

Understanding our data is fundamental to our journey of improving diversity and inclusion at Change Healthcare. As a company, diversity and inclusion has always been part of our growth and integration strategy, but the recent civil unrest in response to long-term racial and social injustice in America has reinforced our commitment to diversity and inclusion and highlighted areas of opportunity to accelerate and amplify our efforts. While we are strong in certain areas, it was clear we needed to do more. Although we cannot control what happens outside of our company, we can have the courage to take action on our core values to “Include All” and “Embrace Differences.” Including all is not just about addressing racial injustice, we are committed to diversity and inclusion across the board. And that starts by showing up, speaking up, listening, and learning.

 

With a commitment to listening and learning, our CEO asked to hear directly from our workforce to better understand areas of opportunity to improve as a company during a special employee Town Hall dedicated to what we call “Conversations that Matter.”

 

That feedback was quickly turned into action when our CEO outlined the following specific next steps our company is taking on our journey to fight racial and social injustice and build a truly diverse and inclusive culture:

 

•	Corporate donations to organizations we believe will make the biggest impact in advancing social justice
•	Launching a new matching gifts program to match employee charitable contributions
•	Requiring all people leaders to complete Unconscious Bias Training
•	Revamping our D&I education program
•	Continuing to develop talent and recruitment strategies to improve diverse representation among our leadership and all levels of our organization
•	Expansion of our cross-cultural mentoring programs
•	Reinforce and supplement our “Include All” corporate value to more clearly articulate our commitment to D&I
•	Continue to talk and listen to one another and drive ongoing inclusion
•	Leadership commitment to require diverse representation in speaking opportunities
•	Reassessing our accelerated development program and its impact on both our early career hiring and diversity efforts, including our internship program, and recruiting from Historically Black Colleges and Universities (or HBCUs)

 

Board and Management Engagement

 

Our Board is active in overseeing our diversity and inclusion efforts and recently received an update from our CEO regarding diversity and inclusion at Change Healthcare. Our leadership team provides regular updates to our Board, which include a comprehensive overview, action plan and data on our diversity and inclusion efforts.

 

To ensure we remain committed to our diversity and inclusion efforts, our Board will monitor our progress over time.

Change Healthcare • 2020 Proxy Statement        12

Election of 10 Directors

Above are our 10 nominees for election as Director, each of whom currently serves on the Board. Each nominee has stated his or her willingness to serve on the Board. All of our Director nominees who are elected at the 2020 Annual Meeting will be elected for a one-year term expiring at the 2021 Annual Meeting when their successors are duly elected and qualified in accordance with our Company’s amended and restated bylaws (the “Amended and Restated Bylaws”), (or earlier upon their resignation, removal or death). A plurality of the votes cast in the election of Directors at the Annual Meeting is required for the election of Directors.

For each of the 10 nominees for election as Directors at the 2020 Annual Meeting, set forth below is information as to the principal occupation of each Director during at least the past five years, the other public company directorships and the experience, qualifications, and skills that, in the opinion of the Nominating and Corporate Governance Committee and the Board, provide an appropriate mix of experience and skills relevant to the size and nature of our business and make the individual qualified to serve as a Director of the Company.

Change Healthcare • 2020 Proxy Statement        13

Director Nominees for Election at the 2020 Annual Meeting

Neil E. de Crescenzo
Age: 59   Director since: 2017   Other Public Boards: 0		Occupation: •  President and Chief Executive Officer, Change Healthcare Inc.     Director Highlights: Mr. de Crescenzo brings significant management and leadership experience as a member of our Management team and from his service in multiple management and leadership positions within large providers of software and technology products and services, as well as his many years of experience in the healthcare software and information technology industries.     Experience: •  Mr. de Crescenzo has served as President and Chief Executive Officer of Change Healthcare since 2013. Prior to joining Change Healthcare, he served as Chief Executive Officer and a member of the board of directors of Legacy Change Healthcare from 2013 to the closing of the Transactions in 2017. Prior to Change Healthcare, he served as Senior Vice President and General Manager of Oracle’s Global Health Sciences business from 2006 to 2013. Prior to that, he spent a decade at IBM Corporation from 1996 to 2006. •  He currently serves on the board of directors of the Nashville Health Care Council, the Middle Tennessee American Heart Association, and is chairman of the executive committee of the board of directors of the Healthcare Leadership Council.

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Your Board unanimously recommends a VOTE FOR each Nominee

Change Healthcare • 2020 Proxy Statement        18

Corporate Governance   Our Board sets high standards for our company’s officers, management and employees. Implicit in this philosophy is the importance of sound, transparent and effective corporate governance. The Board operates pursuant to our Corporate Governance Guidelines, which can be found at http://ir.changehealthcare.com. The information contained on or accessible through our website is not considered part of this proxy statement.

Board Oversight

Risk Oversight

The Board retains broad responsibility for significant risks while delegating certain specific risk oversight responsibilities to its committees. The Board oversees our risk management activities through a combination of processes, including direct engagement with management.

Consistent with our leadership structure, the Board reviews and discusses with management our guidelines and policies with respect to risk assessment and the steps management has taken to monitor and control such exposures.

Cybersecurity Oversight

The Compliance Committee receives quarterly reports from our Chief Information Security Officer regarding a range of cybersecurity activities that meet regulatory and customer requirements while maintaining the confidentiality and integrity of information under our care. Our cybersecurity program consists of a cross functional, risk-based approach to cybersecurity, including global 24 hours-a-day, 7 days-a-week cyber threat detection and alerting and remediation technologies that ensure that the risk of a cybersecurity breach is mitigated and that there is a clear response plan in the event of a breach.

Data Privacy Oversight

Our Chief Privacy Officer reports to the Compliance Committee on a quarterly basis regarding the Company’s data privacy activities, including the development and maintenance of a robust Privacy Risk Management Framework with ownership and oversight by the Enterprise Privacy Office, the business unit privacy and compliance teams, and other appropriate stakeholders. We protect and safeguard our customers’ data through an integrated privacy impact assessment process for review of new and updated products and applications, as well as through automation of data privacy incident monitoring and reporting, risk scoring and decision-support.

Compensation Risk Oversight

In administering our compensation program, the Compensation Committee strives to achieve a balance among the elements of compensation to accomplish the objectives of the program. The Compensation Committee reviews the Company’s overall compensation program in the context of the risks that may be presented by the structure of our compensation program and the metrics used to determine compensation under that program. Based upon this review, the Compensation Committee believes that our compensation program does not create a reasonable likelihood of a material adverse effect on the Company.

