DEF 14A 1 a52397062.htm CHEMED CORP. DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

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Chemed Corporation

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 2021

The Annual Meeting of Stockholders of Chemed Corporation will be held virtually via webcast on May 17, 2021, at 11:00 a.m. Eastern Time for the following purposes:

(1)	To elect directors;

(2)	To ratify the selection of independent accountants by the Audit Committee of the Board of Directors;

(3)	To hold an advisory vote to approve executive compensation;

(4)	To consider a stockholder proposal requesting a semi-annual report on (a) the Company’s policies on political spending and (b) political contributions made; and

(5)	To transact any other business properly brought before the meeting.

To attend the virtual Annual Meeting, stockholders must preregister online at register.proxypush.com/che. The above matters are described in the Proxy Statement accompanying this Notice. You are urged, after reading the Proxy Statement, to vote your shares by proxy by either: (a) completing, signing, dating and returning your proxy card in the postage-paid envelope provided, or (b) voting by telephone, or (c) voting via the Internet using the instructions on your proxy card. Voting instructions are described in more detail in the Proxy Statement.

Your vote is extremely important. If you have any questions or require any assistance with voting your shares, please contact the Board of Directors’ proxy solicitor:

Innisfree M&A Incorporated

Stockholders Toll-Free: (877) 800-5194

Banks and Brokers: (212) 750-5833

Stockholders of record at the close of business on March 24, 2021 are entitled to notice of, and to vote at, the Annual Meeting.

	Brian C. Judkins
	Secretary

April 9, 2021

Table of Contents

		PAGE
CONSIDERATION OF 2020 SAY ON PAY VOTE		1

2020 COMPENSATION		1

2020 PERFORMANCE		1

PROXY STATEMENT
	Stockholders Entitled to Vote	4
	Quorum	4
	Vote Requirements	5
	How to Vote	5

PROPOSAL 1 – ELECTION OF DIRECTORS
	General	7
	Nominees	7
	Recommendation	9

CORPORATE GOVERNANCE
	Narrative Disclosure to Director Compensation Table	10
	Directors Emeriti	11
	Majority Voting in Director Elections	11
	Committees and Meetings of the Board	12
	Procedures Regarding Director Candidates Recommended by Stockholders	12
	Director Independence	13
	Board Risk Oversight	14
	Compensation Risk	14
	Compensation Committee Interlocks and Insider Participation	14
	Board Leadership Structure; Related Person Transactions	14
	Code of Ethics	15
	Stockholder Communications	15

COMPENSATION DISCUSSION AND ANALYSIS
	Consideration of the 2020 Say On Pay Vote	15
	Overview of Compensation Program	16
	How Compensation Decisions are Made	16
	Role of Executive Officers	17
	Objectives of Compensation Program	17
	Elements of Executive Compensation	17
	Executive Compensation Consultant, Independence	18
	Peer Group	18
	Base Salaries	19
	Annual Non Equity Incentive Compensation	19
	Long-Term Incentives	22
	Retirement Benefits	24
	Tax Considerations	25
	Employment Agreements	25
	Stock Ownership Guidelines	27

REPORT OF THE COMPENSATION COMMITTEE		27

EXECUTIVE COMPENSATION
	Summary Compensation	28
	All Other Compensation Table	29
	Grants of Plan-Based Awards	30
	Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table	31
	Employment Agreements	31
	Annual Cash Incentives	32
	Stock Incentive Plans	32
	Outstanding Equity Awards at Fiscal Year End	34
	Option Exercises and Stock Vested	35
	Nonqualified Deferred Compensation	36
	Excess Benefit Plan and Deferred Compensation Plan	36
	Potential Payments Upon Termination or Change in Control	37
	Executive Pay Ratio	43

TRANSACTIONS WITH RELATED PERSONS		43

SECURITY OWNERSHIP
	Security Ownership of Certain Beneficial Owners	44
	Security Ownership of Executive Officers and Directors	45

DELINQUENT SECTION 16(A) REPORTS		46

CLAWBACK POLICY		46

ANTI-HEDGING POLICY		46

PROPOSAL 2 – RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
	PUBLIC ACCOUNTING FIRM	46
	Recommendation	46

REPORT OF THE AUDIT COMMITTEE		47

PRINCIPAL ACCOUNTANT FEES AND SERVICES		48

PROPOSAL 3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION		48
	Recommendation	49

PROPOSAL 4 – STOCKHOLDER PROPOSAL ON POLITICAL SPENDING		49
	Recommendation	52

PROPOSALS FOR THE NEXT ANNUAL MEETING
	Proposals to be Included in Our 2022 Proxy Statement	52
	Stockholder Proposals Regarding Nominations or Other Business at the 2022 Annual Meeting	52

IMPORTANT NOTICE REGARDING AVAILABILITY OF
	PROXY MATERIALS FOR ANNUAL MEETING	53

OTHER INFORMATION		53

Consideration of the 2020 Say On Pay Vote

Following our 2020 Annual Meeting of Stockholders, the Compensation Committee and the Board of Directors reviewed the results of the non-binding stockholder advisory vote on our executive compensation (“2020 Say On Pay Vote”). Stockholders voted in favor of Say On Pay, with 95.76% positive votes, 4.02% negative votes, and .22% abstentions (results rounded to the nearest hundredth of a percent). Given the strong vote in favor, the Company continued its ongoing communication with stockholders and maintained its executive compensation policies and practices, that include the following changes from earlier practices (abbreviated terms are defined within):

●	Replacement of the previous annual incentive program, which was based on a multiple of historical growth rates in Adjusted EPS applied to prior year actual payouts, with a target bonus plan based on achieving goals related to Adjusted EPS and Return on Assets;

●	Replacement of the previous long-term incentive plan with performance share units subject to performance-based vesting related to a cumulative three-year Adjusted EPS target and a three-year relative TSR performance metric;

●	A policy that stock incentive compensation is subject to a “double trigger” in the event of a change in control of the Company. New incentives vest only upon employment termination without good cause or for good reason after a change in control; and

●

A clawback policy such that the Compensation Committee will review all performance-based compensation awarded to or earned by certain officers during the three-year period prior to any restatement of the Company’s financial results. If the Compensation Committee determines such compensation would have been lower had it been calculated based on the restated financial statement, the Compensation Committee may seek to recover the excess amount.

●	Additionally, in 2018, the Board of Directors amended The Senior Executive Severance Policy and the Change in Control Plan to limit any gross-up payments payable under the plans to the then-existing participants in the plans.

Management maintains a policy of soliciting feedback in connection with the Say On Pay vote and changes to the executive compensation program from a number of its largest stockholders.

2020 Compensation

The Compensation Committee and the Board believe that our executive compensation program provides our executive officers with a balanced compensation package that includes a reasonable base salary along with annual and long-term incentive compensation plans that are based on the Company’s financial performance. We believe the shareholder approval in 2020 further validates our executive compensation program. For 2020, about 77.4 percent of our President and Chief Executive Officer’s actual total direct compensation was performance-based, while the weighted average for the other named executive officers was about 73.6 percent. “Performance-based” compensation includes non equity incentive awards, option awards, and performance share unit awards.

On a periodic basis, the Company’s executive compensation consultant provides the Compensation Committee with a review of executive compensation. The most recent review included base salary, annual bonus, and long-term incentives for 12 individuals and the Chief Executive Officer.

2020 Performance

The following chart summarizes both Chemed’s Adjusted EPS and stock price performance since 2003.

CHEMED CORPORATION

RECONCILIATION OF ADJUSTED NET INCOME

FOR THE YEARS ENDED DECEMBER 31, 2003 THROUGH 2020 (IN THOUSANDS)


			(1)			(2)		(3)		(4)		(5)		(6)		(7)	(8)	(9)	(10)	(11)	(12)	(13)
			2003			2005		2007		2009		2011		2013		2014	2015	2016	2017	2018	2019	2020
Reconciliation of Adjusted Net Income
(1)	Net income/(loss)	$	(3,435	)	$	35,817	$	61,641	$	73,784	$	85,979	$	77,227	$	99,317

SEC Form DEF 14A filed by Chemed Corp.