YOUR VOTE IS IMPORTANT

WE URGE YOU TO VOTE USING TELEPHONE OR INTERNET VOTING, IF AVAILABLE TO YOU, OR IF YOU RECEIVED THESE PROXY MATERIALS BY MAIL, BY COMPLETING, SIGNING, DATING, AND RETURNING THE ENCLOSED PROXY CARD PROMPTLY. PLEASE NOTE THAT IF YOUR SHARES ARE HELD BY A BANK, BROKER, OR OTHER RECORDHOLDER AND YOU WISH TO VOTE THEM AT THE MEETING, YOU MUST OBTAIN A LEGAL PROXY FROM THAT RECORDHOLDER.

								PROXY STATEMENT SUMMARY

Our Annual Meeting of Stockholders (the “Annual Meeting”) will be held at our corporate offices located at 8840 Cypress Waters Boulevard, Suite 300, Dallas, Texas 75019 on

Wednesday, April 20, 2016, at 8:30 a.m. Central Time or at any subsequent time that may be necessary by any adjournment or postponement of the Annual Meeting.

 

We are making the proxy solicitation materials available to stockholders who hold shares in “street name” electronically via the Internet under the Notice and Access rules and regulations of the Securities and Exchange Commission (the “SEC”). On or about March 10, 2016, we will mail to such stockholders a Notice of Internet Availability of Proxy Materials (“Notice”) in lieu of mailing a full set of proxy materials. Accordingly, our proxy materials are first being made available to our stockholders on or about March 10, 2016. The Notice includes information on how to access and review the proxy materials, and how to vote, via the Internet. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access the proxy

materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We believe this method of delivery will decrease costs, expedite distribution of proxy materials to you, and reduce our environmental impact. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our Annual Meeting. Stockholders who received the Notice but would like to receive a printed copy of the proxy materials in the mail should follow the instructions in the Notice for requesting such materials. Stockholders of record will receive a full set of proxy materials, which will also be sent out on or about March 10, 2016.

 

We are furnishing you these proxy materials in connection with the solicitation of proxies on behalf of our Board of Directors (the “Board”) for use at the Annual Meeting. This proxy statement includes information that we are required to provide under SEC rules and is designed to assist you in voting your shares.

Proxies in proper form received by us at or before the time of the Annual Meeting will be voted as specified. You may specify your choices by marking the appropriate boxes on your proxy card. If a proxy card is dated, signed and returned

without specifying choices, the proxies will be voted in accordance with the recommendations of the Board set forth in this proxy statement, and, in their discretion, upon such other business as may properly come before the Annual Meeting. Business transacted at the Annual Meeting will be confined to the purposes stated in the Notice of Annual Meeting. Shares of our common stock, par value $0.01 per share (“Common Stock”), cannot be voted at the Annual Meeting unless the holder is present in person or represented by proxy.

 

The Notice will provide you with instructions regarding how to (1) view on the Internet our proxy materials for the Annual Meeting; and (2) instruct us to send proxy materials to you by email. The proxy materials are also available on our website at

www.amnhealthcare.com under the “Investor Relations” tab. Choosing to receive proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment.

 

The proxy materials include:

 

•

Our Notice of Annual Meeting of Stockholders,

 

•

This proxy statement, and

•

Our 2015 Annual Report.

If you receive a paper copy of these materials by mail, the proxy materials also include a proxy card.

 

								GENERAL INFORMATION

Proxies will be solicited on behalf of the Board by mail, telephone, email or other electronic means or in person, and we will pay the solicitation costs. We will supply our proxy materials, including our 2015 Annual Report, to brokers, dealers, banks and voting trustees, or their nominees for the

purpose of soliciting proxies from beneficial owners, and we will reimburse them for their reasonable expenses. We have retained MacKenzie Partners, Inc. to assist in soliciting proxies for a fee of $7,000, plus reasonable out-of-pocket expenses.

 

In accordance with our Amended and Restated By-laws (the “Bylaws”), the Board has fixed the close of business on February 23, 2016 as the record date (the “Record Date”) for determining the stockholders entitled to notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. At the close of business on the Record Date, the

outstanding number of our voting securities was 47,992,687 shares. Each stockholder is entitled to one vote for each share of Common Stock he or she held as of the Record Date. Shares cannot be voted at the Annual Meeting unless the holder is present in person or represented by proxy.

 

The following matters will be voted on at the Annual Meeting:

 

•

Proposal 1: To elect the eight directors nominated by the Board and named in this proxy statement,

 

•

Proposal 2: To approve, by non-binding advisory vote, the compensation of our named executive officers,

•

Proposal 3: To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016, and

 

•

Such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

 

With respect to Proposal 1, the election of directors, you may vote FOR, AGAINST or ABSTAIN. Our Bylaws require that in an election where the number of director nominees does not exceed the number of directors to be elected, each director will be elected by the vote of the majority of the votes cast (in person or by proxy). A “majority of votes cast” means that the number of shares cast “FOR” a director’s election exceeds the number of votes cast “AGAINST” that director’s election. In accordance with our Bylaws, the following do not count as votes cast: (a) a share otherwise present at the meeting, but for which an ABSTAIN vote was cast; and (b) a share otherwise present at the meeting as to which a stockholder gives no authority or direction. In an uncontested election, a nominee who does not receive a majority of the votes cast will not be elected. An incumbent director who is not elected because he or she does not receive a majority of the votes

cast will continue to serve as a holdover director, but shall tender his or her resignation to the Board. Within 90 days after the date of the certification of the election results, the Corporate Governance Committee will make a recommendation to the Board on whether to accept or reject the resignation or whether other action should be taken, and the Board will act on the Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it.

With respect to Proposals 2 and 3 (or on any other matter to be voted on at the Annual Meeting), you may vote FOR, AGAINST or ABSTAIN. If you ABSTAIN from voting on either Proposal 2 or 3, the ABSTAIN vote will have the same effect as an AGAINST vote.

 

The Board recommends that you vote:

 

•

FOR the election of the eight directors nominated by the Board and named in this proxy statement,

 

•

FOR the approval, on a non-binding advisory basis, of the compensation of our named executive officers, and

•

FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.

 

How to vote your shares depends on whether you hold your shares as a “stockholder of record” or as a “beneficial owner,” which terms we explain in Question 12 below. If you are a stockholder of record, you can vote in the following ways:

 

•

By Internet: by following the Internet voting instructions included in the proxy package sent to you (or by going to www.proxyvote.com and following the instructions) at any time up until 11:59 p.m., Eastern Time, on the day before the date of the Annual Meeting.

 

•

By Telephone: by following the telephone voting instructions included in the proxy package sent to you (i.e., by calling 1-800-690-6903 and following the instructions) at any time up until 11:59 p.m., Eastern Time, on the day before the date of the Annual Meeting.

 

•

By Mail: if you have received a printed copy of the proxy materials from us by mail, by marking, dating, and signing your proxy card in accordance with the instructions on it

and returning it by mail in the pre-addressed reply envelope provided with the proxy materials. The proxy card must be received prior to the Annual Meeting.

 

•

In Person: in person at the meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted if you later decide not to attend the Annual Meeting.

If you are a beneficial owner, you should follow the instructions in the Notice or your broker should give you instructions for voting your shares. In these cases, you may vote by Internet, telephone or mail, as applicable. You may vote your shares beneficially held through your broker in person if you attend the Annual Meeting and you obtain a valid proxy from your broker giving you the legal right to vote the shares at the Annual Meeting.

 

Stockholder of Record. You are a stockholder of record if at the close of business on the Record Date your shares were registered directly in your name with American Stock Transfer & Trust Company, LLC, our transfer agent.

Beneficial Owner. You are a beneficial owner if at the close of business on the Record Date your shares were held by a brokerage firm or other nominee and not in your name. Being

a beneficial owner means that, like most of our stockholders, your shares are held in “street name.” As the beneficial owner, you have the right to direct your broker or nominee how to vote your shares by following the voting instructions your broker or other nominee provides. If you do not provide your broker or nominee with instructions on how to vote your shares, your broker or nominee will be able to vote your shares as described below.

 

Stockholders of Record. If you are the stockholder of record and you do not vote by proxy card, by telephone, via the Internet or in person at the Annual Meeting, your shares will not be voted at the Annual Meeting.

Beneficial Owners. If you are the beneficial owner and you do not direct your broker or nominee how to vote your shares, your broker or nominee may vote your shares only on those

proposals for which it has discretion to vote. Under the rules of the New York Stock Exchange (“NYSE”), your broker or nominee does not have discretion to vote your shares on non-routine matters such as Proposals 1 and 2. We believe that Proposal 3 — ratification of our auditor — is a routine matter on which brokers and nominees can vote on behalf of their clients if clients do not furnish voting instructions.

 

								GENERAL INFORMATION

Brokers or other nominees who hold shares for a beneficial owner have the discretion to vote on routine proposals when they have not received voting instructions from the beneficial owner at least ten days prior to the Annual Meeting. A broker non-vote occurs when a broker or other nominee does not receive voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares. Broker non-votes will be counted for purposes of calculating

whether a quorum is present at the Annual Meeting, but will not be counted for purposes of determining the number of votes present in person or represented by proxy and entitled to vote with respect to certain proposals. Accordingly, a broker non-vote will not impact our ability to obtain a quorum nor will it impact any vote that requires a majority of the votes cast (Proposal 1).

 

Yes, you may revoke a proxy you have given at any time before it is voted at the Annual Meeting by (1) giving our Secretary a letter revoking the proxy, which the Secretary must receive prior to the Annual Meeting, or (2) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting does not standing alone constitute your

revocation of a proxy. You may change your vote at any time prior to the voting of your shares at the Annual Meeting by (a) casting a new vote by telephone or over the Internet by the time and date set forth in Question 11 above, or (b) sending a new proxy card with a later date that is received prior to the Annual Meeting.

 

We will announce preliminary results at the Annual Meeting. We will publish final results in a current report on Form 8-K that we will file with the SEC within four business days after the Annual Meeting. If the official results are not available at

that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available.

 

The Board is elected by the stockholders to oversee their interest in the overall success of our business and financial strength. The Board serves as our ultimate decision-making body to the extent set forth in our Certificate of Incorporation

and Bylaws. It also selects and oversees members of our senior management, who, in turn, oversee our day-to-day business and affairs.

 

Eight directors are to be elected at the Annual Meeting to hold office until the next annual meeting or until their successors are duly elected and qualified, or until the director resigns, is removed, or becomes disqualified. The proxy will be voted in accordance with the directions stated on the card, or, if no directions are stated, for election of each of the eight nominees listed below. Upon the recommendation of the Corporate Governance Committee, the members of the Board have nominated for election our eight current directors. The director nominees for election named below are willing to be duly elected and to serve. If any such nominee is not a candidate for election at the Annual Meeting, an event that the Board does not anticipate, the proxies will be voted for a substitute nominee. We set forth information with respect to the business experience, qualifications and affiliations of our director nominees below.

 

		Mark G. Foletta Director Since 2012 Age: 55 Board Committees: Audit Committee Business Experience, Qualifications and Affiliations: The Board has concluded that

Mr. Foletta is qualified to serve on the Board because he brings considerable audit, financial and healthcare experience and also has experience as a public company director. The Board has designated Mr. Foletta as a financial expert for its Audit Committee. Since August 2015, Mr. Foletta has served as the Interim Chief Financial Officer of Biocept, Inc., a publicly traded diagnostics company. Since February 2013, Mr. Foletta has served as a director of Regulus Therapeutics Inc., and is Chairman of its Audit Committee and a member of its Nominating and Governance Committee. Since November 2014, Mr. Foletta has served on the Board of DexCom, Inc., a publicly-held company, where he is the Lead Director. Additionally, Mr. Foletta serves as a director of Viacyte, Inc., a privately held company. Mr. Foletta served as Senior Vice President, Finance and Chief Financial Officer of Amylin Pharmaceuticals, Inc. from March 2006 until October 2012, and he previously served as Vice President, Finance and Chief Financial Officer of Amylin from March 2000 to March 2006. He previously served as a director and Chairman of the Audit Committee of Ambit Biosciences Corporation (sold in 2014)

and also served as a director of Anadys Pharmaceuticals, Inc. (sold in 2011). Mr. Foletta received a B.A. from the University of California, Santa Barbara. He is a Certified Public Accountant (inactive) and a member of the Corporate Directors Forum.

 

		R. Jeffrey Harris Director Since 2005 Age: 61 Board Committees: Compensation and Corporate Governance Committees Business Experience, Qualifications and Affiliations: The Board has concluded that

Mr. Harris is qualified to serve on the Board because he brings considerable mergers and acquisitions experience. In addition, Mr. Harris has experience as a director on public company compensation and corporate governance committees, which experience is essential in designing and maintaining our executive compensation programs and developing our succession planning strategies. Since 2002, Mr. Harris has been involved as an investor in and a director of early stage companies. Mr. Harris served on the Board of Sybron Dental Specialties from April 2005 until Danaher Corporation acquired it in 2006. Mr. Harris served on the Board of Playtex Products, Inc. from 2001 until Energizer Holdings acquired it in October 2007. Mr. Harris was director of Prodesse, Inc., an early stage biotechnology company, from 2002 until 2009, when Gen-Probe Incorporated acquired it. Since 2008 he has been a director of Guy & O’Neill, Inc., and he serves on the Board of Brookfield Academy, a non-profit entity, and is Chairman of the Board and a co-founder of BrightStar Wisconsin Foundation, Inc., a non-profit economic development corporation. Additionally, Mr. Harris is a director of Somna Management, Inc. and Okanjo Partners, Inc., both early stage technology companies based in Wisconsin. Mr. Harris also served Apogent Technologies, Inc. in the following capacities: (1) as Of Counsel from December 2000 through 2003, (2) as Vice President, General Counsel and Secretary from 1988 to 2000 (when the company was known as Sybron International, Inc.), and (3) as a director from 2000 until Fisher Scientific International, Inc. acquired it in 2004.

 

								PROPOSAL 1: ELECTION OF DIRECTORS

		Michael M.E. Johns, M.D. Director Since: 2008 Age: 74 Board Committees: Compensation and Corporate Governance (Chair) Committees Business Experience, Qualifications and Affiliations: The Board has concluded that

Dr. Johns is qualified to serve on the Board because he has extensive healthcare experience and is a recognized healthcare thought leader. This expertise is vital in shaping our strategy to deliver innovative and expanded service offerings as a healthcare workforce solutions company. Dr. Johns is a Professor in the School of Medicine at Emory University, where he also served as Chancellor from October 2007 through August 2012. He is a member of the Board of Regents of the Uniformed Services University for the Health Sciences. Additionally, Dr. Johns is a member of The National Academy of Medicine of the National Academy of Science. He also serves on the Boards of Directors of Intelligent Fingerprinting, a privately held company, West Health Institute, a non-profit medical research organization, and several philanthropic entities. Dr. Johns served on the Board of the Genuine Parts Company from 2000 until April 2015 and at various times during his tenure was a member of its Compensation, Governance and Nominating Committee and its Audit Committee. He also served on the Board and the Compensation Committee of Johnson & Johnson from 2005 to 2014. Dr. Johns served as Interim Executive Vice President for Health Affairs for Emory University and as Interim Chairman and CEO of Emory Healthcare from September 1, 2015 through January 31, 2016. He served as the Interim Executive Vice President for Medical Affairs and Interim Chief Executive Officer of the University of Michigan Health System from June 2014 through March 2015. From 1996 to 2007, Dr. Johns served as Executive Vice President for Health Affairs and Chief Executive Officer of the Robert W. Woodruff Health Sciences Center of Emory University and the Chairman of the Board of Directors of Emory Healthcare. From 1990 to 1996, Dr. Johns was Dean of the Johns Hopkins School of Medicine and Vice President of the Medical Faculty at Johns Hopkins University.

 

		Martha H. Marsh Director Since: 2010 Age: 67 Board Committees: Compensation (Chair) and Corporate Governance Committees Business Experience, Qualifications and Affiliations: The Board has concluded that

Ms. Marsh is qualified to serve on the Board because she has extensive “C-suite” leadership and expertise in the healthcare

industry. Ms. Marsh’s experience and understanding of the challenges and opportunities of large healthcare facilities are immensely useful in directing our strategy to innovate and provide enhanced and expanded workforce solutions service offerings to meet our clients’ shifting needs. Ms. Marsh serves as a director of Owens & Minor, Inc. and also serves on its Governance and Nominating Committee, as Chairperson, and on its Compensation and Benefits Committee. Since October 2015, she has served as a director of Edwards Lifesciences Corporation. She also serves on the Board and the Compensation Committee of Teichert, a privately held company. Prior to Thoratec Corporation’s acquisition by St. Jude Medical in 2015, she had served on Thoratec’s Board. Ms. Marsh served as President and CEO of Stanford Hospital and Clinics for eight years, from April 2002 until her retirement in August 2010. Previously, Ms. Marsh served as the CEO of UC Davis Medical Center and the Chief Operating Officer of the UC Davis Health System from 1999 to 2002. Prior to that time, she served as the Senior Vice President for Professional Services and Managed Care at the University of Pennsylvania Health System, and before that as President and CEO of Matthew Thornton Health Plan in Nashua, New Hampshire. Ms. Marsh is a past Chair of the Board of Trustees for the California Hospital Association and the California Association of Hospitals and Health Systems and a former director of Ascension Healthcare Network, a privately held company.

