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The Board and the Nominating and Corporate Governance Committee annually evaluate the Board’s effectiveness and needs, and the Nominating and Corporate Governance Committee periodically reviews the mix of skills, composition and expertise on the Board. All of our director nominees have the experience, qualifications, attributes and skills to fit our strategy.

The following shows information relating to the age, tenure, and diversity of our twelve director nominees.

 

We are committed to making a positive difference in the lives of our patients, our team members, and those in our communities, regardless of whether they are direct recipients of our care. Our ESG program is built on these four interconnected pillars:

The Compensation Committee has adopted a number of commonly viewed best practices that it believes are consistent with our performance-based compensation philosophy, contributing to the long-term interests of our stockholders.

We believe in a strong connection between compensation for our NEOs and our short-term and long-term financial performance. Consequently, we believe annual bonuses and long-term incentive compensation for our NEOs should be “at risk” or based upon our performance, the successful attainment of meaningful financial and other performance-related goals and objectives, and/or stock price. The design of our executive compensation program aims to align these objectives with creation of stockholder value.

2023 Total Compensation at Target Pay Mix

 

2023 Total Compensation at Target Pay Mix

 

You can find the key documents outlining our corporate governance framework on our website at investors.optioncarehealth.com/corporate-governance/governance-resources. These include our Third Amended and Restated Certificate of Incorporation, our Fourth Amended and Restated By-Laws (our “By-Laws”), our Corporate Governance Guidelines, and the charters of the standing committees of the Board. We regularly review these documents to adapt to changing regulatory requirements, evolving practices, concerns raised by our stockholders and other key stakeholders, and other circumstances that may arise.

Our Corporate Governance Guidelines state that at least a majority of the Board members must meet the independence standards set by The Nasdaq Stock Market (“Nasdaq”). The Board will consider all relevant facts and circumstances when determining the independence of each director.

The Board determined that each of our directors and director nominees is independent under applicable Nasdaq rules, except for John C. Rademacher, who is not considered independent due to his role as our President and Chief Executive Officer.

The Board has five standing committees: an Audit Committee, a Compensation Committee, a Finance and Investment Committee, a Nominating and Corporate Governance Committee, and a Quality and Compliance Committee. The Board determined that all standing committee members are independent under applicable Nasdaq and Securities and Exchange Commission (“SEC”) rules for committee membership. Additionally, the Board determined that each member of the Audit Committee satisfies the additional independence criteria specified in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Before reaching these decisions, the Nominating and Corporate Governance Committee examined the relevant legal and Nasdaq listing standards related to the independence of Board and committee members. The committee then

In addition to the five standing committees of the Board described above, in March 2023, the Board established a special transactions committee to assist it in evaluating our proposed transaction with Amedisys, Inc. (the “Amedisys Transaction”). Subsequent to the termination of the Amedisys Transaction, this committee was disbanded in July 2023.

The Quality and Compliance Committee provides board-level oversight of cybersecurity risk. As part of its oversight role, the Quality and Compliance Committee receives reports about our practices, programs, or notable threats or incidents related to cybersecurity throughout the year, including through periodic updates from our Senior Vice President, Chief Information Security Officer (“CISO”) and other leaders. The Quality and Compliance Committee provides regular reports to the full Board about these matters and other areas within its responsibility, and the CISO and other leaders provide updates regarding cybersecurity matters to the full Board as appropriate.

We believe one of the principal responsibilities of the Board is to oversee our management succession planning. Pursuant to its charter, the Nominating and Corporate Governance Committee is responsible for overseeing the design of our management development and succession planning process. The full Board typically reviews our management succession plan at least annually.

Our management succession plan covers scenarios such as a sudden departure of our Chief Executive Officer, and also looks ahead to the longer-term succession planning for both our Chief Executive Officer and other key executives. Our Chief Executive Officer and our Chief Human Resources Officer conduct a review with the full Board of both our internal talent and their development plans as well as potential external recruitment needs, taking into account the profiles and skills most critical to our leadership and strategy.

