| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under Rule 14a-12 |
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Dear fellow shareholders,Fellow Shareholders,
It has beenIn 2022, Tenet delivered a year since we entered the pandemicsolid financial performance, continuing to demonstrate disciplined management and strong operational execution to drive long-term value for our shareholders. Our team effectively navigated a dynamic operating environment with further COVID related disruptions and inflationary pressures. Our consistent operating performance and deleveraging over the last 12 months clearly have beenseveral years has increased our ability to generate stronger free cash flow. Underpinning this is a steadfast commitment to excellence in compliance and quality and safety as we continually enhance services in our communities.
We finished 2022 strong with fourth quarter results consistent or above the expectations we set for all three business segments. This was driven by increased volumes and excellent cost management. We also delivered strong cash flow in 2022, congruent with the increasing value of the key parts of our business. Most importantly, we remained focused on the transformation of Tenet into a high-performing, diversified healthcare services company. We continued to expand our industry-leading ambulatory surgery business and increased our higher acuity, specialty care services.
Tenet is well-positioned to continue executing our strategic focus that was set into action several years ago as part of a transformative strategy. Let me provide some highlights.
USPI remains a distinctive, industry-leading ambulatory surgery platform that we continue to scale. In 2022, USPI maintained its track-record for delivering 4 to 6% annual, same-facility revenue growth, a testament to higher acuity growth. For example, total joint cases grew by over 13% in 2022 relative to 2021. USPI’s M&A engine, under the Tenet umbrella, continues to be an extraordinary challenge and learning experience. This has brought a marked increaseindustry-leading differentiator, with 45 centers added to the paceportfolio in 2022. We intend to invest approximately $250 million in ambulatory M&A and de novo center development each year, and we have a robust pipeline to support that level of investment.
The hospital portfolio demonstrates consistency in performance and continues to transform. In 2022,our operations,operators effectively managed contract labor costs while balancing access to care and improving clinical quality and patient safety metrics. We have real-time, data-driven management systems that continue to enable operational excellence. We continue to enhance high-acuity clinical programs by continuing to invest in cardiovascular, neurosciences, surgical services, NICU and trauma across markets. Additionally, we opened a new 100-bed, state-of-the-art hospital in Fort Mill, South Carolina.
Conifer maintains favorable performance and expands its commercial pipeline. In 2022, Conifer maintained a nearly 28% Adjusted EBITDA margin while also growing third-party customer revenue by 10%. This was supported by Conifer’s performance on cash collections, coding quality, and other key metrics for its clients. We continue to optimize the efficiency and effectiveness of Conifer’s revenue cycle management services through automation and offshoring. Additionally, we continue to see increasing sales activity from our reinvestment in Conifer’s commercial capabilities.
Tenet continues to foster an ecosystem of physicians with a shared commitment to excellence. We continue to attract and retain a network of locally, regionally, and nationally recognized physicians who share our commitment to compliance, quality and safety, and patient experience. In 2022, we welcomed more than 200 new physicians across medical and surgical specialties to our employed physician group. USPI also continued to increase the number of physician partners, as well as overall active medical staff.
Tenet continues to embrace a needdiverse workforce that represents the communities we serve. We have continued to handle an equally significant increase of information effectively and efficiently coupled with many emotional ups and downs never experiencedinvest in our past. Our company was at the front lineworkforce with increased and competitive pay, bonus programs, and incremental benefits. Senior administrative and clinical leaders, including physician leaders, across our system experiencingportfolio are engaged in retention and recruitment efforts which are yielding positive results. Nursing hires increased in 2022 over 2021. Additionally, both nurse turnover and overall turnover continued to improve throughout 2022. We remain steadfast in our goal of building a high-caliber, diverse workforce that represents the frustrations, fearcommunities we serve and are committed to caring for patients.
Environmental, Social, and Governance (ESG) continues to be purpose-driven. We continue to advance our programs that support the key tenets of ESG, with focus and Board oversight. In 2022, we advanced our diversity recruitment and hiring approach, continued to deploy enterprise-wide inclusive culture training, progressed hospital energy management programs, and maintained strong corporate governance policies and practices to protect the long-term interests of our shareholders. Our 2023 ESG report will share details of steps we are taking to foster a diverse and inclusive culture, strengthen the health of our communities, balance the needs of our patients with the goals of improved climate sustainability, lead with integrity, and apply sound governance.
Leadership remains committed to a high-performance culture. In 2022, we lost our former Executive Chairman, Ron Rittenmeyer. As many of you know, Ron was deeply committed to Tenet and ensured a seamless management transition which was largely completed in late 2021. We have assembled a high-performing leadership team that will continue to drive strategic priorities and the other externalculture of quality, safety and internal pressures that resulted from dealing with what started as an unknown. compliance.
I am pleased to report that your company took on these challenges directly, struggled throughenthusiastic about the early days, never lost a step in responding — and today we are a stronger, leaner, and more focused business, driven by an experienced and highly qualified team of professionals. We had a renewed commitment to operate as a closer and more engaged organization, shedding the truly unnecessary costs and aggressively seeking out effective solutions that had strength and sustainability.
2020 started with positive upward trends in January and February building on solid momentum from the prior year and seeing the positive impacttrajectory of our multi-year turnaround work. The virus was in the news, but minimal actionable information was available, so we decidedwell-positioned businesses. I would like to pre-purchase additional PPEextend my sincere gratitude to all our physicians, caregivers, and review in detail each facilities’ infection control processes. We established our headquarters clinical teamstaff for their unwavering commitment. I continue to be inspired by the single sourcepeople I meet who have found their calling to provide innovative and compassionate care for our communities. I am grateful for the support of truth with daily group calls with the field, and they had the responsibility of monitoring and disseminating both clinical and regulatory information. We added support personnel to this team to ensure we had adequate and skilled personnel dedicated to areas such as HR policies, reimbursement methods directly related to COVIDour shareholders and our government relations team on policies that seemedpartners as we continue to be forthcoming daily.fulfill our mission.
As with others, we faced challenges never experienced in the history of our company. We believe the transformation we started in late 2017 played a major role in our ability to respond quickly, pivot immediately and ensure we had companywide clarity on what steps were needed. As we stated in the last two years, we had upgraded many key roles, established processes tightly tied to data-driven metrics and a decision process that was efficient with streamlined accountability and ownership. Our ability to perform under such difficult and constantly evolving circumstances underscores the effectiveness of the changes we had made, the strength and commitment of our people and the ability to grasp and respond to the unknown.
Saum Sutaria, M.D. Chief Executive Officer Tenet Healthcare |
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This last year demonstrated how a clear strategy and actionable and accountable teams will come together successfully amid a tumultuous environment. Not only were we able to continue providing vital healthcare, but we also executed well on multiple strategic initiatives. We did not stray from our stated plans because they were the right ones for our patients, our physicians, our shareholders and our people. We pride ourselves on being accountable – and we were.
Across our network of more than 600 facilities, we are extremely proud that we were able to carry forward a cohesive response while remaining true to the commitments set forth before the virus took hold. Those include supporting our employees, giving back to local and national causes, our approach to leadership and governance, fostering a culture of inclusivity and cultivating programs that mitigate our impact on the environment. They all fit together to create sustainable business across every level.
Solidifying our commitment to the values and goals of ESG (Environmental, Social and Governance), we have formally established a new committee of our Board of Directors consisting of independent directors to focus directly on our company’s increasing efforts in the areas of ESG. We believe this topic is of the utmost importance and deserves special attention by our Board. Unlike many industries, delivery of healthcare has many unique requirements. We believe we can continuously improve over time and have launched in our facilities several engineering efforts to outline opportunities in
sustainability. We also created a Diversity Council and are building Employee Resource Groups to foster, develop and ensure a more sustainable inclusive environment throughout our business. Our Board of Directors, which has been refreshed by over 70%, since the fourth quarter of 2017, represents the commitment we have to a balanced, effective and diverse organization. We will, with the addition of the ESG Committee of our Board and the development of other programs, measure improvements and address opportunities ensuring this commitment is an enduring part of the fabric of the company.
In 2020, our resilience as an organization was tested, and we outperformed, delivered on our commitments and continued building a framework for our future growth and success.This was possible because of our team members and their selfless commitment to our patients, each other and our communities. Together, they have fostered a very strong character for Tenet – and we are incredibly grateful.
In closing, we are also grateful to our shareholders, the communities we serve and the many partners we engage to deliver the care we provide. Our mission is of the highest order, and we approach every day grateful for these points of support and with a determination to provide the best possible care with humility, dignity and professionalism. From our patients, our team, our Board and our many partners, thank you for your confidence and support as we advance our mission.
With gratitude,
Ronald A. Rittenmeyer
Executive Chairman and CEO
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TENET HEALTHCARE CORPORATION
14201 Dallas Parkway
Dallas, Texas 75254
(469) 893-2200
Notice of Annual Meeting of Shareholders
to be held on Thursday, May 6, 202125, 2023
March 26, 2021April 14, 2023
To our Shareholders:
Our 20212023 Annual Meeting of Shareholders (the “Annual Meeting”) will be held on May 6, 2021,25, 2023, at 8:00 a.m. Central Time. You will be able to attend and participate in the Annual Meeting by visiting www.virtualshareholdermeeting.com/THC2021,registering at www.proxydocs.com/THC. After you complete your registration, you will receive further instructions via email, including a unique link that will provide you access to the Annual Meeting, where you will be able to listen to the meeting live, submit questions and vote,vote. Our Annual Meeting is being held for the following purposes:
| 1. | To elect the |
| 2. | To vote, on an advisory basis, to approve the Company’s executive compensation. |
| 3. | To vote, on an advisory basis, on the frequency of future advisory votes to approve the Company’s executive compensation. |
| 4. | To ratify the selection of Deloitte & Touche LLP as our independent registered public accountants for the year ending December 31, |
| 5. | To |
We will also consider and take action on any other business that properly comes before the meeting or any adjournment or postponement of the meeting.
Only shareholders of record of our common stock at the close of business on March 12, 2021,28, 2023 are entitled to notice of and to vote at the Annual Meeting.
It is important that your shares be represented and voted at the Annual Meeting. You may vote your shares via the Internet, by telephone or by completing and returning a proxy card. Specific voting instructions are set forth in the “General Information Regarding the Annual Meeting and Voting” section of the accompanying Proxy Statement and on the proxy card.
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| Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary |
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders To Be Heldto be held on May 6, 202125, 2023
The accompanying Proxy Statement and the Company’s proxy card, as well as our Annual
Report on Form 10-K for the year ended December 31, 2020,2022, are available at www.proxyvote.comwww.proxydocs.com/THC.
As provided above, due to the public health impact of the COVID-19 pandemic, weWe have adopted a virtual meeting format for our Annual Meeting, conducted via a live audio webcast. You will be able to attend the Annual Meeting online, listen to the meeting live, submit questions and vote your shares electronically during the meeting by visiting www.virtualshareholdermeeting.com/THC2021.registering at www.proxydocs.com/THC. We have designed the format of the Annual Meeting to provide shareholders with substantially the same rights and opportunities to participate as they would at an in-person meeting. As always, we encourage you to vote your shares prior to the Annual Meeting.