Government Affairs Oversight

The Board maintains oversight of our government affairs and any risk related to the reputational harm that can be caused through the misalignment of political spending in the form of soft money contributions or payments to trade associations. The Board oversees management to ensure that Change Healthcare’s political activities align with our core values and code of conduct while avoiding risk to stockholders.

Our state and federal lobbying efforts center on sharing industry best practices to help inform policymakers and support sound policy decisions. To date, we have no staff registered as lobbyists. Our contracted lobbyists and lobbying expenditures, which average less than $300,000 per year, are made transparent through required state and federal reporting. Currently, we do not have a PAC organization, and make no political contributions.

Environmental, Social and Governance Oversight

In accordance with our Corporate Governance Guidelines, our Board monitors Change Healthcare’s performance on its financial objectives, strategies, goals, compliance and risk mitigation and handling of any risks or emerging risks arising from environmental, social and governance (ESG) matters, as well as the performance of management.

Change Healthcare • 2020 Proxy Statement        19

Anti-Harassment, Anti-Retaliation, Non-Discrimination Oversight

Matters such as sexual harassment, retaliation or discrimination of any kind are strictly prohibited at Change Healthcare. Our comprehensive policies apply to our Board, senior management, employees, and any contingent workers or business partners of Change Healthcare.

Because these matters have the ability to be disruptive to our business, cause reputational harm and decrease value for our stockholders, the Board oversees management’s handling of matters involving sexual harassment, retaliation, or discrimination and exercises its authority to address such matters independently of management.

COVID-19 Oversight

During the outbreak of COVID-19 (coronavirus), our Board has closely monitored Change Healthcare’s business and response, receiving frequent updates and briefings from management who, under the leadership of our Chief Executive Officer and executive leadership team, were able to maintain business continuity, proactively act in the best interests of our business and stockholders over the short and long term, and maintain the health and safety of our most valuable asset - our employees.

Board’s Role in Long-Term Strategic Planning

Our Board takes an active role engaging with management to formulate Change Healthcare’s long-term strategy for stockholder value creation.

The Board and management deliberate on the execution of Change Healthcare’s long-term strategic plans, the status of key strategic initiatives, opportunities and risks facing Change Healthcare. Additionally, our Board periodically devotes time to conduct a long-term strategic review with management. During these reviews, our Board and management discuss, among other things, emerging innovations, competition, risks to the business, technological and industry trends, and short and long-term plans and priorities for each of our business units.

Through these processes, our Board focuses its collective experience and perspective on the most critical long-term strategic issues and opportunities facing Change Healthcare.

Committees of the Board

Board Committees

To support sound, transparent and effective corporate governance, our Board delegates certain responsibilities to our Board committees. We have four standing committees: the Audit Committee; the Compensation Committee; the Nominating and Corporate Governance Committee; and the Compliance Committee. Each director who serves on our committees is independent. The Board may also establish, from time to time, any other committees that it deems necessary or desirable. The committee charters for the Audit Committee, Compensation Committee, and the Nominating and Corporate Governance Committee are available on our Investor Relations section of our corporate website at http://ir.changehealthcare.com under Corporate Governance. Directors serve on these committees until otherwise determined by our Board.

Committee Composition

Committees	Diana McKenzie	Neil Simpkins	Nicholas Kuhar	Philip Pead	Phillip Roe	Robert Zollars	Nella Domenici	Bansi Nagji
Audit
Compensation
Nominating & Corporate Governance
Compliance

	indicates the chair of the relevant committee.
	indicates committee membership.

Change Healthcare • 2020 Proxy Statement        20

Board and Committee Responsibilities

Meetings and Attendance

All Directors are expected to make every effort to attend all meetings of the Board, meetings of the committees of which they are members and any meeting of stockholders. When applicable, Directors are encouraged to attend such meetings in person but may also attend by telephone or video conference.

Our Board met 4 times during fiscal year 2020.

Each Director attended 100% of the aggregate number of meetings of the Board and all standing committees, except Phillip Roe who would have attended more than 75% of the Board and committee meetings if not for a family emergency.

Committee Responsibilities

The following functions are expected to be the common recurring activities of our Board committees in carrying out their responsibilities. These functions serve as a guide, with the understanding that our committees may carry out additional functions and adopt additional policies and procedures as may be required or appropriate in light of changing business, legislative, regulatory, or other conditions. Our committees may also carry out any other responsibilities and duties delegated to them by the Board from time to time.

Change Healthcare • 2020 Proxy Statement        21

Board Independence

Independence Standards and Independence of Directors

Independent Directors of Change Healthcare are determined according to Rule 5605(a)(2) of the Nasdaq listing requirements. The Nasdaq independence requirements include a two-part test: (i) the director must not be an employee of the Company and must not engage in various types of business dealings with the Company and (ii) the Board affirmatively determines that the Director has no direct or indirect relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director.

In making these determinations, our Board broadly considers all relevant facts and circumstances, including detailed written information provided by each Director regarding each Director’s business and personal activities as they may relate to the Company and our management.

Majority of Independent Directors

9 of our 10 Director nominees are independent of Change Healthcare and management, in accordance with Nasdaq requirements and our Corporate Governance Guidelines.

Our Chief Executive Officer, Neil de Crescenzo, is the only member of the Board that is not independent.

Independent Advisors

In addition, our Board and each committee has the power to retain, terminate and approve the fees of independent consultants, legal, financial, accounting and other advisors, at Change Healthcare’s expense, as necessary and appropriate and in accordance with our Board committee charters, to assist in their duties to Change Healthcare and our stockholders.

Board Committee Independence

Committee Independence

All Board committees are comprised of independent Directors, as required by SEC rules and the listing rules of the Nasdaq Stock Market applicable to Board and committee service.

Financial Expertise

Each member of the Audit Committee has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. In addition, Mr. Roe and Ms. Domenici meet the Nasdaq listing standard of financial sophistication and are “audit committee financial experts” under the SEC rules.

Board Composition and Leadership Structure

Board Composition and Leadership Structure

In accordance with our Corporate Governance Guidelines, we believe that it is important that our Board retain the flexibility to optimally address the needs of our business at any given point in time. At this time, we believe it is in the best interest of the business and our stockholders that the roles of Chair and Chief Executive Officer be separate.