 

		Susan R. Salka Director Since: 2003 Age: 51 Board Committees: Executive Committee Business Experience, Qualifications and Affiliations: Ms. Salka has served as our

President since May 2003 and our CEO since May 2005. The Board has concluded that Ms. Salka is qualified to serve on the Board because she has nearly three decades of experience in the healthcare services industry, including 26 years of experience with us in various roles, including Chief Financial Officer and Chief Operating Officer. In such roles, she has helped grow our business both organically and through acquisitions into the national industry leader we are today. Ms. Salka serves as a director of McKesson Corp. and is a member of its Audit Committee. Ms. Salka also serves on the Board of San Diego State University Campanile Foundation. Prior to joining us, Ms. Salka worked at BioVest Partners, a venture capital firm, and at Hybritech, a subsidiary of Eli Lilly & Co., which Beckman Coulter later acquired. Ms. Salka served on the Board and the Audit Committee of Beckman Coulter from 2007 until 2011, when Danaher Corporation acquired it. Additionally, she served on the Board of Playtex Products, Inc. from 2001 until Energizer Holdings acquired it in October 2007.

 

		Andrew M. Stern Director Since: 2001 Age: 66 Board Committees: Audit and Corporate Governance Committees Business Experience, Qualifications and Affiliations: The Board has concluded that

Mr. Stern is qualified to serve on the Board because he brings deep and long-standing healthcare industry experience as well as unparalleled investor communications and media expertise, which have been critical in guiding the structuring of our communications strategy with our investors, clients and other key stakeholders. Since 1983, Mr. Stern has served as Chairman of the Board and Chief Executive Officer of Sunwest Communications, Inc., a public relations firm. Mr. Stern also serves as a director of Medical City Dallas Hospital, an advisory director of the Center for Political Communication and Chairman-elect of the Committee on Governance of the American Hospital Association. From 1975 to 1977, he served as Staff Assistant to President Gerald R. Ford at The White House and then served in senior corporate positions until founding Sunwest in 1982.

 

		Paul E. Weaver Director Since: 2006 Age: 70 Board Committees: Audit (Chair) and Executive Committees Business Experience, Qualifications and Affiliations: The Board has concluded that

Mr. Weaver is qualified to serve on the Board because of his extensive international audit and finance experience and sophistication. Mr. Weaver is designated as a financial expert on the Audit Committee and serves as the Chairman. Mr. Weaver serves as the Chairman of the Board of Unisys Corporation and Chairman of its Audit Committee. Additionally, Mr. Weaver serves on the Board of WellCare Health Plans, Inc., is Chairman of its Audit Committee, and is a member of its Compensation Committee. He also serves as a member of the Board of Directors of the Statue of Liberty-Ellis Island Foundation, a not-for-profit entity, and also serves on its Executive Committee. Mr. Weaver is a former Vice Chairman of PricewaterhouseCoopers, LLP and was Chairman of its global technology, infocom and entertainment/media practice group. Mr. Weaver previously served on the Board of Gateway, Inc. and the Board of Idearc Inc.

		Douglas D. Wheat Board Chairman Director Since: 1999 Age: 65 Board Committees: Executive Committee Business Experience, Qualifications and Affiliations: The Board has concluded that

Mr. Wheat is qualified to serve on the Board because he possesses significant healthcare staffing industry knowledge and extensive expertise in corporate finance and mergers and acquisitions. Such knowledge and expertise are critical to the successful design and implementation of our growth strategy. Since 2007, Mr. Wheat has been a partner of Southlake Equity Group. He serves as Chairman of the Board of Overseas Shipholding Group, Inc., a publicly traded company, for which he has been a director since 2014. Since April 2013, Mr. Wheat has served as Vice Chairman of the Board of Dex Media, Inc. Mr. Wheat served as Chairman of the Board of SuperMedia Inc. from 2010 until its merger with Dex Media in April 2013. Mr. Wheat previously served on the boards of several other companies, including Nebraska Book Company, Inc., Smarte Carte Corporation, and Playtex Products, Inc., for which he was Chairman from 2004 to 2006.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF

EACH OF THE EIGHT DIRECTOR NOMINEES NAMED ABOVE.

								CORPORATE GOVERNANCE

Our Board and executive officers view strong and effective corporate governance as essential to our success. Our commitment to quality corporate governance allows our team members who oversee day-to-day corporate governance matters to focus on corporate governance best practices and not just adequate ones. Our Board, executive leaders, and members of our internal audit, risk management, investor relations and legal departments collaborate throughout the year to ensure that we are being governed in accordance with the highest standards.

Accordingly, among other things, we periodically review our current corporate governance practices against benchmarks on a range of corporate practices. Over the past two years, we have, among other things, taken the following steps:

 

Ø

We collaborated with a well-respected outside organization, Corporate Executive Board, on a review of our committee charters and corporate governance guidelines to help ensure that our governance practices were still in line with best practices. We concluded our charters and guidelines were generally in line with best practices and made appropriate changes that we believed improved them.

 

Ø	We collaborated with Corporate Executive Board on a review of our board evaluation questionnaire to ensure it was garnering relevant and useful information as to critical board functions and practices.

 

Ø	The Audit Committee lengthened the duration of its meetings to ensure that we gave information technology and data security, recent hot topics, more effective oversight and focus at the Board level.

Ø	We reviewed and revised our Executive Compensation Philosophy in light of the Compensation Committee’s current views of our compensation program.

 

Ø

We recognize that director tenure, term limits, mandatory retirement age and board refreshment have collectively become an area of focus for many institutional investors and proxy advisory firms. Accordingly, we analyzed whether Board term limits or mandatory retirement age requirements would be appropriate for us. After careful consideration, we decided against such limits or requirements at the present time. We believe our current Board collectively has the necessary experience, skills and knowledge and a high level of engagement to serve our best interests and provides us a diverse set of perspectives for the industry in which we operate. We also believe, after considering all of the relevant facts and circumstances, that all of our directors (other than our CEO) are, indeed, independent in fact and not just independent “on paper.” Our Corporate Governance Committee will continue to stay abreast of director tenure and board refreshment developments within the institutional investor and proxy advisory firm community and will continue to consider our directors’ tenure, both individually and collectively, as one of the many factors it analyzes in annually selecting director nominees in the future.

We note that we are proud to have been recognized in 2015 as best-in-class for our ethics, compliance and governance programs by the NYSE Governance Services and the Corporate Secretary organizations. We intend to continue to strive to adhere to the principles and practices that those awards recognize.

 

As another essential component to quality corporate governance, we have a strong commitment to promoting a culture of ethics and integrity, and our values define the way we do business. The Board is committed to fostering a strong ethical tone at the Company and expects all of its employees to strive to fulfill their responsibilities in accordance with the highest standards of professional and personal conduct. Accordingly, we have adopted the following:

 

•

a Code of Business Conduct and Ethics (“Code of Business Conduct”),

 

•

a Code of Ethics for the Principal Executive Officer and Senior Financial Officers (“Financial Officers Code of Ethics”), and

•

Corporate Governance Guidelines (“Guidelines”).

As discussed above, our Board and its committees regularly and carefully review these key governance documents to ensure they always capture what we believe to be the best governance practices for our Company. We publish the above-referenced documents, as they may be modified from time to time, in the link entitled “Corporate Governance” located within the “Investor Relations” tab of our website at www.amnhealthcare.com. We also make these materials available in print to any stockholder upon request. The Board regularly reviews corporate governance developments and modifies the Guidelines, the Code of Business Conduct and the Financial Officers Code of Ethics as warranted.

 

The Board has adopted categorical standards for director independence, which we set forth in the Guidelines that are available on our website as set forth above. Under these standards, a director will not be considered independent if:

 

(1)

the director does not qualify as independent under Rule 303A.02(b) of the NYSE Listed Company Manual,

 

(2)

the director or an immediate family member is a partner of, or of counsel to, a law firm that performs substantial legal services for us on a regular basis, or

 

(3)

the director or an immediate family member is a partner, officer or employee of an investment bank or consulting firm that performs substantial services for us on a regular basis for which it receives compensation.

The Board does not consider the following relationships to be material relationships that would impair a director’s independence:

 

(1)

the director or an immediate family member is an executive officer of another company that does business with us and the annual sales to, or purchases from, us are less than 1% of the annual revenues of the company for which he or she serves as an executive officer,

(2)

the director or an immediate family member is an executive officer of another company which is indebted to us, or to which we are indebted, and the total amount of either company’s indebtedness to the other is less than 1% of the total consolidated assets of the company for which he or she serves as an executive officer and such indebtedness is not past due, or

 

(3)

the director or an immediate family member serves as an officer, director or trustee of a charitable organization, and our discretionary charitable contributions to the organization are less than 1% of its total annual charitable receipts.

The Board has determined that director nominees Mark G. Foletta, R. Jeffrey Harris, Dr. Michael M.E. Johns, Martha H. Marsh, Andrew M. Stern, Paul E. Weaver and Douglas D. Wheat meet our categorical standards for director independence and the applicable rules and regulations of the NYSE and federal securities laws regarding director independence. Our CEO is the only member of our Board who the Board has not deemed independent.

 

The Guidelines establish directors’ duties to adhere to our Code of Business Conduct, including our policies on conflicts of interest, and to avoid any action, position or interest that conflicts with an interest of ours or gives the appearance of a conflict. We require directors to report any potential conflicts of interest immediately to the Chairman of the Corporate Governance Committee. We do not, without approval of the Board, permit a director or executive officer, or his or her immediate family member (i.e., spouse, parent, step-parent, child, step-child, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law or anyone (other than a tenant or employee) who shares that person’s home) or any other person meeting the definition of “related person” under Item 404 of Regulation S-K promulgated under

the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (each, a “related person”), to enter into a transaction in which we are a participant if (a) the amount involved exceeds $120,000, and (b) the related person has or will have a direct or indirect material interest. We annually solicit information from directors and executive officers to monitor potential conflicts of interest and comply with SEC requirements regarding approval or disclosure of “related person transactions.” We did not engage in any transaction in 2015 nor is there any currently proposed transaction that exceeds or is expected to exceed $120,000 in which we were or are a participant and in which a related person had or will have a direct or indirect material interest.

 

We expect each of our Board members to attend each meeting of the Board and of the committees on which he or she serves. We expect our directors to attend our annual meeting of stockholders. During 2015, the Board met six times and took one action by unanimous written consent. In 2015, no member of the Board attended fewer than 75% of

the aggregate of (i) the total number of meetings of the Board (held during the period for which he or she has been a director) and (ii) the number of meetings held by all committees of the Board (during the periods that he or she served on such committees). All of our directors attended our 2015 Annual Meeting of Stockholders.

 

								CORPORATE GOVERNANCE

We separate the roles of Chairman of the Board and the Chief Executive Officer. Our CEO, Ms. Salka, is responsible for working with the Board in setting our strategic direction and our day-to-day leadership and performance, while the Chairman of the Board, Mr. Wheat, leads the Board in overseeing our strategy, provides guidance to our CEO and presides over meetings of the Board. The Board believes that having separate roles:

(1)

increases the independent oversight of the Company and enhances the Board’s objective evaluation of our CEO,

 

(2)

provides our CEO with an experienced sounding board in the Chairman, and

 

(3)

provides an independent spokesperson for the Company.

 

The Board as a whole is responsible for overseeing our risk exposure as part of determining a business strategy that generates long-term shareholder value. The Board shapes our enterprise-wide risk capacity, appetite and tolerance levels that provide the foundation for our overall strategy and direction. The Board recognizes that risk mitigation not only preserves value, but also, when risk is managed appropriately, creates value and opportunity.

Indeed, purposeful and appropriate risk-taking in certain areas is important for us to be competitive and to achieve our long-term goals. Accordingly, the Board has implemented a risk governance framework in which it periodically identifies key risks facing us and determines our risk appetite for each of the identified key risks. We have designed our enterprise risk management process utilizing open communication between our executive team and Board to regularly highlight the opportunities and threats to our business and the steps we are willing to take to capitalize on our business opportunities and to mitigate against identified risks. As part of this process, we maintain an Enterprise Risk Management Committee, which as part of our annual strategic planning assists the Board in identifying key risks. We typically focus on five to seven risks annually, which risks may relate to, among other things, business operations, competitive landscape, supply of quality healthcare professionals, talent, technology systems and innovative strategies. The Enterprise Risk Management Committee also assists the Board in determining our risk tolerance for each key risk in light of our (1) existing risk capacity, (2) appetite, if any, to take on additional risk, (3) risk velocity and (4) mitigation factors. The Board’s determination of our key risks and our tolerance for each ultimately directly influences how we operate our business, including how we marshal our resources and make operational decisions.

With the oversight of our Board, members of our executive team, including our CEO, are given overall responsibility for monitoring and managing one or more identified key risks as well as Company risk generally. The members of our executive team and others, in turn, facilitate an appropriate culture of integrity and risk awareness for our team members. We also maintain internal processes and an internal control environment to facilitate the identification and management of

risks. Our Board meets with management at regular Board meetings and, if necessary, at other times to discuss strategy and success in addressing our identified key risks along with any others that may face us from time to time.

In addition to the foregoing, each of the Board’s standing committees set forth below focuses attention on risk areas implicated by its area of expertise, and reports regularly to the Board on such risks. All committees play significant roles in carrying out the risk oversight function.

Audit Committee Risk Oversight. The Audit Committee assists the Board in fulfilling its oversight responsibilities of our compliance with ethical and certain legal requirements, and our process to manage business and financial risk. Among other things, the Audit Committee’s specific duties include:

 

(1)

overseeing the work of our independent auditors,

 

(2)

reviewing and discussing with management our major risk exposures and the steps management has taken to monitor, control and manage such exposures, including our risk assessment and risk management guidelines and policies,

 

(3)

reviewing and discussing with management key technology initiatives and risks and reviewing periodic cybersecurity reports,

 

(4)

approving procedures for receiving complaints by us regarding accounting, internal accounting controls or auditing matters, reviewing our code of conduct program and reviewing attorneys’ reports containing evidence of material violations of securities laws, breaches of fiduciary duty or other similar violations of state or federal law, and

 

(5)

reviewing the results of significant investigations, examinations or reviews performed by regulatory authorities and management’s responses.

Compensation Committee Risk Oversight. The Compensation and Stock Plan Committee (the “Compensation Committee”) is responsible for analyzing the risk associated with our compensation practices. We design our incentive compensation to reward officers and

 

other key employees for committing to and delivering on financial goals that we believe are challenging yet (i) reasonably achievable, (ii) require meaningful revenue and profitability performance to reach the target level, and (iii) require substantial revenue and profitability performance to reach the maximum level. The financial performance required to reach the maximum level of compensation is developed within the context of budget planning and, while difficult to achieve, is not viewed to be at such an aggressive level that it would induce bonus-eligible employees to take inappropriate risks that could threaten our financial and operating stability. The Compensation Committee has reviewed our material cash incentive plans, which fall into two types: (1) those for front line sales production employees and (2) those for the sales and corporate leadership. The front line sales incentive plans typically provide incentives based on monthly or quarterly financial or individual and team operational metrics, and include monthly or quarterly payouts. Roughly half of our team members participate in one of our approximately 100 sales incentive plans. The sales and corporate leadership plans use annual financial targets based on consolidated and/or division metrics as well as individual leadership and performance considerations, and include quarterly or annual payouts. We have internal controls over financial reporting and the measurement and calculation of compensation goals, and other financial, operational and compliance policies and practices that are designed to keep these compensation programs from being susceptible to manipulation by any employee, including our named executive officers.