2021 Proxy Statement
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| Proposal | ||||
| Corporate Governance and Board Practices | ||||
Commitment to Sound Corporate Governance Policies and Practices | ||||
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Communications with the Board of Directors by Shareholders and Other Interested Parties | ||||
| Director Compensation | ||||
| Executive Officers | ||||
| Securities Ownership | ||||
| Compensation Discussion and Analysis | ||||
| Human Resources Committee Report | ||||
| Executive Compensation Tables | ||||
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Securities Authorized for Issuance Under Equity Compensation Plans | ||||
Proposal | ||||
| Audit Committee Report | 73 | |||
| 76 | ||||
| Other Information | ||||
| Appendix A: Non-GAAP Financial Measures | A-1 | |||
This Proxy Statement includes certain financial measures not in accordance with generally accepted accounting principles in the United States (GAAP), such as Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted EPS. Definitions of these measures are contained in Appendix A to this Proxy Statement.
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Below are highlights of certain information in this Proxy Statement. Please refer to the complete Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2020,2022 before you vote.
20212023 ANNUAL MEETING OF SHAREHOLDERS
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Date and Time: Thursday, May at 8:00 a.m. Central Time
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Place: Online by registering at www.proxydocs.com/THC
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Record Date: March
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Information:
The Notice of Internet Availability, this Proxy Statement and related proxy materials are being mailed or made available to shareholders on or about March 26, 2021.April 14, 2023. Copies of this Proxy Statement, the Company’s proxy card and our Annual Report on Form 10-K for the year ended December 31, 2022 are available at www.proxyvote.comwww.proxydocs.com/THC.
VOTING MATTERS AND BOARD RECOMMENDATIONS
Proposals | Board’s Recommendation | Page | ||||||||||
Proposal |
| Board’s Recommendation | Page | |||||||||
1 |
Election of Eleven Director Nominees |
Vote FOR each nominee |
5 |
Election of Ten Director Nominees |
Vote FOR Each Nominee |
6 | ||||||
2 |
Advisory Approval of the Company’s Executive Compensation |
Vote FOR |
63 |
Advisory Approval of the Company’s Executive Compensation |
Vote FOR |
71 | ||||||
3 |
Ratification of the Selection of Deloitte & Touche LLP as Independent Registered Public Accountants for the Year Ending December 31, 2020 |
Vote FOR |
66 |
Advisory Approval of the Frequency of Future Advisory Votes to Approve the Company’s Executive Compensation |
Vote ONE YEAR |
72 | ||||||
4 |
Ratification of the Selection of Deloitte & Touche LLP as Independent Registered Public Accountants for the Year Ending December 31, 2023 |
Vote FOR |
75 | |||||||||
5 |
Shareholder Proposal on Requesting a Report on Patients’ Right to Access Abortion in Emergencies |
Vote AGAINST |
76 | |||||||||
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Proxy Statement Summary
Business Overview
Tenet is a diversified healthcare services company focused on our mission to provide quality, compassionate care in the communities we serve. At December 31, 2022, Tenet hashad approximately 110,000102,400 employees delivering and supporting care through our three business units – Hospitals,segments — Hospital Operations and other, Ambulatory Care and Conifer. We operate an expansive network across the country, with 65 acute care61 hospitals and over 550575 other healthcare facilities, including surgical hospitals, ambulatory surgery centers, urgent care centers, imaging centers, surgical hospitals, off-campus emergency departments and micro-hospitals. Through our subsidiary United Surgical Partners International, Inc. (USPI), Tenet operates the nation’s largesta leading ambulatory surgery platform in the country that includes partnerships with more thanover 50 prominent health systems and close to 5,000 physicians.system partners. In addition, our subsidiary Conifer Health Solutions, is a leading provider ofLLC subsidiary provides comprehensive end-to-end and focused-point business process services, including hospital and physician revenue cycle management, patient communications and engagement support, and value-based care servicessolutions, to hospitals, health systems, physician practices, employers and other clients.
Repositioned Care Delivery Portfolio
A critical element of our strategy remains the ongoing transformation of our care delivery offerings. We continue to invest strategically in USPI, establishing new ownership positions in approximately 45 ambulatory surgery centers in 2022. We also continue our strategic deployment of capital to enhance high-acuity hospital services. Our efforts include capacity expansion, new construction in high-growth, attractive locations and investments in innovation. Across our comprehensive network of facilities, we are focused on introducing new services at a lower cost and offering patients excellent service in the most clinically appropriate setting. The evolution of our care delivery locations since 2017 reflects our strategy to invest strategically in USPI. Our focus is on markets where we can provide a strong value to payers and consumers.
Our Resilience in Responding to COVID-19Strong Long-Term Performance
COVID-19 presented some of the most difficult challenges we have ever witnessed for our business, our healthcare workers and our families. The response demonstrated by our caregivers and staff was nothing short of heroic. They worked tirelessly on the frontlines and through a support network to adjust to a fluid and uncertain environment, and they demonstrated compassion for patients and fellow team members, as well as a determination to bring us all to the other side of this crisis.
Every protocol in our response was built to maintain the highest standards for quality and safety and meet the needs of our communities. We adapted at every step, including facing reduced demand for services from the shut-down of elective care across our network, investing in the establishment of COVID-safe infrastructure throughout our hospitals and facilities, managing numerous community surges and supporting our healthcare workers in providing excellent care at all times.
Our Incident Command Center served as the hub of this effort, including close coordination across a network of more than 600 facilities and thoughtful calibration of strategy. Our response was also informed by the use of custom, real-time dashboards, allowing us to constantly have a pulse on critical metrics, such as supply inventory, PPE, medication, equipment and ICU availability.
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Proxy Statement Summary
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Every day, but especially during this challenging time, our team members have led by example and done what they have been called upon and trained to do – with honor and professionalism.Overview of Director Nominees
Governance Highlights
Name and Occupation | Age | Director Since | Independent | Other Public Boards | Committee Memberships | |||||||||||||
| AC | ESG | HR | NCG | QCE | ||||||||||||||
J. Robert Kerrey Chairman, Tenet Healthcare; Managing Director, Allen & Company; Former U.S. Senator | 79 | 2012* | Yes | Chair | ✓ | |||||||||||||
James L. Bierman Former President and CEO, Owens & Minor, Inc. | 70 | 2017 | Yes | 2 | ✓ | Chair | ||||||||||||
Richard W. Fisher Former President and CEO, Federal Reserve Bank of Dallas | 74 | 2017 | Yes | 1 | ✓ | Chair | ✓ | |||||||||||
Meghan M. FitzGerald Adjunct Professor, Columbia University | 52 | 2018 | Yes | 1 | ✓ | Chair | ✓ | |||||||||||
Cecil D. Haney Admiral, U.S. Navy (Ret.) and Former Commander of U.S. Strategic Command and U.S. Pacific Fleet | 67 | 2021 | Yes | 1 | ✓ | ✓ | ||||||||||||
Christopher S. Lynch Former National Partner in Charge of the Financial Services practice at KPMG, LLC | 65 | 2019 | Yes | 1 | ✓ | ✓ | ||||||||||||
Richard J. Mark Former Chairman and President, Ameren Illinois Company | 67 | 2017 | Yes | ✓ | ✓ | ✓ | ||||||||||||
Tammy Romo Executive Vice President and CFO, Southwest Airlines Co. | 60 | 2015 | Yes | Chair | ✓ | |||||||||||||
Saumya Sutaria, M.D. CEO, Tenet Healthcare | 50 | 2020 | No | |||||||||||||||
Nadja Y. West, M.D. Lieutenant General, U.S. Army (Ret.) and 44th Surgeon General of the U.S. Army | 62 | 2019 | Yes | 2 | ✓ | ✓ | ✓ | |||||||||||
AC: Audit Committee ESG: Environmental, Social and Governance Committee |
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QCE: Quality, Compliance & Ethics Committee ✓ = Member |
Board Refreshment
In response to specific shareholder feedback, the Board accelerated its refreshment process in the fall of 2017, recruiting nine independent directors since that time. On November 4, 2020, the Board appointed the Company’s President and Chief Operating Officer, Saum Sutaria, M.D., as a director. Dr. Sutaria’s leadership has been especially pivotal in accelerating the Company’s growth and successfully navigating the many challenges posed by the pandemic. In addition, on January 7, 2021, the Board appointed Admiral Cecil D. Haney, a retired four-star Admiral, as a director. Admiral Haney complements the Board given his leadership and experience, particularly in the areas of cybersecurity and systems planning. Further, on January 22, 2021, following his confirmation by the U.S. Senate as Secretary of Defense, General Lloyd J. Austin III resigned from the Board. We are grateful to General Austin for his service as our Board member. Altogether, these new directors have brought a diversity of viewpoints, approaches and experiences to the Board as it addresses the risks and pursues the long-term strategies in front of the Company.
Sound Governance Practices
Our Board is committed to sound corporate governance policies that protect the long-term interests of shareholders, promote accountability, and give shareholders a voice. The Board has long maintained many best practices, including annual election of directors by majority standard, a robust annual self-evaluation process, and frequent shareholder engagement. In recent years, the Board has further enhanced the Company’s governance practices. That includes an amendment to our Bylaws in 2018 that provides shareholders with beneficial ownership of 25% of Tenet’s outstanding shares with the right to call a special meeting, as well as an amendment in 2019 that allows for shareholders to nominate directors via proxy access on market standard terms.
ESG Committee
In 2021, the Board formed an ESG Committee. The ESG Committee’s purpose is to oversee and support the Company’s commitment to social, environmental and other public policy initiatives, including, among other things, climate change impacts, sustainability, and diversity and inclusion. The formation of the ESG Committee and our other recent governance enhancements, driven in large part by shareholder feedback, are intended to ensure the continued alignment of our corporate governance policies and practices with the long-term interests of our business and our shareholders.
Active Shareholder Engagement Program
Our Board regularly solicits input from investors and governance groups to better inform decision-making and gain insight into shareholder perspectives on a broad range of topics, including corporate governance practices. We value our shareholders’ perspectives on our business and interact with them through a variety of shareholder engagement activities. As we engage with shareholders, feedback is regularly reviewed by our Board.
| * | Senator Kerrey served as a director from March 2001 to March 2012 prior to his appointment in November 2012. |
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Proxy Statement Summary
Director Nominees’ Experience and Diversity
Having an independent Board Characteristicsis a core element of our governance philosophy. Under our Corporate Governance Principles, at least two-thirds of the Board must consist of independent directors. Of our 10 Board nominees, 9 are independent in accordance with the requirements set forth in our Corporate Governance Principles. Moreover, our Board believes that having a diverse mix of directors with complementary qualifications, expertise and attributes is essential to meeting its oversight responsibility. The following highlights the core skills and experience of our Board nominees:
The Board recommends that you vote 
Director Stock Ownership and Retention Requirements
The Board has adopted stock ownership and retention requirements that require each non-employee director with more than one year of service on the Board to own shares of our stock. In addition, each non-employee director is required to own shares of our stock with a value equal to five times the annual cash retainer within five years after the date on which the director joins the Board. Directors who have not satisfied their ownership requirements must retain 100% of any “net shares” received upon the exercise of stock options and the vesting of restricted stock or RSUs until such time as the requirements are met. For this purpose, “net shares” means the number of shares received upon exercise of stock options or upon vesting of restricted stock or RSUs less the number of shares sold or deducted to pay the exercise price (in the case of options), withholding taxes and any brokerage commissions. A detailed discussion of these requirements can be found under “Stock Ownership and Retention Requirements” beginning on page 47. As of the record date, all of our non-employee directors were in compliance with the requirements or within the applicable period to come into compliance.
| 2023 PROXY STATEMENT | 29 |
Executive Officers
Biographical information for the executive officers of the Company is set forth below. Biographical information for Dr. Sutaria can be found under “Nominees for Election to the Board of Directors” beginning on page 6.
Paola M. Arbour,Executive Vice President and Chief Information Officer Ms. Arbour, |
| Thomas W. Arnst,Executive Vice President, Chief Administrative Officer, General Counsel and CorporateSecretary Mr. Arnst, 60, serves as Tenet’s Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary, where he leads enterprise Human Resources, Legal and Government Relations. He also serves as Chief Risk Officer. Prior to assuming these roles, Mr. Arnst served as Chief Administrative Officer, General Counsel and Corporate Secretary of our Conifer subsidiary. He has more than 30 years of experience working in leadership roles across healthcare, outsourcing and financial services, among other industries. Before joining Conifer in 2018, Mr. Arnst served as Chief Administrative Officer at Millennium Health. Previous positions also include Executive Vice President, Chief Administrative Officer, General Counsel, Head of Global Human Resources and Corporate Secretary at Expert Global Solutions. During his career, Mr. Arnst has also held executive leadership positions at Safety-Kleen, AmeriServe, RailTex and Ryder. He is a graduate of the University of Miami, where he received his Juris Doctor and his Master of Laws. He obtained his Bachelor of Business Administration degree in Finance from Florida Atlantic University. |
| Daniel J. Cancelmi,Executive Vice President and Chief Financial Officer Mr. Cancelmi, |
| Lisa Y. Foo,Executive Vice President, Commercial Operations Ms. Foo, 32, was appointed Tenet’s Executive Vice President, Commercial Operations in March 2022. In this capacity, Ms. Foo leads several enterprise functions including strategy, business development, marketing, data and analytics, and procurement. She previously served as Vice President, Chief Commercial and Strategy Officer from April 2019 to March 2022. Prior to that, Ms. Foo held various positions at McKinsey & Company, a global management consulting firm, including Associate Partner from 2017 to 2019 in the San Francisco office. She earned her Bachelor of Science in Biological Engineering from Massachusetts Institute of Technology. |
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Securities Ownership
Securities Ownership of Management
The table below discloses the shares, options and other securities beneficially owned by our directors and director nominees, each of our named executive officers (NEOs), and our current directors and executive officers as a group, as of March 7, 2023 (unless indicated below otherwise). No director or current executive officer has pledged any shares of our common stock.
| Name | Shares Beneficially Owned(1) | |||||||||||
Shares of Common Stock(2) | Options Exercisable Within 60 Days of March 7, 2023 | Percent of Class as of March 7, 2023 | ||||||||||
Paola Arbour | 33,006 | 38,556 | * | |||||||||
Thomas W. Arnst | 21,178 | -0- | * | |||||||||
James L. Bierman | 50,038 | (3) | -0- | * | ||||||||
Daniel J. Cancelmi | 454,543 | 61,383 | * | |||||||||
Richard W. Fisher | 24,545 | (4) | -0- | * | ||||||||
Meghan M. FitzGerald | 31,587 | (5) | -0- | * | ||||||||
Lisa Foo | 12,224 | -0- | * | |||||||||
Cecil D. Haney | 10,853 | (6) | -0- | * | ||||||||
J. Robert Kerrey | 56,123 | (7) | -0- | * | ||||||||
Christopher S. Lynch | 29,916 | (8) | -0- | * | ||||||||
Richard J. Mark | 43,621 | (4) | -0- | * | ||||||||
Ronald A. Rittenmeyer | 533,081 | (9) | -0- | * | ||||||||
Tammy Romo | 57,598 | (10) | -0- | * | ||||||||
Saumya Sutaria, M.D. | 399,836 | -0- | * | |||||||||
Nadja Y. West, M.D. | 27,780 | (11) | -0- | * | ||||||||
Current executive officers and directors as a group (14 persons)(12) | 1,252,848 | (13) | 99,939 | 1.3 | % | |||||||
| * | Less than 1%. |
| (1) | Except as indicated, each individual named has sole control as to investment and voting power with respect to the securities owned. |
| (2) | As noted below, the totals in this column for each non-employee director include RSUs granted under the terms of our stock incentive plans. These RSUs are settled in shares of our common stock either upon termination of service or upon the third anniversary of the date of grant. |
| (3) | Includes 23,487 RSUs granted under our stock incentive plans. |
| (4) | Includes 23,545 RSUs granted under our stock incentive plans. |
| (5) | Includes 20,770 RSUs granted under our stock incentive plans. |
| (6) | Includes 10,853 RSUs granted under our stock incentive plans. |
| (7) | Includes 31,442 RSUs granted under our stock incentive plans. |
| (8) | Includes 21,938 RSUs granted under our stock incentive plans. |
| (9) | The information is as of October 1, 2022, the date of Mr. Rittenmeyer’s resignation due to personal health reasons. Includes 15,000 shares held by Mr. Rittenmeyer’s spouse. |
| (10) | Includes 20,246 RSUs granted under our stock incentive plans. |
| (11) | Includes 21,501 RSUs granted under our stock incentive plans. |
| (12) | Does not include securities owned by Mr. Rittenmeyer, who resigned effective October 1, 2022. |
| (13) | Includes RSUs granted to non-employee directors under our stock incentive plans. |
| 2023 PROXY STATEMENT | 31 |
Securities Ownership
Securities Ownership of Certain Shareholders
Based on reports filed with the SEC, each of the following entities owns more than 5% of our outstanding common stock as of the dates indicated below. We know of no other entity or person that beneficially owns more than 5% of our outstanding common stock.
Name and Address | Number of Shares Beneficially Owned | Percent of Class as of March 7, 2023 | ||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 11,498,067 | (1) | 11.02 | % | ||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 11,304,003 | (2) | 10.83 | % | ||||
Glenview Capital Management, LLC 767 Fifth Avenue, 44th Floor New York, NY 10153 | 8,896,111 | (3) | 8.53 | % | ||||
Harris Associates L.P. 111 S. Wacker Drive, Suite 4600 Chicago IL 60606 | 5,463,374 | (4) | 5.24 | % | ||||
| (1) | Based on a Schedule 13G/A filed with the SEC on March 8, 2023 by BlackRock, Inc., on behalf of itself and its named subsidiaries and affiliates (collectively, “BlackRock”), as of February 28, 2023. BlackRock reported sole voting power with respect to 11,163,024 of the shares indicated above and sole dispositive power with respect to all of the shares indicated above. |
| (2) | Based on a Schedule 13G/A filed with the SEC on February 9, 2023 by The Vanguard Group, Inc., on behalf of itself and its named subsidiaries and affiliates (collectively, “Vanguard”), as of December 31, 2022. Vanguard reported sole voting power with respect to 0 of the shares indicated above, shared voting power with respect to 50,310 of the shares indicated above, sole dispositive power with respect to 11,149,102 of the shares indicated above and shared dispositive power with respect to 154,901 of the shares indicated above. |
| (3) | Based on a Schedule 13D/A filed with the SEC on February 14, 2023 by Glenview Capital Management, LLC and its named subsidiaries and affiliates (collectively, “Glenview”), and Lawrence M. Robbins, as of December 31, 2022, and additional information available to the Company as described in this footnote. Glenview Capital Management, LLC serves as an investment manager to various Glenview funds, and Mr. Robbins is the Chief Executive Officer of Glenview Capital Management. Glenview and Mr. Robbins reported shared voting and investment power with respect to all of the shares indicated above. |
| (4) | Based on a Schedule 13G/A filed with the SEC on February 14, 2023 by Harris Associates L.P. (“Harris”), as of December 31, 2022. Harris reported sole voting power with respect to 2,836,239 shares and sole dispositive power with respect to all of the shares indicated above. |
| 32 | |
Compensation Discussion & Analysis
This Compensation Discussion and Analysis (CD&A) describes our executive compensation programs, our process for determining executive compensation and the compensation paid to the following NEOs for 2022:
Named Executive Officer | Title | |
Saum Sutaria | Chief Executive Officer | |
Dan Cancelmi | Executive Vice President and Chief | |
| Executive Vice President, | |
| Executive Vice President, | |
| Executive Vice President | |
Ron Rittenmeyer | Former Executive Chairman(2) | |
| (1) | Ms. |
| (2) | Mr. Rittenmeyer resigned as Executive Chairman and a member of our Board due to |
CD&A Table of Contents
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2022: Advancing our Strategy and Mission to Expand Quality, Compassionate Care | 34 | |||
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| 2023 PROXY STATEMENT | 33 |
Compensation Discussion & Analysis
Overview
2022: Advancing our Strategy and Mission to Expand Quality, Compassionate Care
In 2022, Tenet delivered solid operational results in the face of a dynamic and challenging environment. As the nation emerges from the COVID-19 pandemic, stresses on the workforce and the supply chain continue to evolve. Our strong operational execution during 2022 underscores the resolve of our colleagues across the enterprise and our focus on providing quality, compassionate care to the communities we serve. We continued to expand our Ambulatory Care segment through ongoing organic growth, accretive M&A and de novo development. We continue to enhance high acuity services across our acute care facilities, including cardiovascular, neurosciences, surgical services, trauma, and women’s health. At Conifer, we increased revenue over 2021 revenue and delivered strong margins by maximizing opportunities through automation and improving the effectiveness and efficiency of Conifer’s services.