Our President and Chief Executive Officer, Neil de Crescenzo, is a member of our Board as a non-independent Director. In choosing our Chief Executive Officer, the Board considered Mr. de Crescenzo’s significant management and leadership experience as a member of our management team and from his service in multiple management and leadership

Change Healthcare • 2020 Proxy Statement        22

positions within large providers of software and technology products and services and Mr. de Crescenzo’s many years of experience in the healthcare software and information technology industries.

Howard Lance is Chairman of the Board. Mr. Lance brings extensive leadership and management skills developed through his prior services as a chief executive officer and director of other public companies, in addition to his past experience as chairman of legacy Change Healthcare. Mr. Lance presides over our Board meetings as Chairman of the Board.

Qualifications of Directors

In accordance with our Corporate Governance Guidelines, our Nominating and Corporate Governance Committee monitors the mix of specific experience, qualifications and skills of our Directors in order to assure that our Board, as a whole, has the necessary tools to perform its oversight function effectively in light of Change Healthcare’s business, structure and risk.

In determining the qualifications of our Directors, our Nominating and Corporate Governance Committee considers individual qualifications which include strength of character, mature judgment, industry knowledge related to Change Healthcare, independence of thought and an ability to work collegially with the other directors serving on our Board. In assessing the diversity of skill sets for our Directors, and in accordance with our Corporate Governance Guidelines, our Nominating and Corporate Governance Committee considers various and relevant career experience, diversity of background, existing commitments to other companies, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, corporate governance background, relevant technical skills, relevant business or government acumen, financial and accounting background, technology background, healthcare background, compliance background, executive compensation background and the size, composition and combined expertise of our existing Board. While neither the Nominating and Corporate Governance Committee nor the Board has adopted a formal policy regarding diversity, they evaluate each candidate in the context of the Board’s membership as a whole and seek to achieve a mix of members that represents a diversity of background and experience in order to promote the representation of diverse views on the Board.

Succession Planning

Our Chairman oversees and facilitates, in consultation with our Chief Executive Officer and our Chief People Officer, annual review of a succession plan relating to our Chief Executive Officer and other executive officers that is developed by management. Our Board also delegates oversight of the succession plan developed by management to the Compensation Committee of the Board. The succession plan includes, among other things, an assessment of the experience, performance and skills for possible successors to our Chief Executive Officer. In addition, our Board approves and maintains a process regarding Chief Executive Officer succession in the event of an emergency or other sudden temporary or permanent absence of our Chief Executive Officer or executive officers.

Board Governance

Board and Committee Self-Evaluations and Individual Director Evaluations

Acting through the Nominating and Corporate Governance Committee and with the assistance of our Chairman, the Board conducts a self-evaluation periodically to determine whether it and its committees are functioning effectively. Such evaluation may include consideration of the individual performance of Directors serving on our Board. The Nominating and Corporate Governance Committee will also review the overall process to consider and determine the optimal method for conducting the evaluation.

Board Nomination Process, Identifying Nominees for Election to the Board, Newly Appointed Directors

The Nominating and Corporate Governance Committee is responsible for identifying, evaluating and recommending nominees for election to our Board. Final selection of Director nominees for election remains within the sole discretion of our Board.

Depth of experience, fitness and the ability to make meaningful contributions to our Board’s oversight of the business and affairs of Change Healthcare in addition to a willingness to exercise independent judgment, and an impeccable reputation for honest and ethical conduct that align with our core values, are important factors when identifying opportunities to add new directors to our Board. Additionally, in identifying new Director candidates, our Board evaluates a candidate’s time commitments to ensure the appropriate amount of time, energy, and care is given to the needs of our business.

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Our Nominating and Corporate Governance Committee often identifies potential director candidates by asking current directors and executive officers for their recommendations of persons they believe possess the right mix of criteria and qualifications, and are prepared to represent the best interests of Change Healthcare and our stockholders. Our Nominating and Corporate Governance Committee may also engage firms that specialize in identifying director candidates to our Board. Director nominations also may be made at the recommendation of stockholders pursuant to our Amended and Restated Bylaws.

Our Nominating and Corporate Governance Committee will evaluate candidates for nomination for election to the Board of Directors, including those recommended by stockholders on a substantially similar basis as it considers other nominees. Our amended and restated bylaws establish advance notice procedures with respect to the nomination of candidates for election as Directors, other than nominations made by or at the direction of the Board of Directors or a committee of the board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder will have to comply with advance notice requirements and provide us with certain information. Generally, to be timely, a stockholder’s notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the immediately preceding annual meeting of stockholders. Our Amended and Restated Bylaws also specify requirements as to the form and content of a stockholder’s notice.

Our stockholders agreement grants Blackstone the right to designate nominees to our Board of Directors subject to the maintenance of certain ownership requirements. Mr. Nicholas L. Kuhar and Mr. Neil P. Simpkins, who are each employees of Blackstone, were designated by Blackstone in accordance with the stockholders agreement. For additional information on our stockholders agreement, see “Certain Relationships and Related Transactions—Stockholders Agreement.”

Our Board believes adding a breadth of fresh perspectives is vital to the long-term success of our Company. Accordingly, since the completion of our initial public offering, we have added two new Directors—Diana McKenzie and Nella Domenici – and re-welcomed Bansi Nagji to the Board. Each of our newly appointed Directors was recommended to our Nominating and Corporate Governance Committee as a candidate for the Board by a current Board member.

Executive Sessions

Executive Sessions of Independent Directors

To ensure free and open discussion and communication, independent Directors have the opportunity to meet in executive session with no members of management present from time to time. Our Chairman convenes and chairs such sessions. In fiscal year 2020, the Board met 3 times in executive session.

Director Orientation and Continuing Education

Management, working with our Board, provides an orientation process for new Directors and coordinates Director continuing education programs. The orientation programs are designed to familiarize new Directors with Change Healthcare’s businesses, strategies, significant financial, accounting and risk management issues, corporate governance and compliance policies, and internal and external auditors. As appropriate, management creates opportunities for additional educational sessions for our Directors on matters relevant to Change Healthcare, our business, and our industry, as well as educational programs relevant to their director responsibilities.

Stockholder Engagement

Our Board and management believe engagement with our stockholders is a hallmark of sound, transparent and effective corporate governance. Consistent with our core values, we earn trust and include all. When we include all, we celebrate different ways of thinking and know that great perspectives come from outside the boardroom.