The Compensation Committee considers the risks associated with the compensation plans in light of several factors, including (1) the amount of incentive compensation paid to a particular group as a percentage of total incentive cash paid and as a percentage of division and/or consolidated revenue,

gross profit and adjusted EBITDA (“AEBITDA”), (2) the number of plan participants in any particular plan as a percentage of total incentive plan participants, and (3) the amount of target incentive compensation per individual plan participant, which typically ranges from 10% to 80% of total compensation (and can range from approximately 60% to 80% of named executive officers’ total compensation). The Compensation Committee believes the use of a long-term incentive award program with targets that span a three-year performance period balances risk and reward by discouraging excessive risk that could threaten our long-term value, but at the same time encourages innovation to build our value in the short- and long-term. The Compensation Committee also reviews our program for design features that have been identified by experts as having the potential to encourage excessive risk-taking, such as: (A) too much focus on equity, (B) compensation mix overly weighted toward short-term results, (C) highly leveraged payout curves and steep payout cliffs at specific performance levels that could encourage short-term actions to meet payout thresholds, and (D) unreasonable goals or thresholds. After its consideration of the foregoing factors, the Compensation Committee has determined that our compensation programs and policies do not create risks that are reasonably likely to have a material adverse effect on us.

Corporate Governance Committee Risk Oversight. The Corporate Governance Committee considers the risk associated with our quality programs. It reviews and discusses with our management relevant quality metrics, performance improvement, compliance with certification standards and related laws and regulations as well as our enterprise risk management process relating to the quality of our services.

 

We have standing Audit, Corporate Governance, Compensation and Executive Committees. The Board committees are chaired by independent directors, each of whom reports to the Board at Board meetings on the activities and decisions made by their respective committees. The Board makes committee assignments and designates committee chairs based on a director’s independence, knowledge and areas of expertise. We believe this structure helps facilitate efficient decision-making and communication among our directors and fosters efficient Board functioning at

Board meetings. In line with our value of continuous improvement, the directors conduct an evaluation of the performance of the Board and each of the committees on an annual basis. We describe the current functions and members of each committee below. A more detailed description of the function, duties and responsibilities of the Audit, Corporate Governance and Compensation Committees is included in each Committee’s charter available in the link entitled “Corporate Governance” located within the “Investor Relations” tab of our website at www.amnhealthcare.com.

 

								CORPORATE GOVERNANCE

Audit Committee. Our Audit Committee Charter, last amended in December 2015, sets forth the duties of the Audit Committee. Generally, the Audit Committee is responsible for, among other things, overseeing our financial reporting process. In the course of performing its functions, the Audit Committee as provided by our Audit Committee Charter:

 

(1)

reviews our internal accounting controls and audited financial statements,

 

(2)

reviews with our independent registered public accounting firm the scope of its audit, its audit report and its recommendations,

 

(3)

considers the possible effect on the independence of such firm in approving non-audit services requested of it, and

 

(4)

appoints our independent registered public accounting firm, subject to ratification by our stockholders.

Corporate Governance Committee. Our Corporate Governance Committee Charter, last amended in September 2014, sets forth the duties of the Corporate Governance Committee. Generally, the Corporate Governance Committee:

 

(1)

identifies and recommends individuals qualified to become members of the Board,

 

(2)

evaluates periodically the Code of Business Conduct, the Financial Officers Code of Ethics and the Guidelines,

 

(3)

reviews the Board’s performance on an annual basis,

 

(4)

reviews and evaluates succession planning for the CEO and other members of our executive management team,

(5)

recommends potential successors to the CEO, and

 

(6)

reviews and discusses with our executive team relevant quality metrics, performance improvement, compliance with certification standards and related laws and regulations as well as our enterprise risk management process relating to the quality of our services.

With respect to director nominee procedures, the Corporate Governance Committee utilizes a broad approach for identification of director nominees and may seek recommendations from our directors, officers or stockholders or it may choose to engage a search firm. In evaluating and determining whether to ultimately recommend a person as a candidate for election as a director, the Corporate Governance Committee considers the qualifications set forth in our Guidelines, including judgment, business and management experience (including financial literacy), leadership, strategic planning, reputation for honesty and integrity, diversity and independence from management. It also takes into account specific characteristics and expertise that it believes will enhance the diversity of knowledge, expertise, background and personal characteristics of the Board. The Corporate Governance Committee may engage a third party to conduct or assist with the evaluation. Ultimately, the Corporate Governance Committee seeks to recommend to the Board those nominees whose specific qualities, experience and expertise will augment the current Board’s composition and whose past experience evidences that they will (1) dedicate sufficient time, energy and attention to ensure the diligent performance of Board duties, (2) comply with all duties of care, loyalty and confidentiality applicable to them as directors of publicly traded corporations, and (3) adhere to our Code of Business Conduct.

 

The Corporate Governance Committee considers stockholder recommendations of qualified nominees when such recommendations are submitted in accordance with the procedures described in the Bylaws. To have a nominee considered by the Corporate Governance Committee for election at the 2017 Annual Meeting of Stockholders, a stockholder must submit the recommendation in writing to the attention of our Secretary at our corporate headquarters no later than January 20, 2017 and no sooner than December 21, 2016. Any such recommendation must include the information set forth on Exhibit A to this proxy statement (page A-1). Once we receive the recommendation, we will deliver to the stockholder nominee a questionnaire that requests additional information about his or her independence, qualifications and other matters that would assist the Corporate Governance Committee in evaluating the stockholder nominee, as well as certain information that must be disclosed about him or her in our proxy statement or other regulatory filings, if nominated. Stockholder nominees must complete and return the questionnaire within the timeframe provided to be considered for nomination by the Corporate Governance Committee.

The Corporate Governance Committee received no recommendation for a director nominee from any stockholder for the director election to be held at the Annual Meeting.

Compensation Committee. The Compensation Committee Charter, last amended in April 2015, sets forth the duties of the Compensation Committee. Among other things, the Compensation Committee (i) reviews, and, when appropriate, administers and makes recommendations to the Board regarding (A) compensation (including employment agreements or severance arrangements, if applicable, and executive supplemental benefits or perquisites, if any) of our CEO, all senior officers that report directly to our CEO, and the directors and (B) our incentive compensation plans and equity-based plans, (ii) prepares the Compensation Committee Report and oversees the preparation of our compensation disclosure and analysis required by the SEC to be included in our annual proxy statement and recommends their inclusion in the annual proxy statement to the Board, (iii) recommends the proposals on “say-on-pay” and the frequency of the “say-on-pay” vote that are required by SEC rules, and (iv) evaluates the performance of our CEO.

Compensation Committee Interlocks and Insider Participation. The Compensation Committee, whose members are Mr. Harris, Dr. Johns and Ms. Marsh, consists exclusively of non-employee, independent directors, none of whom has a business relationship with us, other than in his or her capacity as director, or has any interlocking relationships with us that are subject to disclosure under the rules of the SEC related to proxy statements.

The Compensation Committee reviews all components of compensation of the named executive officers and other senior officers that directly report to our CEO on an annual

basis and will consider changes at other times if a change in the scope of an officer’s responsibilities justifies such consideration. The Compensation Committee generally conducts its salary and bonus structure review for a particular year in the last quarter of the previous year or early in the subject year. At that time, the Compensation Committee evaluates compensation by, among other things, reviewing (1) peer benchmarking information relating to financial performance and compensation levels, (2) the individual’s performance, duties and experience, (3) analysis and advice from its compensation consultant, (4) our financial and operational performance, and (5) the recommendations of our CEO (who does not provide a recommendation for herself). With respect to our Senior Management Incentive Bonus Plan, as Amended and Restated (the “Bonus Plan”), which our stockholders reapproved in April 2012, the Compensation Committee, as the administrator of the Bonus Plan, designates which participants are eligible for an award, the performance criteria for the award and the maximum award each year. Prior to or at the beginning of each fiscal year, the Board sets financial targets for our performance. Thereafter, the Compensation Committee sets the range of financial performance and corresponding targets for the named executive officers’ cash incentive compensation under the Bonus Plan.

The Compensation Committee may also grant annual equity awards under our Equity Plan, as Amended and Restated (the “Equity Plan”). In addition to annual grants, the Compensation Committee has granted equity awards to key employees upon their initial employment, promotion or as special retention awards. To further serve this purpose, the Board adopted our 2014 Employment Inducement Plan under which we may issue up to 200,000 shares of our Common Stock to prospective employees and officers. In the Compensation Committee’s discretion, it may authorize our CEO to grant equity awards to non-officer employees within certain individual and aggregate thresholds with the effective date of each such grant generally being the effective date of the grantee’s promotion or commencement of employment. The Compensation Committee reviews any awards granted by our CEO. The Compensation Committee does not have any policy or practice to time the grant of equity awards in conjunction with the release of material non-public information.