Operational Excellence Our results in 2022 demonstrate our focus on operational excellence. We advanced our high acuity strategy in the hospital business, leveraging data and analytics to manage labor costs. We continue to drive operational efficiency across the portfolio and deliver attractive margins across each of our businesses. | Financial Performance We delivered solid results across our portfolio in 2022, notwithstanding a challenging industry environment with unprecedented increases in contract labor costs and continued pressures from COVID spikes. Adjusted EBITDA margins remained strong due to our operational focus and effective execution. | Expanded Ambulatory Care We acquired 45 ambulatory care centers, highlighted by the acquisition of 22 centers associated with United Urology Group and the opening of de novo centers through a continued focus on business development. Additionally, we now own the full 100% interest in USPI’s voting stock by acquiring Baylor Scott and White’s interest during 2022. | ||||
Refinanced and Retired Debt During the year ended December 31, 2022, we retired approximately $2.6 billion aggregate principal amount of certain of our senior unsecured notes and senior secured first lien notes. These notes were retired using proceeds from the June 2022 sale of $2.0 billion aggregate principal amount of 6.125% senior secured notes due 2030 and cash on hand. These transactions reduced future annual cash interest expense payments by approximately $60 million. | Commitment to ESG We furthered our commitment to environmental, social, and governance (ESG) values and goals in 2022. The goal of our ESG initiatives is to create a better, more sustainable path for future generations. In 2022, we conducted our enterprise-wide environmental materiality assessment to identify and evaluate potential environmental issues that could affect our business and/or our stakeholders. We also continued the implementation of our hospital energy management program and enhanced access to high acuity specialty care in our communities. | Talent Development Talent development remains a critical aspect of our focused strategy. We attracted external talent to provide outside perspectives and new thinking. Additionally, we continued to train and grow our existing talent base through a variety of programs designed to promote strong performance, provide greater opportunities, and grow our business. Our commitment to underrepresented populations to further our objective of fostering an engaging culture that represent the markets we serve continues. 55% of newly hired employees in 2022 self-identified as racially or ethnically diverse. |
| 34 | |
Compensation Discussion & Analysis
 |
2022 Compensation Program Highlights
2022 Annual Incentive Plan Payouts | In February 2023, the HR Committee approved final payouts under our 2022 Annual Incentive Plan, with corporate performance achieved at 80% of target, and final payouts for our NEOs ranging from 88% to 104% of target payout levels after applying each officer’s individual performance multiplier. | |
| 2022 LTI Program Awards | In February 2022, the HR Committee approved 2022 Long-Term Incentive (LTI) awards for executive officers comprised of the following restricted stock units (“RSUs”): • 50% time-based awards vesting ratably over three years, and • 50% performance-based awards earned over a three-year period based on the achievement of Adjusted EPS* and Adjusted Free Cash Flow Less Cash NCI*. These performance metrics are established at the start of each year of the three-year performance period subject to a cumulative three-year relative total shareholder return (“Relative TSR”) performance modifier. | |
2020 Performance- Based RSUs | In February 2023, the HR Committee certified final achievement of the 2020 performance-based RSUs granted to the NEOs (other than Mr. Rittenmeyer and Mr. Arnst), with such awards earned at 159.7% of target as a result of exceeding the maximum target for each applicable performance goal for 2020 and 2021, exceeding the targeted Adjusted EPS goal for 2022 and below threshold achievement for the Adjusted Free Cash Flow Less Cash NCI goal for 2022. The HR Committee also certified final achievement of Mr. Arnst’s 2020 performance-based RSUs, which were based on Conifer performance for the first year of the performance period and Tenet performance for the final two years of the performance period, with such awards earned at 127.3% of target. The payout was a result of exceeding the target for the Conifer EBITDA goal for 2020, exceeding the threshold for the Conifer Total Revenue and Conifer Cash Collection goals for 2020, exceeding the maximum target for each applicable performance goal for 2021, exceeding the targeted Adjusted EPS goal for 2022 and below threshold achievement for the Adjusted Free Cash Flow Less Cash NCI goal for 2022. | |
| * | See Appendix A for definitions of Adjusted EPS and Adjusted Free Cash Flow which is then less cash distributions paid to NCI as reflected on the Company’s consolidated statements of cash flow. |
2022 Say-on-Pay Vote
Our annual Say-on-Pay vote is one of our opportunities to receive feedback from shareholders regarding our executive compensation program, and the HR Committee takes the result of this vote into account when shaping the compensation program for the Company’s NEOs. At our 2022 Annual Meeting, the Say-on-Pay proposal received over 96% support, demonstrating increased, strong support for our executive compensation program. In light of this continued shareholder support, our HR Committee did not make any changes to the structure of our executive compensation program as a result of the 2022 vote. The HR Committee will continue to consider shareholder feedback, input from our independent compensation consultant and the outcomes of future Say-on-Pay votes when assessing our executive compensation programs and policies and making compensation decisions for our NEOs.
| 2023 PROXY STATEMENT | 35 |
Compensation Discussion & Analysis
Compensation Elements Link Pay with Performance
The following table outlines the primary components of our NEOs’ 2022 compensation packages:
| Element | Description | Purpose | ||
Base Salary | • Fixed cash compensation set annually • Based on market data, individual performance, internal pay equity and the scope and complexity of the officer’s role | • Attracts and retains talented executives with competitive fixed pay | ||
Annual Incentive Plan | • Compensation tied to achievement of annual performance goals • Target award amounts increase with executive’s level of influence on business outcomes and reflect individual performance and internal equity | • Motivates and rewards executives for meeting or exceeding annual goals that drive long-term growth • Challenging, objective performance metrics set annually based on the Company’s business plans | ||
| Long-Term Incentive Compensation | ||||
Performance-
| • Performance-based RSUs cliff vest after a three-year performance period based one-half on adjusted earnings per share (EPS)* and one-half on adjusted free cash flow (FCF) minus cash distributions paid to noncontrolling interests (NCI)*; these goals are established at the beginning of each year within the three-year performance period • Relative TSR modifier is measured over the full three-year performance period and may reduce or increase earned payouts by 25% | • Establishing goals for each year of the three-year performance period provides the Company with flexibility, particularly in the current unpredictable macroeconomic environment, to ensure goals remain relevant and challenging throughout the performance period and avoids awards that have weakened retentive value in the event of a single year of below threshold performance or windfall value in the event of a single year of superior performance • Applying the Relative TSR modifier over the full performance period strengthens long-term shareholder alignment and motivates our executives to achieve long-term share price appreciation | ||
Time-Based RSUs
| • Time-based RSUs vest ratably over three years based on continued service** | • Aligns economic interests of executives and shareholders through equity ownership • Provides strong retentive value | ||
| * | See Appendix A for definitions of Adjusted EPS and Adjusted Free Cash Flow which is then less cash distributions paid to NCI as reflected on the Company’s consolidated statements of cash flow. |
| ** | Mr. Rittenmeyer’s time-based RSUs generally vested ratably in 11 quarterly installments; however, his unvested outstanding awards accelerated upon his termination as a result of disability in October 2022. |
| 36 | |
Compensation Discussion & Analysis
Best Practices Support Strong Compensation Governance
We maintain the following best practices to ensure our governance of executive compensation reflects our pay-for-performance philosophy and aligns the interests of our executives and shareholders.
| What We Do | ||||||
 | Actively engage with investors | | Emphasize pay-for-performance | |||
| Maintain meaningful stock ownership and retention requirements for executives and non-employee directors | | Include clawback provisions for all performance-based | |||
| Conduct an annual compensation risk assessment | | Provide double-trigger change-in-control severance and LTI acceleration | |||
| Cap payouts under the annual incentive plans and performance-based RSU awards | | Retain an independent compensation consultant | |||
| What We Don’t Do | ||||||
Ø | No excise tax gross-ups on change-in-control | Ø | Directors and executive officers cannot hedge or | |||
Ø | No excessive perquisites | Ø | No backdating stock option grants or repricing of | |||
Ø | No single-trigger equity acceleration on a change-in-control | Ø | No current dividend payments on unvested equity awards | |||
| 2023 PROXY STATEMENT | 37 |
Compensation Discussion & Analysis
Detailed Description and Analysis
2022 Compensation Decisions
Base Salary
Base salary provides our NEOs with a fixed base annual income and helps us attract and retain high-performing executives. The HR Committee sets NEO salaries each year considering individual performance reviews, internal pay equity considerations, the scope and complexity of the executive’s role and an assessment of peer group and market survey data provided by our independent compensation consultant. Dr. Sutaria’s base salary increase of $300,000 and the $50,000 increases for Mr. Arnst and Ms. Arbour reflected a market-based adjustment based on the HR Committee’s review of survey and peer group information. Mr. Cancelmi received a base salary increase of $49,950 to recognize his strong performance and better align his pay with competitive market practices. Ms. Foo received a $100,000 base salary increase in connection with her promotion and increased responsibilities.
Named Executive | 2022 Annual Base Salary (as of December 31, 2022) | |
Saum Sutaria | $1,500,000 | |
Dan Cancelmi | $ 750,000 | |
Tom Arnst | $ 650,000 | |
Lisa Foo | $ 650,000 | |
Paola Arbour | $ 550,000 | |
Ron Rittenmeyer | $1,500,000 | |
Annual Incentive Plan
Our Annual Incentive Plan (AIP) provides annual cash incentives to our executives that drive financial, operational and individual performance. The program is designed to motivate executives to meet objectives that matter to our investors and align with the Company’s long-term strategy. To that end, the HR Committee selects financial and operational metrics that our executives directly influence with challenging targets so that, in order to pay out, the Company must meet the goals communicated to shareholders. The AIP also includes (i) an individual performance component to focus directly on the contributions of each NEO and to reflect performance on qualitative factors like leadership, integrity, promotion of Company values, and positively influencing Company culture and (ii) a quality and compliance multiplier to promote a culture of quality and compliance by rewarding or penalizing executives for clinical events, adherence to policies and procedures and audit results. Final individual payouts under the AIP are determined as follows:
| 38 | |
Compensation Discussion & Analysis
2022 Target Annual Incentive Award Levels for Named Executive Officers
In 2022, the HR Committee approved the following target bonus award levels for each NEO. Dr. Sutaria’s target bonus increased to 150% to better align with competitive market practices, and Ms. Foo’s target bonus was increased to 75% in connection with her promotion. The target bonuses for the other NEOs remained consistent with 2021 target bonuses.
Named Executive Officer | Target Award Relative to Base Salary | ||||
Saum Sutaria | 150 | % | |||
Dan Cancelmi | 100 | % | |||
Tom Arnst | 75 | % | |||
Lisa Foo | 75 | % | |||
Paola Arbour | 75 | % | |||
Ron Rittenmeyer | 150 | % | |||
2022 AIP Performance Metrics and Results
Funding for the 2022 AIP pool was based on the Company’s total annual Adjusted EBITDA (weighted 70%) and Adjusted Free Cash Flow Less Cash Payments to Noncontrolling Interests (Adjusted FCF Less NCI) (weighted 30%). Payout of each of these metrics can range from 0% to 200% depending on performance.
The HR Committee continued to use Adjusted EBITDA as the most significant metric because it is the primary measure used by financial analysts and investors to judge the Company’s financial performance. The HR Committee also continued to use Adjusted Free Cash Flow less NCI as a metric because it captures the Company’s ability to sustainably generate cash that can be used for the Company’s long-term strategic goals, including acquisitions, investing in joint ventures, or repurchasing outstanding equity or debt securities, as well as other general corporate purposes. Furthermore, free cash flow generation allows the Company to fund growth without raising additional debt and can also be used to retire existing indebtedness, both of which enhance long-term shareholder value. Given the importance of Adjusted Free Cash Flow less NCI to both short-term and long-term value creation for shareholders, the HR Committee decided to continue using it in both the 2022 AIP and LTI programs.
The Adjusted EBITDA and Adjusted Free Cash Flow Less NCI threshold, target and maximum levels and actual performance, as well as the final funding pool are set forth below:
Metric | Threshold Level | Target Level | Maximum Level | Actual Performance | Percentage of Target | Calculated Payout | ||||||||||||||||
Adjusted EBITDA(1) | $ | 3.375 billion | $ | 3.475 billion | $ | 3.575 billion | $ | 3.469 billion | 93.8 | % | 65.7% | |||||||||||
Adjusted FCF less NCI(2) | $ | 65 million | $ | 145 million | $ | 225 million | $ | 109 million | 55.3 | % | 16.6% | |||||||||||
Calculated Funding Pool |
| 82.3% of Target | ||||||||||||||||||||
Final Funding Pool(3) |
| 80% of Target | ||||||||||||||||||||
| (1) | See Appendix A for definition of Adjusted EBITDA. |
| (2) | Adjusted Free Cash Flow (see Appendix A for definition) minus cash distributions paid to NCI reflected on the Company’s consolidated statements of cash flow and actual performance reflects adjustments made at the discretion of the HR Committee after considering certain items that impacted cash flows in 2022. |
| (3) | Following management’s recommendation to reduce the funding pool, the HR Committee approved the final funding pool at 80% of target. |
Individual Performance Modifiers
After completion of the fiscal year, the HR Committee undertakes a robust individual performance review for our executive officers. These reviews allow the HR Committee to incorporate into the AIP program certain quantitative and qualitative elements tailored specifically to each executive’s role and circumstances. These reviews also allow the HR Committee to take into consideration factors such as integrity, promotion of Company values, and a positive influence on Company culture, which further the Company’s business objectives and strategies. The result is an individual performance multiplier applied to the calculated AIP amount that can range from 0% to 150%. The ratings are calibrated across the entire Company to ensure the AIP funding pool remains fixed.
| 2023 PROXY STATEMENT | 39 |
Compensation Discussion & Analysis
For the CEO, the HR Committee gathers feedback from select members of management and discusses the performance of the officer with the other independent members of the Board in executive session. For reviews of other executive officers, the CEO provides the HR Committee a detailed evaluation and recommendation based in part on a self-assessment completed by each executive officer.
The HR Committee applied a performance multiplier of 130% for Mr. Rittenmeyer and the following performance modifiers for our other NEOs based on the material factors provided below.
Named Executive Officer | Individual Performance Multiplier | Performance Review Summary | ||||||
ı | Dr. Sutaria | 130% | • Advanced key strategic objectives as part of the Company’s continuing transformative growth strategy started several years ago • Lead strong financial and operating performance through disciplined management and strong operational execution • Continued to strengthen the Company’s leadership team, as well as its commitment to diversity and an inclusive culture, to drive a high-performance culture committed to quality, safety and compliance | |||||
| Mr. Cancelmi | 130% | • Enhanced our liquidity and capital structure by retiring or refinancing approximately $2.6 billion of debt with a lower interest rate, and eliminating any noteworthy debt maturities until Q3-2024 • Lead focused financial discipline and execution that helped drive Adjusted EBITDA margin improvement over 2021 despite a highly inflationary environment • Strengthened the enterprise-wide finance organization with external and internal talent for key leadership roles, and continued the successful transition of various finance functions to our Global Business Center (GBC) in Manila, Philippines • Championed the implementation and launch of a new enterprise payroll and human resources cloud-based information technology system | |||||
| Mr. Arnst | 130% | • Continued to lead and strengthen our legal and human resources teams to drive performance as enterprise-wide Chief Administrative Officer and General Counsel • Driving the continued streamlining of our legal and human resources functions as part of our continuing enterprise service delivery model and external spend reductions • Leading the continuing shift of service functions to our GBC with over 3,000 roles successfully transitioned as of December 31, 2022, as well as positioning the GBC for continued future success • Championed the implementation and launch of a new enterprise payroll and human resources cloud-based information technology system | |||||
| Ms. Foo | 130% | • Enhanced the strategy and growth teams across the company with talent upgrades, implementation of best practices and development of focused, market-based strategies within care delivery markets to enable continued growth in higher acuity hospital and ambulatory surgery services • Provided leadership in strategic capital deployment, physician engagement and capacity management to support continued volume recovery and sustained acuity improvement across the hospital portfolio • Continued to advance enterprise procurement initiatives in support of the company’s efficiency agenda and enhanced enterprise data & analytics capabilities to further data-driven and predictive management tools | |||||
| 40 | |
Compensation Discussion & Analysis
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Strategy from July 2003 to March 2005, and Vice President of Technology from October 1998 to July 2003. Ms. Quintana earned her bachelor’s degree from Louisiana State University and her master’s degree from Tulane University. She co-founded the PepsiCo Women of Color Alliance, which was awarded the Catalyst Award in 2007. She is a past founding board member of the Network of Executive Women and previously served on the Board of Catholic Charities of Dallas. She has also been named one of the Top 50 Hispanic Women in Business by Hispanic Business Magazine and one of the Top 50 Women in Grocery by Progressive Grocer. She currently serves on the board of directors for Fetch Rewards, Inc.
Securities Ownership of Management
The table below discloses the shares, options and other securities beneficially owned by our directors and director nominees, each of our NEOs, and our current directors and executive officers as a group, as of March 15, 2021 (unless indicated below otherwise). No director or current executive officer has pledged any shares of our common stock.
Name | Shares Beneficially Owned(1) | ||||||||||||||
Shares of Common Stock(2) | Options March 15, 2021 | Percent of Class | |||||||||||||
Audrey Andrews |
|
65,545 |
|
|
56,626 |
|
|
* |
| ||||||
Paola Arbour |
|
9,029 |
|
|
-0- |
|
|
* |
| ||||||
James L. Bierman |
|
42,242 |
(3) |
|
-0- |
|
|
* |
| ||||||
Daniel J. Cancelmi |
|
362,000 |
|
|
-0- |
|
|
* |
| ||||||
Richard W. Fisher |
|
41,825 |
(4) |
|
-0- |
|
|
* |
| ||||||
Meghan M. FitzGerald |
|
36,021 |
(5) |
|
-0- |
| |||||||||
Cecil D. Haney |
|
3,057 |
(6) |
|
-0- |
|
|
* |
| ||||||
Sandra R.A. Karrmann |
|
8,309 |
(7) |
|
-0- |
|
|
* |
| ||||||
J. Robert Kerrey |
|
75,769 |
(8) |
|
-0- |
|
|
* |
| ||||||
Christopher S. Lynch |
|
22,120 |
(9) |
|
-0- |
|
|
* |
| ||||||
Richard J. Mark |
|
41,825 |
(4) |
|
-0- |
|
|
* |
| ||||||
Ronald A. Rittenmeyer |
|
626,534 |
(10) |
|
119,260 |
(11) |
|
* |
| ||||||
Tammy Romo |
|
56,802 |
(12) |
|
-0- |
|
|
* |
| ||||||
Saumya Sutaria |
|
100,331 |
|
|
-0- |
|
|
* |
| ||||||
Nadja Y. West |
|
19,984 |
(13) |
|
-0- |
|
|
* |
| ||||||
Current executive officers and directors as a group (17 persons) |
|
1,538,936 |
(14) |
|
188,368 |
|
|
1.6 |
% | ||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Ownership
Named Executive Officer | Individual Performance Multiplier | Performance Review Summary | ||||||||||||
Securities Ownership of Certain Shareholders
Based on reports filed with the SEC, each of the following entities owns more than 5% of our outstanding common stock as of the dates indicated below. We know of no other entity or person that beneficially owns more than 5% of our outstanding common stock.
Name and Address | Number of Shares Beneficially Owned | Percent of Class as of March 15, 2021 | ||||||||
Glenview Capital Management, LLC 767 Fifth Avenue, 44th Floor New York, NY 10153 | 16,225,320 | (1) | 15.24 | % | ||||||
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 12,191,094 | (2) | 11.45 | % | ||||||
The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 11,407,086 | (3) | 10.71 | % | ||||||
Harris Associates L.P.
111 S. Wacker Drive, Suite 4600 Chicago IL 60606 | 7,114,001 | (4) | 6.68 | % | ||||||
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Delinquent Section 16(a) Reports
Due to a technical issue, the Form 4 filing reporting one transaction for J. Robert Kerrey was filed one day late.
Compensation Discussion & Analysis
This CD&A describes our compensation programs and reviews compensation decisions for the following Named Executive Officers (NEOs) for 2020:
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CD&A Table of Contents
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Compensation Discussion & Analysis
2020: Delivering Quality, Compassionate Care While Responding
Ms. Arbour
110%
• Advanced clinical innovations supporting hospital transfers, bed management and Emergency Room improvements; standardized patient management platform with Electronic Medical Record integration; modernized imaging services and capabilities with migration to COVID-19the cloud
In 2020, Tenet faced challenges never experienced in our history. Our ability to perform under such difficult
• Drove automation of technology spend, savings, and constantly evolving circumstances underscored the strength of our colleaguesforecasting accuracy across the enterprise as well asand at a hospital level
• Transformed legacy HR and Payroll to cloud based SAAS platform across the positive impactenterprise; successfully negotiated and launched the transition to a new IT services outsourcer
• Achieved significant financial performance through productivity initiatives inclusive of our multi-year turnaround, which began under the leadership of our Boardsupplier negotiations to reduce overall cost to deliver
• Successfully and Executive Chairman and Chief Executive Officer (CEO), Ron Rittenmeyer. We implementedswiftly restored services to enterprise while increasing infrastructure resilience after a comprehensive and active response to the pandemic, focused on the safety of our personnel and our patients, and steadily improved performance in each operating segment as we moved through the year. We continued to advance top-tier clinical programs to serve growing acute and chronic care needs in our hospitals, while completing a transformational ambulatory transaction and pivoting our business toward higher-growth, lower cost-of-care settings. And, we continued to post an improved level of margin performance at Conifer, which provided exceptional support to clients throughout the pandemic.cybersecurity incident
Quality and Compliance Modifiers
In addition, following the completion of the fiscal year the HR Committee reviews (i) negative hospital events that occurred during the fiscal year, such as any patterns of serious safety events and multiple condition level deficiencies during surveys, noncompliance resulting in immediate jeopardy, “needs improvement” or “unsatisfactory” audit ratings, and (ii) positive compliance and quality events such as optimal internal audit results, optimal clinical compliance scorecard audit results and Centers for Medicare & Medicaid Services zero citation surveys. Following its review of 2022 quality and compliance performance, the HR Committee determined that no modification (positive or negative) would apply to the AIP awards for 2022 for the NEOs.
2022 AIP Payouts
The table below shows target and actual AIP awards earned by each NEO for 2022. Mr. Rittenmeyer’s target and actual AIP award for 2022 shown below have been pro-rated through his termination date, as provided for under the terms of the Rittenmeyer Agreement described under “Mr. Rittenmeyer’s Disability Benefits” below.
Named Executive Officer | Target AIP Payout | Calculated AIP Payout | Individual Performance Multiplier | Quality & Compliance Modifier | 2022 Actual AIP Payout | |||||||||||||||
Saum Sutaria | $ | 2,250,000 | $ | 1,800,000 | 130 | % | No modification | $ | 2,340,000 | |||||||||||
Dan Cancelmi | $ | 750,000 | $ | 600,000 | 130 | % | No modification | $ | 780,000 | |||||||||||
Tom Arnst | $ | 487,500 | $ | 390,000 | 130 | % | No modification | $ | 507,000 | |||||||||||
Lisa Foo | $ | 487,500 | $ | 390,000 | 130 | % | No modification | $ | 507,000 | |||||||||||
Paola Arbour | $ | 412,500 | $ | 330,000 | 110 | % | No modification | $ | 363,000 | |||||||||||
Ron Rittenmeyer | $ | 1,682,877 | $ | 1,346,302 | 130 | % | No modification | $ | 1,750,192 | |||||||||||
Long-Term Incentive Compensation
2022 LTI Awards
In 2022, LTI compensation for executive officers was granted entirely in RSUs, comprised of 50% time-based awards vesting ratably over three years (or, for Mr. Rittenmeyer, ratably over 11 quarters) and 50% performance-based awards earned over a three-year performance period, consistent with the simplifications made to the Company’s LTI program in 2020. The HR Committee believes that this program provides alignment of management’s incentives with shareholder interests and encourages sustained value creation for shareholders.
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Compensation Discussion & Analysis
Our strong relative TSR performance highlights the successful execution of our multi-year turnaround strategy since our change in leadership a little over three years ago. We believe that our three-year TSR, which captures the effect of the intense turnaround effort that began in late 2017, is a more meaningful measure of our longer-term performance than our one-year TSR, which can be significantly impacted by short-term market volatility unrelated to our performance (as occurred at various times during 2020). Despite the challenge and uncertain macroeconomic environment presented during the last year by COVID-19, the achievements highlighted above illustrate the positive impact of our multi-year turnaround as well as our continued momentum in building a framework for our long-term growth and success. Further, our 2021 year-to-date TSR performance (as of March 25, 2021) remains strong and ranks above the 90th percentile of our peer group and the S&P 500.
2020 Compensation Program Highlights
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Compensation Discussion & Analysis
| 2023 PROXY STATEMENT | 41 |
Compensation Discussion & Analysis
Long-Term Incentive Compensation
Performance-Based RSUs (50%) |
• Earned based on Adjusted FCF less Cash NCI and Adjusted EPS, with goals set annually to reflect current conditions and business strategy with threshold (0%), target (100%), and max (200%) • Subject to Relative TSR modifier based on performance over the entire performance period (+/- 25% based on cumulative performance versus direct peers) | |
Time-Based RSUs (50%) | • Solely subject to service-based vesting and forfeiture conditions • Awards directly align executive and shareholder interests while encouraging retention throughout the three-year ratable vesting cycle |
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| • Key metric for our • Measures the Company’s
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• Measures the Company’s ability to generate cash flows from operations that can | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| • Comparing the Company’s
• Measures the Company’s shareholder return against its three direct publicly traded competitors: Community Health Systems, HCA Healthcare and Universal Health Services
Compensation Discussion & Analysis
2022 LTI Grant Values for Named Executive Officers The following table summarizes the total target grant value of LTI awards granted in February 2022 to each of our NEOs participating in our 2022 LTI program.
The Company will disclose its achievement against the applicable performance metrics for the 2022 Performance-Based RSUs following completion of the three-year performance period. Results of 2020 LTI Awards The performance-based RSUs granted in February 2020 were divided into three equal one-year tranches, with performance in each year measured based on Adjusted Earnings per Share performance (weighted 50%) and Adjusted Free Cash Flow Less NCI performance (weighted 50%), with a modifier based on relative TSR measured over the full three-year performance period that adjusts the total payout by +/- 25%. All of our 2022 NEOs, other than Mr. Rittenmeyer and Mr. Arnst, received these grants, which vested in February 2023 following the HR Committee’s certification of the Company’s achievement under the performance metrics. The following table shows the Company’s results under the 2020 performance-based RSUs over the three-year performance period ended December 31, 2022.
The performance-based RSUs granted in February 2020 to Mr. Arnst were divided into three equal one-year tranches, with performance in each year measured based on Conifer EBITDA (weighted 45%), Conifer Total Revenue (weighted 30%) and Conifer Cash Collections (weighted 25%). In light of Mr. Arnst’s provision of services to Tenet as a whole, rather than only to Conifer, in 2021, the HR Committee determined that it would be appropriate to provide that the performance goals for 2021 and 2022 under Mr. Arnst’s performance-based RSUs would be determined based on the Company-wide Adjusted Earnings per
Compensation Discussion & Analysis Share (weighted 50%) and Adjusted Free Cash Flow Less NCI (weighted 50%) performance measures, subject to the relative TSR modifier, each as described above with respect to the performance-based PSUs held by our other NEOs. In addition, the threshold payout percentage for 2021 and 2022 was decreased to 0%, with the maximum payout percentage for 2021 and 2022 increased to 200%, consistent with the terms applicable to the performance-based RSUs described above. The following table shows the results of Mr. Arnst’s 2020 performance-based RSUs over the three-year performance period ended December 31, 2022.
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Human Resources Committee Report Our Human Resources Committee (HR Committee) has reviewed and discussed with management the Compensation Discussion and Analysis above. Based on this review and these discussions, the HR Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and included in this Proxy Statement. Members of the Human Resources Committee J. Robert Kerrey, Chair Richard W. Fisher Christopher S. Lynch Richard J. Mark Tammy Romo
2022 Summary Compensation Table The following table summarizes the compensation for the years ended December 31,
Executive Compensation Tables
Executive Compensation Tables
Grants of Plan-Based Awards During The following table sets forth information concerning grants of equity
Executive Compensation Tables
Sutaria Employment Agreement Dr. Sutaria and the Company are parties to an amended and restated employment agreement (the “Sutaria Agreement”), which provides for an initial term from September 1, 2021 through December 31, 2025, with automatic one-year renewals unless either party provides advance notice of their intention not to renew and subject to earlier termination in accordance with the terms of the agreement. In addition to setting forth standard terms regarding minimum base salary, target bonus under the AIP, eligibility for LTI awards and employee benefits, the Sutaria Agreement provides for an annual Company contribution to the ERA of no less than $250,000. The Rittenmeyer Employment Agreement Prior to his resignation, Mr. Rittenmeyer and the Company were parties to an amended and restated employment agreement, which was most recently amended on February 25, 2022 (the “Rittenmeyer Agreement”). The Rittenmeyer Agreement, as amended, provided that Mr. Rittenmeyer would serve as Executive Chairman through December 31,
Executive Compensation Tables
Outstanding Equity Awards The following table sets forth information as of December 31, 2022 with respect to outstanding equity awards granted to each of the NEOs other than Mr. Rittenmeyer. As of December 31, 2022, Mr. Rittenmeyer had no outstanding equity awards. Outstanding Equity Awards at 2022 Fiscal Year-End Table
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Executive Compensation Tables
Option Exercises and Stock Vested The following table sets forth certain information regarding stock options exercised and restricted stock unit awards vested during
Pension Benefits The following table sets forth information as of December 31,
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Supplemental Executive Retirement Plan Mr. Cancelmi
Code of 1986 (Section 409A). At retirement, the annual benefit (paid on a monthly basis) to a participant will be a product of four factors:
The monthly SERP benefit is reduced in the event of a participant’s early retirement (age 55 with 10 years of service) or termination of employment prior to age 62 by 3% for each year that employment termination occurs before age 62 (subject to a maximum reduction of 21%). Monthly SERP benefits are further reduced by an additional 3% each year if benefits begin to be paid prior to age 62. Unreduced retirement benefits under the SERP are available for participants who terminate on or after age 62. In the event of a change of control, participants fully vest in their SERP benefits and no early retirement or payment reduction will apply. SERP benefits payable in the event of a termination of employment within two years following a change of control event described in Section 409A will commence on the first day of the month following the participant’s termination of employment, subject to the six-month delay applicable to key employees under Section 409A. Otherwise, any SERP benefits payable following a change of control will be paid at normal retirement or early retirement as described above. None of our NEOs has received credited service under the SERP for years not worked for the Company or its acquired entities, however, the ESP, which was adopted in 2006, would provide each NEO with continued accrual of age and service credit under the SERP during his or her “severance period.” The SERP and ESP have been amended to eliminate these accruals during the severance period for employees that became SERP participants after August 3, 2011.
Executive Compensation Tables
Nonqualified Deferred Compensation The following table sets forth information as of December 31,
Deferred Compensation Plan All our Named Executive Officers and non-employee directors are eligible to participate in our Deferred Compensation Plan. Dr. Sutaria, Mr. Cancelmi, Ms. Participants are permitted to elect to defer various types of covered compensation (“Deferral Contributions”) to the Deferred Compensation Plan. We make an employer matching contribution equal to 50% of an employee’s base compensation and/or bonus deferrals, in each case, with match deferrals not to exceed 6% of compensation. All elective deferrals and employer contributions made to the Deferred Compensation Plan are fully vested when made. Amounts deferred under the Deferred Compensation Plan will generally be distributed, as directed by the participant, upon either termination of service or the occurrence of a specified date. Matching and discretionary contributions are distributed upon termination of service. Distributions may be made in cash or in shares of our common stock and may be made in the form of a lump sum payment or annual installments over a one- to 15-year period, as elected by the participant. Any amounts that are payable from the Deferred Compensation Plan upon a termination of employment are subject to the six-month delay applicable to key employees under Section 409A.
Executive Compensation Tables Participants may request, no more frequently than daily, that any of the following investment crediting rates be applied to amounts credited to their Deferred Compensation Plan accounts: (i) an annual rate of interest equal to 120% of the applicable federal long-term (10-year) interest rate (which generated an annual return for
performance of our common stock, designated as stock units that are payable in shares of our common stock. Amounts that are deemed to be invested in stock units may not be transferred out of stock units and will be paid in shares of our common stock. Executive Retirement Account We maintain the Executive Retirement Account (ERA) in order to provide additional deferred compensation benefits to members of the Company’s senior management who are not eligible to participate in the SERP, which includes Upon becoming Potential Payments Upon Termination or Change of Control The information below describes and quantifies certain compensation that would be paid under existing plans and arrangements if Due to the number of factors that affect the nature and amount of any benefits paid upon the occurrence of any of the events discussed below, any actual amounts paid may be different. Factors that could affect these amounts include the timing of the event, the Company’s stock price and the executive’s age. Mr. Rittenmeyer’s Disability Benefits As a result of his resignation, which was considered a termination on account of disability under the Rittenmeyer Agreement, in addition to accrued obligation, Mr. Rittenmeyer received the following disability payments and benefits:
Executive Compensation Tables
Mr. Rittenmeyer’s entitlement to these disability benefits was contingent upon his compliance with his post-termination restrictive covenants. Pursuant to the Rittenmeyer Agreement, Mr. Rittenmeyer was bound by perpetual confidentiality and non-disparagement covenants, as well as non-competition and non-solicitation covenants that would have applied for two years following the date of termination had he not passed away. Dr. Sutaria’s Employment Agreement Benefits Upon
If such termination occurs within six months prior to,
If Dr. Sutaria’s employment is terminated as a result of Dr. Sutaria’s death or “disability” (as defined in the Sutaria Agreement), Dr. Sutaria will be eligible to receive:
In the event Dr. Sutaria elects not to renew the Sutaria Agreement upon expiration of its then-current term, Dr. Sutaria will be entitled to continued vesting of Pursuant to the terms of the Sutaria Agreement, Dr. Sutaria is bound by perpetual confidentiality and non-disparagement covenants. The Sutaria Agreement also contains employee non-solicitation covenants that apply for the duration of Dr. Sutaria’s employment with the Company and for two years thereafter, and a noncompetition covenant that applies with respect to four of the Company’s
Executive Compensation Tables
Death, Disability and Retirement Upon retirement on or after age 62, a NEO would receive a pro-rata bonus earned under the AIP for the year that includes the date of retirement. Other than
The table set forth below reflects the estimated aggregate amount of payments and other benefits each NEO
Executive Compensation Tables Non-Cause Termination/No Change of Control Subject to the terms of the ESP and applicable equity plans and award agreements,
The table set forth below reflects the estimated aggregate amount of payments and other benefits (not including reimbursable legal fees, if any, to obtain benefits under the ESP and certain reimbursable excise taxes, if any, incurred by the participant under Section 409A) each NEO would receive
Executive Compensation Tables Non-Cause Termination/Change of Control Subject to the terms of the ESP and applicable equity plans and award agreements, each of the NEOs (other than Mr. Rittenmeyer and Dr. Sutaria, whose separation benefits are described above) is entitled to the following severance payments and other benefits if his or her employment is terminated without cause, or by the executive for good reason (a “non-cause” termination), during the period beginning six months prior to a change of control and ending 24 months following the occurrence of a change in control (the “protection period”):
In 2012, the Company amended the ESP to eliminate all reimbursements and gross ups with respect to golden parachute excise taxes. Pursuant to the ESP, if any payment or other benefit to which an executive is entitled under the ESP or otherwise will become subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, then the executive’s payments and benefits shall be either (i) provided to the executive in full, or (ii) provided to the executive as to such lesser extent which would result in no portion of such payments and benefits being subject to the excise tax, whichever of the amounts results in the receipt by the executive, on an after-tax basis, of the greatest amount of benefits. The table set forth below reflects the estimated aggregate amount of payments and other benefits (not including reimbursable legal fees, if any, to obtain benefits under the ESP and certain reimbursable excise taxes, if any, incurred by the participant under Section 409A) each NEO
Executive Compensation Tables
Definitions: “Cause” under our deferred compensation plans, ESP, SERP, AIP and
A “change of control” under our deferred compensation plans, ESP, SERP, AIP and stock incentive plans will have occurred if: (i) any one person, or more than one person acting as a group, acquires, directly or indirectly, whether in a single transaction or a series of related transactions, more than 50% of the total fair market value or voting power of our stock (including stock held prior to such acquisition); (ii) any one person, or more than one person acting as a group, acquires, directly or indirectly, during a 12-month period ending on the date of the most recent acquisition by such person or persons, 35% or more of the total voting power of our stock (not considering stock owned by such person or group prior to such 12-month period); (iii) a majority of the members of the Board are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of our Board prior to such election; (iv) a sale, exchange, lease, disposition or other transfer of all or substantially all of the assets of the Company; or (v) there occurs a liquidation or dissolution of the Company that is approved by a majority of the Company’s shareholders. This definition of change of control complies with Section 409A except for item (v) “Good Reason” under our ESP, SERP, AIP and stock incentive plans is defined as: (a) in the case of a voluntary termination of employment by an executive preceding or more than two years following a change of control: (i) a material diminution in the executive’s job authority, responsibilities or duties, (ii) a material diminution of the executive’s base salary, (iii) an involuntary and material change in the geographic location of the workplace at which the executive must perform services, or (iv) any other action or inaction that constitutes a material breach by the employer or a successor of the agreement under which the executive provides services; (b) in the case of a voluntary termination of employment by an executive upon or within two years following a change of control: (i) a material downward change in job functions, duties, or responsibilities which reduces the rank or position of the executive, (ii) a reduction in the executive’s annual base salary, (iii) a reduction in the aggregate value of the executive’s annual base salary and AIP target bonus opportunity, (iv) a material reduction in the executive’s retirement or supplemental retirement benefits, (v) an involuntary and material change in the geographic location of the workplace at which the executive must perform services, or (vi) any other action or inaction that constitutes a material breach by the employer or a successor of the agreement under which the executive provides services.
