Pre-IPO Healthcare Services Company Case Study

Following several years of double-digit revenue and earnings growth, this Private Equity-backed Healthcare Services Company set its sights on an IPO to fund its future growth. After bringing on a new management team and moving into new markets, the Company had evolved into a leading technology-enabled, high-growth, direct-to-consumer firm with around $500 million in annual revenue.

Prior to the IPO, several compensation matters needed to be addressed. As a private firm, the Company had a history of granting stock options to employees at hire, but otherwise had no regular grant policy or long-term incentive plan. Given the tenure of the management team, prior awards had fully vested for many executives. Furthermore, the Company wanted to evolve its pay program to align more closely with public company practices and investor expectations related to the IPO valuation.

To address these issues, we worked in concert with the board and management to craft durable and competitive compensation practices that would serve as part of the foundation for the Company’s future growth in the public domain.

By facilitating the right conversations, conducting the appropriate analyses, and applying our decades of experience in the field, our team delivered a variety of customized solutions to the Company:

• Established a formal peer group and conducted the Company’s first independent pay review of its senior executive officers
• Developed a long-term incentive program using a portfolio of equity vehicles, with performance hurdles tied to financial goals communicated as part of the IPO
• Developed recommendations for IPO staking grants to acknowledge the gap between contributions to date and ownership levels ahead of the public offering
• Designed a competitive non-employee director pay program that would enable the board to recruit and retain independent board members
• Assisted in sizing and approving share authorization for the Company’s stock incentive plan and employee stock purchase plan (ESPP)
• Implemented an explicit committee process and calendar to assist the Committee with meeting its ongoing responsibilities
• Developed broader governance policies surrounding clawbacks, stock ownership guidelines, hedging/pledging policies, and executive agreements to align with public company expectations