Syneos Health (SYNH) 10-K/A2022 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-K/A

(Amendment No. 1) 

(Mark One)

For the fiscal year ended December 31, 2022

or

For the transition period from _______ to ______

Commission File Number: 001-36730

SYNEOS HEALTH, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (919) 876-9300

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☒   No  ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes  ☐   No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant, based on the closing sale price of $71.68 on June 30, 2022, was approximately $7,342,569,400.

As of February 9, 2023, there were approximately 103,241,365 shares of the registrant’s Class A common stock outstanding. 

EXPLANATORY NOTE

On February 15, 2023, Syneos Health, Inc. filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“Original Form 10-K”). The Original Form 10-K omitted portions of Part III, Items 10 (Directors, Executive Officers and Corporate Governance), 11 (Executive Compensation), 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), 13 (Certain Relationships and Related Transactions, and Director Independence), and 14 (Principal Accountant Fees and Services) in reliance on General Instruction G(3) to Form 10-K, which provides that such information may be either incorporated by reference from the registrant’s definitive proxy statement or included in an amendment to Form 10-K, in either case filed with the Securities and Exchange Commission (“SEC”) not later than 120 days after the end of the fiscal year.

We no longer expect that the definitive proxy statement for our 2023 annual meeting of stockholders will be filed within 120 days of December 31, 2022. Accordingly, this Amendment No. 1 to Form 10-K (“Amendment”) is being filed solely to:

This Amendment does not otherwise change or update any of the disclosures set forth in the Original Form 10-K and does not otherwise reflect any events occurring after the filing of the Original Form 10-K. Accordingly, the Amendment should be read in conjunction with the Original Form 10-K and the Company’s filings made with the SEC subsequent to the filing of the Original Form 10-K. Capitalized terms used herein and not otherwise defined are defined as set forth in the Original Form 10-K.

As used in this report, the terms “Syneos Health, Inc.,” “Company,” “we,” “us,” and “our” mean Syneos Health, Inc. and its subsidiaries unless the context indicates otherwise.

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SYNEOS HEALTH, INC.

FORM 10-K/A
(Amendment No. 1)

For the Fiscal Year Ended December 31, 2022

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Board of Directors

The following information with respect to our Board of Directors (the “Board”) and executive officers is presented as of April 10, 2023:

John M. Dineen - Independent Chair of the Board

Barbara W. Bodem - Independent Director

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Bernadette M. Connaughton - Independent Director

Michelle Keefe - Chief Executive Officer and Director

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William E. Klitgaard - Independent Director

Kenneth F. Meyers - Independent Director

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Matthew E. Monaghan - Independent Director

David S. Wilkes, M.D. - Independent Director

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Alfonso G. Zulueta - Independent Director

Executive Officers

For biographical information on Ms. Keefe, please see “Board of Directors” above.

Stanford (Ben) Rudnick - Interim Chief Financial Officer

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Michael Brooks - Chief Operating Officer

Christian Tucat - Chief Business Officer

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Jonathan Olefson - General Counsel and Corporate Secretary

Committees of the Board

Standing Committees of the Board of Directors

Our Board of Directors has adopted Corporate Governance Guidelines and Principles and charters for our separately designated standing Nominating and Corporate Governance Committee, Audit Committee, and Compensation and Management Development Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of the Company. You can access our current committee charters and our Corporate Governance Guidelines and Principles by visiting “Investors—Corporate Governance—Governance Documents” on our website at www.syneoshealth.com. The following table provides membership information of each Committee of our Board:

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Code of Business Conduct and Ethics and Code of Ethics

We have adopted a Code of Business Conduct and Ethics relating to the conduct of our business by all of our employees, officers, and directors, as well as a Code of Ethics for Principal Executive Officer and Senior Financial Officers. These policies are posted under “Investors—Corporate Governance—Governance Documents” on our website at www.syneoshealth.com. We intend to post on our website all disclosures that are required by law or the Nasdaq rules concerning any amendments to, or waivers from, any provision of these codes. Additionally, we have adopted an Insider Trading Compliance Policy to establish guidelines for our directors, officers and employees regarding transactions in our securities, and Policy Statement Guidelines for Corporate Disclosure for the disclosure of information related to our Company to the investing public, market analysts, brokers, dealers, investment advisors, and the media.

Audit Committee

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Item 11. Executive Compensation.

Compensation Committee Report

The Compensation and Management Development Committee has reviewed and discussed the following Compensation Discussion and Analysis (“CD&A”), with our Company’s management. Based on this review and discussion, the Compensation and Management Development Committee recommended to our Board that the CD&A be included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2022 and our proxy statement for our 2023 annual meeting of stockholders.

THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS

KENNETH F. MEYERS, Chair

BERNADETTE CONNAUGHTON

DAVID S. WILKES, M.D.

ALFONSO G. ZULUETA

Contents of the Compensation Discussion and Analysis

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Compensation Discussion and Analysis

Named Executive Officers

This CD&A provides information regarding our compensation program and describes the compensation decisions for the Named Executive Officers (“NEOs”) for 2022 listed below.

2022 and early 2023 leadership changes:

Our Company

Syneos Health is a leading fully integrated biopharmaceutical solutions organization built to accelerate customer success. We translate unique clinical, medical affairs and commercial insights into outcomes to address modern market realities.

We bring together a talented team of professionals, who work across more than 110 countries, with a deep understanding of patient and physician behaviors and market dynamics. Together we share insights, use the latest technologies and apply advanced business practices to speed our customers’ delivery of important therapies to patients.

Syneos Health supports a diverse, equitable and inclusive culture that cares for colleagues, customers, patients, communities and the environment.

Our operations are divided into two reportable segments, Clinical Solutions and Commercial Solutions. Our Clinical Solutions segment offers comprehensive global services for the development of diagnostics, drugs, biologics, devices, and digital therapeutics that span Phase I to IV of clinical development. This segment offers individual services including regulatory consulting, project management, protocol development, investigational site recruitment, clinical monitoring, technology-enabled patient recruitment and engagement, clinical home health services, clinical trial diversity, biometrics, and regulatory affairs, all across a comprehensive range of therapeutic areas.

Our Commercial Solutions segment provides commercialization services, including deployment solutions, communications solutions (public relations, advertising, and medical communications), and consulting services. We integrate our clinical and commercial capabilities into customized solutions by sharing knowledge, data, and insights. We believe this collaboration across the development and commercialization continuum facilitates unique insights into patient populations, therapeutic environments, product timelines, and the competitive landscape.

We pay for performance and believe our compensation philosophy, discussed in the section below, is effective, market-appropriate and in line with stockholder expectations.

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Executive Summary

In April 2022, we completed a CEO transition to drive continued momentum. Michelle Keefe, who previously served as the Company’s President, Medical Affairs and Commercial Solutions, brings more than 30 years of life sciences industry experience to lead the Company through the next era as a data and insights-driven organization and unlock market opportunities in support of long-term sustainable value creation.

Our executive compensation program supports long-term value creation. More than 86% of our CEO compensation and 79% of the compensation for our other NEOs is variable and at risk, meaning it is tied to our stock price performance and/or subject to achievement of pre-set rigorous performance targets that are important to stockholder value creation.

Special, one-time “transformation” equity awards were granted to accelerate revenue growth and new business awards in the Clinical Solutions Segment. These specific business results are directly tied to our future performance and generating shareholder value. The performance targets were set to require stretch efforts above and beyond regular operations with a goal to incentivize progress toward our strategic priorities, including the creation of shareholder value as a result of our transformation initiatives and maintaining a cohesive executive leadership team following the CEO transition.

Our named executive officers did not receive annual cash incentive awards for 2022. Actual performance with respect to the previously determined internal financial metrics did not meet threshold performance levels for our 2022 Management Incentive Plan and no payout was provided.

2020-2022 performance-based restricted stock units were earned at 65% of target. This below-target performance was driven by achievement of 90%, 100%, and 93% of the adjusted earnings per share (“Adjusted EPS”) goals established for 2020, 2021, and 2022 respectively. We achieved 90% of the return on invested capital (“ROIC”) goal for the three-year performance period ending in 2022 after the Compensation and Management Development Committee (referred to in this CD&A as the “Committee”) adjusted ROIC target to remove the impact of acquisitions not anticipated at the time goals were set for the period, resulting in a payout of 57% of target for the ROIC goal which, when taken together with the achievement of 72% of target for the combined adjusted earnings per share goals, resulted in a combined 65% of target performance shares vesting for the period.

Realized compensation for 2022 was significantly below total potential compensation reported in the 2022 Summary Compensation Table. The rigor of our incentive programs and alignment with shareholder interests are evidenced by our short-term annual cash incentive payout at 0%. Our long-term performance-based stock awards were achieved at below target as follows: Adjusted EPS was achieved at 63% (2020 PRSUs), 63% (2021 PRSUs), and 59% (2022 PRSUs) for the 2022 performance period, and ROIC was determined to be achieved at 57% (2020 PRSUs) for the three-year performance period ending in 2022. In contrast, due to SEC rules, we are required to disclose in the Summary Compensation Table the grant-date fair value, as determined under ASC 718, of equity awards granted in 2022, regardless of actual performance and without regard to potential future forfeitures of these awards (i.e., if performance goals are not achieved).

2022 Performance and Business Update

Revenue increased 3.5% on a reported basis and 5.8% on a constant currency basis for the year ended December 31, 2022. Net income for the year ended December 31, 2022 increased 13.5% year over year. Adjusted net income for the year ended December 31, 2022 increased 4.2% year over year and adjusted diluted earnings per share grew by 5.8% over the year ended December 31, 2021. Clinical Solutions net new business awards contracted 35% in the year ended December 31, 2022, compared to the prior year, while Commercial Solutions net new business awards grew 1.6% in the year ended December 31, 2022. Cash flow from operations for the year ended December 31, 2022 remained strong at approximately $427.0 million, declining 5.2% from the record level achieved for the year ended December 31, 2021. We successfully refinanced our Term Loan A and expanded our revolving credit facility to $1 billion, extending maturities for each to November 2027.¹

In 2022, we accelerated key initiatives and investments in Strategic Business Development and Clinical Operations to transform the Clinical Solutions business for long-term growth. These initiatives are expected to improve request for proposal volume, and win rates and repeat business with small to midsize customers. Further, we anticipate these initiatives will help us continue to win new Large Pharma strategic relationships and expand existing relationships, consistent with our long term growth goals. Additionally, we consolidated several strategic projects under Project Velocity, a unified transformational effort designed to unlock efficiency, innovation, and growth, that will bring value to customers and employees.

Leadership remains relentlessly focused on our customers, employees and the continued transformation of our business. We remain confident in our strategy and the long-term market opportunity and are encouraged by feedback we are receiving from our customers and the early signs of positive impact from our investments.  

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Results of 2022 Say‑on‑Pay Vote

At the 2022 annual meeting, 97.8% of the shares present and entitled to vote at the 2022 annual meeting cast votes in favor of our “Say-on-Pay” proposal, on an advisory basis. The Committee believes that the Say-on-Pay vote at our 2022 annual meeting endorsed our Company’s compensation philosophy and programs and is reflective of the continued focus on evolving our executive compensation strategy. The Committee will continue to monitor and address stockholder feedback each year as it reviews and establishes future executive compensation programs. Also at the 2022 annual meeting, our stockholders approved, on an advisory basis, “One Year” as the frequency of future stockholder advisory votes on executive compensation. In light of this result, which was consistent with the Board’s recommendation, the Board has determined to hold an advisory Say-on-Pay vote each year. This will remain in place until the next advisory vote on the frequency of Say-on-Pay votes is presented to the Company's stockholders. Accordingly, our next Say-on-Pay vote is expected to be held at our 2023 annual meeting.

Our Executive Compensation Program

Our compensation strategy has consistently focused on providing total compensation opportunities designed to attract and retain high-caliber executives and to incentivize them to achieve company performance goals that are closely aligned with stockholder interests. We emphasize pay-for-performance and long-term value creation for our stockholders, compensating our executives with a combination of base salary, short-term cash incentives and long-term equity incentives, with our incentive compensation opportunity being weighted more heavily than base salary. Accordingly, a significant portion of our executives’ compensation is at risk. We believe these elements provide clear accountability and rewards for producing results.

We believe our executive compensation program is competitive with our peer group and ensures our NEOs have appropriate incentives to deliver short-term results, while also creating long-term stockholder value.

Compensation Philosophy

Our executive compensation philosophy is designed to align pay with performance. Our executives are accountable for the performance of the business and are compensated based on that performance. Our executive compensation programs are designed to attract and retain top executive talent and motivate them to achieve outstanding operational and financial performance through our company values. This performance, in turn, builds value for our stockholders.

The Committee seeks to achieve the following goals in connection with our executive compensation program and decisions regarding individual compensation:

Elements of our Executive Compensation Program

Overall, the Committee believes the Company’s executive compensation policies and programs are effective, market-appropriate, and in line with stockholder expectations. The following key elements of our executive compensation program are designed to align the interests of our NEOs and other senior executives with the interests of our stockholders:

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Compensation Element Key Features and Purpose Base Salary Fixed annual cash compensation to attract and retain talented executives. Base salary increases are considered every year in the context of market practice and to reflect the scope and complexity of each executive's position. Actual positioning varies to reflect each executive's skills, experience, and performance in role. Fiscal Year 2022 Actions Effective April 2022, the Committee approved base salary increases as follows: from $567,000 to $1,000,000 for Ms. Keefe and from $567,000 to $750,000 for Mr. Brooks to recognize their expanded responsibilities in connection with their appointments as CEO and Chief Operating Officer, respectively; from $600,000 to $618,000 for Mr. Meggs; and from $500,000 to $520,000 for Mr. Olefson. Effective June 2022, Mr. Tucat's base salary increased from $473,000 to $520,000 to recognize his expanded responsibilities in connection with his appointment as Chief Business Officer. Management Incentive Plan ("MIP") Cash Incentive Award Performance-based cash incentives to motivate and reward short-term outcomes that the Committee believes will support long-term value creation for stockholders. Payouts are based on the results achieved as determined by the Committee after evaluating our performance against pre-established, short-term financial goals. In addition, we must achieve a minimum level of Adjusted EBITDA for any executive to receive a payment under the MIP, which is subject to the Committee's discretion. For our 2022 fiscal year, the MIP included two financial performance measures: MIP Revenue; and MIP EBITDA. Achievement of approximately 96.5% of the MIP Revenue and 93.5% of the MIP EBITDA performance targets were required to receive any MIP funding for the respective measures. See below under "Compensation Element Details-Cash Incentives- Annual Cash Incentives" for definitions of the performance measures. Individual MIP opportunities are expressed as a percent of base salary and vary for executives based on their positions. Target MIP award opportunities are generally established so that total annual cash compensation (base salary plus target MIP) approximates the median of our peer group. The range of potential MIP payouts is zero to 200% of target. For our 2022 fiscal year, the actual performance for each of MIP Revenue and MIP EBITDA was below threshold, so no payout was provided to our NEOS for 2022 performance. Long-Term Incentive ("LTI") Compensation We grant stock-based compensation awards annually to motivate long-term creation of long-term stockholder value, to reward achievement of multi- year financial objectives, and to retain key talent. PRSU vesting: NEOS receive PRSUS, which vest after three years only upon achievement of goals established by the Committee for the relevant performance periods. The potential number of PRSUS that can vest ranges from zero to 150% of the target number of PRSUS granted. Annual time-based RSU vesting: The time- based RSUs are designed to incentivize stock value creation over time, to align interests of our executives with those of our shareholders, and to retain executive talent. Long-term incentives for 2022 were delivered in an equal mix of performance-based restricted stock units ("PRSUs") (50%) and time- based restricted stock units (“RSUs”) (50%). The PRSUS granted in 2020, 2021, and 2022 are based on two evenly- weighted-metrics and vest at the end of the applicable three-year performance period based on the achieved results against pre-set targets for Adjusted EPS (for each individual year) and ROIC (for the three-year period). The PRSUS granted in 2020 for the 2020-2022 performance period vested at 72% of target for Adjusted EPS and 57% of target for ROIC. The ROIC target was adjusted to remove the impact of acquisitions not anticipated at the time goals were set for the period. The combined overall vesting for the 2020 PRSUs was 65% of target. The time-based RSUs granted in January 2022 vest in three approximately equal annual installments commencing on the first anniversary date of the grant, contingent upon continued service. Special one -time “Transformation” grants. These grants of PRSUs and time -based RSUs were designed to incentivize successful transformation of the Company’s performance and strengthen retention over the next two fiscal years. The potential number of PRSUs that can vest ranges from zero to 125% of the target number of PRSUs granted. In December 2022, the Compensation Committee approved “Transformation” LTI awards for Ms keefe and Messres. Brooks, Olefson, and Tucat. The awards were delivered in a mix of PRSUs (50%) and RSUs (50%). The PRSUs vest in late 2024 based on the achieved results against two evenly-weighted metrics: Consolidated Revenue and Net New Business Awards for the Clinical Solutions segment. The time-based RSUs cliff vest on the second anniversary of the grant, contingent upon continued service. Mr. Meggs also received a “Transformation” time-based RSU grant in December 2022, which will cliff vest on the second anniversary of the grant, contingent upon continued service. Promotion Grants Each of Ms. Keefe, Mr. Brooks, and Mr. Tucat received a grant of RSUs in 2022 in connection with their appointments to Chief Executive Officer, Chief Operating Officer, and Chief Business Officer, respectively. These grants included time-based RSUs (50% of the total target award value) and PRSUS (50% of the total target award value) both of which will vest based on the same performance- and time-vesting conditions as applied to the Annual PRSU granted by the Company in 2022.

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Compensation Governance Highlights

The Committee has instituted several corporate governance features related to executive compensation, which are highlighted below:

What We Do Periodic Risk Assessment-At least annually, the Committee assesses whether our compensation programs encourage behavior that would create risks reasonably likely to have a material adverse effect on our Company. The Committee has concluded it does not. Performance-Based Equity Awards -50% of our total target annual LTI awards are performance-based equity awards which are measured over a three-year performance period and cliff vest after the end of the three-year period. Incentive Clawbacks - The Company maintains a clawback program, which allows for recovery of all or a portion of any incentive compensation (both cash incentives and equity incentives) awarded to the NEO related to restatements of our financial statements or misconduct. Limited Perquisites - The Company provides limited perquisites to NEOS, including executive physicals to our NEOS to ensure executives maintain their health. Provision of Annual LTI Awards - We annually make awards of long-term incentives that are tied to stock performance. The overlay of these awards helps mitigate the possibility of behaviors that would enhance incentive earnings in one year at the expense of future performance results. Short-Term Incentive Cap-Our incentive plans include a cap on payout opportunities. This mitigates against the possibility of excessively high earnings potential that could motivate inappropriate behavior. Employment Agreements - Our executives have at-will employment and letter agreements. “Double-Trigger” Change-in-Control Acceleration – Employment agreements for our NEOS contain “at-will” employment provisions, and both a change-in-control and a qualifying termination of service are required to accelerate vesting of the NEO's equity grant(s). Stock Ownership Guidelines - We require our NEOS and non - employee directors to achieve and maintain designated stock ownership levels, including 2.5x base salary for our NEOS and 5x base salary for our CEO, which ensure their investment in Syneos Health's long-term success. Annual Say-on-Pay Advisory Vote - The Board previously determined that the Say-on-Pay vote will be held annually until the next stockholder vote on the frequency of the Say-on-Pay vote What We Don't Do No Gross-Ups - We do not provide for tax reimbursement payments or gross-ups in the event of any “golden parachute” excise taxes or otherwise. No Above-Market Returns - We do not offer preferential or above- market returns on compensation deferred by our NEOS. No Guaranteed Salary Increases - Employment agreements for our NEOS do not contain any guaranteed contractual salary increases. The Committee determines our CEO's salary increases, if any, and, together with our CEO, any salary increases for our remaining NEOS. No Repricing of Stock Options - The Company's equity plans prohibit repricing of stock options without stockholder approval. No Hedging-Our Insider Trading Compliance Policy prohibits officers, employees and directors from hedging of our stock. No Pledging-Our Insider Trading Compliance Policy prohibits officers, employees and directors from pledging of our stock.

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Compensation Decision Roles The Committee develops the compensation program for our NEOs and other executive officers, which includes authorizing all equity-based awards, recommending or reporting its decisions to the Board, and overseeing the administration of the compensation programs for the Company's NEOs. While the Committee has the sole responsibility for developing the program, it solicits advice from the Committee's independent consultant, Exequity LLP (the "Consultant"), which provides market level compensation and practices as further described below. The CEO uses this information in recommending targets, evaluating performance, recommending appropriate salary and incentive awards, and making proposals for changes in our NEOs' compensation packages (other than her own). The CEO also participates in Committee meetings at the request of the Committee to provide background information regarding her recommendations. However, our CEO does not have a vote on Committee matters. Our Chief Human Resources Officer participates in and assists the Committee on compensation and governance matters, at the Committee's discretion. Multiple times during the year, the Committee holds executive sessions without our CEO or other executive officers to facilitate the exchange of candid views among Committee members and to establish our CEO's compensation. At least annually, the CEO reviews the performance of each NEO and other executives (other than herself) and makes recommendations to the Committee with respect to salary adjustments and incentive amounts. The Committee's annual review of the CEO's performance includes feedback directly from the Board and indirectly from members of our senior management team. The Committee also develops the compensation program for non-employee directors with the assistance of the Consultant. A description of the Committee's responsibilities is in the Committee's Charter available under "Investors - Corporate Governance-Governance Documents" on our website at www.syneoshealth.com. Compensation Consultant The Committee's Consultant provides advice and assistance to the Committee in developing the compensation program for our NEOs, as well as for other senior executives. The Consultant was engaged by, reports directly to, and carries out responsibilities as assigned by the Committee. The Consultant provides information regarding market compensation levels and practices, assists the Committee in the review and evaluation of such compensation levels and practices, and advises the Committee regarding compensation decisions, particularly with respect to the compensation of our CEO. The Consultant also provides information and advice on non-employee director compensation. At the discretion of the Committee, a principal of the Consultant attends meetings of the Committee and communicates with the Chair of the Committee between meetings to provide timely advice on questions and decisions before the Committee. The Committee has direct access to the Consultant throughout the year. The Committee has the sole authority to retain and terminate the Consultant and to approve the Consultant's fees and all other terms of its engagement with the Consultant. The Consultant does not provide services to the Company (directly or indirectly through affiliates) other than those provided to the Committee. The Committee has considered the independence factors in applicable SEC rules and Nasdaq listing standards and other facts and circumstances and concluded that the services performed by the Consultant do not raise any conflict of interest. Peer Group The Committee considers competitive marketplace practices in making its compensation decisions by reviewing our executive compensation program and comparing it to compensation paid to executives in comparable roles at comparably sized peer group companies including companies with whom we compete for talent. We do not target any specific market position in establishing compensation, but generally aim to have a compensation program that is in line with the market, as determined by the collected market information. We also consider the performance of our Company with respect to comparative historical financial and stockholder returns of our peer companies and the impact of compensation on our current-year operating budget. The Committee and Consultant review the peer group every year to ensure the companies remain appropriate and relevant for use in competitive compensation analysis. As part of this review, the Consultant and Committee compare criteria including size by revenue, the complexity of our business, customer base, services provided, geographic scope, and market capitalization of several companies in our industry to be potential peer companies. Our peer group consisted of the following 18 companies at the time the Committee reviewed our executives' compensation for 2022, which was re-confirmed by the Committee in May 2022. JANAUARY MARCH MAY Q2 Q1 Peer Group Companies Agilent Technologies, Inc. AMN Healthcare Services, Inc. Bio-Rad Laboratories, Inc. Catalent, Inc. Cerner Corporation Charles River Laboratories International, Inc. Endo International plc ICON Public Limited Company IQVIA Holdings Inc. Laboratory Corporation of America Holdings Mettler-Toledo International Inc. PerkinElmer, Inc. Perrigo Company plc PPD PRA Health Sciences Quest Diagnostics Incorporated Waters Corporation West Pharmaceuticals Services, Inc.

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Target Pay and Mix of Compensation Elements

We do not employ a purely formulaic approach for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation, or among the different forms of non-cash compensation. Instead, the Committee determines what it believes to be the appropriate level and mix of our compensation elements to retain our senior management team, motivate them and align their interests with those of our stockholders.

Historically, the Committee has weighted a higher level of the total target compensation mix to equity-based compensation. We provide a portion of our executive compensation in the form of PRSUs that cliff vest after three years and RSUs that vest annually over three years, with 50% of the total target equity award grant being performance-based. We believe our approach to compensation supports the retention of our executives and aligns their interests with those of our stockholders by encouraging executives to participate in the long-term success of our Company and create stockholder value.

The following illustration provides information regarding fiscal year end 2022 compensation for NEOs, including the mix between performance-based and fixed elements; how performance-based compensation was allocated between annual and long-term incentive elements; and how total compensation was allocated between cash and equity components. Compensation reflected in the graph below includes salary, target annual incentive opportunity, and the grant-date fair value of long-term incentives granted during 2022 and excludes the value of other benefits and perquisites, which are minimal. RSUs are included in variable pay below because the value varies with stock performance.

As shown in the chart, a substantial portion of our executives’ total compensation opportunity is variable, 86.6% for Ms. Keefe, our current CEO, and 79.5% for our other NEOs (other than Mr. Macdonald).

CEO 16.1% Annual Incentive Target 51.3% Performance Linked 35.2% Target PRSUs 13.4% Base Salary 86.6% Variable Pay 35.2% Time-based RSUs OTHER NEOS 16.3% Annual Incentive Target 47.9% Performance Linked 31.6% Target PRSUs 79.5% Variable Pay 31.6% Time-based RSUs 20.5% Base Salary

In determining current and future compensation, the Committee considers the economic value as well as the retention value of prior equity grants received by our NEOs, as well as internal equity, which means we review each NEO’s compensation against the compensation of our other senior team members and other Company employees generally. In determining the reasonableness of a NEO’s total compensation, the Committee considers not only individual and corporate performance compared to targets, but also the nature of each element of compensation provided, including salary, annual cash incentives, and long-term incentive compensation, as well as the executive’s severance and change-in-control arrangements.

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Compensation Element Details

Total direct compensation (in millions) for each of our NEOs in 2022 is illustrated in the table below. More information about the design and outcomes for each element is provided in subsequent sections.

BASE SALARY ANNUAL INCENTIVE LONG-TERM INCENTIVE¹ TOTAL DIRECT COMPENSATION Michelle Keefe Jason Meggs Michael Brooks Christian Tucat Jonathan Olefson Alistair Macdonald $0.86 $0.00 $7.58 $8.44 $0.61 $0.00 $2.05 $2.66 $0.69 $0.00 $5.34 $6.03 $0.47 $0.00 $1.99 $2.46 $0.52 $0.00 $2.68 $3.20 $0.57 $0.00 $5.25 $5.82

(1) Excludes additional compensation charges incurred under ASC 718 with respect to the payout of the 2019 PRSUs as described below.

Base Salary

We use base salary to recognize the experience, skills, knowledge, responsibilities, and performance in role of our NEOs. When establishing base salaries for 2022, the Committee considered the compensation of executives in our peer group. In addition, the Committee reviews a variety of other factors, including but not limited to:

Base salary is intended to aid in the attraction and retention of talent in a competitive market and is targeted at the market median, although actual salaries may be higher or lower as a result of various factors, including those given above as well as internal pay equity within the Company and the degree of difficulty in replacing the individual. The Consultant provides the Committee with benchmark data as part of the review process. In connection with her appointment as CEO, Ms. Keefe’s salary was increased to $1,000,000 in April 2022 to recognize her expanded responsibilities. Mr. Brooks’ salary was increased to $750,000 in April 2022 to recognize his expanded responsibilities with his appointment to the Company’s Chief Operating Officer. Mr. Tucat’s salary was increased to $520,000 in June 2022 to recognize his expanded in responsibilities with his appointment to the Company’s Chief Business Officer. Salaries for Messrs. Meggs and Olefson were increased 3% and 4%, to $618,000 and $520,000 respectively aligned with market-based increases.

Cash Incentives

Annual Cash Incentives

Overview

Our compensation philosophy connects our executives’ potential annual earnings to the achievement of annual performance objectives designed to support execution of our business strategies. The Management Incentive Plan (“MIP”) is intended to reward accomplishment of organizational goals and specific individual performance objectives identified as critical to our success. The MIP provides for the payment of cash bonuses dependent upon achievement of predetermined corporate financial performance targets, as well as certain measures specific to individual performance.

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Individual MIP Targets

The overall MIP potential varies depending upon the NEO’s position. Each NEO’s MIP target represents the percent of salary that NEO may potentially receive as an annual cash incentive award if the Company achieves the pre-determined goals established by the Committee for the year. Ms. Keefe’s MIP target was increased from 70% to 120% in April 2022 upon her appointment as the Company’s CEO. Mr. Brook’s MIP target was increased from 70% to 100% in April 2022 upon his appointment as the Company’s Chief Operating Officer. Mr. Tucat’s MIP target was increased from 60% to 70% in June 2022 upon his appointment as the Company’s Chief Business Officer. For 2022, the MIP targets for each of our NEOs were as follows (Mr. Macdonald resigned in 2022 and so was ineligible to receive a payout under the MIP):

⁽¹⁾ Target pro-rated for 2022 to reflect partial year in new role.

Potential MIP payouts for 2022 ranged from zero to 200% of each NEO’s MIP target, so that executives could earn above-target payouts if actual performance significantly exceeded predetermined annual goals, could earn below-target payouts, or could earn no payouts if performance was below the minimum thresholds established for the year.

End-of-Year Assessment Process

Following the end of each fiscal year, the Committee, with the assistance of our CEO, for all NEOs other than herself, reviews actual results and performance against the goals for such fiscal year and determines the amounts, if any, of the annual cash incentives to be paid to our NEOs under the MIP. The Committee also conducts a similar review, which includes additional assessment by the Board of Directors, to determine the amount, if any, of the annual cash incentive to be paid to the CEO under the MIP. The Committee reserves the right to reduce MIP payouts for an individual NEO or for the executive team as a whole, based on its judgment of individual or the executive team’s performance.

Financial Performance Metrics

The 2022 MIP performance goals included two financial measures: MIP Revenue, weighted at 66% of total MIP target, and MIP EBITDA, weighted at 34% of total MIP target. Our MIP Revenue is defined as the Company’s revenue reduced by the total reimbursable expenses of our clients and excludes certain non-recurring financial impacts as determined by the Committee. The 2022 actual MIP Revenue was increased to reflect unfavorable impact from foreign exchange rates and MIP EBITDA was reduced to reflect favorable impact from foreign exchange rates.  

Our MIP EBITDA is defined as the reported Adjusted EBITDA excluding the amount of MIP-related expense recorded during the year and certain non-recurring financial impacts as determined by the Committee. EBITDA represents earnings before interest, taxes, depreciation, and amortization. The Company defines Adjusted EBITDA as EBITDA, further adjusted to exclude expenses and transactions that the Company believes are not representative of its core operations, namely: restructuring and other costs; transaction and integration-related expenses; asset impairment charges; share-based compensation expense; other (income) expense, net; and (gain) loss on extinguishment of debt. For additional information about the MIP, please refer to the “2022 Grants of Plan-Based Awards” table contained in this Amendment, which shows the threshold, target, and maximum incentive amounts payable under the MIP for our fiscal year 2022 performance.

2022 MIP Performance Scale

Performance for both MIP EBITDA and MIP Revenue were below threshold goals, resulting in no NEOs, including the CEO, receiving payment under the 2022 MIP.

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Long-Term Incentive Compensation

Our long-term incentive compensation awards are intended to link NEO compensation to stockholder interests and long-term Company performance. Performance-based and time-based grants were made to each of our NEOs in 2022. Our performance-based grants include metrics that align with our long-term strategic plan to drive stockholder value over the longer term and work in tandem with annual cash incentives, which focuses on shorter-term metrics (Revenue and Adjusted EBITDA growth).

Long-Term Incentives Granted in 2022

The Company made long-term incentive grants to NEOs during 2022 comprising annual awards and special one-time grants associated with leadership changes and actions to strengthen retention and incentives as the Company moves forward with its transformation initiatives.  

Annual Grants

In January 2022, the Committee approved long-term incentive awards for the NEOs for the 2022 - 2024 performance period. The composition of these awards was similar to prior awards and consisted of (i) PRSUs and (ii) time-based RSUs. Grants made to Ms. Keefe and Messrs. Meggs, Brooks, Tucat, and Olefson during 2022 are shown in the table below and represent the grant date fair value of the awards.

(1) In connection with Mr. Macdonald’s resignation, Mr. Macdonald forfeited all PRSUs received for the 2022 grant.

The time-based RSUs granted in January 2022 vest in three approximately equal annual installments beginning on the first anniversary of the date of grant, subject to the NEO’s continued employment with the Company.

The January 2022 PRSUs are scheduled to cliff vest approximately three years from the grant date with 50% of the target award amount allocated to achievement of three-year ROIC and 50% of the target award amount allocated to achievement of three annual Adjusted EPS performance targets for each year of the three-year performance period at the time the PRSUs were issued. For example, 2022 PRSUs include Adjusted EPS performance goals for 2022, 2023, and 2024 and one ROIC goal measured at the end of 2024. Threshold performance results in 50% vesting; target performance results in 100% vesting; and maximum performance results in 150% vesting.  

ROIC is determined by dividing Adjusted EBITDA, affected by the cash tax rate, by the end-of-period Invested capital, which is defined as the sum of total debt and total shareholders’ equity.  The ROIC may be adjusted to account for the impact of all (i) mergers, divestitures, and/or acquisitions completed during the ROIC performance period, and (ii) changes in tax policy and/or legislation that occur during the ROIC performance period.

Adjusted EPS for a given performance period is adjusted diluted earnings per share (defined as diluted earnings per share excluding acquisition-related deferred revenue adjustments; acquisition-related amortization; restructuring and other costs; transaction and integration-related expenses; share-based compensation expense; gain or loss on extinguishment of debt; other income (expense), net; and the income tax effect of the above adjustments).

Promotion Grants

Ms. Keefe received a one-time equity grant of 53,154 RSUs (with a grant date fair value of $3,718,653) in May 2022 in connection with her appointment as the Company’s CEO. Fifty percent (50%) of this award is time-based RSUs that will vest in three approximately equal installments on each of (i) the first anniversary of the grant date, (ii) January 18, 2024, and (iii) January 18, 2025, subject to her continued employment with the Company. The remaining fifty percent (50%) is PRSUs that will vest based on the same performance and time-vesting conditions as applied to the PRSU awards granted by the Company in January 2022.

Mr. Brooks received a one-time equity grant of 27,562 RSUs (with a grant date fair value of $1,928,237) in May 2022 in connection with his appointment as the Company’s Chief Operating Officer. Fifty percent (50%) of this award is time-based RSUs that will vest in three approximately equal installments on each of (i) the first anniversary of the grant date, (ii) January 18, 2024, and (iii) January 18, 2025, subject to his continued employment with the Company. The remaining fifty percent (50%) of is PRSUs that will vest based on the same performance and time-vesting conditions applied to the PRSU awards granted by the Company in January 2022.

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Mr. Tucat received a one-time equity grant of 2,808 RSUs (with a grant date fair value of $182,660) in June 2022 in connection with his appointment as the Company’s Chief Business Officer. Fifty percent (50%) of this award is time-based RSUs that will vest in three approximately equal installments on each anniversary of the grant date in 2023, 2024, and 2025, subject to his continued employment with the Company. The remaining fifty percent (50%) is PRSUs that will vest based on the same performance and time-vesting conditions applied to the PRSU awards granted by the Company in January 2022.

Transformation Grants

Our NEOs also received long-term equity grants in December 2022 to strengthen retention and provide additional incentives for successful transformation of Company performance (“Transformation” awards). The composition of these awards consisted of (i) PRSUs and (ii) time-based RSUs. The table below represents the grant date fair value of the awards.

The time-based “Transformation” RSUs granted in December 2022 cliff vest on the second anniversary of the date of grant, subject to the NEO’s continued employment with the Company.

The “Transformation” PRSUs are scheduled to cliff vest two years from the grant date with 50% of the target award amount allocated to achievement of the Consolidated Revenue target established for 2023, and 50% of the target award amount allocated to achievement of the Clinical Solutions Segment Net New Business Award target established for 2023. Performance for these measures will be determined based on the 2023 results and the awards will vest on the second anniversary of the grant in December 2024 based on the performance measured for 2023. Threshold performance results in 50% being earned; target performance results in 100% being earned; and maximum performance results in 125% being earned. Consolidated Revenue means the Company’s consolidated revenue as reported in the Company’s Annual Report on Form 10-K. Clinical Solutions Segment Net New Business means the net new business awards for the Company’s Clinical Solutions Segment as reported in the Company’s Annual Report on Form 10-K.

PRSUs Earned in 2022

PRSUs were granted to NEOs in 2020, 2021, and 2022. These PRSUs were subject to achievement of Adjusted EPS and ROIC performance targets established for each performance period. To the extent the performance goals were achieved, the PRSUs vest after the third anniversary of the grant date, following certification by the Committee.

Performance targets and actual performance results for Adjusted EPS and ROIC for the performance periods which have completed are shown in the table below. Following certification by the Committee in February 2023, the actual achievement of the 2020 Adjusted EPS PRSUs resulted in 72% of the target 2020 Adjusted EPS PRSUs vesting in February 2023, determined by the average of Adjusted EPS performance for years 2020, 2021, and 2022. Performance for the 2020 ROIC PRSUs would have resulted in no target shares vesting in February 2023 with respect to the PRSUs for which achievement is subject to ROIC performance. However, the Committee adjusted the ROIC target for the impact of acquisitions which occurred during the three-year performance period not anticipated when the ROIC goal was established and approved a payout of 57% of the target with respect to the 2020 ROIC PRSUs, resulting in 65% total vesting for the 2020 PRSUs and an additional compensation charge for 2023.

With respect to the PRSUs granted in 2021 that are subject to achievement of Adjusted EPS, approximately 113% of target shares were earned for 2021 and approximately 63% of target shares were earned for 2022. These PRSUs will vest after the end of the performance period (2021 - 2023), subject to continued service.

With respect to the PRSUs granted in 2022 that are subject to achievement of Adjusted EPS, approximately 59% of target shares were earned for 2022. These PRSUs will vest after the end of the performance period (2022 – 2024), subject to continued service.