As we evolve as a publicly traded company, we look forward to evolving our stockholder engagement efforts. Our stockholder engagement efforts will develop to address the needs, priorities and perspectives of our stockholders. By bringing diverse perspectives together and listening to our stockholders, we will stay in tune with matters that are important to you. We believe useful input enhances our governance practices and policies, which ultimately produces long-term success and value for our Company and our stockholders.

Stockholder Communications with Directors

Anyone who would like to communicate with, or otherwise make any concern known directly to the chairman of any of the Audit, Compensation, Nominating and Corporate Governance and Compliance Committees, the Chairman of the Board, or to the independent Directors as a group, may do so by addressing such communications or concerns to our Corporate Secretary, Attention: Carrie A. Ratliff, 3535 Piedmont Rd, Building 14, Suite 600, Atlanta, GA 30305 or corporatesecretary@changehealthcare. com who will forward such communications to the appropriate party.

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Director Compensation

For fiscal year 2020, in connection with our initial public offering, we developed a market-competitive director compensation program for non-employee, non-Blackstone/McKesson affiliated Directors. The program provides eligible Directors with an annual compensation package of $285,000 ($315,000 in the case of the Vice Chairman) consisting of $120,000 ($150,000 in the case of the Vice Chairman) as an annual cash retainer and $165,000 in value of restricted stock units. Restricted stock units vest in full on the first anniversary of the grant date. Eligible Directors may elect to receive their restricted stock unit award in the form of deferred stock units, which will settle on the date the director ceases to be a member of our Board.

Directors who are employed by us and Directors who are affiliated with Blackstone are not compensated by us for their services as Directors. Mr. Nagji was not compensated for his service as a Director while he was employed by McKesson and he rejoined our Board after the end of fiscal year 2020. In fiscal year 2020, Messrs. Lance, Pead, Roe and Zollars and Ms. McKenzie each received an annual cash retainer of $120,000. In addition, Mr. Zollars received an additional $15,000 for service as the chair of the Nominating and Corporate Governance Committee, Mr. Pead received an additional $30,000 for serving as the chair of the Compliance Committee, Mr. Roe received an additional $30,000 for serving as chair of the Audit Committee, and Mr. Lance received an additional $15,000 for service as chair of the Compensation Committee. Each of Messrs. Lance, Pead, Roe and Zollars and Ms. McKenzie were granted 11,426 RSUs.

The table below shows amounts paid to our non-employee Directors that received compensation for the year ended March 31, 2020. Ms. Domenici joined our Board after the end of fiscal year 2020.

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As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders are entitled to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this proxy statement pursuant to the disclosure rules of the Securities and Exchange Commission (the “SEC”). This item, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on compensation for our named executive officers. The vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation objectives, policies and practices described in this proxy statement. Accordingly, we are providing our stockholders with the opportunity to cast an advisory vote on the fiscal year 2020 compensation of our named executive officers as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosure.

Stockholders are being asked to vote on the following resolution:

“Resolved, that the stockholders approve the compensation of Change Healthcare Inc.’s named executive officers, as disclosed in this Proxy Statement pursuant to the disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosure).”

Please refer to the section entitled “Compensation Discussion & Analysis” of this proxy statement for a detailed discussion of our executive compensation principles and practices and the fiscal year 2020 compensation of our named executive officers.

Although, as an advisory vote, this proposal is not binding upon the company or the Board, the Compensation Committee, which is comprised solely of independent directors and is responsible for making decisions regarding the amount and form of compensation paid to our executive officers, will carefully consider the stockholder vote on this matter, along with all other expressions of stockholder views it receives on specific policies and desirable actions.

Our Board unanimously recommends that you vote “FOR” this proposal.

Report of the Compensation Committee

The Compensation Committee, which is comprised solely of independent Directors of the Board, oversees our compensation programs and is responsible under its charter for determining the compensation of our executives. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K.

Respectfully submitted,

Neil P. Simpkins, Chairman

Howard L. Lance, Former Chairman (April 2019 – June 2020)
Robert J. Zollars (March 2020 – present)
Bansi Nagji
Nicholas L. Kuhar (June 2020 – present)

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Executive Summary

The following summarizes our executive compensation program with respect to our named executive officers for the fiscal year ended March 31, 2020 and the material elements of the compensation packages awarded to such officers. The individuals whose compensation is discussed below are:

We collectively refer to these individuals as our “named executive officers.”

Fiscal Year 2020 Highlights

In fiscal year 2020, we delivered strong financial performance:

COVID-19 Impact

The Compensation Committee’s decisions for fiscal year 2020 as described in this proxy statement were made prior to the onset of the COVID-19 pandemic. The Compensation Committee will continue to monitor the impact of the COVID-19 pandemic on our executive compensation programs.

Objectives of our Compensation Program

Our fiscal year 2020 performance demonstrates our continued execution of our strategic goals and plans. While our business continues to evolve to reflect the changing needs of our customers, our compensation program remains centered around a pay-for-performance philosophy that is designed to reward our named executive officers for their abilities, experience and efforts.

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Our compensation program for named executive officers is designed to:

The following chart provides a brief summary of the principal elements of our executive compensation program for fiscal year 2020. We describe these elements, along with retirement, non-qualified deferred compensation, severance and other benefits in more detail in this Compensation Discussion & Analysis.

Our named executive officers also are eligible to receive the same benefits that we provide and participate in all plans that we offer to other full-time employees, including health and welfare benefits and participation in our 401(k) Savings Plan, or in the case of Mr. O’Reilly for periods through March 15, 2020, our Group Registered Retirement Plan in Canada (including, in each case, a matching contribution by the Company). In addition, our named executive officers who are on our U.S. payroll are entitled to participate in our supplemental non-qualified deferred compensation plan (“DCAP”) and our non-qualified supplemental 401(k) plan (“Supplemental 401(k) Plan”). These plans allow our executives to save for retirement without regard to Internal Revenue Code limits. All named executive officers are also eligible for an annual executive physical, which helps ensure the health of our executives and protects the investment we make in these key individuals.

Alignment of Interests between Executives and Stockholders

In our first year as a public company, we adopted several compensation and governance policies to support our pay-for-performance philosophy and align the interest of management with our stockholders, including stock ownership guidelines for our executives and directors, anti-hedging and anti-pledging policies, and a clawback policy.

What We Do			What We Don’t Do
	Tie a significant portion of executive pay to corporate performance goals			Provide excise tax golden parachute gross-ups
	Require significant stock ownership for executives and directors			Permit hedging or pledging of our securities
	Tie incentive compensation to a clawback policy that covers financial restatements impacted by fraud or misconduct			Encourage excessive or inappropriate risk-taking through our compensation programs
	Use an independent compensation consultant			Permit repricing of underwater stock options without stockholder approval

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The majority of our named executive officers’ target direct compensation (which includes base salary, target annual incentive opportunity, and target value of long-term incentive awards) is at risk based on the Company’s performance:

Compensation Discussion & Analysis in Detail

Fiscal Year 2020 Named Executive Officers

Our Compensation Philosophy

Our compensation philosophy is based on our belief that our compensation programs should align our named executive officers’ interests with those of Change Healthcare and its stockholders in achieving positive and accountable business results and our strategic objectives. Accordingly, in determining the compensation of our named executive officers, we are guided by the following key principles:

We strive to maintain a performance-oriented culture and provide compensation that rewards our named executive officers when they help us achieve our objectives. At the same time, we believe an appropriate portion of their compensation should be at risk if the Company fails to achieve its goals. Consistent with this philosophy, we have sought to create an executive compensation package that balances short-term versus long-term components, cash versus equity elements and fixed versus contingent payments in ways that we believe will best motivate our named executive officers.

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The Role of the Compensation Committee and Management

Our Compensation Committee maintains strategic oversight of our compensation and benefit programs.

Scope

The Compensation Committee works directly with our Chief Executive Officer to set annual compensation for our named executive officers other than our Chief Executive Officer. To this end, our Chief Executive Officer completes an evaluation of each named executive officer, makes recommendations regarding the compensation of each named executive officer and presents his evaluations and compensation recommendations to the Compensation Committee.

Process

In implementing our compensation philosophy described above, the Compensation Committee sets the annual compensation of our named executive officers after considering the following evaluations and recommendations from our Chief Executive Officer: (i) the nature, responsibilities and experience of each named executive officer; (ii) the named executive officer’s contribution to achieving the company’s objectives; and (iii) the named executive officer’s achievement of his or her individual objectives. The Compensation Committee sets the compensation of our Chief Executive Officer in a meeting at which the Chief Executive Officer is not present. The compensation for our named executive officers is set and recommended for adoption at meetings of the Compensation Committee generally held in the first quarter of each fiscal year.

Role of the Compensation Consultant

The Compensation Committee has engaged Radford, a unit of Aon plc, a compensation consulting firm (the “Consultant”), to assist in aligning compensation for our named executive officers with market practices. The Compensation Committee has concluded that the Consultant is an independent consultant after considering the factors relevant to the Consultant’s independence from management, including the factors set forth by the SEC rules regarding compensation consultant independence. For fiscal year 2020 this included: conducting a review of the competitiveness of our executive compensation program and assisting in the development of our stock ownership guidelines. Based on input from the Consultant, we believe that the components and mix of our compensation program are consistent with current competitive compensation components and practices in our industry and align the interests of executives with the interests of our stockholders by correlating pay to the achievement of both short- and long-term objectives.

To assist the Compensation Committee in achieving this alignment, the Consultant established a peer group composed of the 21 companies described below. The peer group, reviewed and approved by the Compensation Committee, was selected based on weighted parameters and financial information and is intended to ensure that we remain within a reasonable range of the peer median in terms of revenue, headcount and market value.

The Compensation Committee periodically reviews our named peer group. Due to mergers and acquisition activity, AthenaHealth, CA Technologies, Fiserv and Symantec were removed from our named peer group. After considering the market value, revenue and headcount of each, the Compensation Committee added Paychex, ManTech and NortonLifeLock to the peer group.

Components of Our Executive Compensation Program

Our Compensation Committee regularly monitors executive compensation trends and best practices, our business needs, and relevant regulatory changes in order to ensure that our compensation program is competitive in the market and align pay to performance. Compensation for our named executive officers consists of the following key components:

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Base Salary

We provide each named executive officer with a base salary for the services that the executive officer performs for us. This compensation component constitutes a stable element of compensation while other compensation elements are variable. Base salaries are reviewed annually and may be increased based on the individual performance of the named executive officer, Company performance, any change in the executive’s position within our business, the scope of his or her responsibilities and any changes thereto. The base salaries in effect for fiscal year 2020, were as follows: Mr. de Crescenzo, $850,000; Mr. Eliasson, $650,000; Mr. Joshi, $450,883; Mr. Laur, $500,000; Mr. O’Reilly, $392,440¹; and Mr. Choy, $450,883.

Mr. de Crescenzo’s base salary was increased to $850,000 effective April 1, 2019 in order to align to competitive market practice. Mr. O’Reilly’s base salary was increased to $500,000 effective March 16, 2020 in connection with his transfer to our U.S. payroll to align to the market. None of the other named executive officers received increases to their base salaries in fiscal year 2020.

Annual Cash Incentive Program

We provide our named executive officers with the opportunity to share in our success through annual cash incentive awards under our annual cash incentive program (the “AIP”). The AIP provides Change Healthcare’s senior management and certain other key employees the opportunity to earn annual cash compensation in addition to their base salaries. The Compensation Committee has general authority for oversight and interpretation of the AIP. The Compensation Committee, with the recommendations of our Chief Executive Officer (other than with respect to himself), is responsible for (i) setting annual objective performance targets; (ii) reviewing actual performance; and (iii) determining the amount of the compensation payable to each named executive officer.

Under the AIP, a participant’s annual target incentive opportunity is calculated as a percentage of the participant’s eligible base salary, with the target percentage generally being aligned with the participant’s level and role at the Company. The funding of annual cash incentive awards under the AIP is dependent on achievement of annual objective performance targets by the Company as a whole and of the operating division or divisions to which a participant provides services, if applicable. The amount of compensation a participant is eligible to be paid under the AIP is determined primarily on the basis of objective Company performance measures determined by the Compensation Committee each year. Currently we use Adjusted EBITDA and revenue as these performance measures, with the ability to further reflect the attainment of individual objectives.

After reviewing the actual performance of the Company, the Compensation Committee, with recommendations of our Chief Executive Officer (other than with respect to himself), then undertakes an evaluation of each named executive officer’s performance. The Compensation Committee does not rely on preset formulas, thresholds or multiples in its evaluation, but instead relies upon its and our Chief Executive Officer’s judgment after careful consideration of an executive’s performance during the year against pre-established objectives, leadership qualities, operational performance, business responsibilities, long-term potential to enhance stockholder value, current compensation arrangements and tenure with the Company.