Pay Ratio Disclosure The The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules. For purposes of calculating the amount of compensation paid to our median employee during The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Pay Versus Performance In accordance with rules adopted by the Securities andExchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation and Company performance for the fiscal years listed below. The HR Committee did not consider thispay versus performance disclosure or the “compensation actually paid” amounts below in making its pay decisions for any of the fiscal years shown.
Description of Certain Relationships of Information Presented in the Pay Versus Performance Table As described in more detail in the Compensation Discussion & Analysis, the Company’s executive compensation program reflects a pay-for-performance compensation with Company performance, all of those Company measures are not presented in the Pay VersusPerformance Table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with “compensation actually paid.” In accordance with SEC rules, the Company is providing the following representations of the relationships between information presented in the Pay Versus Performance Table.Company vs Peer Group TSR and Compensation Actually Paid vs Company TSR 
Compensation Actually Paid vs Net Income Compensation Actually Paid vs Adjusted EBITDA 
Financial Performance Measures The following list presents the financial performance measures that the Company has determined represent the most important in linking “Compensation Actually Paid” to our PEO and the other NEOs for 2022 to Company performance. These measures are not ranked. Adjusted EBITDA; Adjusted Free Cash Flow (FCF) less cash distributions paid to noncontrolling interest (NCI) reflected on the Company’s consolidated statements of cash flow; and Adjusted Diluted Earnings Per Share. See Appendix A for definitions of each of these non-GAAP measures, and see the Compensation Discussion & Analysis beginning on page 33 for information regarding how these measures were used in our 2022 executive compensation program.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table summarizes certain information with respect to our equity compensation plans pursuant to which rights remain outstanding as of December 31, Equity Compensation Plan Information
Proposal We are asking shareholders to vote on an advisory resolution to approve the Company’s executive compensation as reported in this Proxy Statement. As described in the “Compensation Discussion and Analysis” section of this Proxy Statement beginning on page We urge you to read In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (Exchange Act), we are asking shareholders to vote in favor of the following advisory resolution at the Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s This resolution, commonly referred to as a “say-on-pay” resolution, will be considered to have been approved by shareholders on an advisory basis if the votes cast for approval exceed the votes cast against approval. This advisory resolution is not binding on the Board. Although non-binding, the Board and the HR Committee will review and consider the voting results when making future decisions regarding our executive compensation program. Unless the Board modifies its policy of holding an advisory say-on-pay vote on an annual basis, the next advisory say-on-pay vote will be held at our
Proposal 3 - Advisory Vote on Frequency of Future Advisory Votes to Approve Executive Compensation Pursuant to Section 14A of the Exchange Act, we are asking shareholders to vote on whether future advisory votes to approve executive compensation of the nature reflected in Proposal 2 above should occur every year, every two years or every three years. The Board of Directors has determined that continuing to hold an advisory say-on-pay vote every year is the most appropriate policy for the Company at this time and recommends that shareholders vote for future advisory say-on-pay votes to occur every year. While the Company’s executive compensation programs are designed to promote a long-term connection between pay and performance, the Board recognizes that executive compensation disclosures are made annually. Holding an annual advisory say-on-pay vote provides the Company with more direct and immediate feedback on our compensation disclosures. However, shareholders should note that because the advisory say-on-pay vote occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our executive compensation programs in consideration of any one year’s advisory say-on-pay vote by the time of the following year’s annual meeting of shareholders. An annual advisory say-on-pay vote also is consistent with the Company’s practice of having all directors elected annually and annually providing shareholders the opportunity to ratify the Audit Committee’s selection of independent registered public accountants. We understand that our shareholders may have different views as to what is an appropriate frequency for future advisory say-on-pay votes, and we will carefully review the voting results on this proposal. Shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Shareholders are not voting to approve or disapprove the Board’s recommendation. If none of the three frequencies receive a majority of the votes cast, the Board will consider the frequency voting choice receiving the greatest number of votes cast as the advisory vote of shareholders on this matter. This advisory vote on the frequency of future advisory say-on-pay votes is not binding on the Board. Although non-binding, the Board will carefully review the voting results on this proposal. Notwithstanding the Board’s recommendation and the outcome of the shareholder vote, the Board may in the future decide to conduct advisory say-on-pay votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs. Unless marked to the contrary, proxies will be voted for the option of every “ONE YEAR” as the frequency for future advisory say-on-pay votes.
Audit Committee Report The Audit Committee is The Audit Committee The Audit Committee
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the Company’s
Members of the Audit Committee Tammy Romo, Chair Richard W. Fisher Cecil D. Haney Christopher S. Lynch Richard J. Mark
Audit Committee Report
Independent Registered Public Accounting Firm Fees
How We Control and Oversee the Non-Audit Services Provided by Deloitte The Audit Committee has retained Deloitte (along with other accounting firms) to provide non-audit services. We understand the need for Deloitte to maintain objectivity and independence as the auditor of our financial statements and our internal control over financial reporting. Accordingly, the Audit Committee has established the following processes and procedures related to non-audit
The Audit Committee has adopted policies and procedures for pre-approving all non-audit services that Deloitte performs for us. Specifically, the Audit Committee has pre-approved the use of Deloitte We Have Hiring Restrictions for Deloitte Employees The Audit Committee has adopted restrictions on our hiring of any Deloitte partner, managing director, manager, staff member, advising member of the department of professional practice, reviewing actuary, reviewing tax professional and any other individuals responsible for providing audit assurance on any aspect of Deloitte’s audit and review of our financial statements. We Rotate Key Audit Partners and Periodically Consider Audit Firm Rotation The Audit Committee assures that key Deloitte partners assigned to our audit are rotated as required at least every five years, and the Audit Committee and its chair actively participate in selecting each new lead engagement partner. To help ensure continuing auditor independence, the Audit Committee also periodically considers whether there should be a regular rotation of the independent registered public accountants.
Proposal The Audit Committee is directly responsible for the appointment, compensation (including fee negotiations), retention and oversight of the Company’s independent registered public accounting firm (including the lead audit partner) retained to audit the Company’s financial statements. The Audit Committee has selected Deloitte & Touche LLP to serve as our independent registered public accountants for the year ending December 31,
Based on this evaluation, the members of the Audit Committee believe that the continued retention of Deloitte to serve as the Company’s independent auditor is in the best interests of the Company and its shareholders. Deloitte is familiar with our operations, and the Audit Committee is satisfied with Deloitte’s reputation in the auditing field, its personnel, its professional qualifications and its independence.
Deloitte representatives will attend the Annual Meeting and respond to questions where appropriate. Such representatives may make a statement at the Annual Meeting should they so desire. Shareholder Approval Although ratification is not required by our bylaws or otherwise, the Board is submitting the selection of the independent registered public accountants for shareholder ratification as a matter of good corporate governance. Ratification of the selection of the independent registered public accountants by the shareholders requires that the votes cast in favor of ratification exceed the votes cast opposing ratification. If a favorable vote is not obtained, the Audit Committee may reconsider the selection of Deloitte. Even if the selection is ratified, the Audit Committee, in its discretion, may select different independent auditors if it subsequently determines that such a change would be in the best interest of the Company and its shareholders.
Proposal 5 - Requesting a Report on Patients’ Right to Access Abortion in Emergencies The Marguerite Casey Foundation has advised the Company that it intends to introduce the following non-binding shareholder proposal at the Annual Meeting. The Company is not responsible for any inaccuracies it may contain. Following the proposal and supporting statement, which are set forth below, we explain why our Board recommends a vote “AGAINST” this proposal. HOSPITAL POLICIES CONCERNING PREGNANT PATIENTS’ RIGHT TO ACCESS ABORTION IN EMERGENCIES WHEREAS: Tenet Health operates hospitals and other acute health care facilities in 19 states that have adopted laws severely restricting access to abortion. According to its website, Tenet Health’s impact “spreads far and deep with more than 465 ambulatory surgery centers and surgical hospitals, 61 hospitals and approximately 110 additional outpatient centers and other sites of care.”1 Although most abortions are not performed in a hospital setting, those that are performed in a hospital are often the most serious and complicated abortions, including those performed because a woman’s life or health is in danger or in later stages of pregnancy, when severe fetal anomalies are first detected. As many as 30% of pregnancies end in miscarriage, and the methods of managing a miscarriage are the same as for abortion. Some untreated miscarriages can lead to complications that can be life-threatening. Ectopic pregnancies (1-2% of all pregnancies) are never viable. (Washington Post, 7.16.22) It has been widely reported that in states that have passed severe restrictions on abortion, doctors have been struggling with the legality of providing terminations for ectopic pregnancies, incomplete miscarriages, or other circumstances where miscarriage is inevitable or the health or life of the pregnant woman is in danger. Some patients have been denied care by health care providers. (Associated Press, 6.16.22; Bloomberg, 7.12.22; Washington Post, 7.16.22; Texas Tribune, 7.15.22; Kaiser Health News, 8.8.22) The Department of Health and Human Services, under guidance from the executive order of President Biden, clarified that the Emergency Medical Treatment and Active Labor Act (EMTALA) preempts any state law which prohibits abortion and does not include an exception for the life and health of the pregnant person. Therefore, healthcare providers are required to provide stabilizing medical treatment, including abortion, to a patient who presents to the emergency department and is found to have an emergency medical condition. RESOLVED: Shareholders request that the Company report on its current policy regarding availability of abortions in its operations, including but not limited to whether such policy includes an exception for the life and health of the pregnant person, and how the Company defines an emergency medical condition.
