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 16, 2024 (
(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:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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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. |
On February 14, 2024, the Board of Directors (the “Board”) of Community Health Systems, Inc. (the “Company”), upon the recommendation of the Compensation Committee of the Board (the “Compensation Committee”), met and approved the following compensation arrangements for 2024 for (i) the Company’s named executive officers as reflected in the Company’s definitive proxy statement for its 2023 annual meeting of stockholders (other than Wayne T. Smith, who was a named executive officer in such proxy statement and previously served as the Company’s Executive Chairman of the Board prior to his retirement effective January 1, 2023, and now serves as the non-executive Chairman of the Board) (the “Applicable 2023 NEOs”), along with (ii) Kevin A Stockton, the Company’s Executive Vice President of Operations and Development, and Chad A. Campbell, the Company’s Regional President – Region Operations, each of whom is expected to be included as a named executive officer in the Company’s upcoming definitive proxy statement for its 2024 annual meeting of stockholders (such individuals, together with the Applicable 2023 NEOs, collectively, the “Applicable NEOs”).
2024 Base Salaries
The Board approved the following base salary amounts for the Applicable NEOs for fiscal year 2024:
| Name and Position |
2024 Base Salary | |||
| Tim L. Hingtgen, Chief Executive Officer |
$ | 1,326,125 | ||
| Kevin J. Hammons, President and Chief Financial Officer |
$ | 795,675 | ||
| Lynn T. Simon, M.D., President, Healthcare Innovation and Chief Medical Officer |
$ | 679,691 | ||
| Mark B. Medley, Regional President – Region Operations |
$ | 672,000 | ||
| Kevin A. Stockton, Executive Vice President of Operations and Development |
$ | 710,000 | ||
| Chad A. Campbell, Regional President – Region Operations |
$ | 672,000 | ||
2024 Cash Incentive Compensation
The Board approved performance goals for the Applicable NEOs for fiscal year 2024 under the Company’s 2019 Employee Performance Incentive Plan with target opportunities as follows (expressed as a percentage of base salary):
| Name and Position |
Target Opportunity | |||
| Tim L. Hingtgen, Chief Executive Officer |
225 | % | ||
| Kevin J. Hammons, President and Chief Financial Officer |
125 | % | ||
| Lynn T. Simon, M.D., President, Healthcare Innovation and Chief Medical Officer |
105 | % | ||
| Mark B. Medley, Regional President – Region Operations |
115 | % | ||
| Kevin A. Stockton, Executive Vice President of Operations and Development |
105 | % | ||
| Chad A. Campbell, Regional President – Region Operations |
115 | % | ||
In addition, each of the Applicable NEOs 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. Hingtgen; 35% for Mr. Hammons; 20% for each of Dr. Simon and Mr. Stockton; and 10% for each of Mr. Medley and Mr. Campbell. Each Applicable NEO will also have the opportunity to achieve an additional percentage of his or her base salary for overachievement of performance goals up to a maximum of an additional 35% for Mr. Hingtgen and an additional 25% for each of Mr. Hammons, Dr. Simon, Mr. Stockton, Mr. Medley and Mr. Campbell.
Long-Term Incentive Compensation – Equity Awards
Pursuant to the Company’s Amended and Restated 2009 Stock Option and Award Plan, the Board approved the following equity grants to the Applicable NEOs, with a grant date of March 1, 2024 (the “Grant Date”):
| Name and Position |
Non-Qualified Stock Options |
Time Vesting Restricted Stock |
Performance-Based Restricted Stock |
|||||||||
| Tim L. Hingtgen, Chief Executive Officer |
200,000 | 200,000 | 400,000 | |||||||||
| Kevin J. Hammons, President and Chief Financial Officer |
90,000 | 90,000 | 180,000 | |||||||||
| Lynn T. Simon, M.D., President, Healthcare Innovation and Chief Medical Officer |
40,000 | 40,000 | 80,000 | |||||||||
| Mark B. Medley, Regional President – Region Operations |
25,000 | 25,000 | 50,000 | |||||||||
| Kevin A. Stockton, Executive Vice President of Operations and Development |
40,000 | 40,000 | 80,000 | |||||||||
| Chad A. Campbell, Regional President – Region Operations |
25,000 | 25,000 | 50,000 | |||||||||
The number of shares of performance-based restricted stock granted to each Applicable NEO is subject to the attainment of certain performance objectives during the three-year period beginning January 1, 2024 and ending December 31, 2026, with the ultimate number of performance-based restricted 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 with respect to 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.
Retention Cash Awards
The Board approved the offer of retention cash awards to Mr. Stockton, Mr. Medley and Mr. Campbell in the amount of $1,000,000, $500,000, and $500,000, respectively. Each of these awards will be divided into two installment payments, with 40% of the award payable in the third quarter of 2025 and the remaining 60% payable in the first quarter of 2027, provided that in any such case such individual remains employed by the Company through the payment date. The Board and the Compensation Committee believe these awards would serve as a key long-term retention device for these individuals in light of the requirement for these executives to remain employed with the Company through the applicable payment date in order to receive each such cash payment. These awards have not yet been entered into.
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 16, 2024 | COMMUNITY HEALTH SYSTEMS, INC. | |||||
| (Registrant) | ||||||
| By: | /s/ Tim L. Hingtgen | |||||
| Tim L. Hingtgen | ||||||
| Chief Executive Officer | ||||||
| (principal executive officer) | ||||||
Document and Entity Information |
Feb. 14, 2024 |
|---|---|
| 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. 14, 2024 |
| 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 |