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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 26, 2010 (February 24, 2010)
Date of Report (date of earliest event reported)
COMMUNITY HEALTH SYSTEMS, INC.
(Exact name of Registrant as specified in charter)
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Delaware
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001-15925
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13-3893191 |
(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.) |
4000 Meridian Boulevard
Franklin, Tennessee 37067
(Address of principal executive offices)
Registrants telephone number, including area code: (615) 465-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (l7 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers; Compensatory Arrangements of Certain Officers.
On February 24, 2010, the Board of Directors of Community Health Systems, Inc. (the Company),
upon recommendation of the Compensation Committee of the Board of Directors (the Compensation
Committee), met and approved certain compensation arrangements for the Companys Named Executive
Officers. The Companys Named Executive Officers are each employees of the Companys wholly-owned
subsidiary, Community Health Systems Professional Services Corporation, and receive no compensation
for their services as an officer of the Company. We have included an additional executive officer,
Thomas D. Miller, in this report; Mr. T. Miller is expected to be included as a Named Executive
Officer in our definitive proxy statement for our annual meeting of stockholders for 2010. The following
arrangements were approved:
Incentive Compensation Payments for 2009 under the 2004 Employee Performance Incentive Plan
The following payments in respect of fiscal year 2009 incentive compensation targets, under the
Companys 2004 Employee Performance Incentive Plan (the Cash Incentive Plan) were approved, the
Named Executive Officers having been found to have met the levels of their performance goals
indicated below:
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Percentage of Total |
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Target Opportunity |
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2009 Incentive |
Name and Position |
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Attained |
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Compensation Payment |
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Wayne T. Smith,
Chairman, President and
Chief Executive Officer
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100% of target
(including
overachievement)
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$ |
3,900,000 |
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W. Larry Cash,
Director, Executive
Vice President and
Chief Financial Officer
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100% of target
(including
overachievement)
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$ |
1,400,000 |
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William S. Hussey,
Division President,
Division Operations
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100% of target
(including
overachievement)
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$ |
825,000 |
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David L. Miller,
Division President,
Division Operations
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100% of target
(including
overachievement)
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$ |
825,000 |
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Michael T. Portacci,
Division President,
Division Operations
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100% of target
(including
overachievement)
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$ |
750,000 |
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Thomas D. Miller,
Division President,
Division Operations
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100% of target
(including
overachievement)
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$ |
825,000 |
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2010 Incentive Compensation Targets
The Compensation Committee has also established performance goals for each of the Named Executive
Officers for fiscal year 2010 under the Cash Incentive Plan, which are substantially the same as
the goals and opportunities utilized to determine incentive compensation for 2009. For fiscal year
2010, the incentive compensation plans established by the Compensation Committee include the
following components:
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the total maximum incentive bonus attainable is as follows (expressed as a percentage of
the executives base salary): |
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Position |
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2010 Plan Maximum |
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CEO |
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300 |
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CFO |
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200 |
% |
Division Presidents |
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150 |
% |
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of the total maximum bonus attainable, the incentive compensation to be awarded for the
attainment of financial objective targets is 265%, 165%, and 130% for the CEO, CFO and each
Division President, respectively; and of the total maximum bonus attainable, the incentive compensation
to be awarded for the attainment of non-financial performance improvements has been set at
25%, 25% and 10% for the CEO, CFO and each Division President, respectively; these amounts
will be reduced if the performance improvements are not attained. Any such reduction will
be determined in the discretion of the Compensation Committee. The 2010 non-financial
performance criteria shall include such items as: successful physician recruitment efforts;
maintaining expenditures within the established capital budget; maintaining/improving the
2009 overall clinical compliance; and volume, revenue and earnings growth relative to
industry peers. |
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The remaining component of the incentive compensation plan formula makes available up to
10% of the officers salary for overachievement of financial targets. |
2010 Base Salaries
The following base salary amounts for the Companys Named Executive Officers were approved on
February 24, 2010, to be effective retroactive to January 1, 2010. None of our executive officers
has a written employment agreement.
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Name and Position |
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2010 Base Salary |
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Wayne T. Smith, Chairman, President and Chief Executive
Officer |
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$ |
1,365,000 |
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W. Larry Cash, Director, Executive Vice President and
Chief Financial Officer |
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$ |
735,000 |
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William S. Hussey, Division President, Division Operations |
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$ |
600,000 |
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David L. Miller, Division President, Division Operations |
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$ |
600,000 |
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Michael T. Portacci, Division President, Division
Operations |
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$ |
550,000 |
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Thomas D. Miller, Division President, Division Operations |
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$ |
600,000 |
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Option Grants and Restricted Stock Awards
Pursuant to the Companys Amended and Restated 2000 Stock Option and Award Plan and/or the 2009
Stock Option and Award Plan, the Compensation Committee approved the following equity grants to its
Named Executive Officers:
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Non-Qualified |
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Performance-Based |
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Name and Position |
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Stock Options |
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Restricted Shares |
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Wayne T. Smith,
Chairman, President and
Chief Executive Officer |
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50,000 |
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200,000 |
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W. Larry Cash,
Director, Executive
Vice President and
Chief Financial Officer |
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25,000 |
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80,000 |
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William S. Hussey,
Division President,
Division Operations |
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10,000 |
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40,000 |
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David L. Miller,
Division President,
Division Operations |
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10,000 |
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40,000 |
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Michael T. Portacci,
Division President,
Division Operations |
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10,000 |
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40,000 |
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Thomas D. Miller,
Division President,
Division Operations |
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10,000 |
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40,000 |
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All other executive
officers as a group
(40,000 of the
restricted shares
awarded were
performance-based, the
balance, 60,000 shares,
were granted with
3-year time vesting
restrictions only) |
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22,500 |
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100,000 |
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The grants of nonqualified stock options will vest in equal one-third (1/3) increments on the
first three anniversaries of the grant date. The performance-based restricted stock awards have
both performance and time vesting components. Generally, the performance objective that must be
met is the Companys attainment for calendar year 2010 of either (i) seventy-five percent (75%) or
more of the low end of the range of projected earnings per share from continuing operations, or
(ii) ninety percent (90%) or more of the low end of the range of net operating revenues, each as
stated in the Companys earnings release filed with the Securities and Exchange Commission on Form
8-K on February 17, 2010. Once the performance objective has been attained, restrictions will
lapse in equal one-third (1/3) increments on each of the first three anniversaries of the award
date. If the performance objective is not attained, the awards will be forfeited in their
entirety. Notwithstanding the performance objectives and the vesting requirements described above,
the restrictions will lapse earlier in the event of the death or disability of the grantee, or in
the event of a change in control of the Company. In the event of a grantees termination of
employment without cause by his or her employer, the award will not be terminated; rather when it
is determined that the performance objective has been met (or if it has already been met), the
award will accelerate in its entirety on such date.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this Report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: February 26, 2010 |
COMMUNITY HEALTH SYSTEMS, INC.
(Registrant)
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By: |
/s/ Wayne T. Smith
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Wayne T. Smith |
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Chairman of the Board,
President and Chief Executive Officer
(principal executive officer) |
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By: |
/s/ W. Larry Cash
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W. Larry Cash |
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Executive Vice President, Chief Financial Officer
and Director
(principal financial officer) |
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