The Compensation Committee retains an independent consultant to assist it in fulfilling its responsibilities. Since 2008, the Compensation Committee has utilized Frederic W. Cook & Co., Inc. as its compensation consultant. Our compensation consultant advises the Compensation Committee on a variety of topics, including, among others, our equity compensation program, the design of our cash incentive program, the evaluation of the alignment of our compensation program with our stockholders’ interests, the risks presented by our executive compensation program structure, the assessment of the program compared to our peers and director and executive compensation trends.

 

								CORPORATE GOVERNANCE

In retaining and utilizing Frederic W. Cook & Co., the Compensation Committee considers (1) directors’ experience with its employees and representatives while serving on other boards, (2) knowledge and experience in executive compensation program design, corporate finance and legal and regulatory issues, (3) experience providing consultative services to boards, as well as its analysis of our existing program and proposal of key considerations in evaluating and strengthening our program and (4) factors affecting independence, including factors set forth by the NYSE for evaluating the independence of advisors. In connection with its consideration of Frederic W. Cook & Co.’s independence,

the Compensation Committee factored in that Frederic W. Cook & Co. does provide consulting services to other companies that have a director who is also a director of ours, but it does not have any other relationship with or provide any other services to us. As a result of the Compensation Committee’s review of the factors affecting independence, it has determined that Frederic W. Cook & Co. is independent and has no conflicts of interest with us.

Executive Committee. The Executive Committee exercises the power of the Board in the interval between meetings of the Board.

 

The Board has established the following procedure for stockholders to communicate with members of the Board and for all interested parties to communicate with the presiding director or the non-management directors as a group. All such communications should be addressed to the attention of our Secretary at our corporate headquarters located at 12400

High Bluff Drive, Suite 100, San Diego, CA 92130. The Secretary collects and maintains a log of each such communication and forwards any that the Secretary believes requires immediate attention to the appropriate members of the Board, who then determine how such communication should be addressed.

 

We pay non-management directors an annual cash retainer and no meeting fees. Additionally, the Chairman of the Board and Committee Chairpersons receive an additional annual retainer. We also reimburse directors for out-of-pocket expenses incurred in connection with their service. Annual retainers are payable in four equal quarterly installments. The table below sets forth the annual retainers for fiscal year 2015.

Position		Annual Retainer ($)
Non-Management Director			60,000	(1)
Chairperson of the Board			75,000
Chairperson of Audit Committee			30,000
Chairperson of Compensation Committee			15,000
Chairperson of Corporate Governance Committee			10,000

(1)	Effective beginning April 1, 2015, we increased the non-management director retainer from $50,000 to $60,000.

 

We typically grant equity awards to non-management directors upon appointment or election to the Board, and annually thereafter during the director’s term and anticipate that we will continue to grant annual equity awards to non-management directors at some level for the foreseeable future. Since 2010, the aggregate grant date fair value (“AGD Fair Value”) of such awards has typically been approximately $135,000.

On April 22, 2015, we granted each non-management director an equity award of 5,532 restricted stock units (“RSUs”), which will vest on April 20, 2016. Each director had the option of deferring receipt of shares of Common Stock underlying vested RSUs until his or her separation of service or receiving them upon vesting.

 

								DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES

The Board believes that all directors should maintain a meaningful personal financial stake in the Company to align their long-term interests with those of our stockholders. Accordingly, it is the Board’s desire that each non-management director will hold Common Stock and vested but unsettled RSUs of the Company equal to a value

of at least three times the director’s annual cash retainer, i.e., $180,000. The value of unvested RSUs and vested or unvested SARs and options are not taken into account in determining whether a director meets our director equity ownership guidelines. As of December 31, 2015, all of our directors satisfy our director equity ownership guidelines.

 

The following Compensation Discussion and Analysis (“CD&A”) provides a detailed description of our executive compensation objectives, philosophy, practices and programs as well as how the Compensation Committee determines executive compensation under those programs. In particular, this CD&A provides information related to each of the following aspects of our executive compensation program: (1) the objectives and philosophy of our executive compensation program, (2) our executive compensation oversight, processes and criteria, (3) the components of our compensation program, and (4) how each component fits into our overall compensation objectives.

Our CD&A focuses on the compensation of our named executive officers for fiscal year 2015, who were: (1) Susan R. Salka, President and Chief Executive Officer, (2) Brian M. Scott, Chief Financial Officer, Chief Accounting Officer and Treasurer, (3) Ralph S. Henderson, President, Healthcare Staffing, and (4) Denise L. Jackson, Senior Vice President, General Counsel & Secretary. In January 2016, we changed Mr. Henderson’s title to President, Professional Services and Staffing.

 

We believe that our executive compensation program should be and is designed to help us build long-term shareholder value. Among other things, the Compensation Committee premises our compensation objectives on the following guiding principles:

 

•

Pay for performance, with variable pay constituting a significant portion of total compensation,

•

Create commonality of interest between our executives and stockholders by tying realized compensation directly to changes in shareholder value,

 

•

Support the attainment of our short- and long-term financial and strategic objectives, and

 

•

Attract, retain and motivate highly skilled executives.

 

								COMPENSATION DISCUSSION AND ANALYSIS

What We Do

 

ü

Executive Compensation Philosophy. We maintain an Executive Compensation Philosophy for the Company, which we review at least every other year.

 

ü

Align Pay with Our Performance. Our named executive officer pay is aligned with actual total shareholder returns and our financial performance, with variable pay constituting roughly 60% to 80% of named executive officer compensation.

 

ü

Reward Improvement in Shareholder Value. We grant performance restricted stock units (“PRSUs”) based on absolute and relative total shareholder return (“TSR PRSUs”) over a three-year performance period, which is intended to reward named executive officers for above market stock performance (relative to companies in the Russell 2000 Index) or hold them accountable for relatively poor stock performance (relative to companies in the Russell 2000 Index).

 

ü

Grant PRSUs that Focus on Our Long-Term Goals. We grant PRSUs based on our long-term annual AEBITDA margin goals (“AEBITDA PRSUs”).

 

ü

Require Stock Ownership. We maintain meaningful stock ownership guidelines under which our CEO is required to hold shares of Common Stock equal in value to three times her base salary and other named executive officers are required to hold shares of Common Stock equal in value to two times their annual base salary.

 

ü

Cap Incentive Awards. We maintain a cap on annual bonus awards under the Bonus Plan of 200% to 240% for our named executive officers.

 

ü

Regularly Review Our Peer Group. We regularly review our designated peer group to ensure that our compensation program is properly aligned with the actual peers with which we compete for talent and business.

What We Don’t Do

 

×

No Risky Programs. We do not engage in compensation programs that create undue risk.

 

×

No Pledges or Hedges of, or Liens on, our Common Stock. We prohibit the pledging of, or hypothecating, or otherwise placing a lien on, any Common Stock or other equity interests of the Company. We also prohibit hedging.

 

×

No Employment Contracts Other than with CEO. We do not provide employment contracts other than for our CEO.

 

×

No Perquisites. We generally provide no perquisites to named executive officers.

 

×

No Tax Gross-ups. We have committed to cease entering into new employment or other agreements with tax gross-ups for named executive officers.

 

×

No Options or SARs. We have not granted equity awards in the form of options or SARs since 2010.

2015 Financial, Operational and Stock Performance Highlights

A long-standing principle of our executive compensation program is to link pay to performance. Accordingly, when making compensation decisions, we analyze our financial, operational and stock performance and execution on our strategic initiatives. As set forth below, the Company delivered exceptionally strong financial and stock performance in 2015 and continued to make significant progress on our long-term strategic goals.⁽¹⁾

Highlights for 2015 included:

 

•

The price of our Common Stock increased 58% in 2015, from $19.60, the closing price on December 31, 2014, to $31.05, the closing price on December 31, 2015, which brought our cumulative total shareholder return for the last three years (i.e., since December 31, 2012) to 169%.

 

•

Our consolidated AEBITDA(2) increased year over year 81%, from $91.5 million to $165.2 million, which exceeded our 2015 operating plan (“2015 Ops Plan”) target of $112.0 million by 47%.

•

Our annual consolidated AEBITDA margin(3) increased 250 basis points year over year, from 8.8% to 11.3%.

 

•

Our consolidated revenue increased 41% year over year, from $1.036 billion to $1.463 billion, which exceeded our 2015 Ops Plan target by 17%.

 

•

We expanded our workforce solutions offerings to include healthcare executive and leadership interim staffing and permanent placement services through our acquisitions of B. E. Smith, The First String Healthcare, and MillicanSolutions.

 

•

We successfully integrated our earlier acquisitions of Avantas, Medefis, Onward Healthcare and Locum Leaders, all of whom we believe provided immediate strategic value to our clients.

