AMN 2018 Proxy Statement

COMPENSATION DISCUSSION AND ANALYSIS threshold level for each metric typically starts at a minimum performance level, e.g., 90% of the targeted consolidated AEBITDA. The maximum bonus typically requires a performance level of 110% to 120% of the target amount for each metric. We have typically used incremental hurdles (usually 1% increments for AEBITDA and one-half percent increments for revenue) of performance between the threshold level and the maximum level that increase the amount of bonus that can be earned on a straight-line basis depending on the hurdle ultimately achieved. A portion of the bonuses has been based on non-financial factors, such as performance relative to direct competition, leadership, achievement of strategic objectives and TSR. In setting each named executive officer’s target bonus, the Compensation Committee evaluates benchmarking data for comparable positions generally and within our peer group, the recommendations of our CEO (except with respect to her target bonus), individual performance, knowledge, experience and responsibilities, and the amount of the potential bonus under various performance scenarios. As with base salary, the Compensation Committee considers these factors in the context of each individual’s total cash compensation as well as the total compensation package (i.e., equity and cash) generally. As set forth in our Executive Compensation Philosophy, the principles governing the annual design include the following: (1) the metrics must be tied to key indicators of our success and our annual objectives, (2) the performance goal must be reasonably achievable and viewed as fair, while at the same time encouraging stretch performance, (3) the metrics must be simple to understand and can be influenced by the subject executive, (4) the portion of an individual’s target annual cash compensation attributable to target annual bonus should increase with successively higher levels of responsibility, and (5) payouts should reflect our performance as well as the performance of the subject executive. The Compensation Committee may amend the Bonus Plan at any time and may also amend any outstanding award granted under the Bonus Plan, provided it may not amend the Bonus Plan without the approval of our shareholders if the amendment would affect the tax deduction of payments made under it. LONG-TERM INCENTIVES Long-term incentives in the form of equity awards serve as the third component of our executive compensation program. Under our Equity Plan, we grant equity awards, with various vesting parameters, typically three years in length, to named executive officers and key employees as an incentive to have a long-term perspective in supporting and developing our strategic objectives. We also use them as an employee retention tool. We utilize PRSUs as part of our long-term incentive structure to strengthen the performance-based component of the long-term incentive program. In 2017, we utilized TSR PRSUs and AEBITDA PRSUs for performance-based equity for all of our named executive officers. In general, we believe long-term equity incentive opportunities should be targeted to approximately the market median so that when combined with base salary and target annual bonus, total compensation falls around the median of market levels. The following principles govern the design of our long- term incentives: (1) performance periods should cover multiple years to create balance between short- and long-term objectives, (2) long-term incentives should function to (a) align executive and shareholder interests, (b) enhance focus on improvements in operating performance and the creation of shareholder value and (c) drive achievement of our long-term strategic objectives, (3) awards should support long-term retention of key contributors through vesting, (4) aggregate annual share usage should be carefully managed to avoid excessive levels of shareholder value transfer in relation to those of our peer group, and (5) the aggregate cost of long-term incentives should be reasonable compared to members of our peer group, and the cost implications should be supported by our annual and longer-term operating plans. RETIREMENT AND HEALTH PLANS Retirement plans and other customary employee benefits serve as the fourth component of our executive compensation program. We adopted our 2005 Amended and Restated Executive Nonqualified Excess Plan (the “ Deferred Compensation Plan ”) primarily as a result of a market review that indicated that a deferred compensation plan was a significant component of 38 AMN HEALTHCARE SERVICES, INC. ⎪ 2018 Proxy Statement