Additionally, senior executives and other emerging talent regularly attend and present at Board and committee meetings, providing the Board with opportunities to interact with those individuals and assess their leadership capabilities.

We are dedicated to making a positive impact on the lives of our patients, our team members and those in our communities, regardless of whether they directly receive our care. Our mission is to transform healthcare by offering innovative services designed to improve outcomes, lower costs and bring hope to patients and their families. Sustainability is a core part of our mission, and we strive to ensure that our ESG program aligns with this philosophy.

Our approach to sustainability is a set of actions focused on providing extraordinary care to our stakeholders. Our business-relevant ESG program is structured around four interconnected pillars: Reducing our Impact on the Environment, Caring for Our Patient Community, Empowering Our People, and Managing a Responsible and Resilient Enterprise. These pillars address the ESG-related aspects of our business that we believe are most important for our patients, employees, stockholders and other stakeholders.

We believe that embracing diversity, equity and inclusion (“DEI”) strengthens us as a company and fosters innovation. We recognize and value our team members’ diverse talents, backgrounds and perspectives. Our commitment extends to striving toward a workforce where all levels, including senior management, reflect the diversity of the communities we serve. We aim to cultivate a culture where everyone feels a sense of belonging and empowerment to share their experiences and ideas.

Our efforts in promoting DEI have been acknowledged with several awards. Recent accolades include being named to DiversityInc’s Top Ranked Hospitals and Health Systems list, earning the Military Friendly® Employer designation, and receiving the Gallup Exceptional Workplace Award (GEWA).

In 2023, we took steps to enhance our governance and ensure better coordination among our ESG related key initiatives. We merged our DE&I Steering Committee and ESG Working Group into a unified DE&I and Sustainability Steering Committee. This committee is jointly led by our Vice President of Communications and DE&I and our Assistant General Counsel, who oversee our ESG program. The committee operates under the executive sponsorship of our Chief Human Resources Officer and our General Counsel and Corporate Secretary.

This committee includes representatives from various functions and convenes quarterly to offer oversight, guidance, and strategic direction for integrating DEI and other ESG principles into our business operations and decision-making processes. Additionally, it reviews our DEI- and other ESG-related programs and initiatives, monitoring progress against any internal goals we set. Committee members play a crucial role as advocates, facilitating the integration of our DEI and other ESG initiatives into our day-to-day operations.

For more information about our ESG program, please visit optioncarehealth.com/about/corporate-responsibility.

The Board and management highly value the perspectives of our stockholders. To help ensure that we better understand and prioritize the main concerns of our stockholders, our directors and senior management actively engage in extensive investor outreach throughout the year. We frequently engage in discussions with members of the investment community, covering topics such as our business results, strategy, and capital structure. Our executive leadership, including our Chief Executive Officer and our Chief Financial Officer, regularly meet with analysts covering our securities and industry. Throughout 2023, we presented at several conferences, conducted numerous non-deal road shows, and welcomed institutional investors to tour our facilities.

In addition to our ongoing investor relations efforts, in the second half of 2023, we engaged with stockholders who owned approximately 33% of our shares to gather feedback on the Board, our corporate governance framework, executive compensation programs, and ESG-related practices. We also sought input on the Board’s oversight role in these areas. These discussions, which included members of our executive leadership team and, in many instances, independent members of the Board, influence and inform our policies, practices, and disclosures.

Below, we provide a summary of key feedback from these discussions and the corresponding actions we took in response.

During 2023, the Board met 15 times. Each Board member who served during 2023 attended or participated in 75% or more of the total number of Board meetings and the total number of meetings of any committee they were a part of.

In addition, under our Code of Business Conduct, our employees, officers and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.

In connection with the BioScrip Merger, on August 6, 2019, we entered into a Director Nomination Agreement with HC I (the “Director Nomination Agreement”) whereby, for so long as HC I met certain beneficial ownership thresholds and subject to certain other conditions, HC I was entitled to designate a number of nominees for election to the Board equal to the product obtained by multiplying (a) the percentage of the total voting power of our outstanding common stock then beneficially owned by HC I and its affiliates and (b) the authorized number of directors on the Board, including any vacancies, with such product rounded up to the nearest whole number in all cases.

Additionally, in connection with the BioScrip Merger, we entered into a Registration Rights Agreement with HC I (the “Registration Rights Agreement”) that, among other things, grants customary registration rights to HC I, including demand registration rights, shelf registration rights, and piggyback registration rights. Other stockholders who received common stock pursuant to the BioScrip Merger may also become a party to the Registration Rights Agreement. The registration rights are subject to certain specific conditions and limitations as more fully defined in the Registration Rights Agreement.

Our Code of Business Conduct outlines the principles guiding our business practices. It applies to all of our directors, officers, employees and contractors, regardless of job level or position. Our Code of Business Conduct is available at investors.optioncarehealth.com/corporate-governance/governance-resources. Amendments or waivers will be promptly posted on our website when required by law or Nasdaq rules.

Section 16(a) of the Exchange Act requires our directors and executive officers, among others, to file with the SEC an initial report of their ownership of our stock on Form 3, and reports of any changes in ownership on either Form 4 or Form 5. Administrative staff and other advisors assist in preparing and filing these reports on their behalf.

Based solely on a review of reports filed with the SEC and on written representations from reporting individuals, we believe that all required reports for 2023 were submitted on a timely basis, except for the following delinquent Form 4 filings due to administrative error: (i) for each of Mr. Arlotta, Ms. Betten, Ms. Bierbower, Dr. Deckmann, Mr. Golding, Mr. Kraemer, Mr. Pate, Mr. Sahney, and Mr. Sullivan, one late Form 4 filing reporting one restricted stock unit (“RSU”) grant, (ii) for each of Mr. Golding and Mr. Pate, one late Form 4 filing reporting one cash-settled RSU settlement, and (iii) for Mr. Rademacher, one late Form 4 filing reporting two RSU grants and two stock option grants.

Any communications intended for the Board or individual members should be directed to our Corporate Secretary at 3000 Lakeside Drive, #300N, Bannockburn, IL 60015, or by e-mail to OCH-CorporateSecretary@optioncare.com with a request to forward the communication to the intended recipient. Stockholder communications will be forwarded to Board members per instructions, although we reserve the right to not forward to Board members any abusive, threatening, or otherwise inappropriate materials.

Subject to any agreement we may enter into, the Board has the overall responsibility for selecting candidates for nomination or appointment to the Board. The Nominating and Corporate Governance Committee evaluates potential candidates for Board service and will recommend to the Board director candidates for nomination or appointment.

When considering director candidates, both the Board and the Nominating and Corporate Governance Committee seek to ensure that each director possesses specific critical personal qualities and attributes. These qualities, which the Board believes are essential for the proper functioning of the Board, include accountability, ethical leadership, governance expertise, integrity, skill in risk management, and sound business judgment.

Additionally, the Board and the Nominating and Corporate Governance Committee believe that directors should have the mature confidence to assess and challenge existing practices and propose alternative solutions, possess a keen awareness of our business and the social realities of our operating environment, maintain independence and high-performance standards necessary for Board oversight, and possess the humility, professional maturity, and style to interface openly and constructively with other directors.

Beyond the above criteria, our Corporate Governance Guidelines specify that the Nominating and Corporate Governance Committee will annually assess the qualifications, qualities, skills and other criteria suitable for Board members and director candidates. This assessment considers the Board’s composition at the time, the skills required for effective Board and committee operations, and insights from the annual Board and committee self-evaluations (see “—Annual Board and Committee Self-Evaluations” below).