 

•

We continued to make progress on our long-term initiative of significantly upgrading our front and back office technology platforms in order to deliver best-in-class client and healthcare professional experiences and optimize the efficiency of our business operations.

 

								COMPENSATION DISCUSSION AND ANALYSIS

Our “Executive Compensation Philosophy” embraces the following principles, which the Compensation Committee re-affirmed in April 2015 during its review of our Executive Compensation Philosophy:⁽⁴⁾

 

•

Pay for performance, with variable pay constituting a significant portion of total compensation,

 

•

Create commonality of interest between our executives and stockholders by tying realized compensation directly to changes in shareholder value,

 

•

Support the attainment of our short- and long-term financial and strategic objectives,

 

•

Reward our executives for long-term improvement in shareholder value,

 

•

Provide differentiated pay based on an executive’s contributions to our performance,

•

Attract, retain and motivate highly skilled executives,

 

•

Build a strong talent base to reinforce our succession plan objectives,

 

•

Be competitive with companies in our peer group, and

 

•

Maximize the financial efficiency of the overall program from tax, accounting, and cash flow perspectives.

With these principles as our foundation, we have designed and continually evaluate and modify, as necessary, our executive compensation program to support our strategic objectives of achieving above-market growth in revenue and profitability by (1) being a market leader and innovator in healthcare workforce solutions and staffing services, (2) growing our overall revenue mix from workforce solutions and technology and (3) delivering a superior customer experience through operational excellence and agility.

 

								COMPENSATION DISCUSSION AND ANALYSIS

Our executive compensation philosophy is reflected in the primary components of our executive compensation program: (1) base salary, (2) annual cash performance bonuses, and (3) long-term incentive awards, typically in the form of equity. The Compensation Committee’s overall philosophy is to set total target compensation (salary, short-term annual performance awards, and long-term incentive awards) at or about the median level of competitive practice both for individual compensation components as well as the total target compensation, although it may vary, sometimes significantly, upward or downward from the median for individual named executive officers based on individual performance, experience, scope of responsibilities, internal parity considerations, the recommendations of our CEO (for compensation other than her own) and succession considerations.⁽⁵⁾

Base Salary

We utilize base salary as an essential component of our executive compensation program. We utilize base salary to attract and retain talented executives and to provide them with a fixed base of cash compensation. As set forth below, we analyze a variety of factors in addition to peer group comparative information in setting salaries for our named executive officers.

Annual Cash Incentive Performance Bonus

The principles associated with our performance-based compensation reflect a balance of objectives. Our annual cash incentive consists of (1) a financial performance component that we base solely on our annual operational results as measured against certain financial metrics (the “Financial Component”) and (2) a non-financial component based on, among other things, (A) our performance relative to our direct competitors and (B) individual leadership contributions (the “RP/Leadership Component”). We focus the Financial Component on the achievement of financial targets set out in our annual operating plan that we set with the goal of achieving what we believe constitutes above market performance in the healthcare workforce solutions industry. Because we base our annual operating plan on goals related to the execution of our operational and business strategies, the annual cash incentive plan supports the achievement of our strategic goals. The RP/Leadership Component of our annual cash incentive focuses on incentivizing both superior performance over our direct

competitors as measured against certain financial metrics and effective leadership in line with our core values and executive leadership competencies. The Compensation Committee also considers relative and total shareholder return in determining our CEO’s award under the RP/Leadership Component.

Long-Term Incentives

We believe our long-term incentives should consist primarily of equity. The principles guiding the design of our long-term incentive plans include utilizing long-term incentives to (1) align executive and stockholder interests, (2) enhance focus on improvements in operating performance and the creation of shareholder value, (3) drive achievement of our long-term strategic objectives, (4) support long-term retention of key contributors and (5) retain and incent potential CEO successors. We also believe that the aggregate cost of long-term incentives should be reasonable in comparison to our peer group, should avoid excessive levels of shareholder value transfer in relation to our peer group and should be reasonable in cost in light of our annual and long-term operating plans. With the foregoing principles in mind, our long-term incentive plan utilized three vehicles for all named executive officers as follows:

 

ü

PRSUs Based on Total Shareholder Return. We utilized TSR PRSUs, the ultimate realizable value of which depend on performance against two measures: (1) a relative basis against a broader market (companies in the Russell 2000 Index at the beginning of the performance period) and (2) an absolute total shareholder return basis. Because our TSR PRSU awards measure relative total shareholder return and absolute total shareholder return over a three-year period, we believe this type of award encourages longer-term strategic focus on the creation of shareholder value beyond execution of annual financial targets.

 

ü

PRSUs Based on Annual AEBITDA Margin. We had a goal of achieving a 10% annual AEBITDA margin. Beginning in 2013, we created our AEBITDA PRSU to further incent our named executive officers to achieve that goal by 2016. As discussed above, we substantially exceeded our AEBITDA margin goal in 2015. We have set our AEBITDA margin goal to 13% for 2018, which will serve as the target for our 2016 AEBITDA PRSU awards.

 

ü

Traditional Time-Vested RSUs. We utilized time-vested RSUs as part of our long-term incentive program the ultimate value of which depend on the price of our Common Stock and provide for performance-based accelerated vesting. In addition to stockholder alignment, we believe these awards are a necessary and effective retention tool, which is consistent with our compensation principles.

Additionally, to support specific succession planning and retention objectives for Mr. Henderson and Mr. Scott, both of whom we consider to be highly-skilled and valuable executives, we granted each of them a special equity award during 2015, which we discuss more fully below.

 

The primary responsibilities of the Compensation Committee include oversight of our executive compensation programs. Specifically, they include:

 

•

determining the compensation of our CEO and, in partnership with our CEO, establishing the compensation of all other named executive officers, including salary, cash incentives and equity awards,

 

•

making recommendations to the Board regarding the design of our incentive compensation programs, and

 

•

establishing the financial metrics and performance targets under our incentive compensation programs.

 

The duties of the Compensation Committee require specific knowledge regarding the executive compensation market. Accordingly, to understand our position within the marketplace for management talent and to assist the Compensation Committee in making compensation decisions that will help attract and retain a strong management team, the Compensation Committee reviews (1) compensation information for companies comparable in size and industry, (2) our financial performance both against our internal financial targets and our designated peer group, and (3) internal compensation comparability among senior executives.

 

Our 2015 peer group ranged from approximately $548 million to $2.7 billion in revenues based on each peer’s most recently reported (as of February 25, 2016) four fiscal quarters and from approximately $133 million to $2.4 billion in market capitalization (as of December 31, 2015). For purposes of comparison, our consolidated revenue for our most recently reported last four fiscal quarters equaled $1.46 billion and our

market capitalization as of December 31, 2015 equaled approximately $1.48 billion, placing us in the upper third of our 2015 peer group for both metrics. We have excluded Gentiva Health Services, Inc. from the market capitalization and revenue calculations above because they were acquired in 2015.

 

								COMPENSATION DISCUSSION AND ANALYSIS

In July 2015, the Compensation Committee evaluated our peer group for 2016 using, among other metrics, annual revenue and market capitalization. It reviewed (1) our 2015 peer group, (2) peers utilized by Institutional Shareholder Services (“ISS”) that were not in our 2015 peer group, (3) companies that were not in our 2015 peer group that disclosed us in their proxy statement as part of their peer group and (4) companies within our GICS code that met ISS’s revenue band criteria. Based on its evaluation, the Compensation Committee made the following

changes to our peer group effective for 2016:

 

Additions		Subtractions
Premier, Inc.		Gentiva Health Services, Inc.
Huron Consulting Group Inc.		Heidrick & Struggles International, Inc.
Healthcare Services Group, Inc.		CDI Corp.

 

In line with our core value of continuous improvement, we (1) listen to our stockholders, (2) review the latest trends in executive compensation practices, (3) evaluate whether certain pay practices are viewed with disfavor by stockholders or proxy advisory services and (4) review our pay practices to ensure that we have designed and implemented compensation programs that we believe will create value for our stockholders with a balance of short- and long-term incentives. The principal components of our executive compensation program include:

 

(1)

base salary,

 

(2)

short-term or annual performance awards in the form of cash bonuses,

 

(3)

long-term incentive awards,

 

(4)

a non-qualified deferred compensation plan as well as benefits generally available to all of our employees, and

 

(5)

for our CEO, an employment agreement with severance provisions and, for our other named executive officers, severance arrangements.

