XML 33 R10.htm IDEA: XBRL DOCUMENT v3.20.4
Share-Based Compensation
 12 Months Ended
Dec. 31, 2020
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
NOTE 2 — SHARE-BASED COMPENSATION
 
Reclassifications
Certain prior year amounts have been reclassified to conform to the 2020 presentation.
Stock Incentive Plans
In May 2020, the 2020 Stock Incentive Plan for Key Employees of HCA Healthcare, Inc. and its
Affiliates
(the “2020 Plan”) was established to replace the 2006 Stock Incentive Plan for Key Employees of HCA
 Holdings
, Inc. and its
Affiliates (the “2006 Plan”).
 Our stock incentive plans are designed to promote the long term financial interests and growth of the Company by attracting and retaining management and other personnel, motivating them to achieve long range goals and aligning their interests with those of our stockholders through opportunities for stock-based compensation and stock ownership in the Company. Stock option, stock appreciation right (“SARs”) and restricted share unit (“RSUs”) grants vest solely based upon continued employment over a specific period of time, and performance share unit (“PSUs”) grants vest based upon both continued employment over a specific period of time and the achievement of predetermined financial targets over time.
 No further grants will be made under the 2006 Plan, and no shares under the 2006 Plan are available for grant under the 2020 Plan.
 
At December 31, 2020 there were 20.274 million shares available for future grants under the 2020 Plan.
Employee Stock Purchase Plan
Our employee stock purchase plan (“ESPP”) provides our participating employees an opportunity to obtain shares of our common stock at a discount (through payroll deductions over three-month periods). At December 31, 2020, 5.865 million shares of common stock were reserved for issuance under the ESPP provisions. During 2020, 2019 and 2018, the Company recognized $13 million, $12 million and $10 million, respectively, of compensation expense related to the ESPP.
Stock Option, SAR, RSU and PSU Activity – All Plans
The fair value of each stock option and SAR award is estimated on the grant date, using valuation models and the weighted average assumptions indicated in the following table. Awards under our stock incentive plans generally vest based on continued employment (“Time Stock Options and SARs” and “Time RSUs”) and based upon continued employment and the achievement of certain financial targets (“Performance Stock Options and SARs”, “Performance RSUs” and “PSUs”). PSUs have a three-year cumulative earnings per share target, and the number of PSUs earned can vary from zero (for actual performance of less than 90% of target for 2020 and 2019 grants and less than 80% of target for 2018 and prior grants) to two times the original PSU grant (for actual performance of 110% or more of target for 2020 and 2019 grants and 120% or more of target for 2018 and prior grants). Each grant is valued as a single award with an expected term equal to the average expected term of the component vesting tranches. The expected term of the share-based award is limited by the contractual term. We use historical exercise behavior data and other factors to estimate the expected term of the options and SARs.
Compensation cost is recognized on the straight-line attribution method. The straight-line attribution method requires that total compensation expense recognized must at least equal the vested portion of the grant-date fair value. The expected volatility is derived using historical stock price information for our common stock and the volatility implied by the trading of options to purchase our stock on open-market exchanges. The risk-free interest rate is the approximate yield on United States Treasury Strips having a life equal to the expected share-based award life on the date of grant. The expected life is an estimate of the number of years a share-based award will be held before it is exercised. The expected dividend yield is estimated based on the assumption that the dividend yield at date of grant will be maintained over the expected life of the grant.
    
2020
    
2019
    
2018
  
Risk-free interest rate
   
 
1.44
% 
     2.50 %      2.62 % 
Expected volatility
   
 
27
% 
     27 %      29 % 
Expected life, in years
   
 
6.15
 
     6.18       6.15  
Expected dividend yield
   
 
1.19
% 
     1.16 %      1.37 % 
Information regarding Time Stock Options and SARs and Performance Stock Options and SARs activity during 2020, 2019 and 2018 is summarized below (share amounts in thousands):
 
   
Time
Stock
Options
and
SARs
    
Performance
Stock
Options and
SARs
    
Total
Stock
Options
and
SARs
    
Weighted
Average
Exercise
Price
    
Weighted
Average
Remaining
Contractual Term
     
Aggregate
Intrinsic Value
(dollars in millions)
  
Options and SARs outstanding, December 31, 2017
     11,156       4,586       15,742     $ 43.47                   
Granted
     2,342       —       2,342       101.96                   
Exercised
     (3,917 )      (1,774 )      (5,691 )      27.86                   
Cancelled
     (221 )      (145 )      (366 )      68.43                   
   
 
 
    
 
 
    
 
 
                           
Options and SARs outstanding, December 31, 2018
     9,360       2,667       12,027       61.49                   
Granted
     1,349       —       1,349       138.31                   
Exercised
     (1,137 )      (523 )      (1,660 )      44.45                   
Cancelled
     (522 )      —       (522 )      93.26                   
   
 
 
    
 
 
    
 
 
                           
Options and SARs outstanding, December 31, 2019
     9,050       2,144       11,194       71.79                   
Granted
  
 
1,120
 
  
 
—
 
  
 
1,120
 
  
 
144.47
 
                 
Exercised
  
 
(2,159
) 
  
 
(1,325
) 
  
 
(3,484
) 
  
 
44.07
 
                 
Cancelled
  
 
(175
) 
  
 
—
 
  
 
(175
) 
  
 
111.69
 
                 
   
 
 
    
 
 
    
 
 
                           
Options and SARs outstanding, December 31, 2020
  
 
7,836
 
  
 
819
 
  
 
8,655
 
  
$
91.53
 
  
 
6.0 years
 
   
$
631
 
   
 
 
    
 
 
    
 
 
                           
Options and SARs exercisable, December 31, 2020
  
 
4,562
 
  
 
819
 
  
 
5,381
 
  
$
71.25
 
  
 
4.8 years
 
   
$
502
 
The weighted average fair values of stock options and SARs granted during 2020, 2019 and 2018 were $35.98, $38.21 and $28.90 per share, respectively. The total intrinsic value of stock options and SARs exercised during 2020, 2019 and 2018 was $328 million, $153 million and $456 million, respectively. As of December 31, 2020, the unrecognized compensation cost related to nonvested stock options and SARs was $53 million.
Stock Option, SAR, RSU and PSU Activity – All Plans (continued)
 
Information regarding Time RSUs, Performance RSUs and PSUs activity during 2020, 2019 and 2018 is summarized below (share amounts in thousands):
 
    
Time RSUs
    
Performance
RSUs
    
PSUs
    
Total RSUs
and PSUs
    
Weighted
Average
Grant
Date Fair
Value
  
RSUs and PSUs outstanding, December 31, 2017
      3,465       227       3,562       7,254     $ 72.05  
Granted
      1,464       —       1,261       2,725       101.85  
Performance adjustment
      —       —       1,250       1,250       69.27  
Vested
      (1,487 )      (136 )      (2,500 )      (4,123 )      67.33  
Cancelled
      (319 )      (91 )      (151 )      (561 )      78.82  
    
 
 
    
 
 
    
 
 
    
 
 
          
RSUs and PSUs outstanding, December 31, 2018
      3,123       —       3,422       6,545       86.32  
Granted
      973       —       796       1,769       138.45  
Performance adjustment
      —       —       227       227       69.94  
Vested
      (1,216 )      —       (1,251 )      (2,467 )      75.97  
Cancelled
      (260 )      —       (159 )      (419 )      103.27  
    
 
 
    
 
 
    
 
 
    
 
 
          
RSUs and PSUs outstanding, December 31, 2019
      2,620       —       3,035       5,655       105.23  
Granted
   
 
1,048
 
  
 
—
 
  
 
808
 
  
 
1,856
 
  
 
144.17
 
Performance adjustment
   
 
—
 
  
 
—
 
  
 
206
 
  
 
206
 
  
 
81.89
 
Vested
   
 
(1,030
) 
  
 
—
 
  
 
(1,364
) 
  
 
(2,394
) 
  
 
88.63
 
Cancelled
   
 
(162
) 
  
 
—
 
  
 
(93
) 
  
 
(255
) 
  
 
124.50
 
    
 
 
    
 
 
    
 
 
    
 
 
          
RSUs and PSUs outstanding, December 31, 2020
   
 
2,476
 
  
 
—
 
  
 
2,592
 
  
 
5,068
 
  
$
125.40
 
    
 
 
    
 
 
    
 
 
    
 
 
          
The total fair value of RSUs and PSUs that vested during 2020, 2019 and 2018 was $349 million, $346 million and $413 million, respectively. As of December 31, 2020, the unrecognized compensation cost related to RSUs and PSUs was $330 million.