We operate in the rapidly evolving, highly regulated U.S. healthcare industry. Each of our director nominees has held senior leadership roles (in some cases as chief executive officer) in large healthcare organizations or served on the boards of such entities. In these capacities, they accumulated significant and diverse experience in strategic and financial planning, financial reporting, governance practices, compliance, risk management, and human capital management. Some nominees have served as chief financial officers or senior finance leaders at complex organizations, gaining expertise in capital allocation practices as well as mergers and acquisitions. Several nominees also possess in-depth public company experience, either as executive officers or board members, providing an understanding of corporate governance practices and trends. The Board and the Nominating and Corporate Governance Committee believe that the skills, qualities, attributes, and experiences of the director nominees offer a diverse range of perspectives, effectively addressing evolving needs, overseeing strategy and risk management practices, and representing the long-term interests of our stockholders.

The Board has undergone significant refreshment in recent years. Starting January 2, 2024, Ms. Bodem and Mr. Wright were appointed to the Board. Ms. Bodem brings significant finance and capital allocation experience due to her roles as chief financial officer or other senior finance leadership roles at several large, complex health care companies. Mr. Wright brings operational, human capital management, and risk management expertise due in part to his leadership experience at an organization encompassing 55,000 team members across five global regions.

The Board has also nominated Eric K. Brandt for election to the Board at the Annual Meeting. Mr. Brandt brings added expertise in finance, governance, corporate strategy, and information technology, gained from his executive roles in the technology and healthcare sectors, as well as his service as a member of several public company boards.

Together with Ms. Bierbower and Dr. Deckmann, who joined the Board in 2022, five of the twelve director nominees have under two years of service on the Board as of the date of this Proxy Statement.

The Board and the Nominating and Corporate Governance Committee also take into account the overall diversity of the Board concerning factors such as age, disability, gender identity or expression, ethnicity, military veteran status, national origin, race, religion, sexual orientation, and other backgrounds and experiences. Both the Board and the Nominating and Corporate Governance Committee are committed to actively seeking out individuals who will contribute to such diversity for inclusion in the pool of candidates from which Board nominees are chosen.

In 2023, the Nominating and Corporate Governance Committee engaged and compensated a third-party search firm to aid in the process of identifying and evaluating potential Board candidates, in line with the criteria described above. Pursuant to our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee instructed the third-party search firm to actively look for candidates who would enhance the overall the diversity of the Board, as discussed in “—Approach to Diversity” above.

The third-party search firm developed a substantial and diverse candidate pool through market research and referrals from existing Board members. This was done based on guidance from members of the Nominating and Corporate Governance Committee regarding both the general and specific criteria outlined above. Barbara W. Bodem was initially recommended to the Nominating and Corporate Governance Committee by the third-party search firm, and Eric K. Brandt and Norman L. Wright were initially recommended to the Nominating and Corporate Governance Committee by independent directors. In each instance, these individuals were appointed to the Board or nominated for election to the Board after the Nominating and Corporate Governance Committee conducted numerous interviews with various qualified and diverse candidates in connection with each respective search.

There are no restrictions on the number of terms that a director may serve. The Board presently does not support arbitrary term limits for directors or believe in automatic annual re-nomination of directors. However, the Board generally believes that having a mix of directors with long, medium and short tenures fosters a balanced range of views and insights. This approach allows the Board to benefit from the institutional knowledge held by longer-serving directors and the fresh perspectives contributed by newer directors. If each director nominee is elected to the Board, they will have, on average, served for 3.9 years as of the Annual Meeting.

Directors are expected to dedicate sufficient time and attention to prepare for, attend (either in person or virtually), and actively participate in Board meetings and the committees on which they serve. Our Corporate Governance Guidelines set limits on the number of commitments directors can have to other public company boards. According to these guidelines, no director may serve on more than four public company boards (including the Board), no director that is an executive officer of a public company (including our Chief Executive Officer) may serve on more than two public company boards (including the Board), and no member of our Audit Committee may serve simultaneously on the audit committees of more than three public company boards (including the Audit Committee).

The Board believes that each of our directors and director nominees has sufficient capacity to continue to effectively serve on the Board. As of March 15, 2024, none of our directors exceeded our Corporate Governance Guidelines for public company board memberships. Eric K. Brandt, who has been nominated for election to the Board at the Annual Meeting, currently serves on four other public company boards. On February 27, 2024, Mr. Brandt notified the board of directors of DENTSPLY Sirona Inc. that he would not be standing for re-election at its May 2024 annual meeting of

Stockholders can recommend director candidates for consideration to the Nominating and Corporate Governance Committee. According to our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee will assess stockholder-recommended candidates using the same criteria applied to candidates suggested by Board members or other individuals. Stockholders interested in recommending a director candidate should submit the candidate’s name and background in writing to our Corporate Secretary at 3000 Lakeside Drive #300N, Bannockburn, Illinois 60015, or by e-mail to OCH-CorporateSecretary@optioncare.com.

The matrix below highlights the mix of key skills, qualities, attributes, and experiences of the director nominees that, among other factors, led the Board and the Nominating and Corporate Governance Committee to recommend them for election to the Board. The matrix aims to highlight significant areas of focus for each director, and the absence of a mark does not imply that a particular director lacks that quality or skill. Nominees have developed competencies in these areas through education, direct experience and oversight responsibilities. The demographic information provided is based on voluntary self-identification by each nominee. Additional biographical details on each nominee can be found in “—Director Nominee Biographies” below.

 

Our Chief Executive Officer and our General Counsel and Corporate Secretary, along with other members of our management team, are responsible for managing our new director orientation programs and providing ongoing education for directors. We provide new Board members with relevant materials, briefings and additional educational opportunities to help them better understand our business and fulfill their responsibilities. The entire Board also has access to educational resources and opportunities related to fiduciary duties and other relevant matters, either as needed or upon request.

Continuing education programs for directors may involve a combination of in-house and external presentations and programs. Throughout their tenure on the Board, directors are encouraged to visit our facilities and engage with our team members.

Each year, both the Board and its standing committees conduct a self-assessment to evaluate their effectiveness. The Board believes this helps ensure that its governance and oversight responsibilities, as well as its policies and procedures, are effective and aligned with best practices.

The annual self-evaluation process is managed by our independent Board Chair and the Nominating and Corporate Governance Committee. This process involves each director completing a detailed questionnaire assessing the performance of the Board and each committee on which the director serves. The focus is on identifying the Board’s or

All Non-Employee Directors receive both an annual cash retainer and an annual grant of time-based RSUs for their service on the Board. The below table sets forth the Non-Employee Director compensation program for 2023:

Cash retainers were paid in May 2023. Committee chair or member fees were only paid to directors who were serving on such committees as of the payment date.

A significant portion of the compensation for each Non-Employee Director is provided through equity awards. In May 2023, each Non-Employee Director received an RSU award. The number of shares underlying the award was determined by dividing $150,000 by the per-share closing price of our common stock on the grant date, rounded up to the nearest factor of three for equal pro-rata vesting. These equity awards were granted pursuant to our 2018 Equity Incentive Plan (the “EIP”) and vest in equal amounts on each of the first three anniversaries of the grant date. Vesting accelerates in the event of a change in control or termination of service for any reason other than for cause.

Directors may be reimbursed for reasonable out-of-pocket travel expenses incurred in connection with attending Board and committee meetings and other Board-related activities.

Pursuant to our Stock Ownership and Retention Policy, Non-Employee Directors are required to retain 75% of the net shares (including unvested RSUs) granted to them under our equity plans until they own equity equivalent to three times the annual cash retainer for Board service (excluding retainers for Chair or committee service). Once this ownership guideline is achieved, Non-Employee Directors must maintain the guideline of the net shares granted to them for the duration of their tenure as Non-Employee Directors. Compliance with the guideline is self-reported annually. As of December 31, 2023, each of the Non-Employee Directors was in compliance with these stock ownership and holding guidelines.

The table below provides information about the compensation earned in 2023 by Non-Employee Directors who served on the Board during the year. Please see the “2023 Summary Compensation Table” below for the compensation received by Mr. Rademacher as our President and Chief Executive Officer in 2023. Ms. Bodem and Mr. Wright did not join the Board until January 2, 2024 and are therefore excluded from this table.