Base Salary

Base salary serves as the first component of our executive compensation program. In setting base salaries, the Compensation Committee considers a number of factors, including:

 

(1)

the market salary for similarly situated executives within our peer group and industry and against national benchmarks,

 

(2)

our operational and financial performance,

 

(3)

our stock performance,

 

(4)

individual performance, knowledge, experience and responsibilities, and

 

(5)

for those who report to her, the recommendations of our CEO.

We evaluate our operational and financial performance in light of our annual internal objectives and our annual operating plan, the healthcare staffing industry performance and peer

benchmarking data. We evaluate our stock performance against our peer group and the Russell 2000 Index. Our CEO bases her recommendations on the same factors the Compensation Committee considers, and her recommendations are particularly helpful for the Compensation Committee to evaluate the other executive officers’ performance, knowledge, experience and responsibilities.

Annual Cash Incentive Performance Bonus

Annual cash performance bonus opportunities serve as the second component of our executive compensation program. The Bonus Plan is the mechanism by which the Compensation Committee provides such opportunities. We intend our Bonus Plan to provide a strong incentive for our officers to achieve annual financial objectives that support our strategic objectives. Although certain details of the annual bonus incentive may change from year to year based upon the Compensation Committee’s focus, a few key components comprise its general structure, including specific financial goals based on our annual operating plan. The metrics typically include such financial measures as consolidated revenue and consolidated AEBITDA. The Compensation Committee sets threshold, “target” (i.e., 100%) and maximum amounts for bonuses and a weight for each metric that corresponds to the level of achievement we require to trigger a threshold, target or maximum bonus for the named executive officer under such metric. The threshold level for each metric typically starts at a minimum performance level, e.g., 90% of the targeted consolidated AEBITDA, provided that the minimum level exceeds the prior year’s actual reported results. The maximum bonus typically requires a performance level of 110% to 130% of the target amount for each metric. A portion of the bonuses has been based on non-financial factors, such as performance relative to direct competition, leadership and strategic metrics and total shareholder return.

In setting the named executive officers’ target bonus, the Compensation Committee evaluates benchmarking data for comparable positions generally and within our peer group, the recommendations of our CEO (except with respect to her target bonus), individual performance, knowledge, experience

 

and responsibilities, and the amount of the potential bonus under various performance scenarios. As with base salary, the Compensation Committee considers these factors in the context of each individual’s total cash compensation as well as the total compensation package (i.e., equity and cash) generally.

The Compensation Committee may amend the Bonus Plan at any time and may also amend any outstanding award granted under the Bonus Plan, provided it may not amend the Bonus Plan without the approval of our stockholders if the amendment would affect the tax deduction of payments made under it.

Long-Term Incentives

Long-term incentives in the form of equity awards serve as the third component of our executive compensation program. Under our Equity Plan, we grant equity awards, with various vesting parameters, typically three years in length, to named executive officers and key employees as an incentive to have a long-term perspective in supporting and developing our strategic objectives. We also use them as an employee retention tool. Since 2011, we have utilized PRSUs as part of our long-term incentive structure to strengthen the performance-based component of the long-term incentive program. In 2015, we utilized TSR PRSUs and AEBITDA PRSUs for performance-based equity for all of our named executive officers.

Retirement and Health Plans

Retirement plans and other customary employee benefits serve as the fourth component of our executive compensation program. We adopted our 2005 Amended and Restated

Executive Nonqualified Excess Plan (the “Deferred Compensation Plan”) primarily as a result of a market review that indicated that a deferred compensation plan was a significant component of executive compensation. We exclude our named executive officers from participating in our 401(k) plan, primarily to assist us in satisfying discrimination testing performed on our 401(k) plan. The Deferred Compensation Plan serves as the only retirement plan for our management, including our named executive officers. The Deferred Compensation Plan is not intended to be tax qualified. We describe the Deferred Compensation Plan more fully in the section entitled “Nonqualified Deferred Compensation” below.

We offer healthcare insurance and other employee benefit programs to our named executive officers, which are generally the same as those programs provided to all eligible employees. We offer these plans to support our objective of attracting and retaining strong talent.

Employment and Severance Agreements

Severance arrangements serve as the fifth component of our executive compensation program. We are party to an employment agreement with our CEO, which contains severance provisions, and have entered into severance agreements with each of our other named executive officers. We entered into these agreements in support of our objectives regarding attraction and retention of strong management. In determining the appropriate severance levels, we considered survey data, advice from our compensation consultants and the Compensation Committee’s experience. We describe the terms of these agreements more fully in the section entitled “Termination of Employment and Change in Control Arrangements” below.

 

Our named executive officers’ 2015 direct compensation consisted of the first four components identified above. We discuss in detail below the base salary, cash bonus and long-term incentive components of our 2015 compensation program.

Base Salary

In late 2014 and early 2015, the Compensation Committee reviewed salary levels for the named executive officers and approved modest increases ranging from two to five percent

for certain of the named executive officers. The Compensation Committee set annual base salaries for our named executive officers for 2015 as follows:

 

Named Executive Officer		2014 Salary ($)				2015 Salary ($)				% Increase from 2014 Salary
Susan R. Salka			718,000				740,000				3
Brian M. Scott			400,000				420,000				5
Ralph S. Henderson			410,000				420,000				2
Denise L. Jackson			365,000				365,000				0

 

								COMPENSATION DISCUSSION AND ANALYSIS

Structure. Consistent with the last several years, in 2015, the Financial Component comprised 70% of the total target bonuses, and the RP/Leadership Component comprised the remaining 30%. We tied the Financial Component of the bonus to the achievement of financial targets set forth in the

2015 Ops Plan that we believed represented above market growth for each of our three business segments. As a threshold, the Company had to achieve reported AEBITDA that exceeded its 2014 reported AEBITDA amount of $91.5 million before any bonuses under any metric could be earned.

 

Rationale of Annual Bonus Performance Goals. The Compensation Committee has continued to utilize financial, relative performance and leadership goals in its annual incentive bonus program over the last several years for a variety of reasons. It chose revenue because it believes it is the best measurement to evaluate the success of our strategy to grow as a workforce solutions company and because investors focus on revenue growth as a metric in evaluating our performance. It chose AEBITDA because management, the Board, stockholders and analysts use this measure to assess our profitability and performance. Indeed, these two metrics are routinely areas of focus (along with net income) during our earnings calls. Furthermore, the Compensation Committee believes AEBITDA is an objective measure of management’s performance, and it excludes items over which management has less control, such as amortization, interest expense and taxes. The Compensation Committee uses the RP/Leadership Component to, among other things, distinguish among individuals with respect to non-financial metrics, such as leadership, personal performance and contributions, and execution on our strategic initiatives.

The actual consolidated revenue and consolidated AEBITDA amounts required to reach the 100% target level represented growth that the Compensation Committee believed exceeded general organic growth rates in the markets we serve and took into account the acquisitions we made during late 2014 and early 2015. The threshold for a named executive officer to receive a bonus on the consolidated financial metrics required achieving 82% and 90.5% of our 2015 Ops Plan target for Pre-Bonus AEBITDA (“PB AEBITDA”)⁽⁶⁾ and consolidated revenue, respectively. Additionally, receipt of the target bonus amount for each financial metric required us meeting 100% of our 2015 Ops Plan for that metric, which represented year-over-year consolidated revenue and AEBITDA growth of 7.4% and 8.3%, respectively.

2015 Bonus Plan Payouts. We set forth below a table ($ in 1000’s) summarizing how we performed against the 2015 Ops Plan financial performance metrics utilized in whole or in part in determining the Financial Component portion of our named executive officers’ bonuses.

 

With respect to the RP/Leadership Component, the Compensation Committee believes our named executive officers provided outstanding leadership that resulted in an exceptional financial and operational year for us on an absolute basis and as compared to our peers. Among other things, we successfully completed the acquisitions of The First String Healthcare, MillicanSolutions, B. E. Smith and HealthSource Global Staffing, which furthered our strategic goal of expanding our workforce solutions offerings. We completed the integration of Onward Healthcare, Locum Leaders, Medefis and Avantas into our family of companies.

At the same time, we delivered strong organic growth. Additionally, the Company received three corporate governance-type awards and individual named executive officers received leadership-type awards from various groups as well as industry recognition as top executives. As a result, all named executive officers received the maximum award under the RP/Leadership Component of 200% to 250% of their respective targets. Our CFO received an additional discretionary bonus of $31,500 outside of the Bonus Plan based on his exceptional contributions in 2015.