Fiscal Year 2020

The Compensation Committee determined that for fiscal year 2020 company-wide or corporate level financial performance would account for 100% of the annual cash incentive opportunity for Messrs. de Crescenzo, Eliasson and Choy and, for Messrs. Joshi, Laur and O’Reilly, the financial performance of the named executive officer’s corporate business unit would account for 50% of the executive’s annual cash incentive opportunity with company-wide performance as a whole accounting for the remaining 50%. For Messrs. de Crescenzo, Eliasson, and Choy, 60% of the financial performance measures were based on Adjusted EBITDA and 40% was based on revenue targets under the AIP. For Messrs. Joshi, Laur and O’Reilly, 60% of the fiscal year 2020 financial performance measures for both the Company as a whole and the executive’s corporate business unit, as applicable, were equally weighted and based on Adjusted EBITDA targets and 40% were equally weighted and based on revenue targets under the AIP. We believe the combination of these performance factors and the proportionate weighting assigned to each reflected our overall Company goals for fiscal year 2020, which balanced the achievement of revenue growth with improving our operating efficiency. The Compensation Committee has reserved the ability to adjust the actual financial performance results to exclude the effects of extraordinary, unusual or infrequently occurring events. For fiscal year 2020, the Compensation Committee determined that no such adjustments were necessary.

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The weighted achievement factor for each of the financial performance measures is determined by multiplying the weight attributed to each performance measure by the applicable achievement factor for each measure. For each of the performance measures, the achievement factor is determined by calculating the payout percentage against the target goal based on the following pre-established scale:

If achievement with respect to any performance measure falls between the threshold and target payout percentages, or between the target and maximum payout percentages, the achievement factor for that particular performance measure will be interpolated on a straight-line mathematical basis. If achievement with respect to any performance measure does not reach threshold payout percentage, then that measure will be deemed to have 0% attainment.

The following tables outline the calculation of the funding attainment based on the pre-established scale associated with our actual results against the targets and the resulting weighted and combined achievement factors:

Messrs. de Crescenzo, Eliasson and Choy

Mr. Joshi

Mr. Laur

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Mr. O’Reilly

Notwithstanding the establishment of the performance components and the formula for determining the AIP award payment amounts as described above, the Compensation Committee has the ability to exercise positive or negative discretion and award a greater or lesser amount to our named executive officers under the AIP than the amount determined by the above formula if, in the exercise of its business judgment, the Compensation Committee determines that a greater or lesser amount is warranted under the circumstances.

After determining the financial performance attainment levels, the Compensation Committee, with input from the Chief Executive Officer for all named executive officers participating in the AIP except for himself, then determines each named executive officer’s individual performance attainment based on an assessment of the named executive officer’s achievement of previously established individual performance goals. For fiscal year 2020, the individual performance goals included:

We did not use a formula or assign any particular relative weighting to any individual performance measure. The individual performance attainment percentage can range from 0% to 150%, subject to any overall maximum AIP opportunity set forth in a named executive officer’s offer letter or the Chief Executive Officer’s employment agreement. For fiscal year 2020, the Compensation Committee determined that the following adjustments to the individual performance factors were necessary: Mr. de Crescenzo received a 110% multiplier due to the significant improvement of year-over-year in bookings, revenue and EBITDA; Mr. Eliasson received a 110% multiplier due to the success of our initial public offering and the exit of McKesson; Mr. Laur received a 150% multiplier due to the substantial progress during the year on bookings growth and improved operational performance; Mr. O’Reilly received a 75% multiplier due to a performance gap in operational challenges during the year that could have been mitigated; and Mr. Choy received a 50% multiplier due to a performance gap in operational management of the function relative to fiscal year 2020 objectives. The Compensation Committee did not make any adjustments to Mr. Joshi’s individual performance factor.

For fiscal year 2020, our named executive officers’ target annual cash incentive award as a percentage of eligible base salary was 150% for Mr. de Crescenzo and 85% for Messrs. Eliasson, Joshi, Laur, O’Reilly and Choy.

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Actual amounts paid under the AIP were calculated by multiplying each named executive officer’s base salary in effect on March 31, 2020 by (i) his or her AIP target annual cash incentive opportunity (which is reflected as a percentage of eligible base salary); (ii) the executive’s weighted financial performance achievement factor; and (iii) the individual performance attainment percentage.

The following table illustrates the calculations of the annual cash awards payable to each named executive officer under the 2020 AIP based on fiscal year 2020 financial performance and individual performance. As Mr. Choy’s employment terminated prior to the end of the fiscal year, his AIP amount was prorated.

Equity-Based Awards

In fiscal year 2020, certain Directors and key executives, including each of the named executive officers, were granted long-term equity incentive awards under the 2019 Omnibus Incentive Plan (the “Omnibus Plan”) that are designed to align a portion of our named executive officers’ compensation with the interests of our stockholders and to incentivize them to remain in our service. In fiscal year 2020, following our initial public offering, we granted our named executive officers restricted stock units (RSUs) and performance stock units (PSUs).

The following table illustrates the annual equity awards made to our named executive officers in 2020:

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Restricted Stock Units

For fiscal year 2020, each of our named executive officers received 50% of his annual equity grant in the form of a grant of time-based vesting RSUs under our Omnibus Plan. These RSUs generally vest over four years, with 50% of the RSUs vesting on the second anniversary of a specified vesting commencement date and 25% of the RSUs vesting on each of the third and fourth anniversaries of such specified vesting commencement date; provided, that if the McKesson Exit occurred prior to the second anniversary of our initial public offering, then 25% of the RSUs will vest on the first anniversary of the grant date. Since the McKesson Exit occurred in March 2020, 25% of the RSUs will vest on the first anniversary of the grant date, with the remaining 75% vesting in equal installments on each of the second, third and fourth anniversaries of the vesting commencement date.

Due to requirements imposed by the Tax Matters Agreement between McKesson and the Company in order to preserve McKesson’s tax-free exit, certain of our executives cannot receive shares of our common stock for two years following McKesson’s exit as an investor in the Company. Therefore, Messrs. de Crescenzo, Joshi and Choy received a grant of both (i) cash-settled RSUs, for awards that could potentially vest within that two-year period (representing 75% of the executive’s RSU grant); and (ii) stock-settled RSUs, for awards that could not vest within that two-year period (representing 25% of the executive’s RSU grant). Subject to the named executive officer’s continued employment, cash-settled RSUs granted to Messrs. de Crescenzo and Joshi and Choy vest over three years, with two-thirds of the cash-settled RSUs vesting on the second anniversary of a specified vesting commencement date, and the remaining one-third vesting on the third anniversary of the vesting commencement date; provided, that if the McKesson Exit occurred prior to the second anniversary of our initial public offering, then one-third of the RSUs will vest on the first anniversary of the grant date. Since the McKesson Exit occurred in March 2020, one-third of the cash-settled RSUs will vest on the first anniversary of the grant date, with the remaining two-thirds vesting in equal installments on each of the second and third anniversaries of the vesting commencement date. Subject to the named executive officer’s continued employment, stock-settled RSUs granted to Messrs. de Crescenzo, Joshi and Choy vest in full on the fourth anniversary of a specified vesting commencement date. All of Mr. Choy’s cash-settled and stock-settled RSUs were forfeited upon his termination of employment on March 2, 2020.

Performance Stock Units

In addition, each of our named executive officers received 50% of his annual equity grant in the form of PSUs that may be earned based upon the achievement of certain revenue and Adjusted EBITDA targets over a three-year performance period, with a weighting of 60% for the revenue targets and 40% for the Adjusted EBITDA targets. The number of PSUs that are earned will be determined following the end of the three-year performance period and any earned PSUs will vest on the fourth anniversary of the grant date.

The total number of PSUs that are earned at the end of the performance period will range from a payout of 0% to a maximum of 200% as determined by measuring actual performance over the performance period for Adjusted EBITDA and Revenue against the performance goals based on a pre-established scale. Payout for achievement between the performance levels will be determined based on a straight-line interpolation of the applicable payout range. Payouts are subject to the named executive officer’s continued employment through the end of the vesting period, and are paid out after the certification of the performance results by the Compensation Committee. The Compensation Committee chose Adjusted EBITDA and Revenue performance goals that are, in the compensation committee’s view, challenging but achievable.

Retirement and Other Benefits

Our named executive officers are eligible to receive the same benefits we provide, and to participate in all plans we offer, to other full-time employees, including health and dental insurance, group term life insurance, short-and long-term disability insurance, other health and welfare benefits, our 401(k) Savings Plan or, in the case of Mr. O’Reilly until March 15, 2020, our Group Registered Retirement Plan (including, in each case, Change Healthcare’s matching contribution) and other voluntary benefits.

In fiscal year 2020, Change Healthcare offered two unfunded, nonqualified retirement plans, the DCAP and Supplemental 401(k) Plan, to select executives employed by Change Healthcare, including named executive officers on U.S. payroll. For more information regarding the Company’s retirement plans, see “Narrative to Nonqualified Deferred Compensation for Fiscal Year 2020 Table.”

Perquisites

We offer a limited number of perquisites for our named executive officers, including annual executive physical exams. In addition, in fiscal year 2020 prior to Mr. O’Reilly’s conversion to our U.S. payroll, he received additional benefits in the form of housing and other benefits provided in connection with international assignments (including related tax gross-ups thereon). The value of other perquisites offered to our named executive officers was not above $10,000 and therefore is not reflected in the Summary Compensation Table. The Compensation Committee regularly reviews the benefits provided to our executives and makes appropriate modifications based on the value of these benefits.

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Change in Control and Severance Arrangements

We have developed market-competitive executive severance guidelines (the “Executive Severance Guidelines”). With the exception of Mr. de Crescenzo, who remains party to an employment agreement with us, and Mr. Eliasson whose offer letter provides certain severance protections, each of our named executive officers subject to an employment agreement agreed to terminate his employment agreement and have instead agreed to be subject to the Executive Severance Guidelines, superseding any severance provisions contained in their prior employment agreements. In addition, in connection with his transfer to the U.S. payroll and the conclusion of his international assignment, Mr. O’Reilly is no longer a party to an employment agreement as of March 16, 2020. The Executive Severance Guidelines generally provide for (i) a lump sum severance payment equal to twelve months of base salary; and (ii) a lump sum payment equal to the cost of continued health care coverage at active employee rates for 12 months should the named executive officer’s employment be terminated either by us without cause or by the executive due to constructive termination. The benefits provided under the Executive Severance Guidelines are contingent upon the affected named executive officer’s execution and non-revocation of a general release of claims and compliance with specified restrictive covenants.

Mr. de Crescenzo is party to an employment agreement with us governing the terms of his employment and any future separation. Pursuant to Mr. de Crescenzo’s employment agreement, we provide salary continuation and other benefits in the event of involuntary or, in certain cases, constructive terminations of his employment without cause. Pursuant to his employment agreement, Mr. de Crescenzo is subject to restrictive covenants, including confidentiality, non-competition and non-solicitation obligations pursuant to a restrictive covenant agreement with the Company.

Mr. Eliasson’s offer letter provides that he will receive severance benefits in accordance with the Executive Severance Guidelines in place at the time of his separation from employment. However, if his employment is terminated by the Company without “cause” (as such term is defined in the Executive Severance Guidelines) or by Mr. Eliasson for “good reason” (as such term is defined in the HCIT Holdings, Inc. 2009 Equity Incentive Plan (the “2009 Equity Plan”)), his offer letter provides that he will be entitled to no less than a lump sum payment equal to (i) one-times his base salary; (ii) his target AIP bonus plus (iii) a lump sum amount equal to the portion of health insurance premium that the Company would have paid for active employees with similar coverage for a period of 12 months. These payments and benefits are contingent upon Mr. Eliasson’s execution and non-revocation of a general release of claims. Mr. Eliasson is subject to restrictive covenants, including confidentiality, non-competition and non-solicitation obligations pursuant to a restrictive covenant agreement with the Company.

In addition to any existing severance arrangements, any other compensation and benefits ultimately awarded in connection with a separation are determined at the discretion of the Compensation Committee and may be based on the executive, his or her position, the nature of the potential separation and such executive’s compliance with specified post-termination restrictive covenants.

Changes to Equity Award Change in Control Provisions

In March 2020, the Compensation Committee approved an amendment to the Company’s outstanding equity award agreements to provide for “double-trigger” vesting treatment for outstanding equity awards, including those granted to our named executive officers. This amendment applies to outstanding performance vesting options, performance share awards, restricted stock units and performance share units granted under both the 2009 Equity Plan and the Omnibus Plan. For purposes of these awards, “double-trigger” vesting treatment means that, in the event of a termination of employment by us without “cause” (as defined in the applicable plan) or a resignation by an individual for “good reason,” in either case, within 12 months following a “change in control” (as such term, or similar term, is defined in the applicable plan), the vesting of these outstanding equity awards will be accelerated.

For purposes of the amendment, “good reason” means: (i)  a material diminution in the executive’s authority, title, duties or responsibilities, or the assignment to the executive of any duties inconsistent with the executive’s position; (ii) a material reduction in the executive’s base salary or target bonus opportunity; (iii) relocation by more than 50 miles of the executive’s principal place of employment; or (iv) a material reduction in the level of employee benefits provided to the executive.

See “Potential Payments upon a Termination or Change in Control,” which describes the payments to which our named executive officers may be entitled under their individual employment arrangements or the Executive Severance Guidelines, as applicable.

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Employment Agreements

With the exception of Mr. de Crescenzo, who remains party to an employment agreement with us, and Mr. Eliasson whose offer letter provides certain severance protections, each of our named executive officers subject to an employment agreement agreed to terminate his employment agreement in connection with our initial public offering. The Compensation Committee believes that employment agreements are not necessary to attract members of our executive team and, going forward, entering into employment agreements with executives will be done on an exception-only basis as recommended by the Compensation Committee and approved by the board of directors. Due to the changing marketplace in which we compete for talent, the Compensation Committee regularly reviews this practice to help ensure that we remain competitive in our industry.

Stock Ownership Guidelines

In fiscal year 2020, the Compensation Committee established stock ownership guidelines for the named executive officers to encourage these individuals to maintain a significant ownership interest in the Company and to help align the interests of the executives with the long-term objectives of the Company. Our Chief Executive Officer is required to own Change Healthcare common stock equal in value to at least six times his annual salary. Each of the other named executive officers is required to own Change Healthcare common stock equal in value to at least three times his annual salary. For purposes of meeting these requirements, ownership includes not only shares owned directly by the named executive officer, but also shares and stock-settled RSUs awarded under our long-term incentive equity plans. The Compensation Committee will monitor annually each named executive officer’s progress toward meeting these targets over a five-year period, at the end of which the named executive officer is expected to have reached the applicable ownership level.

Anti-Hedging and Anti-Pledging Policy

The Company’s Securities Trading Policy, applicable to all employees, directors and officers, prohibits the hedging (including through prepaid variable forward contracts, equity swaps, collars, and exchange funds), pledging or short-selling of the Company’s stock. None of our named executive officers engaged in any hedging or pledging activities with respect to the Company’s stock during fiscal year 2020.

Clawback Policy

In fiscal year 2020, the Compensation Committee adopted the Incentive Compensation Clawback Policy (the “Clawback Policy”) in order to ensure that incentive compensation is paid or awarded based on accurate financial results and the correct calculation of performance against incentive targets. For purposes of the Clawback Policy, incentive compensation means performance bonuses and long-term incentive awards, including cash, stock options, stock appreciation rights, restricted stock, RSUs, PSUs or other equity-based awards that have been paid, granted, vested, settled or accrued. In the event of a significant restatement of our financial results due to material non-compliance with financial reporting requirements or if a covered person engages in any detrimental activity, the Compensation Committee reserves the right to seek recovery of any overpayment of any incentive compensation or cause the reduction, cancellation or forfeiture of any incentive compensation. The Clawback Policy covers all current and former Section 16 officers as well as any other current and former employee designated by the Board of Directors, the Compensation Committee or the Chief Executive Officer.

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Summary Compensation Table

The following table summarizes the compensation earned by each of our named executive officers for the fiscal years indicated.

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Amounts shown in the table reflect the components of All Other Compensation, including any perquisites and personal benefits received by named executive officers in fiscal year 2020 to the extent that the total value of such perquisites and personal benefits was equal to or exceeded $10,000. Items deemed perquisites are valued on the basis of their aggregate incremental cost to the Company. For fiscal year 2020, the value of any perquisites to our named executive officers, other than Mr. O’Reilly, did not equal or exceed $10,000. 

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Grants of Plan-Based Awards in Fiscal Year 2020

The following table provides information relating to (i) awards granted under our AIP; and (ii) RSUs and PSUs granted during fiscal year 2020.

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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Arrangements

As discussed above, in connection with our public offering, each of our named executive officers who was party to an employment agreement, other than Mr. de Crescenzo and Mr. Eliasson, agreed to terminate such employment agreement. In addition, Mr. O’Reilly, who was previously subject to an employment agreement in connection with his international assignment, completed his international assignment on March 15, 2020 at which time his Canadian employment agreement was terminated, and he transferred to the U.S. payroll. The material provisions of Mr. de Crescenzo’s employment agreement are described below. See “Compensation Discussion and Analysis—Employment Agreements” above for additional information.

Mr. de Crescenzo’s Employment Agreement

Mr. de Crescenzo’s amended and restated employment agreement, effective as of June 3, 2017, provides that he is to serve as our President and Chief Executive Officer on an at-will basis. The employment agreement does not contain a specified term and will continue until terminated by either party, provided that Mr. de Crescenzo is required to provide 30 days’ advance written notice prior to his resignation. Mr. de Crescenzo’s employment agreement provides for: (i) a minimum base salary of $721,000; and (ii) eligibility to receive an annual cash incentive award under the AIP with a target of 100% of base salary and a maximum payout of 200% of base salary. Mr. de Crescenzo also is entitled to participate in all employee benefit plans, programs and arrangements generally made available to other executive officers generally. The severance terms contained in Mr. de Crescenzo’s employment agreement are described below under “—Potential Payments Upon Termination or Change in Control—Severance Benefits—Employment Arrangements.”

Equity Award Restrictive Covenants and Clawback

By accepting an equity award, our named executive officers agreed to certain restrictive covenants, including an indefinite covenant not to disclose confidential information and not to disparage us, and, during each of the named executive officer’s employment and for the one-year period following any termination of employment (or such longer period as the named executive officer is eligible to receive severance payments from us), covenants related to non-competition and non-solicitation of employees, customers or suppliers, which were incorporated into their respective award agreements.

If a named executive officer materially breaches any of these restrictive covenants, is terminated for cause or after termination it is discovered that grounds for termination for cause existed, then we have the right to “claw back” and recover any gains the named executive officer may have realized with respect to his or her shares acquired under the terms of the equity award agreement.  

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Outstanding Equity Awards at 2020 Fiscal Year-End

The following table provides information regarding outstanding equity awards held by each of our named executive officers as of March 31, 2020.