UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 19, 2021 (
(Exact name of registrant as specified in its charter)
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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):
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
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. ☐
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(i) Change in Designation of an Executive Officer
On February 16, 2021, the Board of Directors (the “Board”) of Community Health Systems, Inc. (the “Company”) elected and appointed Kevin J. Hammons, age 55, who was previously Executive Vice President and Chief Financial Officer of the Company, to the position of President and Chief Financial Officer of the Company. The Company did not enter into or amend any compensatory or other plan, contract or arrangement with Mr. Hammons in connection with his appointment as President. The information required by Items 401(b) and (e) of Regulation S-K with respect to Mr. Hammons was included in the Company’s Proxy Statement on Schedule 14A filed with the SEC on April 2, 2020 and is incorporated herein by reference.
(ii) Compensation Arrangements
On February 16, 2021, the Board, upon recommendation of the Compensation Committee of the Board (the “Compensation Committee”), met and approved the following compensation arrangements for 2021 for the Company’s named executive officers, as reflected in the Company’s definitive proxy statement for its 2020 annual meeting of stockholders (collectively, the “Named Executive Officers”).
2021 Cash Incentive Compensation
The Board approved performance goals for the Named Executive Officers for fiscal year 2021 under the Company’s 2019 Employee Performance Incentive Plan (the “Cash Incentive Plan”), which is discussed in more detail below, with target opportunities as follows (expressed as a percentage of base salary):
| Name and Position |
Target Opportunity | |||
| Wayne T. Smith, Executive Chairman of the Board of Directors |
225 | % | ||
| Tim L. Hingtgen, Chief Executive Officer |
225 | % | ||
| Kevin J. Hammons, President and Chief Financial Officer |
125 | % | ||
| Lynn T. Simon, M.D., President of Clinical Operations and Chief Medical Officer |
115 | % | ||
| Benjamin C. Fordham, Executive Vice President, General Counsel and Assistant Secretary |
115 | % | ||
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 40% for Mr. Smith and Mr. Hingtgen; 25% for Mr. Hammons; 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 Mr. Smith and Mr. Hingtgen, and an additional 25% for Mr. Hammons, Dr. Simon and Mr. Fordham.
The payments made to the Company’s 2020 named executive officers under the Cash Incentive Plan in respect of fiscal 2020 incentive compensation targets will be set forth in the definitive proxy statement to be filed by the Company in connection with the Company’s 2021 annual meeting of stockholders.
2021 Base Salaries
The Board approved the following base salary amounts for the Named Executive Officers for fiscal year 2021:
| Name and Position |
2021 Base Salary | |||
| Wayne T. Smith, Executive Chairman of the Board of Directors |
$ | 1,000,000 | ||
| Tim L. Hingtgen, Chief Executive Officer |
$ | 1,200,000 | ||
| Kevin J. Hammons, President and Chief Financial Officer |
$ | 700,000 | ||
| Lynn T. Simon, M.D., President of Clinical Operations and Chief Medical Officer |
$ | 625,000 | ||
| Benjamin C. Fordham, Executive Vice President, General Counsel and Assistant Secretary |
$ | 625,000 | ||
Long-Term Incentive Compensation – Equity Awards
Pursuant to the Company’s 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, 2021 (the “grant date”):
| Name and Position |
Non-Qualified Stock Options |
Time Vesting Restricted Stock |
Performance-Based Restricted Stock |
|||||||||
| Wayne T. Smith, Executive Chairman of the Board of Directors |
90,000 | 90,000 | 180,000 | |||||||||
| Tim L. Hingtgen, Chief Executive Officer |
100,000 | 100,000 | 200,000 | |||||||||
| Kevin J. Hammons, President and Chief Financial Officer |
75,000 | 75,000 | 150,000 | |||||||||
| Lynn T. Simon, M.D., President of Clinical Operations and Chief Medical Officer |
40,000 | 40,000 | 80,000 | |||||||||
| Benjamin C. Fordham, Executive Vice President, General Counsel and Assistant Secretary |
26,250 | 26,250 | 52,500 | |||||||||
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, 2021 and ending December 31, 2023, 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.
Both the non-qualified stock options and the time-vesting restricted stock vest ratably over three years, beginning on the first anniversary of the grant 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 hereunto duly authorized.
| Date: February 19, 2021 | COMMUNITY HEALTH SYSTEMS, INC. | |||||
| (Registrant) | ||||||
| By: | /s/ Tim L. Hingtgen | |||||
| Tim L. Hingtgen | ||||||
| Chief Executive Officer (principal executive officer) | ||||||
Document and Entity Information |
Feb. 16, 2021 |
|---|---|
| Cover [Abstract] | |
| Entity Registrant Name | COMMUNITY HEALTH SYSTEMS INC |
| Amendment Flag | false |
| Entity Central Index Key | 0001108109 |
| Document Type | 8-K |
| Document Period End Date | Feb. 16, 2021 |
| Entity Incorporation State Country Code | DE |
| Entity File Number | 001-15925 |
| Entity Tax Identification Number | 13-3893191 |
| Entity Address, Address Line One | 4000 Meridian Boulevard |
| Entity Address, City or Town | Franklin |
| Entity Address, State or Province | TN |
| Entity Address, Postal Zip Code | 37067 |
| City Area Code | (615) |
| Local Phone Number | 465-7000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Security 12b Title | Common Stock, $0.01 par value |
| Trading Symbol | CYH |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |