Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(i)
Compensation Arrangements
On February 21, 2018,
the Board of Directors (the Board) of Community Health Systems, Inc. (the Company), upon recommendation of the Compensation Committee of the Board (the Compensation Committee), met and approved the following
compensation arrangements for the Companys named executive officers, as reflected in the Companys definitive proxy statement for its 2017 annual meeting of stockholders (other than Michael T. Portacci, the Companys former division
president, W. Larry Cash, the Companys former president of financial services and chief financial officer, and David L. Miller, the Companys former president and chief operating officer, all of whom are now retired), along with Thomas J.
Aaron, the Companys executive vice president and chief financial officer, Lynn T. Simon, M.D., the Companys president of clinical operations and chief medical officer, and Benjamin C. Fordham, the Companys executive vice president,
general counsel and assistant secretary, who are expected to be included as named executive officers in our definitive proxy statement for our 2018 annual meeting of stockholders (collectively, the Named Executive Officers).
2018 Cash Incentive Compensation Targets
The Board
approved performance goals for the Named Executive Officers for fiscal year 2018 under the Companys 2004 Employee Performance Incentive Plan (the Cash Incentive Plan), with target opportunities as follows (expressed as a percentage
of base salary):
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Name and Position
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Target Opportunity
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Wayne T. Smith, Chairman and Chief Executive Officer
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235%
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Thomas J. Aaron, Executive Vice President and Chief Financial Officer
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130%
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Tim L. Hingtgen, President and Chief Operating Officer
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140%
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Lynn T. Simon, M.D., President of Clinical Operations and Chief Medical Officer
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115%
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Benjamin C. Fordham, Executive Vice President, General Counsel and Assistant Secretary
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115%
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In addition, each Named Executive Officer will have the opportunity to achieve an additional percentage of his or her base
salary for the attainment of specific
non-financial
performance improvements up to a maximum of an additional 30% for Mr. Smith; 20% for Mr. Aaron; 25% for Mr. Hingtgen; and 10% for
Dr. Simon and Mr. Fordham. Each Named Executive Officer will also have the opportunity to achieve an additional percentage of his or her base salary for overachievement of Company-level goals up to a maximum of an additional 35% for
Messrs. Smith and Hingtgen and an additional 25% for Messrs. Aaron and Fordham and Dr. Simon.
The payments made to the Named Executive Officers
under the Cash Incentive Plan in respect of fiscal 2017 incentive compensation targets will be set forth in the definitive proxy statement to be filed by the Company in connection with the Companys 2018 annual meeting of stockholders.
2018 Base Salaries
The Board approved the following base salary amounts for the Named Executive Officers:
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Name and Position
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2018 Base Salary
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Wayne T. Smith, Chairman and Chief Executive Officer
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$1,600,000
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Thomas J. Aaron, Executive Vice President and Chief Financial Officer
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$675,000
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Tim L. Hingtgen, President and Chief Operating Officer
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$900,000
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Lynn T. Simon, M.D., President of Clinical Operations and Chief Medical Officer
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$550,000
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Benjamin C. Fordham, Executive Vice President, General Counsel and Assistant Secretary
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$561,000
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Long-Term Incentive Compensation Equity Awards
Pursuant to the Companys Amended and Restated 2009 Stock Option and Award Plan (the Stock Plan), the Board approved the following equity
grants to the Named Executive Officers, effective March 1, 2018 (the grant date):
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Name and Position
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Performance-
Based Restricted
Shares
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Time-Vesting
Restricted Stock
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Wayne T. Smith, Chairman and Chief Executive Officer
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105,000
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105,000
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Thomas J. Aaron, Executive Vice President and Chief Financial Officer
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50,000
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50,000
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Tim L. Hingtgen, President and Chief Operating Officer
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75,000
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75,000
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Lynn T. Simon, M.D., President of Clinical Operations and Chief Medical Officer
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35,000
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35,000
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Benjamin C. Fordham, Executive Vice President, General Counsel and Assistant Secretary
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35,000
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35,000
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The number of performance-based restricted shares granted to each Named Executive Officer is subject to the attainment of
certain performance objectives during the three-year period beginning January 1, 2018 and ending December 31, 2020, with the ultimate number of shares vesting in respect of such awards after such three-year period ranging from 0% to 200%
of the shares set forth above based on the level of achievement of such performance objectives.
In addition, the time-vesting restricted stock vests
ratably over three years, beginning on the first anniversary of the grant date.
(ii)
Changes in Designation of Certain Executive Officers
On February 21, 2018, the Board of Directors of the Company designated Beryl O. Ramsey as an executive officer of the Company in conjunction with her
promotion to division president. Ms. Ramsey has been overseeing the operations of the Companys affiliated hospitals in one of its operating divisions on an interim basis following the retirement of one of its division presidents.
Ms. Ramsey, age 59, joined the Company in September 2015 as a vice president of division operations, supporting operations in affiliated hospitals in one
of the Companys operating divisions. In her role as division president, she oversees the operations of affiliated hospitals in Alaska, Arizona, Arkansas, Louisiana, Missouri, New Mexico, Oklahoma, and Texas. Ms. Ramsey has more than 25
years of
for-profit
and
non-profit
healthcare leadership experience. From 2009 until August 2015, Ms. Ramsey was a senior vice president at Houston Methodist, a
non-profit
health system comprised of a leading academic medical center in the Texas Medical Center and six community hospitals serving the Greater Houston, Texas area, where she also served as chief executive
officer of Houston Methodist Willowbrook Hospital, a
312-bed
full-service acute care hospital serving northwest Houston. Prior to that, Ms. Ramsey held chief executive officer and other senior management
positions with various
for-profit
and
non-profit
hospitals in Texas and Louisiana, including 11 years with another hospital management company. She holds a masters
degree in business administration from The University of Houston and is a Fellow of the American College of Healthcare Executives.