Proposal 5-Requesting a Report on Patients’ Right to Access Abortion in Emergencies
The Board’s Statement in Opposition Tenet is committed to the highest standards of ethics and compliance, and has a long history of commitment to excellence in healthcare for women and babies. Tenet complies with applicable federal and state laws, including the Emergency Medical Treatment & Labor Act (“EMTALA”), and has adopted an EMTALA Policy to ensure individuals presenting at Tenet’s emergency departments receive an appropriate medical screening examination and stabilizing treatment, including medically necessary abortions, or appropriate transfer in accordance with EMTALA. An “emergency medical condition” is defined in EMTALA and Tenet applies that definition in its operations. As an organization, we rely upon our community of medical providers to determine the detailed clinical policies at each of our facilities, consistent with applicable law and faith-based commitments, if any. These laws are separately established by each state and vary significantly. While we support our facilities in meeting the highest clinical standards and provide the necessary hospital infrastructure, as an organization, we do not dictate clinical activities on a national basis. For this reason, Tenet does not have a company-level policy regarding the availability of procedures, including abortions. Women presenting to our facilities can take comfort in knowing that our hospitals’ local policies and clinical practices protect their safety and access to medically necessary life-saving procedures, including abortions. We believe a Company-level policy regarding the availability of abortions is not appropriate or applicable beyond our general requirement to comply with all applicable laws and the access already provided in our facilities to medically necessary abortions via compliance with EMTALA.
General Information Regarding the Annual Meeting and Voting The Board of Tenet is requesting your proxy for use at the Annual Meeting of Shareholders to be held online Notice of Internet Availability of Proxy Materials Under SEC rules, we have elected to make our proxy materials available to our shareholders over the Internet rather than mailing paper copies of those materials to each shareholder (unless otherwise requested). On or about If you received the Notice only and would like to receive a paper copy of the proxy materials, please follow the instructions printed on the Notice to request that a paper copy be mailed to you. Shareholders who do not receive the Notice will receive a paper or electronic copy of our proxy materials. This Proxy Statement and related proxy materials are being mailed or made available to shareholders on or about Who Can Vote Only shareholders of record of our common stock at the close of business on March Shareholder of Record.If your shares of our common stock are registered directly in your name with our transfer agent, Computershare, you are considered the shareholder of record with respect to those shares and a Notice (or, if requested, printed proxy materials) is being sent to you directly by the Company. As the shareholder of record, you have the right to grant your voting proxy directly to us or to vote in person online at the Annual Meeting. Beneficial Owner.If your shares are held in a brokerage account or by another nominee, you are considered to be the beneficial owner of shares held in street name, and a Notice (or, if requested, printed proxy materials with a voting instruction Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting. How to Cast Your Vote You may vote in one of the following ways: By Internet.You may vote on the Internet using the website noted on your Notice, proxy card or
General Information Regarding the Annual Meeting and Voting
By Telephone.You may vote by calling the toll-free telephone number noted on your Notice, proxy card or By Mail.If you received a paper copy of the proxy card or voting instruction form by mail and choose to vote by mail, please mark your proxy card, date and sign it, and promptly return it in the postage-paid envelope provided with this Online During the Annual Meeting.While we encourage shareholders to vote prior to the meeting, you may vote online during the Annual Meeting. You will need the SHARES MUST BE VOTED EITHER ONLINE DURING THE ANNUAL MEETING, ON THE INTERNET, BY TELEPHONE OR BY COMPLETING AND RETURNING A PROXY CARD If your proxy is properly completed, the shares it represents will be voted at the meeting as you instructed. If you submit your properly executed proxy, but do not provide instructions, your proxy will be voted in accordance with the Board’s recommendations as set forth in this Proxy Statement. Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, brokers may in some cases vote the shares in their discretion but are not permitted to vote on certain proposals and may elect not vote on any of the proposals unless you provide voting instructions. Therefore, unless you provide specific voting instructions, your shares Revoking Your Proxy You have the right to revoke your proxy at any time before it is voted by (1) filing a written notice with our Corporate Secretary, (2) delivering a new proxy bearing a later date, (3) granting a later proxy through telephone or Internet voting, or (4) attending the Annual Meeting virtually and voting online during the Annual Meeting. Vote Required The presence, in person or by proxy, of the persons entitled to vote a majority of the voting shares at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes will be counted for purposes of determining the presence or absence of a quorum. There are different vote requirements for the various proposals:
General Information Regarding the Annual Meeting and Voting
Attending the Annual Meeting and Asking Questions
To participate in the Annual Meeting, you will need the We encourage you to access the Annual Meeting prior to the start time and allow ample time to log in to the meeting webcast and test your computer audio system. Note that if you have technical difficulties during the check-in time or during the Annual Meeting, you should call the technical support number that will be posted on the virtual shareholder meeting login Shareholders may submit written questions Costs of Solicitation We will pay for the cost of proxy solicitations on behalf of the Board. We have engaged Innisfree M&A Incorporated to assist in our proxy solicitations. We will pay Innisfree an amount not to exceed $25,000 in fees for its proxy solicitation services and reimburse it for its reasonable out-of-pocket expenses. In addition to solicitation by mail by Innisfree, proxies may be solicited personally or by telephone, fax or email by our directors, officers and other employees. Proxy materials also may be distributed to the beneficial owners of our stock by brokers, custodians and other parties, and we will reimburse such parties for their reasonable out-of-pocket and clerical expenses.
General Information Regarding the Annual Meeting and Voting
Householding of Shareholder Materials We may send a single Notice or set of proxy materials and other shareholder communications to any address shared by two or more shareholders. This process is called “householding.” This reduces duplicate mailings, saves printing and postage costs and conserves natural resources. We will deliver promptly upon written or oral request a separate copy of the proxy materials to shareholders at a shared address to which a single copy of the documents was delivered. To receive a separate copy, to stop receiving multiple copies sent to shareholders of record sharing an address, or to enroll in householding: Shareholder of Record.If you are a shareholder of record, please submit your request Beneficial Owner.If you are a beneficial owner, please submit your request to your broker, bank or other nominee.
Other Information Shareholder Proposals Shareholder Proposals Submitted Pursuant to SEC Rule 14a-8 for Inclusion in Next Year’s Proxy Statement.To be considered for inclusion in next year’s proxy statement, shareholder proposals submitted in accordance with the SEC’s Rule 14a-8 must be received at our principal executive offices no later than the close of business (5:00 p.m. Central Time) on Director Nominations for Inclusion in Next Year’s Proxy Statement Pursuant to the Company’s Bylaws (Proxy Access) and SEC Rule 14a-19 (Universal Proxy). We have adopted proxy access, whereby a shareholder (or a group of up to 20 shareholders) who has held at least 3% of our outstanding stock for three years or more may nominate a director and have that nominee included in our proxy materials, provided that the shareholder and nominee satisfy the requirements specified in our bylaws. Any shareholder who wishes to use these procedures to nominate a candidate for election to the Board for inclusion in our proxy statement relating to the Other Shareholder Business for Presentation at Next Year’s Annual Meeting. Our bylaws require that any shareholder wishing to nominate a candidate for director or to propose other business at the next annual meeting (other than proposals submitted pursuant to the SEC’s Rule 14a-8 or under our proxy access bylaw) must give us written notice between the close of business on January Incorporation by Reference The information contained above under the captions “Audit Committee Report” and “Human Resources Committee Report” shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor will such information be incorporated by reference into any future filing except to the extent that the Company specifically incorporates it by reference into such filing. Website references throughout this Proxy Statement are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
Other Information Annual Report on Form 10-K We will provide to shareholders by mail, without charge, a copy of our 2022 Annual Report on Form 10-K. To request a copy, you should write to the Corporate Secretary, Tenet Healthcare Corporation, 14201 Dallas Parkway, Dallas, Texas 75254. Forward-Looking Statements Certain statements contained in this Proxy Statement are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are based on future expectations, plans and prospects for the Company’s business and operations that involve a number of risks and uncertainties. Such statements may include, among other words, “believe”, “expect”, “anticipate”, “intend”, “plan”, “will”, “predict”, “potential”, “continue”, “strategy”, “aspire”, “target”, “forecast”, “project”, “estimate”, “should”, “could”, “may” and similar expressions or words and variations thereof that convey the prospective nature of events or outcomes generally indicative of forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. It is possible that Tenet’s actual results may differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements. For a discussion of some of the risks and important factors that could affect the Company’s future results and financial condition, see “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K
Appendix A: Non-GAAP Financial Measures
Adjusted EBITDA, a non-GAAP measure, is defined by the Company as net income available (loss attributable) to Tenet Healthcare Corporation common shareholders before (1) the cumulative effect of changes in accounting Adjusted Free Cash Flow, a non-GAAP measure, is defined by the Company as (1) Adjusted net cash provided by (used in) operating activities from continuing operations, less (2) purchases of property and equipment from continuing operations. Adjusted net cash provided by (used in) operating activities, a non-GAAP measure, is defined by the Company as cash provided by (used in) operating activities prior to (1) payments for restructuring charges, acquisition-related costs and litigation costs and settlements, and (2) net cash provided by (used in) operating activities from discontinued operations. Adjusted diluted earnings (loss) per share from continuing operations (Adjusted EPS), a non-GAAP measure, is defined by the Company as Adjusted net income available (loss attributable) from continuing operations to Tenet Healthcare Corporation common shareholders, divided by the weighted average The Company believes the foregoing non-GAAP measures are useful to The Company believes that Adjusted EBITDA is a useful measure, in part, because certain The Company uses, and believes
These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Because these measures exclude many items that are included in
Appendix A: Non-GAAP Financial Measures of the Company’s operating performance. For example, the Company’s definition of Adjusted Free Cash Flow does not include other important uses of cash including (1) cash used to purchase businesses or joint venture interests, or (2) any items that are classified as Cash Flows
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY:
Annual Meeting of Shareholders
This proxy is being solicited on behalf of the The undersigned hereby appoints Saumya Sutaria,
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE Tenet Healthcare Corporation Annual Meeting of Shareholders Please make your marks like this: ☒ THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 1 YEAR ON PROPOSAL 3 AGAINST ON PROPOSAL 5
You must register to attend the meeting online and/or participate at www.proxydocs.com/THC Authorized Signatures - Must be completed for your instructions to be Please sign exactly as your name(s) appears on
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