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PRSU performance and vesting are outlined in the table below:

*Maximum vesting is 125%

2019 PRSUs

As disclosed in our proxy statement filed in April 2022, in March 2022 the Committee approved a payout of 77% of target with respect to the tranche of PRSUs granted in 2019 (the “2019 PRSUs”) for which vesting was subject to the achievement of certain ROIC goals, although the Company’s achievement of ROIC during the 2019-2021 performance period would have resulted in no payout. This decision, considering the impact of acquisitions during the period which were not anticipated at the time the goal was originally set for the period, resulted in an additional compensation charge with respect to the 2019 PRSUs that is included in the 2022 amounts reported in each of the Summary Compensation Table and Grants of Plan-Based Awards Tables contained in this Amendment.

PERFORMANCE MEASURE THRESHOLD 50% VESTING TARGET 100% VESTING MAXIMUM 150% VESTING ACTUAL APERCENT OF TARGET AMOUNT 2019 PRSUs (Granted 1/8/2019) 16.67% Fiscal 2019 Adjusted ESP $ 2.76 $ 3.07 $3.68 $ 3.23 113% 16.67% Fiscal 2020* Adjusted ESP $3.24% $3.60 $4.32 $3.41 74% 16.67% Fiscal 2021 Adjusted ESP $3.87 $4.30 $5.16 $4.46 109% 50.00% Year-end 2021** ROIC 11.0% 12.5% 14.0% 11.8% 77% Total Vesting March 2,2022 88% 2020 PRSUs (Granted 1/15/2020) 16.67% Fiscal 2020* Adjusted ESP $3.39 $ 3.77 $4.52 $3.41 53% 16.67% Fiscal 2021 Adjusted ESP $4.01 $4.45 $5.34 $4.46 101% 16.67% Fiscal 2021 Adjusted ESP Vesting TDB in 2023 TDB 50.00% Year-end 2022 ROIC Vesting TDB in 2023 TDB Total Vesting, March 2023 TDB in 2023 2021 PRSUs (Granted 1/15/2021) 16.67% Fiscal 2021 Adjusted ESP $3.82 $4.24 $5.09 $4.46 113% 16.67% Fiscal 2022 Adjusted ESP Vesting TDB in 2023 TDB 16.67% Fiscal 2023 Adjusted ESP Vesting TDB in 2024 TDB 50.00% Year-end 2023 ROIC Vesting TDB in 2024 TDB Total4 TDB

Benefit Plans

In 2022, NEOs were eligible to participate in our health and welfare benefits plans under generally the same rules that apply to other employees. Under the plans, eligible employees of the Company and our U.S. subsidiaries may elect to participate in the following plans:

Messrs. Macdonald and Tucat were eligible to participate in employee benefits plans offered by the Company to all employees in the United Kingdom. The Company’s portion of the costs for each NEO’s participation in these plans is reported in “All Other Compensation” in the Summary Compensation Table below.

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Retirement Plans

NEOs residing in the U.S. are eligible to participate in the 401(k) plan offered by our Company under the same rules that apply to other employees. Under the plan, eligible employees of the Company and our U.S. subsidiaries may elect to defer a percentage of their compensation each year subject to plan limits and caps imposed by the Internal Revenue Service (the “IRS”). In 2022, all U.S. NEOs participated in our 401(k) plan. The Company made matching contributions of 50% of the first 9% of each participant’s compensation contribution (for a total match of up to 4.5% of eligible compensation) under this plan.

Mr. Macdonald, our former CEO, resides in the U.K. and participated in the Company’s Group Personal Pension Plan. In 2022 and until his resignation as CEO on April 29, 2022, Mr. Macdonald contributed 3% of his monthly base salary into the pension plan. The Company made contributions of 9% of Mr. Macdonald’s monthly base salary into the pension plan during the period in which he was eligible.

Mr. Tucat resides in the U.K. and is eligible to participate in the Company’s Group Personal Pension Plan. In 2022, Mr. Tucat opted to receive a salary supplement of approximately 6% of his monthly base salary in lieu of a Company contribution into the pension plan.

We also maintain non-qualified deferred compensation plans that enable NEOs and other eligible employees to defer up to 80% of their base salary and up to 100% of their annual bonuses and commissions during their employment or for certain specified minimum deferral periods. The Company does not make any matching or profit-sharing contributions under this plan. Accounts are maintained for participants who elect to defer, offering participants a mix of investment options with a variety of goals and risk tolerance. Although we have established a rabbi trust to assist us in meeting our obligations under the plan, account balances under the plan are unsecured under IRS rules and remain part of the Company’s general assets until distributed to the participants. The value of a participant’s account balance is based solely on the participant’s deferrals and the investment return on such deferrals given the performance of the investment options that they select. We do not guarantee any minimum return on those investments. Ms. Keefe is the only NEO who participated in this plan in 2022.

Severance and Change-in-Control Agreements

Our NEOs are covered by severance and double-trigger change-in-control agreement provisions included in their employment agreements or the Company’s Executive Severance Plan, which are discussed in the Employment Agreements section of this Amendment.

In addition, we entered into agreements with Messrs. Macdonald and Meggs in connection with their departures from the Company. These agreements are described in the Employment Agreements section of this Amendment.

Tax and Accounting Considerations

Accounting for Stock-Based Compensation

We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, for stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date fair value of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of PRSUs, time-based RSUs and other equity-based awards under equity incentive award plans have been and will be accounted for under ASC Topic 718. We expect that we will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. For further information on our accounting for our stock-based compensation awards, refer to the Original Form 10-K.

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Compensation of Named Executive Officers

The following table sets forth summary compensation information for our NEOs for the fiscal years ended December 31, 2022, 2021, and 2020.

Summary Compensation Table

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2022 Grants of Plan-Based Awards

The following table sets forth information regarding the grants of plan-based awards to our NEOs in 2022. In addition, certain awards are subject to accelerated vesting in connection with a qualifying termination of employment or a change in control, as described later in this Amendment.