The Audit Committee also periodically considers whether there should be a rotation of our independent registered public accounting firm because the Audit Committee believes it is important for such firm to maintain independence and objectivity. In 2023, the Audit Committee concluded that there were a number of factors supporting KPMG’s continued independence, including the Public Company Accounting Oversight Board (“PCAOB”) requirements for audit partner rotations and limitations imposed by regulation on non-audit services performed by the firm. Under the auditor independence rules, KPMG also reviews its independence each year and provides a letter to the Audit Committee addressing such matters.

The Audit Committee requires advance approval of all audit and permitted non-audit services performed by our independent auditor, along with approval for the associated fees. When reviewing non-audit service fees, the committee may consider factors such as the potential effects of the provision of such services on auditor independence. As a part of the pre-approval process, the Audit Committee considers the nature of the services to be rendered, the fee structure of such engagement, the amount or range of estimated fees, and whether such services are consistent with the SEC’s rules on auditor independence. During 2023, any such services provided by KPMG were pre-approved by the Audit Committee in accordance with SEC regulations and our policies.

KPMG’s lead audit partner for our audit was rotated beginning with the year ended December 31, 2023, and the engagement quality review partner for our audit was last rotated in 2019. The Audit Committee is involved in considering the selection of KPMG’s primary engagement partner when there is a rotation, which typically occurs every five years.

The following table shows the fees billed by KPMG for the years ended December 31, 2023 and December 31, 2022.

Approval of Proposal 2 requires the affirmative vote of the majority of the shares present or represented by proxy at the Annual Meeting. The vote is an advisory vote, and therefore is not binding on the Audit Committee.

The Audit Committee discussed the overall scope and plans for KPMG’s audit, meeting with KPMG with and without management present to discuss the results of KPMG’s examinations, its evaluations of Option Care Health’s internal controls, and the quality of Option Care Health’s financial reporting.

Based on these reviews and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2023, for filing with the SEC.

Respectfully submitted,

 

 

R. Carter Pate, Chair

Elizabeth D. Bierbower

Barbara W. Bodem

Harry M. Jansen Kraemer, Jr.

Underpinning our compensation philosophy is the belief that we are a growth company with the potential to have a significant impact on the home and alternate site infusion services industry. We believe that achieving that potential should result in value creation for our stockholders. Thus, we believe that management’s incentives, our annual goals, and our longer-term goals set by the Compensation Committee and the Board should reflect that growth orientation.

We believe in a strong connection between compensation for our NEOs and our short-term and long-term financial performance. Consequently, we believe annual bonuses and long-term incentive compensation for our NEOs should be “at risk” or based on our performance, the successful attainment of meaningful financial and performance-related goals and objectives, and/or stock price. The design of our executive compensation program aims to align these objectives with the creation of stockholder value.

 

 

The different elements of our compensation program are interconnected but distinct. The program is designed to emphasize a “pay-for-performance” approach, where a significant part of total compensation is linked to both our and our stockholders’ long-term and short-term financial and strategic objectives. Our compensation philosophy is designed to foster entrepreneurship throughout the organization and is focused on employee value and retention by making long-term, equity-based incentive opportunities a significant component of our executive compensation.

The level for each compensation component is based in part, but not exclusively, on market data, internal equity and consistency, experience and responsibilities, as well as other relevant considerations such as rewarding strong performance.

As outlined in the Proxy Statement for our 2023 annual meeting of stockholders, beginning in 2023, the Compensation Committee revised our compensation philosophy to reflect its intention to align annual total cash compensation for

The Compensation Committee is tasked with evaluating our executive compensation policies, practices and plans to help ensure they align with our compensation philosophy and objectives, or whether modifications are deemed necessary in response to changes in our business or the industries in which we operate or compete for executive talent. When determining the compensation of an NEO, the Compensation Committee takes into account various factors, including: